N.Y. Fed chief to retire; TARP warrant windfall

Receiving Wide Coverage ...
Another Fed departure: William Dudley, the president of the Federal Reserve Bank of New York, announced Monday that he will retire next year, about a half year earlier than scheduled.

Andrew Harrer/Bloomberg

Dudley, who is also vice chair of the Federal Open Market Committee, the Fed’s monetary policy panel, “played a critical role in how the Federal Reserve responded to the financial crisis and its aftermath,” the Wall Street Journal says. “Dudley played key roles in formulating policies to help the economy recover and has been very active in shaping the Fed’s response to make financial firms more resilient to future troubles. He has also been an unusually vocal critic of Wall Street culture.”

Dudley “played a central role helping the central bank respond to the financial crisis, while drawing fire for not doing more to prevent another one,” the paper comments. The New York Fed, “which supervises some of the country’s biggest financial institutions,” has been “dogged by criticism” that it “was a lax regulator even after the [financial] crisis.” Dudley “rejected the criticism but oversaw efforts seeking to improve its performance afterward.” Wall Street Journal, New York Times, American Banker

Saudi prince arrested: Prince al-Waleed bin Talal, a major investor in Citigroup, Apple and Twitter, was one of several dozen prominent Saudi princes, cabinet ministers arrested Saturday in a crackdown on alleged corruption . Al-Waleed was charged with money laundering.

Prince al-Waleed “shot to prominence in the financial world in 1991 after buying a stake in a predecessor to Citigroup,” the Journal notes.

He has also “worked closely with some of Wall Street’s biggest and best-known banks and investors,” the New York Times said. Only a month ago, he sat across from Goldman Sachs CEO Lloyd Blankfein at a meeting in Riyadh, discussing investments and economic developments in the Middle East. Goldman also recently helped Prince al-Waleed’s company acquire a 16 % stake in a Saudi bank. Wall Street Journal, Financial Times, New York Times, Washington Post, American Banker

“This is going to cause some immediate apprehension in terms of investors looking at Saudi Arabia,” said Graham Griffiths, a senior analyst at Control Risks. The prince “is someone who has been represented as a face of the kingdom, someone that a lot of people have done business with and are comfortable doing business with.”

Wall Street Journal
Free data flow: A group of large financial services companies, including Citigroup, JPMorgan Chase and MetLife, are pushing for the free movement of data across borders as part of talks on a new North American Free Trade Agreement.

“It’s a long-coveted goal for financial firms, who say this could potentially save them millions of dollars in technology-storage costs,” the paper says. “They say it’s expensive to comply with data rules in countries where they operate because of requirements to maintain servers within each country’s borders for privacy and other reasons. They also worry about potential risks in countries where protection against hacking might be less robust.”

Windfall: A small group of investors “who had the gumption” to buy esoteric bank securities known as TARP warrants issued during the financial crisis are reaping “windfall gains.”

New York Times
Be vigilant: A recent ruling by a federal judge in San Francisco in two cases against Wells Fargo “sent a clear message to public company officers and directors: be vigilant for bad behavior in your operations, or else,” the Gretchen Morgenson notes. Judge Jon S. Tiger ruled that allegations by plaintiffs suing the bank following last year’s phony accounts scandal had plausibly suggested that a majority of the bank’s directors had “consciously disregarded an obligation to be reasonably informed about the business and its risks or consciously disregarded the duty to monitor and oversee the business.”

Morgenson said the judge’s ruling was “both unusual and welcome” for not allowing “directors of public companies to skate away from liability when corporate misconduct occurs on their watch.”

Quotable
“It’s a reminder that you can’t just be a passive figurehead on a board and keep your fingers crossed that nothing will go wrong. You have to be actively involved and cognizant of what’s going on with respect to the company, or you could very well face liabilities.” — Lewis D. Lowenfels, a New York securities lawyer, on a federal judge’s recent ruling against Wells Fargo.