Why Quarles is a no go at FSB; Employee thrashes CFPB on his way out

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Parting shot: Seth Frotman, the Consumer Financial Protection Bureau’s student loan ombudsman, is going out with a bang, handing the agency’s Acting Director Mick Mulvaney a scathing resignation letter that charges leadership with undermining the agency’s mission to protect consumers. “The bureau’s new political leadership has repeatedly undercut and undermined career CFPB staff working to secure relief for consumers,” Frotman wrote. “Their actions will affect millions of student loan borrowers, including those harmed by the company that dominates this market.” Frotman’s deputy, Michael Pierce, also resigned. Wall Street Journal, New York Times, Washington Post, American Banker

Passage to India: Warren Buffett’s Berkshire Hathaway is looking to make a major investment in India’s dominant mobile-payments provider. Berkshire is reportedly in talks to invest 20 billion to 25 billion rupees ($285 million to $357 million) in One97 Communications, the parent company of Paytm. That would give Berkshire a stake of about 3% to 4% and value Paytm at more than $10 billion. Wall Street Journal, Financial Times

Wall Street Journal

Backlash: President Trump’s “antagonistic posture toward international institutions at foreign summits this summer” may have cost Randal Quarles, the Federal Reserve’s vice chairman for bank supervision, the chairmanship of the Financial Stability Board. Quarles had been the front-runner for the position “but officials in several Western European capitals later argued that an American shouldn’t be rewarded with the position after Mr. Trump lashed out at both the Group of Seven summit in Canada in June and the NATO summit in Brussels in July.” The FSB monitors and advises governments on financial regulation.

For the defense: Attorney John Singer has taken on the unenviable task of defending prominent Wall Street executives who have been accused of sexual harassment — and winning. “His approach, insisting his clients are the true victims, has helped earn some of the men unlikely victories,” the paper reports.

“I think it’s wonderful,” Singer says of the #MeToo movement. “But from a myopic standpoint of what I do for a living, I think it has an underbelly to it, because I think that the firms are shooting people without doing a fulsome investigation.”

Financial Times

What’s new?: Has “banking culture has really changed?” This 15-minute video ponders the question.

Bad adjustment: Student loans outstanding have grown by $500 billion since the 2010-11 academic year, to more than $1.5 trillion, even though loan originations have fallen every year since then. That’s the result of “payment adjustment schemes that offer some short-term relief but add to the overall long-term burden by reducing the minimum payment without lowering the interest rate.”

Elsewhere

Reassigned: Bloomberg News took one of its reporters off the Wells Fargo beat earlier this year following pressure from the bank, according to CNN. The reporter, Shahien Nasiripour, wrote a story in March that called Wells Fargo the “preferred financier for the U.S. gun industry” and detailed the bank's relationship with the National Rifle Association. Wells Fargo CEO Timothy Sloan in a memo to employees, explained the bank's side, which was reported by Wall Street Journal in March. When the bank refused to share a copy of the memo with Nasiripour, the conversation became "contentious." Nasiripour was reassigned and told Sloan had complained to Bloomberg editors about the reporter's behavior. “The incident rocked part of the banking team and was a contributing factor in the departures” of three other Bloomberg reporters, CNN said.

Quotable

“Unfortunately, under your leadership, the Bureau has abandoned the very consumers it is tasked by Congress with protecting. Instead, you have used the Bureau to serve the wishes of the most powerful financial companies in America.” — Seth Frotman, the Consumer Financial Protection Bureau’s student loan ombudsman, in his resignation letter to the agency’s acting director, Mick Mulvaney.

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