Sloan out at Wells Fargo; Facebook charged with housing bias

Receiving Wide Coverage ...

Sloan steps down
Wells Fargo CEO Tim Sloan said he was stepping down Thursday, “ending a 31-year career at the bank and a 2½-year slog to get it back on solid footing.” C. Allen Parker, the bank’s general counsel, was named interim CEO until Wells finds a permanent replacement from outside the company.

“The change atop Wells Fargo could signal a reset of the bank’s plans to put its problems behind it,” the Wall Street Journal commented. “Many of Wells Fargo’s top executives, including Mr. Sloan, have spent decades at the bank, and critics have said those long-tenured leaders have hindered the company from adequately fixing deep-rooted issues.” Wall Street Journal, New York Times, Washington Post

“The board has concluded that seeking someone from the outside is the most effective way to complete the transformation at Wells Fargo,” said Betsy Duke, Wells’ board chairman.

Wells’ stock was higher in after-hours trading following the announcement, “perhaps signaling that [investors] see the transition, however messy, as a necessary step,” the Journal added. “But any optimism that the bank is close to putting its problems behind it would be misplaced.”

American Banker answers three key questions “about why Sloan left now, what role policymakers had in the decision and will continue to have in the company's future, and who in the world would want to be CEO of Wells Fargo.”

Another top banker leaves
Meanwhile, Morgan Stanley president Colm Kelleher announced his retirement, “opening a seat whose filling will signal the Wall Street firm’s likely heir apparent.”

His departure, scheduled for June, sets “the scene for a lengthy contest between his lieutenants to succeed him as president and position themselves to be the bank’s next chief executive.”

In the crosshairs
The Department of Housing and Urban Development accused Facebook of violating the Fair Housing Act with unlawful housing discrimination by allowing real estate companies that advertise on the site “to target potential customers by race, religion and other factors.” HUD’s action also signals “that other online advertising platforms are in its crosshairs.” The agency sent letters to several technology companies, including Google and Twitter “asking for more information about their sophisticated advertising systems.” Wall Street Journal, Financial Times, New York Times, Washington Post

Thinking about Moore
Stephen Moore “might be a useful counter to the group-think” at the Federal Reserve, the Wall Street Journal says in endorsing him for the Fed.

Moore has “followed an unconventional journey” to be considered for the Fed. Wall Street Journal, Washington Post

“Moore's confirmation could be a step toward a more overtly political Fed, signaling a potential move by Trump to have a more direct hand in central bank policies,” American Banker says.

Shot in the arm
After nearly hitting 5% just a few months ago, mortgage rates are heading back to near 4%, “raising hopes for a [housing market] rebound as the spring selling season gets under way.” Wall Stree Journal, Washington Post

Capital question
Deutsche Bank is talking about raising between €3 billion and €10 billion of additional capital as it discusses a potential merger with Commerzbank, “a move designed to end the debate over whether Germany’s largest lender has enough capital.” While the German government “would like Deutsche to raise as much as possible,” bankers “would prefer something at the smaller end of the range to appease shareholders already skeptical about the economics of a potential deal.” Financial Times, Wall Street Journal

Wall Street Journal

Shake it up
Antoine Shagoury, State Street’s chief information officer, “is shaking up how the 227-year-old bank tests new ideas, an effort that has brought new services such as a chatbot for investors and a blockchain-based auditing system.”

Financial Times

Following the script
“This week’s dramatic events at Swedbank” – culminating in the ouster of CEO Birgitte Bonnesen – “show that it is following a similar script to Danske [Bank], almost to the word. Both banks are alleged to have been part of a system that allowed oligarchs and criminals from Russia and elsewhere to move money through their Baltic branches and into the western financial system.”

New York Times

Enabling act
In “the latest example of a major American bank getting caught up in a foreign corruption scandal,” the Nigerian government is suing JPMorgan Chase in a British court for allegedly “enabling corrupt former officials” to loot a government bank account of $900 million. “At the heart of the case is whether JPMorgan did enough to safeguard Nigeria’s money. JPMorgan says it was following instructions it received from senior Nigerian government officials.” The bank has been unsuccessful in having the matter thrown out of court.

Quotable

“It has become apparent to me that our ability to successfully move Wells Fargo forward from here will benefit from a new CEO and fresh perspectives.” — Tim Sloan, announcing that he is stepping down as Wells Fargo CEO.