OCC plans CRA changes; Goldman promotes more women

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Goldman's gender gesture

Goldman Sachs promoted 465 employees to managing director, down from 509 two years ago and “a smaller class than previous ones as the bank looks to cut costs and restore the luster of its upper ranks. A record 29% of the 2019 class are women, slightly higher than the roughly one-quarter in each of the past two cycles.” CEO David Solomon “has said he is committed to closing the gender gap at Goldman, where women make up almost half of the firm’s junior bankers but some 20% of its partners — and even less in revenue-producing roles.”

Separately, Lloyd Blankfein took a swipe at Sen. Elizabeth Warren, whose presidential campaign included the former Goldman CEO in a commercial promoting her proposed wealth tax on billionaires. “Maybe tribalism is just in her DNA,” Blankfein said on Twitter, an obvious reference to Warren’s previous claims to a Native American heritage.

Warren also “blasted Goldman’s response to claims of bias against women applying for the Apple Card, as complaints reignited a sweeping debate over the role of algorithms in consumer finance.”

The Financial Times comes to Goldman’s defense — sort of. “We know it’s trendy to talk about bias in AI and all, but where did this idea that it was [the female applicant’s] gender, and not any of the other criteria that might have separated her from her husband according to this particular algorithm — like, for example, her credit history — come from? You can’t just decide this is a sexist algorithm based on this one event.”

“The part of the debacle that is more worrying — and which to be fair to Warren she did also flag — is that Goldman doesn’t seem to be able to explain what its own algorithms are in fact up to. Goldman telling customers happily that ‘we want to hear from you’ if you don’t think you’ve been scored correctly doesn’t exactly instill confidence that its algorithms have any clue about what they’re doing.”

Wall Street Journal

Just the beginning?

Wells Fargo said its general counsel and former acting CEO C. Allen Parker will be leaving the bank at the end of March. “This marks the first departure from the executive management team since Charles Scharf took over as permanent CEO of the beleaguered bank in late October. More departures could be forthcoming,” the paper suggests, possibly including CFO John Shrewsberry, payments executive Avid Modjtabai and wholesale bank chief Perry Pelos. Last week the bank hired Bill Daley, who oversees public policy and communications and reports to Scharf.

CRA proposal coming

The Office of the Comptroller of the Currency is planning to propose changes next month “to bank lending requirements that could potentially transform the way lenders make billions of dollars in loans and investments in lower-income communities.” The proposed revamp of the Community Reinvestment Act “aims to make the requirements more transparent and objective. That could make it easier for banks to meet lending requirements, particularly in poorer neighborhoods. The move would represent a significant policy victory for banks if it succeeds in making the rules of the road clearer and more consistent.”

However, two other federal bank regulators — the Federal Deposit Insurance Corp. and the Federal Reserve — “haven’t signed on to the plan. It is an open question whether the changes would be applied consistently across the three regulators that oversee the CRA, another industry priority. That split could generate industry pushback if the rules aren’t aligned across the three agencies by the time they are completed.”

Funny money?

German payments company Wirecard, which has been under fire for questions about its accounting practices in Asia, announced last April a $1 billion investment and strategic partnership with an affiliate of Japan’s SoftBank,” which caused the bank’s stock to rise 8.5% that day. But the paper reports SoftBank “itself put no money into deal. Instead, the money came from the personal accounts of a set of SoftBank employees and one outside investor,” Mubadala Investment Co., an Abu Dhabi sovereign-wealth fund.”

Financial Times

No can do

The UK’s biggest banks have scuttled plans to levy a “transaction fee” of nearly three pence on transfers “to compensate victims of banking fraud after an industry consultation deemed the plan unworkable.” Seven banks, including Barclays and HSBC, had proposed a 2.9 pence charge when customers transferred sums above £30. However, some banks and payment providers “were reluctant to absorb the costs of a blanket charge or risk the wrath of their customers by passing it on to them.”

Settled

Paul Mangione, Deutsche Bank’s former head of subprime trading, agreed to pay $500,000 to settle civil claims by the Department of Justice “that he misled investors in 2007 into buying securities backed by defective mortgages." In 2017, the department accused Mangione of contributing to “hundreds of millions of dollars” in investor losses. Under the deal, Mangione "did not admit any liability or wrongdoing."

Quotable

“Surprised to be featured in Sen. Warren’s campaign ad, given the many severe critics she has out there. Not my candidate, but we align on many issues. Vilification of people as a member of a group may be good for her campaign, not the country. Maybe tribalism is just in her DNA.” — Former Goldman Sachs CEO Lloyd Blankfein, responding to his appearance in the senator’s campaign commercial calling for a wealth tax

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Gender issues Gender discrimination Career advancement CRA Penalties and fines Goldman Sachs Wells Fargo OCC
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