Staley probed for ties to disgraced financier; Fed picks face Senate panel
Breaking News This Morning …
Barclays CEO Jes Staley is under investigation by the U.K.'s Financial Conduct Authority and the Bank of England’s Prudential Regulation Authority “over his links to disgraced financier Jeffrey Epstein, who died last year while awaiting trial on charges that he sex-trafficked underage girls.”
“Staley told journalists Thursday that his contact with Mr. Epstein went back to 2000, when he led JPMorgan’s private bank and the financier was a client,” the Wall Street Journal reports.
“I thought I knew him well and I didn’t,” Mr. Staley said. “For sure, with hindsight, with what we all know now, I deeply regret having had any relationship with Jeffrey Epstein.” Wall Street Journal, New York Times, Washington Post
Receiving Wide Coverage ...
Filling the Fed
President Trump’s latest nominees for the Federal Reserve Board will face questioning from the Senate Banking Committee on Thursday. Christopher Waller, the research director at the Federal Reserve Bank of St. Louis, “was an academic before joining the Fed and has a record of research more typical of central bankers,” the New York Times says. But the spotlight will be on the other candidate, Judy Shelton, “a prominent Federal Reserve critic” who “many economists will be watching closely because they see her as a potential threat to the Fed’s prized independence.”
“Shelton has rhetorically questioned whether America even needs the Fed,” the paper says. “She is a longtime fan of pegging the value of the dollar to some common anchor, like gold.” But “it is not just her heterodox economic views that are making former central bankers and top economists wary. It is the possibility, based on her record, that Ms. Shelton could bend her positions to suit Mr. Trump’s preferences, subordinating monetary policy to the White House’s desires.”
The Washington Post, also not a fan, provides 10 of Shelton’s “most controversial quotes.”
The Wall Street Journal, however, says “the caterwauling over her nomination confirms why her intellectual diversity is needed at the Fed. The inconsistency and confusion rest with her critics and the prevailing monetary establishment, and are dangerous for the U.S. economy.”
“Ms. Shelton is clearly qualified for the Fed role. The question for senators is how much they trust [Fed Chair Jerome] Powell, or the academics and journalists who are trying to tank her nomination. If senators really think these people are brilliant theorists capable of guaranteeing economic growth and financial stability — all evidence to the contrary — then go ahead and nix Ms. Shelton. If senators harbor even a sliver of doubt over whether Ms. Shelton’s critics know what they’re doing, that’s all the more reason to confirm her as a distinctive voice in such crucial debates.”
Leaving on a high note
Credit Suisse “reported its highest annual profit in nine years as it seeks to move on from a spying scandal that led to the resignation of its chief executive last week, with gains in its wealth management and markets businesses offsetting a decline in corporate advisory revenue,” the Journal reports.
Outgoing CEO Tidjane Thiam, who was forced to step down after a boardroom battle with Chairman Urs Rohner last week, said the results “were a vindication of his strategy at the bank.” “We have turned Credit Suisse around, and our 2019 results show we can be sustainably profitable,” Thiam told the FT.
The next problem ...
Chinese banks face a bad debt crisis if the coronavirus keeps small businesses shuttered for an extended period, preventing them from servicing their loans. “Bad debt across the banking system could rise from less than 2% at the end of last year to 6.3% of total assets, S&P research shows — a level not seen for two decades. In response, financial regulators have been forced to roll back recent sector reforms and order banks to extend the terms of lending for businesspeople.”
The People’s Bank of China “has filed more than 80 patents related to its secretive plans to launch a digital currency, according to research that shows the extent of Beijing’s ambitions to digitize the renminbi. The trove of patents, seen and verified by the Financial Times, include proposals related to the issuance and supply of a central bank digital currency, a system for interbank settlements that uses the currency, and the integration of digital currency wallets into existing retail bank accounts.”
“Uncovered by the U.S. Chamber of Digital Commerce, their contents shed light on Beijing’s mounting efforts to digitize the renminbi, which has sparked alarm in the West and spurred central bankers around the world to begin exploring similar projects.”
Wells Fargo said it has “ended its forced arbitration policy for employee sexual harassment claims, opening the lender to potential lawsuits in the future,” Reuters reports. The bank “made the decision following a shareholder proposal from Clean Yield Asset Management which has since been withdrawn, asking for a public analysis of mandatory arbitration’s impact on sexual assault claims within the company. The new policy applies to all future harassment claims.”
“Wells Fargo has zero tolerance for sexual harassment,” said David Galloreese, the bank’s head of human resources.
Not taking no for an answer
“Shareholder activists focused on climate issues vowed to press proxy battles with JPMorgan Chase after getting a cold reception” from the bank,” Reuters also reports. “Activists, including the As You Sow Foundation, Trillium Asset Management and Boston Trust Walden, said they had received notices that the bank has asked for regulatory permission to skip votes at its spring annual meeting on proposals such as reporting on greenhouse gas emissions tied to its lending.”
“The bank has asked the Securities and Exchange Commission to reject calls to include those shareholder resolutions in its proxy materials, arguing that they deal with day-to-day business operations that are not subject to shareholder oversight,” American Banker reports.
The U.K.’s Mirror is reporting that Prince Harry has held talks with Goldman Sachs, which it describes as the “controversial” global banking giant, “as he sets his sights on earning millions in the corporate world with wife Meghan. Harry may follow footballer David Beckham and actress Gwyneth Paltrow to be a guest speaker at the bank’s Talks at GS,” the paper said.
All things considered
HSBC is “considering a radical overhaul of the bank to address ongoing underperformance in several of its largest units,” Financial News reports. “The plans include a potential merger of two of its biggest divisions, as well as the creation of a ‘bad bank’ to house billions of dollars of unwanted assets and businesses.”
“If Dems go on to nominate Sanders, the Russians will have to reconsider who to work for to best screw up the US. Sanders is just as polarizing as Trump AND he’ll ruin our economy and doesn’t care about our military. If I’m Russian, I go with Sanders this time around.” — Former Goldman Sachs CEO Lloyd Blankfein, a Democrat, commenting on Twitter about Sen. Bernie Sanders’ strong showing in Iowa and New Hampshire