Risk management

As corporate treasurers use the debt reorganization technique to head off disruptive defaults and bankruptcies, lenders seek more blockers and cooperation agreements to mitigate risks.

Sen. Jack Reed, D-R.I., asked the Federal Reserve to require public reporting of synthetic risk transfers — also known as credit risk transfers, or CRTs — through bank call reports and systemic risk reports.

A new Federal Reserve analysis finds rising debt-to-income and loan-to-value ratios over the past two years, while credit scores largely remained the same.

Former Trump administration officials Steven Mnuchin and Joseph Otting are headlining an investment group that's seeking to rescue the troubled Long Island lender. Otting is expected to serve as CEO, and Mnuchin will have a board seat.

New York Community Bancorp faced new questions Friday after a flurry of disclosures led to a steep sell-off in its stock. The embattled Long Island-based lender beefed up its risk leadership, but Fitch cut its rating to "junk" status.

Investors have hammered the New Jersey-based lender following the turmoil at New York Community Bancorp. But Valley executives say there are key differences between the two real estate-focused banks, and they express confidence that the bank's underwriting will hold up again this cycle.

The regional bank announced a leadership shakeup on Wednesday, capping a tumultuous week in which shareholders became spooked about its exposure to the commercial real estate sector.

Former Flagstar CEO Alessandro DiNello, who had been New York Community's nonexecutive chairman, was named executive chairman after the Long Island bank's stock price fell by more than 59% in a week. New York Community also issued updates on both its deposit situation and its search for a new chief risk officer.

A common concern in housing finance reactions has been the lack of accommodation for strategies routinely used to manage credit, rate and liquidity exposures.

FHA-insured and Department of Veterans Affairs-guaranteed mortgages bear watching next year, according to Intercontinental Exchange.

While a majority of current forborne borrowers sought relief for reasons related to COVID-19, servicers are seeing a growing share of cases involving natural disasters or personal financial issues, the Mortgage Bankers Association said.

For large banks, the agencies wanted to go above the global standards for residential mortgages, as well as some business loans, to avoid giving those lenders a competitive advantage over smaller peers, according to another person familiar with the proposal.

Experts and industry leaders said banks are pumping investment into technology that can connect information silos.

Subordinated debt issuances and asset-backed securities have helped institutions of all asset sizes weather recent market uncertainties and fuel campaigns for growth, according to executives and investment experts.

Institutions can borrow against par-valued securities that they would otherwise have to sell at a loss when there's a run on deposits, and it could have effectiveness beyond its actual usage.

Mortgage-backed securities aren't generally considered risky assets, but how SVB managed them contributed to its woes.

The government-sponsored enterprises will likely have their mainstay bonds exempted from the potential securitization-related rule, but their credit-risk transfers could be subject to it, some experts say.

A larger share of cash-out loans and slowing home-price growth is leading to expectations of more serious delinquencies down the road, according to Milliman.

Fed Chairman Jerome Powell brushed off concerns that rapidly tightening monetary policy could disrupt the financial system. Some economists and policy experts beg to differ, raising concerns about loan defaults or even the collapse of a key institution or counterparty.

The San Francisco bank is following the lead of other U.S. megabanks by providing shorter-term targets ahead of 2050 climate pledges.