Receiving Wide Coverage ...
SoFi chief quits: Social Finance’s chairman and CEO Mike Cagney plans to leave the company he co-founded following lawsuits alleging sexual harassment and unfair work practices at the online lender. He will step down from the chairman’s role immediately and stay as CEO until a replacement is found. Cagney told employees that “negative press [has] become a distraction from the company’s core mission.” Wall Street Journal, Financial Times, New York Times
Wall Street Journal
Preparing for the worst?: In the months before the massive data breach, revealed last week, Equifax spent more than half a million dollars to lobby Congress and federal agencies to get them to ease up on regulation of credit reporting companies, the paper says. Among the issues it lobbied for was limiting the legal liability of such companies as well as “data security and breach notification” and “cybersecurity threat information sharing.”
"Equifax may have displaced Wells Fargo as the new poster child of bad financial behavior for policymakers on Capitol Hill," according to American Banker. Meanwhile the Senate Finance Committee wants answers from Equifax Chief Executive Officer Richard Smith.
The Equifax data breach “could force some lenders to hit the brakes” on their lending goals, especially nontraditional companies that lend money online to customers mainly based on electronic credit checks. “Those checks could become less effective in weeding out someone putting in a loan application with a false identity,” the paper reports.
Equifax stock is down more than 20% in the two trading days since the data breach was announced and the company’s market capitalization has fallen by more than $3 billion to $14 billion.
The paper summarizes the day’s Equifax news here:
Moving on: Edith Cooper, head of human resources at Goldman Sachs and one of the highest-ranking black women on Wall Street, is leaving the bank at the end of the year. “In her nine years overseeing Goldman’s workforce, Ms. Cooper managed huge changes in recruiting and compensation as Goldman sought to refine its sharper edges and grappled with the fallout of the financial crisis,” the paper says.
A long wait for Justice: Federal prosecutors filed a civil lawsuit against the former head of subprime trading at Deutsche Bank, accusing him of misleading investors about loans backing more than $1 billion worth of mortgage-backed securities that were issued before the financial crisis. The executive, Paul Mangione, allegedly participated in a “fraudulent and illegal scheme” that duped investors out of hundreds of millions of dollars.
What are they thinking?: Goldman’s plan to export its nascent consumer finance business to the U.K. is criticized by columnist Patrick Jenkins. “It is not an obvious move” and “defies a lot of logic,” he writes. The market is crowded, loan pricing is competitive, and deposits don’t come cheap. “The timing looks questionable, too.”
Early warning: Citigroup expects its third-quarter securities trading revenue to be down about 15% compared to the same period a year ago, “casting an early shadow” on upcoming quarterly results. Trading revenue was down 5% year-on-year in the second quarter.
“There are some really great tools out there, but the industry today mostly uses older [identification] methodologies. It could take years for the industry to catch up and move to new identity validation standards.” — Zach Perret, chief executive of Plaid Technologies, about the efficacy of electronic credit checks.