In praise of Gerspach; Equifax’s other concern
Receiving Wide Coverage ...
JPMorgan Chase CEO James Dimon stepped in it on Wednesday, disparaging President Trump before quickly backtracking. “I think I could beat Trump,” he said at an event launching the bank’s new $500 million initiative to sponsor public-private partnerships in U.S. cities. But he was just getting warmed up. “I’m as tough as he is, I’m smarter than he is. I would be fine. He could punch me all he wants, it wouldn’t work with me. I’d fight right back,” Dimon said.
But he quickly thought better of it. “I should not have said it. I’m not running for President. Proves I wouldn’t make a good politician. I get frustrated because I want all sides to come together to help solve big problems,” he said in a statement released by the bank after the event. Wall Street Journal, Financial Times, New York Times, Washington Post, American Banker here and here
Citigroup CFO John Gerspach, who is scheduled to retire next March after 10 years on the job, “gave a bullish update the company’s business,” which boosted the bank’s share price on an otherwise down day for bank stocks. “Citigroup has come a very long way since Mr. Gerspach took the reins as CFO in 2009,” the Wall Street Journal says. “He will leave behind a substantially strengthened bank with much higher capital levels, reduced legacy assets and a smaller footprint at home and abroad that should make it more resilient to global shocks.” Wall Street Journal, Financial Times here and here, New York Times, American Banker
The three “pre-eminent U.S. regulators of the financial crisis” — former Federal Reserve Chair Ben Bernanke, former Treasury Secretary Hank Paulson, and former New York Fed President Timothy Geithner — “offered a unified defense of their actions” during the financial crisis at an event hosted by the Brookings Institution Wednesday. “The central dilemma is that it is better to act quickly, but that it makes the politics harder to manage,” Geithner said. Wall Street Journal, Financial Times, New York Times, American Banker
The New York Times looks at how banks have changed since the crisis — and how they've stayed the same. “They are taking less risk and holding more capital. But the powerful industry is also making record profits and is still dominated by huge firms.”
Washington Post economics columnist Robert J. Samuelson offers three takeaways from the financial crisis. "1) We can no longer rule out another worldwide depression — something akin to the Great Depression of the 1930s. 2) Americans have long been ambivalent about big business, and in particular Wall Street, but the financial crisis deepened the ambivalence and hostility. 3) Given the two takeaways above, it may be harder — not easier — for the government to defuse a similar crisis in the future.”
That’s why President George W, Bush’s “unsung role merits greater appreciation today,” the Journal says, noting he supported “unreservedly” what his financial chiefs were doing to contain the crisis. “Ten years after the crisis, the financial system is stronger, but the political system is far more fragile. Polarization, populism and protectionism mean the next crisis will be met with far less political will than the last.”
Wall Street Journal
Out of focus
Equifax may have been preoccupied with other problems when it “stunned the world with the announcement it had been hacked” last year. Two years before that, the credit bureau “believed it was the victim of another theft, only this time at the hands of Chinese spies. In the previously undisclosed incident, security officials feared that former employees had removed thousands of pages of proprietary information before leaving and heading to jobs in China. Some investigators believed Equifax’s intense focus on the matter contributed to a delay in the company’s understanding the extent of the 2017 hack of consumers’ information.”
Not so fast
The Conference of State Bank Supervisors said it intends to file a lawsuit challenging the Office of the Comptroller of the Currency’s authority to grant banking charters to fintech companies. A “lack of immediate interest” from companies like LendingClub and Square is due to “uncertainty about what activities the so-called fintech charter will allow, what regulatory requirements it will carry, and whether it will hold up in court.”
However, Varo Money said it received preliminary and conditional approval from the OCC for its charter, although it still needs to receive approval from the Federal Deposit Insurance Corp. and the Federal Reserve.
Prudential Financial CEO John Strangfeld said he will retire at the end of November and be succeeded by Charles Lowrey, COO of the insurance company’s international businesses.
Kicking the tires
Several large Chinese investors, including the country’s sovereign wealth fund, may be interested in buying HNA Group’s 7.6% stake in Deutsche Bank, which the Chinese conglomerate is looking to unload. Some European and U.S. investors have also expressed interest.
While that’s going on, the bank has imposed severe travel restrictions on its junior and mid-level investment bankers “as the cost-strapped lender steps up its campaign against unnecessary expenses.” Deutsche has banned bankers from visiting its other offices unless they’re also calling on clients.
“The fact is people don’t like banks and during a financial crisis they really don’t like banks. But if you make it too tough on the banking system you damage the public. We all tried to make the case ... but it’s a hard case to make and we failed to make it.” — Former Treasury Secretary Hank Paulson about the political repercussions from bailing out big banks during the financial crisis.