Wanting more The head of the Consumer Financial Protection Bureau believes Wells Fargo has far to go to meet the terms of a 2018 consent order. “I am not satisfied with the bank’s progress to date and have instructed staff to take all appropriate actions to ensure the bank complies with the consent order and Federal consumer financial law,” CFPB Director Kathy Kraninger wrote in a letter to Democrat senators Elizabeth Warren and Sherrod Brown. “Broadly speaking, I consider all options on the table for enforcing Bureau consent orders.” Kraninger’s letter raises “the prospect of potential future penalties or other sanctions against the bank.”
Similar letters were sent by Federal Reserve Chairman Jerome Powell and Comptroller of the Currency Joseph Otting, American Banker reports.
A new name and a rebranding, as well as replacing "culpable senior management" and its board, are needed to salvage Wells Fargo, Kenneth H. Thomas, president of Community Development Fund Advisors, says in this BankThink article. But it will not be easy to accomplish.
Going up Bank of America said it will raise its minimum wage to $20 an hour by 2021. The first hike will be on May 1, when the bank’s minimum pay will increase to $17 an hour from $15. The bank said it expects “tens of thousands” of employees to benefit from the increase.
The move by BofA “is another example of how big banks are trying to deal with shifting political winds in Washington, where they face new scrutiny under the Democrats, who now control the House of Representatives,” the New York Times comments.
It comes “a day before banking industry leaders are scheduled to be grilled on Capitol Hill on their record profits a decade after the financial crisis,” the Washington Post notes.
Wall Street Journal
Failure to communicate UBS fired a senior investment banker in December after “he allegedly failed to apprise his managers of details of a leveraged-buyout loan, highlighting the pressure Wall Street firms are under to keep a lid on risk in the lucrative business.” The paper says the bank dismissed James Boland, the head of its leveraged-finance group in the Americas, and one of his aides for “not informing superiors and the bank’s compliance officials that they had reclassified a bond the firm was underwriting as a loan. That matters because bank loans are subject to government guidelines aimed at curbing excessive risk, while bonds aren’t, and firms that flout the will of regulators risk sanctions including potential fines.”
Dwindling odds Senate Republicans are sounding “increasingly doubtful” about Herman Cain’s chances of being confirmed as a member of the Federal Reserve Board. “Privately, some Senate members and aides expressed skepticism that the White House would formally nominate Mr. Cain for the Fed board. Even if that happens, it could be months until his confirmation would come to the Senate floor for a vote.”
Retrenching Société Générale said it plans to cut nearly 1,600 jobs following “a slump in investment banking revenue in the fourth quarter, retrenching to its core businesses as choppy markets hobble Europe’s banks.” European investment banks “endured a particularly tough first quarter with a slew of economic and political challenges leaving companies reluctant to pursue deals or raise money.”
Quotable
“If you get a job at Bank of America, you’ll make $41,000 [a year]. With the success our company has [had] we have to share that success with our teammates.” — CEO Brian Moynihan, announcing that the bank will raise its minimum wage to $20 an hour by 2021.
The Office of the Attorney General in New York says the bank violated the state's Exempt Income Protection Act, illegally transferring customers' money to debt collectors.
The Providence, Rhode Island, company is having discussions with private wealth management teams elsewhere as it seeks to expand its fledgling private bank. In just three months, private banking deposits doubled to $2.4 billion.
After the Minneapolis-based company reported stubbornly high commercial deposit costs, it reduced its full-year forecast for net interest income by $200 million-$500 million.
The CFPB has dissolved the Office of Supervision, Enforcement and Fair Lending and eliminated the job of associate director in a move that impacts how it designates nonbanks for supervision.
Rising deposit costs have plagued banks in general, and the Tennessee bank had to pay up to bolster liquidity after its failed merger with TD. But First Horizon retained customers in the first quarter while not paying them the special rates they got last year.
U.S. customers who have previously used Sweden-based Klarna's buy now/pay later financing — and paid off their loans in full — will be prequalified for interest-bearing loans through a new version of the Klarna Visa card rolling out later this year.