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CRE Cracks Deepen THURSDAY JANUARY 14, 2021 VOL. 186 No. 9 AMERICANBANKER.COM Follow us on Twitter @AmerBanker CFPB, OCC on collision course 5 over who regulates fintechs CRE cracks deepen The Office of the Comptroller of the Currency appears intent on being the Delinquency rates for commercial real estate loans were holding federal chartering agency for tech firms with steady until the pandemic struck. Now they are on the rise as hotels, banking ambitions. But some experts say the retailers and other business segments continue to struggle. Consumer Financial Protection Bureau is better suited for the job. Page 4 See story on page 3 Wells Fargo establishes 1% 6 new office to oversee consumer practices 0.8% A team led by Michael Lipsitz, a lawyer hired away from Santander last year, will look at everything from whether prices are fair to 0.6% whether complaint data contains notable trends. Page 5 0.4% New Senate Banking chief sets dramatic change of course 0.2% 7 Sen. Sherrod Brown, D-Ohio, said elevating affordable housing issues, examining the 0% financial system through a climate and racial justice “lens” and holding banks accountable 4Q18 1Q19 2Q19 3Q19 4Q191Q202Q203Q20 for their impact on consumers will be among Source: Federal Reserve Board his priorities. Page 6 Visa and Plaid call off 8 merger, ending DOJ litigation dailybriefing Are CRE foreclosures Visa and Plaid have terminated their 3 on the horizon? tie-up and reached an agreement with Commercial real estate portfolios have the Department of Justice to dismiss the Citi shuffles consumer held up better than expected during the litigation brought against them when the 1 banking leadership team pandemic. But rising delinquencies and deal raised antitrust questions. Page 7 In a memo to staff on Tuesday, Citigroup fears of a delayed economic recovery are announced a new head of U.S. consumer renewing questions about credit quality. Deutsche, Signature banking and said that two of its other high- (See chart above.) Page 3 9 to stop doing business with ranking bankers would essentially switch Trump and his company roles. Page 2 Keane stepping down In the wake of last week’s riot at the U.S. 4 as Synchrony CEO Capitol, New York-based Signature is also Acting Comptroller Brooks The Stamford, Conn.-based credit card calling on the president to resign before his 2 expected to step down soon issuer said Tuesday that Brian Doubles, the term ends next week. Page 7 Brian Brooks is planning to leave the Office president and former chief financial officer, of the Comptroller of the Currency within will succeed Margaret Keane in April. Page 4 Global banks warn of days, according to a published report and a 10 market chaos if court source familiar with the situation. Page 2 rushes Libor exit Some of the world’s biggest banks are urging a U.S. judge not to immediately terminate Libor after a group of borrowers filed suit claiming the benchmark was the work of a “price-fixing cartel.” Page 8 THURSDAY JANUARY 14, 2021 AMERICANBANKER.COM PAGE 2 lines of business,” Selva said in the memo. depart within a week. CONSUMER BANKING “This move will ensure we are enabling An OCC spokesman declined to say continuous career development by whether Brooks will resign soon. broadening experience and building a It is unclear whether Treasury Secretary Citi shuffles versatile leadership team.” Steven Mnuchin would name a first deputy comptroller to fill in as the agency’s leader consumer or hold off and let former Federal Reserve OCC Chair Janet Yellen, President-elect Joe Biden’s pick for Treasury secretary, select an banking interim. Acting Brooks joined the OCC in March when he leadership was tapped by Mnuchin to be chief operating Comptroller officer and first deputy comptroller. Brooks had been on the job for just seven weeks team when then-Comptroller Joseph Otting Brooks resigned halfway into his five-year term; By Laura Alix Brooks was named acting comptroller in January 12, 2021 expected to May. Mnuchin, Otting and Brooks had Citigroup announced a slate of leadership worked together as executives at OneWest changes in its U.S. consumer banking Bank in Pasadena, Calif. business on Tuesday. step down Brooks’s next step is unclear, but Gonzalo Luchetti will become head of U.S. speculation immediately began about consumer banking, effective Feb. 1. Luchetti soon whether he was headed back to Coinbase, is currently head of consumer banking in a digital cryptocurrency exchange platform Asia Pacific and Europe, the Middle East and By Kate Berry and Hannah Lang where he had served as chief legal counsel. Africa. Before moving to Asia, he was Citi’s January 12, 2021 Brooks also had been an executive vice global head of wealth management and Brian Brooks is expected to step down as president and general counsel at Fannie insurance in the U.S. acting head of the Office of the Comptroller Mae. In a memo to staff, Anand Selva, the of the Currency within days, paving the way CEO of global consumer banking, praised for President-elect Joe Biden to nominate a Luchetti for launching digital partnerships successor after his inauguration. in India and Southeast Asia, as well as Politico on Tuesday reported that Brooks growing the company’s wealth management is planning to leave and that the agency’s business during the pandemic. chief operating officer, Blake Paulson, is in “This move will ensure strategic continuity line to succeed him in the remaining days and strong leadership as we accelerate the of the Trump administration. Separately, transformation of our business model,” said a source familiar with the situation told Selva, who preceded Luchetti as head of U.S. American Banker that Brooks plans to consumer banking. Selva stepped into his current role when Jane Fraser, who had held the role previously, was named Citgroup’s Established 1836 One State Street Plaza, 27th floor, New York, NY 10004 CEO. Phone 212-803-8200 AmericanBanker.com On May 1, David Chubak, now head of U.S. retail banking, will become head of Citi Editor in Chief Alan Kline 571.403.3846 Copy Editor Neil Cassidy 212.803.8440 retail services, the company’s private-label Managing Editor Dean Anason 770.621.9935 and cobranded consumer and commercial Reporters/Producers credit card businesses. Craig Vallorano, Executive Editor Bonnie McGeer 212.803.8430 Laura Alix 860.836.5431, Kate Berry 562.434.5432 currently head of Citi retail services, will Washington Bureau Chief Joe Adler 571.403.3832 become head of U.S. retail banking. Chubak Executive Editor, Technology Miriam Cross 571.403.3834 and Vallorano are essentially switching roles Penny Crosman 212.803.8673 Jim Dobbs 605.310.7780 with this move, giving Chubak exposure to BankThink Editor Rachel Witkowski 571.403.3857 credit cards and Vallorano experience in John Heltman 571.403.3847, Allissa Kline 716.243.2679 Community Banking Editor Paul Davis 336.852.9496 retail banking. Hannah Lang 571.403.3855 “U.S. consumer banking operates as a Contributing Editor Daniel Wolfe 212.803.8397 John Reosti 571.403.3864, Gary Siegel 212.803.1560 single unified franchise with an integrated Digital Managing Editor strategy that leverages strengths, assets, Christopher Wood 212.803.8437 Jackie Stewart 571.403.3852, Kevin Wack 626.486.2341 best practices and partnerships across For up to date and complete coverage go to AmericanBanker.com THURSDAY JANUARY 14, 2021 AMERICANBANKER.COM PAGE 3 To be sure, the latest percentage is was similarly upbeat during a separate COMMERCIAL LENDING comfortably below that of all real estate industry conference. He said he expects TD’s loans, where delinquencies were 1.92% at commercial real estate exposures, which he the end of the third quarter. But it’s the first said are mostly in major metropolitan areas Are CRE time the rate for commercial real estate in largely grade A-type properties, will be loans has hit the 1% mark in five years. “manageable” over the long run. foreclosures Bankers say they are closely and regularly “And we are well reserved should the monitoring their commercial loan portfolios. situation turn out to be a lot different than They’ve also had more latitude to offer what we are expecting,” he added. on the deferral and forbearance programs under Jennifer Demba, an analyst at Truist the Coronavirus Aid, Relief and Economic Securities, said bank management teams are horizon? Security Act, and at the same time have built telling her they don’t expect to incur “any up massive reserves to cover losses. real” commercial real estate losses “until the By Allissa Kline Brian Foran, an analyst at Autonomous middle of 2021.” But continued hiccups in January 12, 2021 Research who covers regional banks, said the vaccine rollout will put further strain on Nearly a year into the pandemic, the circumstances of the macro environment commercial real estate loans, she said. big questions loom about the future of make it nearly impossible for bankers to “What’s the demand for the vaccine, commercial real estate portfolios. project how bad the portfolios might get how fast can it get rolled out, and how can Namely, how much longer can banks and when. The nation’s coronavirus vaccine the efficacy get better?” Demba said. “The offer deferrals on loans that have soured rollout is behind schedule, and the latest stock market is pricing in the second half of during the pandemic recession, are employment report showed that 140,000 the year for normalization. If [the rollout] foreclosures inevitable, and how quickly jobs were lost in December, the first net doesn’t improve, it could be fourth quarter could foreclosure rates rise if the spigot decline in payroll since the spring.
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