Receiving Wide Coverage ...
Wells names senior team: Wells Fargo announced several management appointments Monday even as it continues to try to manage the fallout from its phony accounts scandal. Avid Modjtabai, who previously led consumer lending at the bank, has been named head of a new payments, digital and innovation group. Franklin Codel was named to replace her as head of consumer lending. The two managers were named by President and COO Timothy J. Sloan, who is expected to replace embattled CEC John Stumpf in the next two years. So far, Sloan has managed to avoid being tainted by the scandal. The bank also named several people to its operating committee. The moves are seen as consolidating Sloan's position as CEO in waiting. Wall Street Journal, Financial Times, New York Times, American Banker
The Wall Street Journal carries a story about how managers at Wells "pushed bankers to sign up customers for potentially costly overdraft protection that they didn't always need or realize they were getting." For example, managers at a branch in Georgia told branch employees to tell customers that debit-card overdraft protection was a requirement for getting checking accounts, according to one of those bankers who is now suing Wells. "We just used to say it comes with it to basically suggest that there wasn't an option," said the former banker, who is one of six named plaintiffs in a federal class-action lawsuit in California against Wells. The former employees claim they were "encouraged and directed" by managers "to use various illegal schemes to open accounts fraudulently."
In the wake of the latest big bank scandal, the New York Times says many consumers are asking themselves this question: "Should I finally remove multibillion-dollar, profit-making corporations from my day-to-day financial life once and for all?" It's not an easy decision, so the Times offers a guide to the "troubles and pitfalls" of switching financial institutions, including credit unions, smaller banks and startups.
Wall Street Journal
Clearer view: There may finally be a light at the end of the tunnel for big European banks as two big unknowns threatening them "should be gone by the end of this year," the Journal reports. Deutsche Bank is working on a settlement with the U.S. Department of Justice over alleged toxic mortgage-backed bonds, while many other Europeans hope their cases can be closed before yearend. Similarly, global capital rule changes are expected to be finalized by December. "There are costs to both these things, but at least with certainty, the view into 2017 and beyond should be clearer," the paper says. "Banks should finally be able to decide unequivocally what lines of business work and so better meet the performance promises they make. Returns on equity for many will still struggle to reach 10% in an ultralow interest rate world, but what returns there are should at least be reliable."
Heavy feedback: The CFPB said it has received nearly one million public comments on its proposed rules to regulate payday lenders, the most in the agency's five-year history. Software that prewrites comments so people can submit comments electronically is reportedly behind the heavy response.
Slow loan growth: As three of the largest U.S. banks – JPMorgan Chase, Citigroup and Wells Fargo — prepare to announce third-quarter results on Friday, commercial loan volumes "have emerged as an area of concern for analysts," the FT reports. "After expanding their loan books aggressively in recent months to help offset a squeeze on margins caused by rock bottom interest rates," banks reduced their commercial lending in the third quarter due to slowing demand from corporations, many of which have shifted issuance to bonds, according to the Federal Reserve. That "sets the stage for another mixed batch of earnings from the under-pressure sector."