John Williams on N.Y. Fed radar; Wells revamps risk management
Receiving Wide Coverage ...
Toast of the coast?: John Williams, the president of the Federal Reserve Bank of San Francisco, is the leading candidate to become the next president of the New York Fed. Current New York Fed chief William Dudley plans to leave this summer.
The New York Fed job is “one of the most influential positions within the U.S. central bank,” the Wall Street Journal notes. As “a chief regulator of the some of the nation’s largest banks [it] serves as the Fed’s window onto Wall Street.”
It’s probably safe to assume Neel Kashkari, the president of the Minneapolis Fed, didn’t get much consideration for the New York job. After overseeing the bailout of big banks during the financial crisis, “he is [now] proposing measures that could break them up. … Mr. Kashkari has argued that rules designed to prevent taxpayer rescues of the financial system haven’t gone far enough, and that ‘too-big-to-fail’ banks remain ticking time bombs that could destabilize the economy.”
Risky business: Speaking of bank regulation, the New York Fed and the Office of the Comptroller of the Currency have differing ideas on how to best conduct it. The New York Fed recently moved some of its examiners back to its headquarters in lower Manhattan “after criticism that examiners had grown too close to the bankers they oversee.” But Joseph Otting, the head of the OCC and a former bank CEO, wants examiners “to remain ensconced in banks’ offices.”
One of the banks under the most scrutiny by regulators, Wells Fargo, said four of its most senior risk-management executives are leaving as it reorganizes that unit. “The moves come as the regulatory probes against Wells Fargo march on,” the Journal reports. The OCC, it said, “is now close to finalizing an enforcement action and civil penalty related to the firm’s risk controls.”
Going mobile: Following three years of investing in digital tools, Citigroup is ready to launch an expanded mobile app that will offer customers “a full suite of banking, credit-card, lending, and investment tools to all users,” the Journal reports. “New services will include virtually instant account opening” and a feature that will allow users, including non-customers, to view their account data at other banks. “The move puts Citigroup more in line with upstart Silicon Valley rivals, who believe that consumers want purely digital services, than its megabank peers, who believe that their large physical footprints are still central to retail banking,” the paper says.
Meanwhile, Denizen, a Silicon Valley fintech start-up backed by Spain’s BBVA, is launching what the Financial Times says is the “world’s first global bank account that will allow account holders to receive money in one country and pay it out in another without incurring any fees.” The start-up, which is licensed as a payments company, not a bank, will target Spaniards living in America as well as up to 10 European Union countries by this summer.
Wall Street Journal
In the dark: Bank of America Merrill Lynch agreed to pay $42 million to the state of New York to settle allegations it routinely routed client orders to high-speed trading firms without their knowledge. It also sent trading orders to Madoff Securities, the firm run by the infamous Bernie Madoff. The firm “went to astonishing lengths to defraud its own institutional clients about who was seeing and filling their orders, who was trading in its dark pool, and the capabilities of its electronic trading services,” state Attorney General Eric Schneiderman said.
Platform building: JPMorgan Chase, Bank of America and Citigroup are developing a corporate bond platform to “overhaul the disjointed bond issuance process, hoping to solidify their control of the lucrative underwriting business.” The three banks, which last year controlled a combined 20% of the new issue market, “want the new platform to improve communication between underwriters and asset managers.”
Meanwhile, Goldman Sachs is looking to bring in 1,000 new investment banking clients, to add to its current roster of 8,000 companies, CEO Lloyd Blankfein said in his annual letter to shareholders.
New York Times
Goldman TV: Goldman has also begun trying to expand the audience for its “Talks at GS” interviews with corporate chieftains and other famous people by posting them on internet sites such as Hulu, Yahoo Finance and Spotify. “The videos do not generate any revenue for the firm, but they do serve in some ways as a branding exercise for Goldman, making the firm seem more accessible,” the paper says.
“I have a story to tell. This is a true story. I blew the whistle. They all know.” — Duke Tran, a former Wells Fargo employee who said he was forced by the bank to lie to customers who were facing foreclosure, then sued the bank when he was fired for refusing to tell people the bank didn’t have the proper documentation.