Receiving Wide Coverage ...
Stay grounded: Two prominent Wall Street figures warned about the risk of the financial industry letting its guard down in boom times. “First, there’s a risk of complacency setting in,” said John Williams, who became president of the Federal Reserve Bank of New York on Monday. “Second, the hard numbers that we tend to focus on … can look like everything’s coming up roses, even when an uncomfortable reality lies beneath. And, finally, culture is a long-run investment that takes many years to develop and requires constant reinforcement to preserve. If you let it erode, you can’t go to the market and obtain a new ‘culture’ overnight.” New York Times, Wall Street Journal
Morgan Stanley CEO James Gorman expressed much the same thoughts, warning about a “tyranny of success” in which people forget the lessons of the not-so-distant past. “It really helps to be a little paranoid and a little scarred,” he said. “Forget about what the regulators want, what the public want, what the politicians want. We don’t want [another crisis].”
Still, the good times roll on. Second quarter trading profits at banks are expected to be up just 6% from the year earlier period. “Luckily, conditions were placid enough for lending and investment banking fees to act as a saving grace. Merger and acquisition activity is booming.” And “traditional business loans, which had been stuck in the mud, also are recovering. Wall Street can take solace from the fact that the declining trend [in trading] of the past several years has been checked, especially when so much else is going their way.”
Good news, bad news: JPMorgan Chase was much in the news on Monday, some positive, some negative. The bank said it will pay a $65 million fine to the Commodity Futures Trading Commission for attempting to manipulate the Isdafix, a dollar benchmark used in the swaps market, to benefit its own positions between 2007 and 2010. Wall Street Journal, Financial Times
In Australia, Robert Priestley, the chairman of the bank’s unit there, resigned his seat as a director of the Australian Securities Exchange. Earlier this month Australian prosecutors filed criminal charges against executives at Deutsche Bank, Citigroup and ANZ Bank for alleged cartel conduct in the underwriting of a stock sale for the Australian bank. JPM underwrote the deal with Deutsche and Citi but has not been charged, nor has Priestley.
On the positive side, Mexico has canceled an arrest warrant issued earlier this month for the head of JPM’s business there for an alleged fraudulent loan to a Mexican real estate developer. The bank had said the charges were “baseless.”
Goldman goings-on: Goldman Sachs has named Pete Lyon, who currently runs the bank’s U.S. capital-markets business, to co-head its technology, media and telecommunications group along with Dan Dees, who is based in San Francisco. “Elevating Mr. Lyon — the group’s first leader outside the West Coast since 2014 — amounts to a bet that emerging technology will continue to become more global, both the entrepreneurs themselves and the investment dollars chasing them,” and that “the next tech giant may crop up far from Silicon Valley.”
Goldman Sachs is quietly working on a $500 million program to finance women-led investment firms using its own capital and that of its clients in order to foster diversity. “The $500 million figure is small relative to the size of the asset management industry, but it could serve as a model for other initiatives,” the Times says. “And with Goldman’s name attached, it could give cautious investors more exposure and experience investing in female-led funds to drive them to do more — eventually changing the depressing statistics around women in the investment world.
Wall Street Journal
Restructuring: Wells Fargo is expected to announce a restructuring of its wealth management business, which is being investigated by several government agencies. The bank is reportedly looking to combine its Wealth Brokerage Services, which has about 3,400 brokers who work out of the bank’s retail branches, and the Private Client Group, which has about 9,500 brokers. The bank’s wealth management business “has been the subject of whistleblower complaints that led to an independent investigation and probes from the Justice Department, Securities and Exchange Commission and Labor Department,” the Journal noted.
Take your time: President Trump’s presumed nomination of Kathy Kraninger to succeed Mick Mulvaney as head of the Consumer Financial Protection Bureau may take a long time to get to confirmation — as long as two years — which may be the White House’s plan. “The administration’s strategy appears to be to keep Mulvaney in office as acting director as long as he is able to do it,” said Alan Kaplinsky, a financial industry lawyer. (Also: American Banker)
Financial Times
Good to go: The New York State Department of Financial Services has approved Square’s application for a virtual currency license.
Quotable
“Strong culture and robust corporate governance are our first lines of defense. They’re a critical part of the tool kit when it comes to protecting people, banks and the economy from risk, scandal, and harm.” — John C. Williams, the new president of the Federal Reserve Bank of New York.
