Receiving Wide Coverage ...
Wells Fargo fallout: Wells Fargo said its $1 billion settlement with the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency will force it to revise downward its recently announced first-quarter profit by $800 million. The fine and the write-down “made it clear the San Francisco-based bank is in a different place than most of its rivals,” the Wall Street Journal comments.
“The fine is a signal that while officials are working to ease post-crisis regulatory rules, they won’t let companies off the hook for misconduct,” the paper adds.
As part of the settlement, which involves the bank’s auto lending and residential mortgage units, not its retail banking operation, Wells also agreed to “track down and compensate hundreds of thousands of customers who were sold unnecessary insurance or hit by excessive home loan fees,” the Financial Times says. Wall Street Journal, Financial Times, New York Times, Washington Post, American Banker
But Wells is still not out of the woods — or the woodshed. The bank is planning to ask the OCC to give it more time to satisfy a 2015 enforcement action involving anti-money-laundering issues in its wholesale business, which works with large corporations. If the bank misses the June 15 deadline to comply with the order, “it could result in another enforcement action.”
Stolen data: SunTrust said one of its former employees may have stolen information on about 1.5 million of its customers. While the person tried to share the information with a “criminal third party,” the bank said it had “not identified significant fraudulent activity” resulting from it. Wall Street Journal, New York Times, Washington Post, American Banker
There’s a potentially bigger and more widespread online theft problem lurking. Zelle, the mobile money-transfer service run by banks, may be making it easier for thieves to steal money. “The same features that make Zelle so useful for customers, its speed and ubiquity, have made it irresistible to thieves,” the New York Times reports. “While all financial systems are susceptible to fraud, aspects of Zelle’s design, like not always notifying customers when money is transferred, have contributed to the system’s vulnerability.” An issue American Banker broached in February.
Wall Street Journal
Mystery: While the big banks delivered boffo profits in the first quarter, their stock prices haven’t followed along. “One big reason is uncertainty over future dividends and buybacks,” the Heard on the Street column says, and the Federal Reserve will play a major role in determining how generous they will be allowed to be based on the results of this year’s annual stress tests, which are expected to be “particularly tough.”
“To keep shareholders happy, banks likely need to buy back as many shares as the Fed will let them,” the paper says. “The problem right now is that neither the banks nor their shareholders have a clear idea how much that will be.”
Where they are now: As part of its series on the 10th anniversary of the financial crisis, the paper catches up with a leading actor in the drama, former Federal Reserve Chair Ben Bernanke. Now with the Brookings Institution in Washington, he even has a highway interchange in South Carolina named after him.
Moving forward: HSBC CEO John Flint is signaling that “much of the heavy lifting is done” in the bank’s seven-year-old overhaul process. “The strategy we have is working,” he told the bank’s shareholders Friday at its annual meeting. “But we now need to keep evolving it and to deliver at pace.”
Too soft?: U.K. regulators “have been found wanting” for letting Barclays CEO Jes Staley off with a fine of no more than £2 million for trying to uncover the identity of a whistleblower at the bank.
“A ban would have meant the end of Mr. Staley’s City career, and Barclays would have been left looking for its fourth chief executive in five years,” the paper notes. “But the decision to spare him — on the basis that the regulators had no evidence of a lack of integrity — has left some questioning how committed the UK is to leaving light-touch regulation in the past.”
Bucking the trend: While the trend in American retail banking has been toward more online services and fewer brick-and-mortar branches, the largest company in the industry is taking the opposite approach, at least in the nation’s capital. JPMorgan Chase is preparing to open its first-ever branches in the Washington area, part of a plan to add 70 new offices in the District, Maryland and Virginia over the next five years.
“We have said all along that we will enforce the law. That is what we did here.” — Acting CFPB director Mick Mulvaney about the agency’s enforcement action against Wells Fargo.