Wells
Fargo Cutting 1,800 Jobs in Mortgage Processing Business - (www.bloomberg.com) Wells Fargo & Co. (WFC), the biggest U.S. mortgage lender, is
eliminating about 1,800 more jobs in its home-loan production business as
rising mortgage rates curtail borrowers’ demand for refinancing. The reductions
are in addition to 3,000 earlier this quarter, Tom Goyda, a spokesman for the
San Francisco-based bank, said in an interview yesterday. Those included 2,300
announced Aug. 21 and smaller cuts prior to that, Goyda said. Wells Fargo is
cutting jobs as higher borrowing costs slow refinancings and new home purchases
fail to compensate for the decline. The bank may originate about $80 billion in
home loans in the third quarter, a 29 percent drop from the three months that
ended June 30, Chief Financial Officer Timothy Sloan said Sept. 9. Wells Fargo
was the biggest employer among U.S. banks at midyear with about 274,000 people.
The workers whose positions are being cut received 60 days’ notice, Goyda said.
JPMorgan
Chase Agrees to Pay $920 Million for London Whale Loss - (www.bloomberg.com) JPMorgan Chase & Co. (JPM), seeking to end probes of a $6.2 billion
trading debacle, admitted to violating federal securities laws and agreed to
pay about $920 million for failing to implement adequate controls and providing
incomplete information to regulators and its board. Senior management knew in
April 2012 that the bank’s chief investment office in London, which was
responsible for the loss, was using aggressive valuations that hid $750 million
in losses, the Securities and Exchange Commission said today in a statement. Some
executives “expressed reservations” at signing off on JPMorgan’s first-quarter
earnings filings last year as required under the Sarbanes-Oxley Act, the SEC
said. The settlement resolves claims by the SEC, the U.S. Office of the
Comptroller of the Currency, Federal Reserve and the U.K. Financial Conduct
Authority. The Justice Department and Commodity Futures Trading Commission are
among agencies still investigating the trading loss at the CIO, a unit of the
New York-based bank that was supposed to help reduce risk and manage excess
deposits. JPMorgan said today it was notified by the CFTC that its staff
intends to recommend enforcement action.
China
Developer’s 20% Loan After Bank Rebuff Signals Risk - (www.bloomberg.com)
China property
developer Zhang Fuguo was rejected by banks for a loan to
help keep building two office towers in the central city of Zhengzhou. So he
turned to a manufacturer of water and gas meters. The 50 million yuan ($8.2
million) loan last month at a 20 percent interest rate will
help Zhang pay workers and buy materials and was like “delivering coal on a
snowy day,” he said. It was less so for one board member at lender Henan Suntront Technology Co. (300259), who abstained from approval on concern that
Zhang’s company would fail to repay the debt.
Obamacare
Unleashes Benefit Changes From Companies - (www.businessweek.com) Barack
Obama wanted to change American health care as we know it. And he is, in ways
that go far beyond the goals of the Affordable Care Act. For weeks, headlines
have cataloged the upheaval at private employers: UPS dropping coverage for
employed spouses, IBM reworking retiree benefits. Yesterday came the biggest
change: Walgreen Co. (WAG:US),
the largest U.S. drugstore chain, told 160,000 workers they must buy insurance
through a private exchange rather than having the company arrange their
coverage. None of the moves was dictated by the health-care law. All, though,
have occurred in an environment shaped by Obamacare, which has pushed
businesses and governments to reexamine their health-care role as costs soar
and national priorities shift. The act now is giving businesses cover to loosen
the decades-old link between jobs and health insurance, a shift that may
further cloud the outlook for an already unpopular law.
Puerto
Rico Yield Above Greece Fuels Longest Rally: Muni Credit - (www.bloomberg.com) Puerto Rico bonds are staging their longest rally in
two months after prices plummeted about 40 percent this year and yields soared
above those on Greek debt. Interest
rates on
tax-exempt Puerto Rico general obligations that mature in July 2041 and are
rated one step above junk climbed to a record 9.29 percent last week, data
compiled by Bloomberg show. That compares with about 9 percent on 30-year
securities of Greece,
which is graded six levels lower and has received billions of euros of rescue
funds. For Mikhail Foux at Citigroup Inc. and Alan Schankel at Janney
Montgomery Scott LLC, the yield surge wasn’t a result of any new deterioration
in the commonwealth’s credit. Governor Alejandro Garcia Padilla is tackling
recurring budget shortfalls and has bolstered a pension system with a weaker
funding level than any U.S. state as he works to preserve the island’s
investment grade.
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