Showing posts with label S&P. Show all posts
Showing posts with label S&P. Show all posts

Thursday, July 26, 2018

Asian Banks....again...

We have been tracking Asian Banks for some time. See: Bullish on Asian Banks Originally posted on the Street Insight section of thestreet.com 2/28/2006 4:35 PM EST and Still Bullish on Asian Banks

Recently, there has been renewed interest in this sector. We commented for an article by S&P analysts Kelsey Bartlett and Carolyn Duren posted Monday, 02 July 2018 11:52 AM ET, some of which is reproduced below:

Deals are heating up among Asian-American designated banks, with two of the nation’s prominent institutions announcing deals since April.

In its second deal since 2013, Hanmi Financial Corp. is acquiring Houston-based SWNB Bancorp Inc. Meanwhile, RBB Bancorp is making a play for Brooklyn, N.Y.-based First American International Corp. — its third deal since 2013. The two Los Angeles-based banks remain interested in diving into new markets with high populations of Asian Americans, management said.

Hanmi expects the combined entity to have $5.7 billion in total assets, while RBB anticipates it will have $2.6 billion in total assets after closing.


On a May 21 call to discuss the deal, Hanmi President and CEO C.G. Kum said the transaction advances the bank's long-term objective of expanding its existing footprint outside of Southern California. The bank will continue to search for "strategic entry points" in attractive markets, he said.
RBB Bancorp President and CEO Alan Thian shared similar sentiments, and said on an April 23 call its First American International acquisition will provide "improved scale, efficiencies and profitability."

(We noted some time ago that Asian-American banks merge with other Asian-American banks).


In 2014, Kum told S&P Global Market Intelligence that Hanmi, a traditionally Korean bank, hoped to diversify its customer base to include more Chinese-Americans, south Asians and customers without any Asian background. Kum will retire in 2019, but Tenner does not expect his departure to vastly change the bank's business model.

William Michael Cunningham, an economist, impact-investing specialist, and an adjunct faculty member at Georgetown University, said Asian-American banks could grow by expanding their footprints in the broader American market, but doing so could "potentially" cause a bank to lose its status with the Federal Deposit Insurance Corp. as a minority depository institution, or MDI, he said.

"You've got to be a big bank these days in order to survive," Cunningham said in an interview. "... But it is something you have to think about, and you have to plan in order to be successful at." 

In an emailed statement, an FDIC spokesman said whether a bank loses its designation "all depends on the ultimate structure" of the resulting merger.

One of the goals of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 is to preserve minority character in cases of merger or acquisition. The FDIC provides technical assistance, training and educational assistance to the banks. The number of banks and thrifts with an MDI designation has dwindled in recent years.


More than 51% of an MDI's voting stock must be owned by one or more "socially and economically disadvantaged individuals," or the majority of the board and the community the institution serves must be predominantly minority, according to FDIC's definition.

Cunningham said there is a "varying degree of value" to being an MDI, noting that regulators have at times tended to "over-help minority banks."

"They're kind of all up in their business," he said. "That reduces management's flexibility. It's a regulatory burden that other banks don't have."

Cunningham also pointed to financial technology and large banks as challenges for MDIs, noting banks like Wells Fargo & Co. are free to conduct business in other languages.

"The big banks have sharpened their skills in the marketplace that MDIs frequent," he added. "That's one of the additional competitive pressures that these institutions face."

Thursday, April 14, 2016

The Real Superpredators

The Real Superpredators

SachsRecently, the Department of Justice announced that Goldman Sachs “agreed to Pay More than $5 Billion in Connection with Its Sale of Residential Mortgage Backed Securities.” Close scrutiny reveals that Goldman will actually pay, for a number of reasons, $0.

Goldman’s Track Record:

We note that:

On April 28, 2003, Goldman Sachs was found to have aided and abetted efforts to defraud investors.

On September 4, 2003, Goldman Sachs admitted that it had misused material, nonpublic information that the US Treasury would suspend issuance of the 30-year bond.

On April 28, 2003, Goldman Sachs was found to have "issued research reports that were not based on principles of fair dealing and good faith .. contained exaggerated or unwarranted claims.. and/or contained opinions for which there were no reasonable bases ". .

On January 25, 2005, "the Securities and Exchange Commission announced settled civil injunctive actions against Goldman, Sachs & Co. relating to the firms' allocations of stock to institutional customers in initial public offerings (IPOs) underwritten by the firms during 1999 and 2000 ".

On July 15, 2010, “the SEC announced that Goldman paid $550 million to settle SEC charges that Goldman misled investors in a subprime mortgage product just as the U.S. housing market was starting to collapse.”

Our Track Record:
On July 3, 1993, we wrote to US Securities and Exchange Commissioner (SEC) Mary Schapiro to notify the Commission about the "Nigerian letter scam."

We designed the first mortgage security backed by home mortgage loans to low and moderate income persons and originated by minority-owned institutions. (See: Security Backed Exclusively by Minority Loans, The American Banker Newspaper. Friday, December 2, 1994.)
We opposed the elimination of Glass-Steagall, a law that separated commercial from investment banks. The removal of this law contributed to the financial crisis, as we warned it would on September 23, 1998.

On June 15, 2000,we testified before the Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises (GSE’s) of the U.S. House of Representatives and suggested that GSEs Fannie Mae and Freddie Mac be subject to a Social Audit. Had the GSE’s been subject to this audit, certain flaws in their operation, including ethical shortcomings, would have been revealed earlier, in a better market in which to make corrections.

In 2001, we participated in the first wide scale home mortgage loan modification project. The Minneapolis-based effort helped 50 families victimized by predatory lending practices.

On December 22, 2003, we warned US regulators that statistical models he created using the proprietary Fully Adjusted Return® Methodology signaled the probability of system-wide economic and market failure.

In 2005, we served as an expert witness in a case that sought to hold Credit Suisse First Boston, Fairbanks/SPS, Moody’s and Standard and Poor’s, US National Bank Association, and other parties legally responsible for supporting and facilitating fraudulent subprime lending market activities. Had this single case been successful, we believe the credit crisis would have been less severe.

On December 22, 2005, we issued a strongly worded warning that system-wide economic and market failure was a growing possibility in a meeting at the SEC with Ms. Elaine M. Hartmann of the Division of Market Regulation.

On February 6, 2006, we again warned regulators that statistical models created using the proprietary Fully Adjusted Return® Methodology confirmed that system-wide economic and market failure was a growing possibility. We stated that: Without meaningful reform there is a small, but significant and growing, risk that our (market) system will simply cease functioning.”

On December 9, 2013, we filed a "Friend of the Court" brief in the United States District Court, Central District of California in an action that the U.S. Department of Justice brought against McGraw-Hill Companies, Inc., and Standard & Poor’s Financial Services LLC.

Why This Deal Matters

This deal has ramifications well beyond the parties to the case. It protects the monetary interest of a narrow set of mainly white persons, short-circuits the justice process, fails to protect the interests of both DOJ and the general public, does little to protect victims of other financial crimes, and damages the country's long-term economic prospects.

Without an admission of guilt, transaction costs — in the broad economic sense of the costs of participating in a market — will increase in financial markets.

This deal continues a pattern of ineffective financial institution regulation and enforcement that is contrary to the public interest. It furthers the legal double standard that Black Lives Matters protesters highlighted when they castigated former President Bill Clinton for Hillary Clinton’s 1996 comments that some black youth were "superpredators."

The financial crisis shows the real superpredators were firms with names like Goldman Sachs, Bear Stearns, Lehman Brothers and Wells Fargo. The fact that many of these superpredators also damaged and destroyed themselves (as superpredators have a tendency to do) is beside the point. Responsible enforcement would have prevented them from also damaging the global economy.

Given their record, Goldman’s license to do business should have been suspended (at the very least.) Clearly, they have compromised both New York Attorney General Eric Schneiderman and the DOJ.

This deserves federal judicial review.

http://www.tnj.com/news/business/real-superpredators