Outraged Members of the House Financial Services Committee were none too happy to hear that Wells Fargo had rewarded CEO Timothy Sloan with a 5% raise and a bonus for 2018 a day after he received a verbal beating from the panel. “It is outrageous and wholly inappropriate that the bank has rewarded Mr. Sloan with a $2 million bonus for 2018,” committee chair Maxine Waters, D-Calif., who said he should be fired, told CNBC. “Another raise for the Wells Fargo CEO in the midst of more scandals and fumbling Congressional testimony. This is not how fair and competitive markets are supposed to work,” added Rep. Katie Porter, another California Democrat.
Porter, a first-term Congresswoman, “enters the chamber with powerful backers," the Washington Post says. "Porter took a bankruptcy class taught by a law professor named Elizabeth Warren, now a senator from Massachusetts, that she has said changed her life trajectory. In 2012, Sen. Kamala D. Harris (D-Calif.), then California’s attorney general, picked Porter to oversee the distribution of a $25 billion settlement with big banks for fraudulent foreclosures. That track record made her a natural for the Financial Services Committee.”
Defensive tactic Goldman Sachs claims the Malaysian government provided the bank with guarantees that the money raised by the state-sponsored 1MDB fund would be used for regional development, “a key part of the U.S. bank’s defense against potential regulatory sanctions over the fund’s multibillion-dollar corruption scandal.” The bank is “being sued for billions of dollars and criminally prosecuted in Malaysia for its role in helping 1MDB to raise $6.5 billion in debt, much of which, it is alleged, was ultimately stolen and used to pay bribes to state officials.”
Abu Dhabi’s state investment company, Mubadala, has stopped doing business with Goldman pending the outcome of the Malaysian case, “piling pressure on the Wall Street bank.” The International Petroleum Investment Company, a Mubadala unit, is a former partner of 1MDB.
Separately, “a dreaded bloodbath at Goldman Sachs under the bank’s new boss has finally begun,” the New York Post reports. The paper says Goldman laid off 65 employees at its New York headquarters at the end of last month. “The body count, however, is expected to swell in the coming weeks,” with an additional dozen people laid off this week. “The layoffs at Goldman have been closely watched on Wall Street for hints about what direction will be taken by [new CEO David] Solomon.”
Wall Street Journal
Not a proponent The proposed merger of Deutsche Bank and Commerzbank, would create “a bank that’s too big to succeed, too big to fail, and too big to save in a crisis,” the paper says. Moreover, it “would do nothing to fix the underlying problem afflicting Germany’s banking system, which is not too few huge banks but rather too many little ones.”
Banned and fined Hong Kong’s Securities and Futures Commission banned UBS from acting as the senior underwriter on initial public offerings for a year and fined the Swiss bank and units of Morgan Stanley and Bank of America a total of $100 million for “cutting corners on IPOs.” The U.K.’s Standard Chartered was also fined. The securities regulator said the banks failed to perform the required due diligence on several IPOs.
Fast money In what could be a quick financial bonanza for the bank, JPMorgan Chase bought $350 million of bonds directly from Ukraine’s government on Tuesday, “a departure from the standard Wall Street practice of arranging bond sales from governments to outside investors. The deal could deliver millions of dollars in gains for JPMorgan, which bought the bonds at a discount and has already begun unloading them to bond funds at full market price.”
Financial Times
Stepping aside Francisco González, BBVA’s former executive chairman, said he is “temporarily” stepping down from his honorary chairmanship post while the bank investigates allegations of corporate spying during his tenure. In January, Spanish media reported the bank had hired a corporate services company to investigate executives from a Spanish construction firm “in order to head off a takeover bid by the company that would have pushed out Mr. González.”
Elsewhere
On the soap box Bank of America CEO Brian Moynihan discussed a variety of subjects on CNBC’s “The Exchange,” including the state of the U.S. economy, mortgage lending and housing, digital banking, and what the bank is doing to promote gender equality.
Bank of America CEO Brian Moynihan
Chris Keane/Bloomberg
Quotable
“Mr. Sloan shouldn’t be getting a bonus, he should be shown the door.” — Rep. Maxine Waters, D-Calif., commenting on Wells Fargo CEO’s compensation package for 2018, which included a 5% raise and a $2 million bonus.
The Bureau of Labor Statistics report showed the labor force continued to expand but at a weaker rate than in recent months. The development weakens the case for a near-term rate hike.
The parent company for crypto exchange Kraken bought the stablecoin payments fintech as it awaits a response to its national trust bank charter application.
This data release means another milestone for the use of updated credit score models than the current FICO Classic has been met by Fannie Mae and Freddie Mac.
The Connecticut-based bank announced its release from a formal agreement with regulators. It is pushing to expand in wealthy areas such as Beverly Hills, California, and Palm Beach, Florida.
The fintech said that Senior Vice President of Group Finance Hwa Tsao would become the company's interim chief financial officer effective Sept. 1 following the departure of CFO Ethan Tandowsky at the end of August. Separately, Gayathri Rajan will assume the role of chief product officer, effective immediately.
The rise in completed modifications occurred as many other loan performance indicators plateaued, and may reflect the temporary impact of recent rule changes.
