Wells gets new chair; household debt at new high
Receiving Wide Coverage ...
Clean slate: As expected, Wells Fargo named Vice Chairman Elizabeth Duke to replace its chairman, Stephen Sanger, effective January 1. Duke becomes the "first woman to hold a top board role at one of the nation's largest banks," according to the Wall Street Journal.
In addition to Sanger, the bank said that two long-serving board members, Cynthia Milligan and Susan Swenson, who joined the board in the 1990s, are also stepping down. Wells also named its newest director, Juan Pujadas, a retired principal at PricewaterhouseCoopers, who will join the board on September 1.
The moves "represent the bank's strongest response yet to the high percentage of shareholders who voted against directors at its annual meeting in April, a clear sign of discontent after years of Wells Fargo being an investor favorite," the Journal said. Wall Street Journal, Financial Times, New York Times
Duke, a former Federal Reserve governor, is no stranger to emergencies, having served on the Fed starting in August 2008, just as the global financial crisis was reaching its nadir. She left five years later.
Trying again: Deutsche Bank named Tom Patrick to be the new head of its Americas business. Patrick, who would be the third person in that role in the last 18 months, was head of the German bank's global equities business. He replaces Bill Woodley, who is leaving the bank.
"The U.S. is the world's biggest and most profitable investment banking market but it has recently been problematic for Deutsche," the Financial Times commented.
Wall Street Journal
U.S. household debt reached a new record of $12.8 trillion in the second quarter, according to the Federal Reserve Bank of New York, the twelfth consecutive quarterly increase. "The increase partly reflects renewed confidence in the economy, as Americans are more willing to purchase homes and borrow to fuel consumer spending," the Journal noted. "But there are signs that some households are becoming overstretched, with a rising share of credit cards going delinquent each quarter."
Credit card balances reached their highest level since 2009, and the percentage of loans 30 days or more delinquent rose to 6.2%, up more than a full percentage point from 5.1% in the year earlier quarter.
Warren Buffett doesn't seem to be worried. On Monday Berkshire Hathaway disclosed that it bought nearly 17.5 million shares of Synchrony Financial, "a vote of confidence for the largest U.S. store credit-card issuer," the Journal said. Berkshire "is increasingly betting on the growing credit-card industry," it added. Berkshire already owns $12.8 billion in American Express stock and smaller stakes in Visa and Mastercard.
Green is blue: The Journal reports that defaults on so-called green loans, mortgages used to finance energy-saving home upgrades, "have increased substantially," in sharp contrast to lenders' claims that the loans are performing well.
Private lenders in the Property Assessed Clean Energy, or PACE, program "have told Wall Street investors, as well as local and federal government officials, that borrower defaults are rare and that no homeowners have gone into foreclosure as a result of the program," the Journal said. But the paper found that the number defaults in California, by far the biggest market for PACE loans, has more than quadrupled in the past year.
"It took almost 80 years after 1930 to have another financial crisis that could have been of that magnitude. And now after 10 years everybody wants to go back to a status quo before the great financial crisis. And I find that really, extremely dangerous and extremely short-sighted." — Federal Reserve Vice Chair Stanley Fischer, about attempts to roll back regulations put in place after the global financial crisis.