Exec departures at Deutsche Bank, SoFi; N.Y. Fed chief warns on 'bad apples'

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Wall Street Journal

Moving on
A little over a year after she got the job, Kate Clifford, Deutsche Bank’s chief operating officer for the Americas, “a key position responsible for relationships with top U.S. regulators,” has left the bank. No successor has been named. Clifford reported to Tom Patrick, CEO for the Americas, who himself “has had off-and-on discussions about leaving the bank over the past year.” He was “the bank’s third Americas CEO in less than 18 months when he took on that role in 2017. Senior U.S. executive roles at the German lender, particularly those facing regulators, have seen high turnover in recent years,” the Journal said.

Also on the move are three top executives at Social Finance. “Marketing chief Joanne Bradford, head of risk Kevin Moss and Ashish Jain, the lender’s top capital markets executive, recently told Chief Executive Anthony Noto about their plans to step down from their roles. All three had been at the company prior to Mr. Noto taking the reins in early 2018.”

“One of the buzziest upstarts to take on big banks, SoFi has faced more challenging conditions in recent years. Higher interest rates have made SoFi’s refinanced student loans and personal loans less attractive to some borrowers and contributed to a slowdown in lending volume, hurting SoFi’s financial results.”

Bad apples
Federal Reserve Bank of New York President John Williams told Wall Street bankers that they need to do more to address bad behavior in their industry and not blame it on just those involved. “When things go wrong, business leaders blame a single ‘bad apple’ as the cause of the problem,” he said in a speech. “But focusing on an individual bad actor can obscure a culture in which people feel that misconduct in the pursuit of profit is tolerated, or even condoned. The ‘bad apple’ theory acts as an excuse for not doing the hard work of cultural reform.”

Not that the bad apples shouldn’t be punished. “There must be meaningful consequences for firms and people when things go wrong,” Williams said. “We have learned that simply levying large fines on companies is not enough to create lasting change. More is needed.”

Financial Times

Gainers
Banks were one of the biggest beneficiaries of the stock market rally Tuesday after Federal Reserve chair Jerome Powell said the central bank would “act as appropriate to sustain the expansion” in the face of the growing tariff standoff between the U.S. and its trading partners. The KBW bank index jumped more than 3.5%, led by Citibank, which climbed more than 5%. Wells Fargo bank analyst Mike Mayo said Powell’s comments “seemed to imply a willingness to cut rates in response to trade conflicts,” which would be particularly positive for “Citigroup followed by Bank of America” – which gained more than 4% – “and JPMorgan Chase” – which rose 3%.

Innovator
HSBC has “quietly” launched its PayMe digital wallet in Hong Kong “in an effort to fend off intensifying competition from Tencent and Alibaba in its most lucrative market.” The bank has received “thousands of applications” since its April launch, the bank says.

Meanwhile, here in the U.S., Jeremy Balkin, head of innovation at HSBC USA, became an American Banker Digital Banker of the Year finalist. The most telling thing about that? Balkin was nominated by a competitor, not by a colleague.

New York Times

Seems like old times
JPMorgan Chase wants to reintroduce binding arbitration — a policy it dropped 10 years ago — on its credit card customers who have a dispute with the bank, even if it involves an older account. “The change, which affects about 47 million accounts, including those for Chase’s popular Sapphire cards, reflects abroader effort by Wall Street firms to prevent customers and employees from engaging in class-action lawsuits that can result in large settlements and bad publicity. Unlike court cases, arbitration cases do not leave a trail of public documents and they cannot be brought by groups of aggrieved customers.” Customers, who have until August 7 not to accept arbitration, could still take the bank to small-claims court.

Quotable

“In the year since our last conference, stories of money laundering and fraud have been an all-too-frequent feature. Culture is at the heart of many of these issues, and addressing the root causes of misconduct must remain a high priority for the industry and regulators.” — Federal Reserve Bank of New York President John Williams, telling bankers that they must do more to weed out misbehavior at their companies.

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