How technology could close gender gap; bank stocks drop

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Wall Street Journal

Bank rout
Bank stocks are on pace for their largest weekly decline this year following signals from the Federal Reserve that it won’t raise interest rates for the foreseeable future. The KBW Nasdaq Bank Index of large commercial banks fell 1.5% Thursday after falling 3% on Wednesday, its biggest one-day percentage drop since December 4.

Tech to the rescue
Senior female executives say technology may help close the gender gap on Wall Street. “As old ways of doing things fall away, new paths are opening and giving women an opportunity to step up.” For example, “the shift toward computerized, quantitative trading is helping to solve a difficult bind for women, who have struggled to gain enough experience to land senior portfolio-manager roles over men who have held top jobs for decades,” one woman said.

Turnover
Freddie Mac said Donald Layton, its CEO since 2012, will retire on July 1 and be succeeded by President David Brickman, who joined Freddie Mac in 1999. Brickman earlier also served as the mortgage agency's executive vice president and head of its multifamily unit.

American Banker asked Brickman about his plans as CEO and what he sees in Freddie Mac’s future.

Backing bankers
Presidential candidate Bernie Sanders bemoans that “not one major Wall Street executive went to jail for destroying our economy in 2008 as a result of their greed, recklessness and illegal behavior.” But James Freeman, assistant editor of the paper's editorial page, wants to remind Sanders “about the myriad ways in which Washington encouraged bankers and everyone else to invest in U.S. residential real estate — from creating the mortgage monsters Fannie Mae and Freddie Mac to promoting lax underwriting with ‘affordable housing goals’ to negative real interest rates set by the Federal Reserve in the early 2000s to bank capital standards in concert with government-anointed credit ratings agencies which encouraged the purchase of mortgage-backed securities.”

Delayed launch
The Commodity Futures Trading Commission still hasn’t signed off on a plan by New York Stock Exchange owner Intercontinental Exchange to launch the first futures contract that would pay out in bitcoin. ICE “initially targeted November 2018 for the launch of the bitcoin futures, which it envisioned as a building block in a broader platform for trading and storing digital currencies.” But the CFTC and ICE can’t agree on how the contract should be regulated.

Financial Times

Fasten your seat belts
“Despite worst-case contingency plans enacted over the past two years, a no-deal Brexit still presents risks to the financial sector and its customers,” the U.K.’s Financial Conduct Authority warned Thursday, “urging firms to take the necessary steps over the next week to plan for a cliff-edge Brexit.” The regulator said “the main risks were around how contracts underpinning financial products — from travel insurance to how to trade shares — will work should the U.K. crash out of the European Union next Friday with no deal in place.”

Fumble?
“Global regulators are cheering a transition from Libor, the now infamous London interbank offered rate that underpins $370 trillion in financial contracts, to a slew of new benchmark rates,” writes Megan Greene, global chief economist at Manulife Asset Management. This reminds her of what could happen when Tom Brady eventually leaves the New England Patriots, her hometown football team. “It will almost certainly be destabilizing. Similarly, the shift from Libor to a new reference rate may seriously undermine financial stability.”

Too much
Standard Chartered “is facing an investor rebellion” over how it calculated CEO Bill Winters pension “in a way that falls foul of U.K. corporate governance guidelines. The investor unrest over pay comes as executives at Britain’s largest listed banks are being subjected to rising pressure to reduce their pension payments so that they are in line with the majority of staff.”

Censored
Swedbank issued an initial report into money laundering allegations at the Swedish bank that had “had many of its details redacted, making it difficult to understand how extensive any problem at Swedbank was.” At the same time the bank’s board said it had “continued confidence” in CEO Birgitte Bonnese.

Elsewhere

Denied
Wells Fargo said there is “no validity” to reports that the bank is looking to replace its CEO Tim Sloan. The New York Post, citing "two people briefed on the talks," reported Thursday that Wells was interviewing former Goldman executive Harvey Schwartz to replace Sloan.

Quotable

“Rumors that Wells Fargo’s board of directors reached out to potential CEO candidates are completely false. CEO Tim Sloan has the unanimous support of the board, and this support has never wavered.” — Board Chair Betsy Duke

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