Receiving Wide Coverage ...
Laplanche's Selective Disclosure: The Justice Department would like to have a few minutes with the founder of LendingClub, and a few of his former colleagues at the online marketplace lender. A DOJ grand jury subpoenaed the company on Monday, LendingClub said in a regulatory filing, without disclosing details of the nature of the subpoena. LendingClub said it's cooperating. LendingClub also said Monday it's looking for additional funding for its loans.
The subpoena came after Renaud Laplanche, founder and CEO, either quit or was fired after the disclosure that he invested in funds buying the company's loans without telling the board. Laplanche also allegedly fabricated information on about $3 million worth of loan applications. Laplanche's resignation/termination and the subsequent grand jury subpoena are the subject of narratives in the Journal and Bloomberg that describe what happened in the days leading up to these events.
As LendingClub board members learned of some of Laplanche's supposed transgressions, they first thought they might simply yank the chairman's title off his office door, Bloomberg reported, citing unnamed sources. Then, as the board tried to get more information, they became increasingly frustrated and they began to lose trust in the CEO. They eventually hired the law firm Arnold & Porter to investigate.
On May 2, two directors summoned Laplanche to a meeting and told him the board insisted he leave, Bloomberg reported. The Journal said the board told Laplanche to quit or he would be fired. Three days later, his departure was announced. Three other LendingClub executives involved in some of the questionable loan sales have also recently resigned or were terminated.
The LendingClub board also examined another matter that raised concerns. Laplanche earlier this year asked the board's risk committee to spend money on a stake in Cirrix Capital, an investment group that bought LendingClub loans. The board agreed, but Laplanche failed to inform the board he personally owned a stake in Cirrix. An unnamed source told Bloomberg Laplanche did not stand to personally benefit from LendingClub's investment in Cirrix.
Laplanche issued a statement to Bloomberg and the Journal that said, "I founded LendingClub on the fundamental values of trust, transparency and accountability. I have always believed that we could accept no compromise in any one of these. I recognize that events occurred on my watch where we failed to meet our high standards. While there are disagreements as to the characterization of facts, I accept that the board acted in good faith." Wall Street Journal, New York Times, Financial Times, Bloomberg
Wall Street Journal
Treasury market trading is set to receive its first watchdog. The Treasury Department and the Securities and Exchange Commission have requested the creation of a data feed by the Financial Industry Regulatory Authority for use in monitoring trades, in a bid to increase oversight of the $13 trillion market. The move is being made in response to October's volatile trading market, when yields on the 10-year note fell and quickly rebounded without an obvious cause. One suspected cause is superfast trading firms, which now represent about half of Treasury trading volume.
State Street is close to an agreement to pay $500 million to settle probes that it overcharged clients on foreign currency market transactions, anonymice told the Journal. The $500 million settlement is expected to resolve Justice Department, Labor Department and SEC probes, as well as private lawsuits.
State Street is accused of saying it would execute trades at market prices, but used inaccurate or fake prices instead. The overcharges took place between 1998 and 2009. Bank of New York Mellon paid $714 million last year to resolve similar claims.
After Jamie Dimon reverted to name-calling tactics last week, Cam Fine responded in an interview with the FT. Aside from saying he felt like he was back in junior high, the CEO of the Independent Community Bankers of America said Dimon calling him a jerk was a continuation of how big banks behave around community banks.
"We could probably pass our agenda tomorrow, if the megabanks didn't constantly interfere," Fine told the FT. "And so the tactic of Jamie Dimon and some of the other CEOs and their trade-group allies is to try and paint this picture that community banks are somehow hurting Wall Street banks, when the truth is just the opposite."
The JPMorgan Chase chairman and CEO called Fine a jerk on CNBC last week, after Fine responded to a Dimon-penned op-ed that community banks found condescending. Dimon wrote that community banks "depend on large banks" to provide them a range of services.
Chicago Tribune: JPMorgan Chase will end its policy of allowing consumers to select a Chase credit card to serve as overdraft protection for a personal checking account. Only savings accounts will be allowed to serve as overdraft protection, starting Aug. 20.
Charlotte Observer: The banking industry continues to repeat its mistakes because executives leave the industry after a crisis, according to a former Bank of America risk executive. "The people who learn the lessons most brutally" go on to exit banking, Rick Parsons said in an interview. Parsons is the author of a new book, "Investing in Banks: Strategies and Statistics for Bankers, Directors and Investors."
"I think the next generation who will be running (banks) in the 2020s will not have as good a memory as the bankers who are running the banks today," Parsons said.
Boston Globe: Here's another skirmish in the long-running war between banks and credit unions. Community banks in Massachusetts argue that credit unions have gained market share in the commonwealth by claiming that they serve low-income consumers.
The "low income" designation is an unfair advantage and a "significant loophole that could become a greater risk if these institutions are allowed to expand exponentially with no limits on commercial lending or membership," Dan Forte, president of the Massachusetts Bankers Association, said in the group's report.
Credit union membership in the Bay State rose 24% since 2014, the bankers said. About 32% of Massachusetts credit unions have low-income designations, including some of the biggest, like Metro CU in Chelsea, Greylock Federal CU in Pittsfield and Harvard University Employees CU.