Receiving Wide Coverage ...
Growing Pains: The toppling of Lending Club chief executive Renaud Laplanche Monday is sure to bring heightened investor scrutiny and concerns about the peer-to-peer business model of the broader online lending industry, which has already been reporting slowing investor demand for loans or drops in lending volume this year, and now needs to prove its members won't be the ones getting disrupted, the Journal says. Legacy banking institutions have been welcoming to online lenders lately. JPMorgan Chase, for example, recently partnered with OnDeck to offer small business loans. But analysts predict the large banks could end up acquiring the marketplace lenders, or pieces of them, if funding pressure continues.
The Lending Club story also raises questions about what kind of company it aims to be, FT's Alphaville points out. Laplanche said in January that Lending Club was not interested in taking credit risk as that would betray its investors. But the recent probe into its loan sales revealed his failure to disclose a personal interest in a fund in which Lending Club was also invested and which was a buyer of Lending Club loans. Why was the company investing in a fund that buys its own loans?, Alphaville asks. The Lending Club woes could confirm Wall Street fears that turning economic conditions will reveal weak internal controls at fintech companies. Lending Club's stock price fell 34% Monday.
Wall Street Journal
Deutsche Bank has rehired Patrick Campion to run its U.S. private bank. Campion left Deutsche in 2007 and became chief executive of HSBC's private bank.
In the past year, the world's listed companies have paid out more than half their profits in the form of shareholder dividends – something that tends to happen only when there's widespread economic weakness. "The implication is companies have kept paying out dividends even as earnings have fallen away, and the risk is companies are paying out dividends that are not sufficiently covered by their profits," said Robert Buckland, global equity strategist for Citi Research. The proportion of profits paid out as dividends by companies has risen to 51% from 43% in two years, Citi says. The long-run median is 46%.
The Big Four professional services firms are rethinking their hiring practices. As technology automates more and more of the audit process, entry-level positions tasked with the more administrative work will be eliminated and, they predict, graduate recruitment will fall. "We may have to start recruiting from technology companies. In the modern world these guys will be hot talent so they will be an expensive resource," said Stephen Griggs, managing partner of audit and risk advisory at Deloitte UK.
New York Times
William Dudley, president of the Federal Reserve Bank of New York, gave an interview in which he talked about the Fed's ability to lend to securities firms. "What we found in the financial crisis is that we could lend to banks but the banks were not always willing to lend to the large securities firms," he said. "So I think that's a potential shortcoming of our system that we should re-evaluate." He also talked about how his previous employment at Goldman Sachs plays into judgment about whether his sympathies lie with Wall Street or Main Street and whether the Fed should change its structure to increase its accountability.