HSBC plan sidesteps CEO question; Bloomberg would toughen bank regulations

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Bloomberg’s about-face

Democrat presidential candidate Michael Bloomberg “unveiled a raft of proposals to strengthen oversight of lenders, protect consumers and make college more affordable, a move that positions the billionaire former New York City mayor closer to the rest of the Democratic field on financial policy,” the Wall Street Journal reports. “The nine-page plan would toughen tests intended to determine whether banks can withstand an economic downturn. It would reverse steps to ease trading restrictions known as the Volcker rule and impose a tax on financial transactions, an idea that has been embraced by other Democrats.”

“Another plank would merge mortgage-finance giants Fannie Mae and Freddie Mac into a single, fully government-owned entity over time, scrapping Trump administration plans to privatize both entities, which have been under government control since the 2008 financial crisis,” the paper says.

“Mr. Bloomberg said he would bolster or restore elements of the 2010 Dodd-Frank law that were reversed or reduced under Mr. Trump,” the New York Times notes. “For example, he proposes making stress tests for banks more stringent and reinstating the requirement that banks produce annual ‘living wills.’” He “promised a return of Obama-era oversight if elected president,” including “reworking the Volcker Rule, one of the most controversial regulations set up in the wake of the 2008 financial crisis. In the past, he has criticized the way the rule put limitations on how banks can invest their money,” the paper adds.

“As the mayor of New York, Mike Bloomberg often jumped to defend Wall Street and rebut calls for tough banking industry regulations after the global financial crisis,” the Washington Post says. The plan announced Tuesday “appears to reverse many of his former positions. It would reinstate tougher oversight for giant banks, institute a financial transactions tax and strengthen consumer protection laws. Among other things, the plan would also make it easier for the Justice Department to prosecute bankers for violations of the law.”

“Bloomberg’s proposal would take on some of the biggest customers of his namesake financial data company, including Goldman Sachs and JPMorgan Chase as well as hedge funds and high-frequency traders.” It would also “create a bipartisan commission to recommend ways to make the financial system more efficient.”

“Years after criticizing the Dodd-Frank Act, the Democratic presidential candidate and former New York City Mayor Michael Bloomberg is now taking a page from the Elizabeth Warren playbook,” American Banker’s Neil Haggerty writes.

Bloomberg “will sell Bloomberg LP, the multibillion-dollar financial-data and media company he co-founded nearly 40 years ago, if he is elected president, his campaign said. Mr. Bloomberg would first put the company in a blind trust and eventually sell,” the Journal reports.

Will he go the distance?

HSBC interim CEO Noel Quinn “announced a sweeping overhaul of the bank’s business on Tuesday” including 35,000 job losses and deep spending cuts, “but the board’s decision to hold off on confirmation of a permanent role for him has left investors wondering about the restructuring,” the Journal says. “The board still might decide to give him the job, but the delay raises questions about the caretaker CEO and the execution of his reforms.”

HSBC interim CEO Noel Quinn
HSBC interim CEO Noel Quinn

“It isn’t clear whether another CEO would do things drastically differently, but the overhaul is a big job with significant execution risk. It also comes at a time when the lender faces many other challenges — the impact of the coronavirus, continuing Hong Kong protests, high global trade tensions and a U.K. adjusting to life outside the European Union,” the paper says.

“Some investors are worried that Mr. Quinn, who has been running the bank on an interim basis since August, will not be in his job long enough to see the overhaul through,” the Financial Times said. “Several shareholders said they were concerned HSBC was embarking on such a dramatic overhaul without a permanent leader.”

The bank still plans to open branches on the West Coast even as it trims its overall U.S. footprint by 30%, American Banker reports.

Wall Street Journal

Eye on digital payments

The U.K.’s Financial Conduct Authority “has stepped up its supervision of digital payments firms because of what it views as the industry’s record of poor compliance and weak protections.” The agency said “it is placing additional scrutiny on companies that offer digital wallets because of what it views as insufficient consumer safeguards. Some payments firms are advertising bank accounts to consumers, even though those firms aren’t covered by protections that would allow consumers to submit claims for compensation if the firm fails, the FCA said.”

Financial Times

Bulletin-board fodder

“The modesty of ambition” that Goldman Sachs displayed at its recent first-ever investor day “signaled how badly the bank’s fortunes have waned,” provoking “laughter” from some of its rivals, the paper comments. “Goldman executives now have reason to hustle hard again. The laughter of rivals will only matter if it persists. For the moment it is [CEO David] Solomon’s greatest asset in motivating his staff.”

Elsewhere

Changes

JPMorgan Chase plans to name Viswas Raghavan and James Casey to jointly run its global investment banking unit while “shifting some of its most senior dealmakers into new jobs focused purely on bringing in business,” Reuters reports. The “leadership makeover highlights the pressures big investment banks are under to retain senior staff in the face of increasing competition from rival boutiques which can attract seasoned bankers with more entrepreneurial roles. Wall Street firms face a tricky balancing act to keep their long-serving top managers happy while providing promotion opportunities for the next generation of leaders.”

Quotable

“Given how profoundly the 2008 crisis undermined faith in the establishment — and given how close it brought the world to economic collapse — authorities everywhere should be doing all in their power to fix the flaws it revealed.” — Democrat presidential candidate Michael Bloomberg’s Wall Street reform plan

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