Receiving Wide Coverage ...
B of A Deck Shuffling: Brian Moynihan is playing musical chairs again. Bank of America's chief executive made a number of personnel moves late Wednesday, including the dismissal, or resignation, of Chief Financial Officer Bruce Thompson; details of all the moves are outlined in American Banker. The Wall Street Journal and the New York Times both speculate the executive shuffling was a response to regulators chastising the firm's leadership for mistakes on its stress-test submission. Thompson's quitting was a surprise, as he was considered a close confidant to Moynihan, not to mention a possible successor. However, Thompson was also responsible for the stress-test submission; B of A received mediocre grades from regulators on three of its past five stress tests. At last year's B of A annual meeting, Moynihan told Thompson to stand up and answer tough questions from investors about why B of A kept messing up on the tests. Unnamed sources told the Journal that Moynihan's relationship with Thompson had gotten worse in recent months. Unnamed sources also told the Journal and the Financial Times that Thompson wanted a job where he could deal more directly with clients. With Thompson out of the picture, the leading question becomes who's seen as Moynihan's most likely heir apparent; the Journal reads between the lines and names Tom Montag, chief operating officer, in part because he was the first executive that Moynihan named in Wednesday's memo, with the CEO giving him kudos. The Journal also took the opportunity to shovel a last pile of dirt on Thompson, noting that his four-year tenure was shorter than the average lifespan of a CFO, based on data from headhunter Korn/Ferry. CLSA analyst Mike Mayo, a vocal critic of Bank of America, told the FT that new CFO Paul Donofrio "may take the opportunity to lower expectations." Wall Street Journal, Financial Times, New York Times, Charlotte Observer
Albanese IM's Symphony: So investment banks and trading desks thought they could hoodwink regulators with the new instant-messaging service, huh? Anthony Albanese, the acting commissioner for the New York Department of Financial Services, showed that he's onto their little ruse. The banks behind Symphony Communications Services, as developers and/or investors, had indicated the messaging service could help them avoid paying $20,000 per year (or more) for a Bloomberg LP terminal and its widely used messaging service. But Albanese sent a letter to Symphony asking for details on the product, seeing as how some of those banks are under investigation for rate-rigging; and how those rate-rigging probes stemmed from the use of instant-messaging services. In one specific request, Albanese asked "whether their use of Symphony's encryption technology can be used to prevent review by compliance personnel or regulators." Symphony's sales team may have gotten a tad too excited about their product. Albanese noted that marketing materials had touted the messaging service's "Guaranteed Data Deletion" and that its data is "100% protected by encryption keys." Wall Street Journal, New York Times, Financial Times
Wall Street Journal
SunTrust Banks is pushing into Silicon Valley, even though the move means taking on added risk. The Atlanta bank was the only regional bank picked to do work on FitBit's recent IPO; SunTrust got the gig by providing a $180 million credit line to FitBit in August. SunTrust's San Francisco office has 27 corporate and investment bankers and Horace Zona, head of tech, media and telecom, wants to hire more, especially a banker with experience lending to security-software companies. The Silicon Valley push carries risks for a bank like SunTrust, such as adding chancier loans to its smaller balance sheet. SunTrust also probably has to lower its prices to get in on some deals, in the hopes of building its name recognition and laying the groundwork to get future, more-lucrative assignments. The paper name-checks some of the other tech firms that have done business with SunTrust: Uber Technologies, SurveyMonkey, AppNexus, DocuSign, MediaMath, TripAdvisor, Alibaba Group Holding and JD.com.
Citigroup tried to collect on $34 million in unpaid loans from New York taxi companies controlled by Evgeny Freidman. In response, Freidman filed for bankruptcy. Freidman claimed in documents filed in bankruptcy court that Citi betrayed him for Uber, as Citi is providing a $2 billion credit line to the upstart ride-giver. Freidman's companies own 46 taxi medallions, each valued at approximately $950,000. With his bankruptcy filing, Freidman has blocked Citi from seizing those medallions.
Discover Financial Services was hit with $18.5 million in fines and restitution by the Consumer Financial Protection Bureau, its first financial penalty against a student lender. The money will be used for refunds for student borrowers Discover told owed more than they actually did and then harassed for repayment. Discover also resisted providing information to borrowers on how to get a tax deduction on their loans. Discover acquired about 800,000 student loans from Citigroup in 2010.
The Hill: Senate Democrats want the Consumer Financial Protection Bureau to force banks and credit unions to start collecting data on lending to minority- and women-owned businesses ASAP. A group of Democrats sent a letter to the CFPB last week urging them to implement Section 1071 of Dodd Frank, which would require the collection of lending data to women- and minority-owned businesses, as well as to small businesses.
Reuters: Now that CIT Group has received regulators' blessing to acquire OneWest Bank, expect other midsized banks to test the M&A waters, according to Reuters' "Breakingviews" column. BB&T also recently got approval to buy Susquehanna in Pennsylvania, which should also help grease the M&A wheels.
Denver Post: The newspaper's editorial board called on Congress to approve legislation to legitimize banking for pot businesses in those states, like Colorado, where marijuana is legal.