Receiving Wide Coverage ...
Call in the SEC: Three Democratic senators, led by Sen. Elizabeth Warren, D-Mass., asked the Securities and Exchange Commission to investigate whether Wells Fargo "violated laws by misleading investors and firing whistleblowers while the bank oversaw the creation of millions of unauthorized, fraudulent accounts," according to the Wall Street Journal. The situation at Wells does "justify an investigation into at least three types of securities law violations," according to the letter the senators sent to the SEC, including signing off on inaccurate financial reports, failing to disclose the fake accounts scandal, and firing employees who tried to report wrongdoing.
Wells Fargo CEO John Stumpf returns to Capitol Hill Thursday but few lawmakers seem to have been mollified by the bank's decision to rescind $41 million of the bank chief's compensation. "Mr. Stumpf's position is far from secure," the Wall Street Journal wrote, as he prepares to face the House Financial Services Committee.
On Wednesday, a group of senators, while applauding the decision to claw back part of Stumpf's pay — plus another $19 million from former community banking head Carrie Tolstedt — indicated the bank "isn't out of the woods," in the Journal's words. Ten Democrats on the Senate Banking Committee sent a letter urging the bank to answer questions they felt Stumpf didn't fully answer at that panel's hearing last week. Warren, the bank's harshest critic in Washington, called the claw back a "small step in the right direction, but nowhere near real accountability," reiterating her demand that Stumpf resign. And now Wells' succession plan may need to change.
Federal Reserve Chair Janet Yellen, who testified before the same House committee on Wednesday, said while the Fed wasn't directly responsible for regulating Wells' retail banking business — it oversees the firm's holding company — the Fed has launched a broad review of compliance policies at all big banks. "We are undertaking a look comprehensively not only in the consumer area but compliance generally because there have been a very disturbing pattern of violations," she said.
Also on Wednesday, California Treasurer John Chiang said his office would suspend for one year "its most highly profitable business relationships" with San Francisco-based Wells Fargo. "How can I continue to entrust the public's money to an organization which has shown such little regard for the legions of Californians who placed their financial well-being in its care?" Chiang wrote in a letter to Stumpf and the bank's board members.
"The loss of the California business — even for a year — is a blow to the bank," the Financial Times reported. "Wells served as the lead underwriter of five of the past 13 bond offerings from California this year, for example, according to Bloomberg, and also acts as a broker-dealer for the state's $75 billion investment pool." Chiang, who also called on Stumpf to resign, said his office would monitor the bank's compliance with sanctions imposed by the CFPB and other regulators. Earlier, the New York Metropolitan Transportation Authority put business with Wells on hold.
Wall Street Journal
Citi joins Zelle team: Citigroup has joined clearXchange, the real-time money transfer network set to do battle against other peer-to-peer payments apps like Venmo, PayPal and Square. ClearXchange is developing "Zelle," which will allow account holders in the network to transfer money using an email address or mobile phone number. Citi is the last of the five biggest banks to join the consortium. The Zelle app is expected to roll out next year.
Self-reliance: Savings and credit cards have displaced bank business loans and home equity loans as the primary means of financing by small business startups, according to a survey. "Personal and family savings have long been the most common source of startup financing, but the portion of business owners digging into their pockets has been increasing," the Wall Street Journal reports. "Sixty-nine percent of firms that were less than two-years old relied on such savings as a source of initial capital, up from just 48% of firms started in 1998 or before. The data comes from the U.S. Census Bureau's first annual survey of entrepreneurs.