Receiving Wide Coverage ...
Leaving: Tim O'Hara, the head of Credit Suisse's global markets division for just the past 10 months after a 30-year career at the bank, is leaving. He will be replaced by Brian Chin, co-head of credit. The unit has suffered heavy losses over the past year. Wall Street Journal, Financial Times
Wall Street Journal
Enemies in high places: The Wells Fargo-Amazon partnership to offer interest-rate discounts on student loans apparently rubbed some influential people the wrong way, according to a Journal expose. The partnership, announced in July and declared dead late last month, first "prompted a sharp public attack" by the Institute for College Access & Success, which called the Wells-Amazon plan "a cynical attempt to dupe current students who are eligible for federal student loans … into taking out costly private loans." The nonprofit, which is funded by the Ford Foundation and the Gates family foundation, then took its complaints to several prominent Democrat lawmakers on Capitol Hill, including Sen. Elizabeth Warren, D-Mass, who put pressure on Amazon to end the deal.
Chip terminal fallout: Don't you just hate those new chip card terminals, which seem to take forever to process your payment at the register? Well, investors don't particularly like the companies that make them, either, although for a different reason – they're not selling enough. On Tuesday, shares of Ingenico dropped 14% after the company warned of lower U.S. sales. That follows on the heels of last Friday's 26% decline in the shares of VeriFone, Ingenico's main rival. Both companies are taking a hit from the slower-than-expected rollout of chip card readers in the U.S., especially among smaller merchants.
Giving it away: Goldman Sachs has started giving clients its closely guarded Securities DataBase system, which measures risk and analyzes securities prices. Sound crazy? The bank's goal is to win more business. Clients can customize and operate the web-based applications on their own. "It's the content, tools and analytics we've been working on for decades, and we're putting it in the hands of clients," said R. Martin Chavez, Goldman's chief information officer.
CD complaints: A growing number of customers who bought market-linked or structured CDs are angry that these fee-heavy, Wall Street-engineered investments are costing them money instead of providing a modest yield. Rather than paying out a fixed interest rate, returns on these CDs are linked to the performance of a pool of stocks or other assets. Investors are supposed to get their original investment back when the CD matures, plus a return based on the performance of the underlying assets. But some consumers say they are being hit with big fees if they have to cash out early. Investment returns on hundreds of such CDs examined by the Journal show many of them underperformed conventional CDs, "in part because their design puts a limit on the upside from gains in the underlying assets."
Behavioral profiling: Deutsche Bank is joining a growing number of investment banks that are using behavioral profiling to recruit U.S. college graduates. Others include Barclays, Citigroup and Goldman Sachs. Noel Volpe, the Deutsche Bank managing director who heads the project, said the screening process will help provide "the specifics of a candidate who matches certain traits that resonate here with our best and brightest people." The bank is working with Koru, a Silicon Valley behavioral testing firm.
Banks as utilities: Some financial regulators and lawmakers would prefer if banks rein in their freewheeling ways and become more staid, like utilities. Well, according to one well-placed observer, that day has already arrived. "Banks look increasingly like competitive utilities," says former Royal Bank of Scotland chairman Sir Philip Hampton, who took the post after its 2008 collapse and oversaw the sale of $1 trillion of the bank's riskiest assets. "There are ever-higher levels of regulation and relatively low utility-like returns."
"That might feel like just desserts for an industry that triggered a global crisis and whose most notorious staff have been shown up as fraudsters, money launderers and cartel operators," the paper adds. "But for anyone with an interest in the health of banks, such as investors eager for a decent return and customers wanting good, low-priced services, it is bad news."
New York Times
Security: Sullivan & Cromwell, the Wall Street law firm that caters to big commercial and investment banks, has hired Nicole Friedlander to help the firm attract cases involving online security breaches. Friedlander, previously co-chief of the complex frauds and online crime unit in the U.S. attorney's office in Manhattan, helped oversee the investigation into a hack against JPMorgan Chase in which information from 83 million customer accounts was compromised. "Companies can be in a very difficult position when they have been hacked," she told the Times. "While law enforcement may see them purely as victims, other arms of the government may not."