Dimon has emergency heart surgery; Waters wants two off Wells' board

Receiving Wide Coverage ...

Dimon’s heart surgery

JPMorgan Chase CEO James Dimon had emergency heart surgery Thursday but the procedure was successful and he is “recovering well,” the bank said in a memo to employees. Dimon was treated for an aortic dissection, which the Wall Street Journal said is “a rare but very serious condition that occurs most commonly in men in their 60s and 70s,” citing the Mayo Clinic.

Bloomberg News

JPMorgan co-presidents Daniel Pinto and Gordon Smith “are running the bank while Mr. Dimon recuperates,” the memo said.

“The good news is that it was caught early and the surgery was successful. He is awake, alert and recovering well,” Pinto and Smith said in the memo. Wall Street Journal, Financial Times, New York Times

Derelicts?

House Financial Services Committee chairwoman Maxine Waters, D-Calif., said Wells Fargo chairwoman Elizabeth A. Duke and another board member, James Quigley, should resign. “Both of them had a clear dereliction of duty as board members,” Waters said after her committee released a scathing report on the bank’s actions following its 2016 phony accounts scandal.

“The investigation — which drew on documents from inside the bank and from regulators — found that senior Wells Fargo leaders had taken a cavalier approach to dealing with the bank’s problems,” the New York Times reported. “The report also described what it called inaccurate testimony last year by Wells Fargo’s chief executive at the time, Timothy J. Sloan, during a hearing before the committee.” New York Times, Washington Post

“The report, which offers a rare peek at private communications between senior regulatory officials and leaders at the scandal-plagued bank, confirms long-standing suspicions that the Office of the Comptroller of the Currency helped to oust Sloan, though it also shows that the Federal Reserve Board played a significant role,” American Banker’s Kevin Wack reports.

Goldman deal?

Goldman Sachs’ Petershill unit, which invests directly in alternative-investment firms, is in talks to buy a minority stake in Permira, a large international private-equity firm, for €500 million, or about $560 million. Wall Street Journal, Financial Times

Indian bank seizure

India’s central bank seized control of struggling Yes Bank, “the first time in more than a decade that the government has stepped in to backstop a private lender,” following a “serious deterioration” in the bank’s financial condition.

The move by the Reserve Bank of India is meant to “prevent a loss of confidence in the country’s financial system.”

Wall Street Journal

Record lows

The average rate on a 30-year fixed-rate mortgage fell to a record low of 3.29% on Thursday, “pulled down by fears that the spread of coronavirus could weigh on the U.S. economy.” While a “decline in mortgage rates typically boosts home sales, a worsening coronavirus epidemic and the efforts to contain it—quarantines, business shutdowns and travel restrictions—could keep would-be home buyers on the sidelines during what is usually a busy spring selling season. Some homeowners and real-estate agents have complained of delays in closing their mortgages in recent weeks.”

Still, mortgage lenders have been swamped with loan applications. “JPMorgan Chase moved some of its home-equity employees to the mortgage business last week to handle an increase in purchase applications and maintain its closing window. This week, the bank paused email marketing campaigns on refinancing because of high application numbers. Wells Fargo said it has been hiring people to underwrite, process and close mortgages to meet demand.”

That drop in rates is actually feeding on itself, as “a major driver of the roaring 2020 bond-market rally is the insatiable demand of major U.S. banks whose hedging needs have risen with each fresh decline in rates. Thanks to this year’s bond rally, banks need to buy around $1.2 trillion of 10-year Treasury bonds to offset risks on mortgages and bank deposits.”

“The plunge both reflects and intensifies commercial banks’ efforts to manage balance-sheet risks including sensitivity to interest-rate swings. This practice, known in industry parlance as convexity hedging, has been a significant factor in the bond market for years but has become even more acute in the postcrisis era as a result of tighter rules adopted after the 2008 crisis.”

More questions

The U.K.’s Financial Conduct Authority and Prudential Regulation Authority “are examining visits by Barclays CEO Jes Staley to Jeffrey Epstein’s private Caribbean island as part of a probe into whether Mr. Staley told the truth about his association with the convicted sex offender.” The two regulators are examining “Mr. Staley’s characterization to the company of his relationship with Mr. Epstein and the subsequent description of that relationship in the company’s response to the FCA.”

“Investigators are comparing disclosures Mr. Staley made to Barclays—and which the bank subsequently made to U.K. financial regulators—with a trove of emails and other documents handed over by Mr. Staley’s former employer, JPMorgan Chase.”

Financial Times

Unearthed

“Nazi hunters at the Simon Wiesenthal center claim to have identified accounts at Credit Suisse used to funnel looted Jewish money to and from 12,000 German fascists living in Argentina” in the 1940s, the FT reports. “The list was thought to have been destroyed in 1943, when Argentina’s republican government was overthrown by a military junta sympathetic to Nazi Germany.”

“Switzerland’s banks have done extensive work trying to uncover Nazi accounts. Credit Suisse said it was not clear how many of the names on the new list might have been exposed in previous forensic work on its archives.”

Challenges overcome

Clare Woodman, Morgan Stanley’s new CEO of Europe, the Middle East and Africa, “the first woman to lead a top investment bank in the City of London and a mother of three,” talks about “challenges faced, decisions made, and strokes of good fortune that allowed her to progress in the male-dominated world of Wall Street banks and the City.”

Quotable

“I am looking very closely at whether there will be a referral.” — House Financial Services Committee chairwoman Maxine Waters on the possibility of referring former Wells Fargo CEO Tim Sloan to the Justice Department for prosecution for making “misleading” statements last year to her committee.