Wall Street Journal
Regulators are putting more pressure on compliance officers at large banks and, as a result, turnover in the job category has soared. Banks have been pressed to hire more compliance officers in recent years to deal with the crush of new regulation. But at the same time, many are getting out of the job. About three dozen senior bank compliance officers quit their jobs last year, according to the headhunter firm Sheffield Haworth. That's about three times higher than the number that left in 2014.
The Journal piece cited JPMorgan Chase, Goldman Sachs and BlackRock as the banks and financial services companies affected by the trend. The Financial Industry Regulatory Authority, Fincen and the New York State Department of Financial Services were cited as the agencies that have been turning up the heat.
Also, the Office of the Comptroller of the Currency recently told banks that compliance officers should not report directly to executives who run businesses. Instead, compliance officers should have more independence. Compliance officers say they often are being placed in the role of fall guy, when the bank gets in trouble.
"It's easier for firms to give up their compliance officer, because what are they going to do, give up the CEO?" an unnamed bank compliance officer told the Journal.
Following CIT Group's steep drop in fourth-quarter profit, CEO John Thain's strategy is facing harsh questions. CIT shares fell 7% on Tuesday, after its earnings were released. During a conference call to discuss earnings, Thain was asked if he planned to sell CIT's rail business, as he's already planning to sell or spinoff its $11 billion commercial-air unit. The rail business doesn't have the same issues as the air business, he said.
The performance of CIT's shares is indicative of a belief that "a recession is imminent," Thain said; he added he does not agree with that forecast.
JPMorgan CEO Jamie Dimon and Warren Buffett of Berkshire Hathaway recently convened a group of institutional investors to discuss ways to improve relations between shareholders and management and to encourage long-term investment instead of a focus on quarterly earnings. Fat chance the attendees were going to raise a fuss over any of these things anyway, said one shareholder activist.
After all, Dimon has called shareholders "lazy" for following the recommendations of proxy-advisory firms like ISS and Glass Lewis; Dimon is already hostile toward any kind of proposal that would rock the boat. So what's the point of Dimon working with the likes of non-activist investors like BlackRock on improving relations between management and shareholders?, asked John Chevedden, who sponsors proposals at corporate annual meetings.
"None of them have a reputation for rocking the boat, or for forging something new in corporate governance," Chevedden said.
Also invited to Dimon and Buffett's soiree were Fidelity Investments, T. Rowe Price, Vanguard Group and Capital Group Cos., owner of the American Funds. Read American Banker's recent coverage of activist investors that target the banking sector here, and an activist investor who tries to make peace with bank management here.
Auto lending has soared into the stratosphere, but that does not mean there's an auto-loan bubble, Ally Financial told analysts and investors on Tuesday. How else to explain the poor performance of the stock of Ally and of subprime auto lender Santander Consumer USA Holdings?; investors must be worried that the auto-lending market has overheated and may soon explode.
Ally CEO Jeff Brown sought to distance his company from the likes of Santander Consumer. "There is no other market participant that can be compared to Ally on an apples-to-apples basis," Brown said during a conference call. "We have a unique position in the markets and a finely honed proprietary underwriting process that is nearly 100 years in the making."
Ally was formerly known as GMAC, the auto-lending arm of Detroit auto giant General Motors. American Banker's coverage of Ally's earnings report focused on Brown's answers to persistent questioning about whether the company might put itself up for sale. Read it here.
Memphis Commercial Appeal: First Horizon National has agreed to pay $1.9 million to settle allegations allegations that its bank unit, First Tennessee Bank discriminated against minority mortgage-loan applicants. The agreement settles an investigation by the U.S. Department of Housing and Urban Development into allegations that the bank engaged in discriminatory lending. The complaint was initially brought by the National Community Reinvestment Coalition.
As part of the settlement's terms, First Tennessee will also establish a $1.5 million fund to provide interest-rate reductions on mortgages and assistance on downpayments and closing costs to borrowers in Memphis, Chattanooga, Knoxville and Nashville, Tenn.
Associated Press: Iran has been given access to $100 billion of overseas assets that had been frozen under economic sanctions. Swift, the international cooperative also known as the Society for Worldwide Interbank Financial Telecommunication, said it reconnected nine Iranian banks to its system, allowing the banks to access the funds. ATMs in Iran are not yet connected to the global financial system.