Receiving Wide Coverage ... New direction: Equifax announced its chairman and CEO, Richard Smith, is leaving the company following the company’s massive data breach. He will be replaced as chairman by Mark Feidler, a current director who will serve as nonexecutive chairman, and Paulino do Rego Barros Jr., most recently head of the company’s Asia-Pacific region, as interim CEO.
Smith, who is still scheduled to testify before Congress next week, said he believes “it is in the best interests of the company to have new leadership to move the company forward.”
Feidler said, “The board remains deeply concerned about and totally focused on the cybersecurity incident. We are working intensely to support consumers and make the necessary changes to minimize the risk that something like this happens again. Speaking for everyone on the board, I sincerely apologize.”
In what the Wall Street Journal called “an unusual agreement,” Equifax and Smith put off a decision on what to call Smith’s departure. The company said Smith “retired” and will likely receive more than $18 million in pension benefits, but he won’t get any severance or a bonus for 2017. In addition, any benefits he gets are contingent on the outcome of the company’s investigation into the data hack.
Weaknesses in Equifax’s security systems were apparent well before the hack occurred, according to several cyber-risk analysis companies interviewed by the Journal. The credit bureau “was behind on basic maintenance of websites that could have been involved in transmitting sensitive consumer information and scored poorly in areas that would play a major role in the company’s massive data breach,” the experts said. Wall Street Journal, Financial Times, New York Times, American Banker here, here and here
The heat is on: Smith isn’t the only one on the hot seat over hacks. On Tuesday, Securities and Exchange Commission Chairman Jay Clayton faced angry senators who had questions about the 2016 breach of the agency’s Edgar system, which only came to light until very recently.
“This breach took place under your predecessor, but the disclosure, or lack thereof, is all yours,” said Senator Sherrod Brown, D-Ohio. “How are Main Street investors expected to have confidence that the SEC can hold big companies accountable when the SEC is not forthcoming?” Wall Street Journal, New York Times, Washington Post
Senator Sherrod Brown, a Democrat from Ohio and ranking member of the Senate Banking, Housing and Urban Affairs Committee, listens during a hearing with Mary Jo White, chairman of the U.S. Securities and Exchange Commission (SEC), not pictured, in Washington, D.C., U.S., on Tuesday, June 14, 2016. Investment advisers registered with SEC would need to create and maintain transition plans to prepare for a major disruption in their business under rule that will be proposed, White said today. Photographer: Andrew Harrer/Bloomberg
Andrew Harrer/Bloomberg
Wall Street Journal Loan probe: The SEC and the FBI are looking into the business practices of Renovate America, the largest provider of so-called green mortgages, also known as PACE loans. The program “has sparked controversy as homeowners have complained about lack of underwriting guidelines and misrepresentation of their loan terms,” the paper notes. Scott McKinlay, the company’s chief legal officer, said in a statement, “we have been assured that Renovate America is not a target of an FBI investigation.”
B of A layoffs: Bank of America has laid off about 250 people, or about 10% of the employees, in its merchant-services joint-venture with First Data Corp. The restructuring is “designed to accelerate our business strategy and better meet merchants’ evolving expectations in this increasingly digital era,” a bank spokesman said. The unit helps businesses handle debit- and credit-card transactions.
Elsewhere If at first you don’t succeed…: Within a span of 40 minutes, a woman tried to rob four Manhattan banks on Tuesday but hit paydirt only on the last try, according to a report on the Daily Beast. At 11:17 a.m., the woman passed a note demanding money at a Bank of America branch. Three minutes later, she was seen with a note at a Capital One branch (though she didn't pass it). Then, at 11:27, she passed a note to a teller at Apple Bank, but again left empty handed. Finally, at 11:57 a.m., she made off with an undetermined sum from a Chase Bank branch. The woman is still at large.
Quotable “There’s a saying that it’s expensive to be poor. You want to cash a check, send money to a loved one, get credit, even pay your bills. For those who are outside the financial system — and there are over 70 million adults in the U.S. and over 2 billion people in the world — those basic consumer transactions can be incredibly time-consuming — you stand in line for 30 to 45 minutes — and very expensive. So democratizing financial service is basically saying the following: We want managing and moving your money to be a right for all citizens, not just the privileged, or the affluent.” — PayPal CEO Dan Schulman
Small Business Bank in Lennox, Kansas received another cease-and-desist order from the Federal Reserve for failing to comply with anti-money laundering and Bank Secrecy Act requirements for the second time in 14 months.
Lower borrowing costs, reduced exposure to the urban office sector and flattening vacancy rates could collectively save lenders from beleaguered corners of the commercial real estate market.
The companies held out hope that they'd get skeptical regulators to sign off on their $286 million deal before determining that canceling it was in their best interests.
In a Senate Judiciary hearing Tuesday morning, some Republican lawmakers signaled openness to joining their Democratic counterparts in supporting the Credit Card Competition Act.
