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Scandal, business models gone awry, missing money and executive shake-ups — 2016 had it all. Here are the financial services executives or groups of them who took the heat and will be looking for better times in 2017.
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John Stumpf, former Chairman and CEO, Wells Fargo

Up until the phony-accounts scandal at Wells Fargo became headline news, John Stumpf was on everybody's shortlist of the banking industry's most admired CEOs. On his watch, Wells not only consistently outperformed its peers, it became the most valuable bank in the world based on market capitalization. Then, in early September, the company was forced to pay $190 million in fines and restitution to settle charges that employees created roughly 2 million fake bank and credit card accounts, and Stumpf's storied career at Wells Fargo and its predecessor, Norwest, was essentially finished. He didn't lose his job right away: First he had to endure two brutal grillings on Capitol Hill that were made worse by his often-bumbling answers, and then he was ordered by Wells' board to return some $41 million in compensation. Finally, with calls for his ouster becoming louder and louder, Stumpf resigned from his posts as chairman and CEO in mid-October.

"While I have been deeply committed and focused on managing the company through this period, I have decided it is best for the company that I step aside," Stumpf, 63, said. How much Stumpf knew about the sham-account openings as they were happening may never be known, but this much is true: His legacy will be forever tarnished by the scheme.

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Carrie Tolstedt, Senior Executive VP of Community Banking, Wells Fargo

Equally damaged by the scandal was Carrie Tolstedt, the former head of Wells Fargo's vast retail banking operations. Tolstedt announced her retirement in late July, and at the time she appeared to be going on her own terms. But then the scandal broke in September, and Stumpf said during his first hearing in Washington that Tolstedt, 56, was asked to resign. "Her departure was based on a number of issues. This was one of them," said Stumpf, referring to the phony accounts. Even before the hearing, shareholders and lawmakers said Tolstedt bore responsibility and demanded that Wells claw back tens of millions of dollars she had earned since 2011. Hillary Clinton, on the campaign trail in September, accused Tolstedt of "ripping off" depositors and expressed dismay that Tolstedt left the bank "not with a pink slip, but with a $125 million payout." (That was roughly the amount she had amassed in stock and options at the time she announced her retirement. She was eventually forced to forfeit some $19 million in unvested Wells Fargo stock). For years, Tolstedt was a mainstay in American Banker's rankings of the Most Powerful Women in Banking. Now she is out of banking, quite possibly for good.
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Marketplace Lenders

"Disgruntled." "Anxious." "Shunning." Those words, used to describe institutional investors' attitudes and actions toward marketplace lenders, dominated headlines starting early in 2016 and foreshadowed the humbling that the upstart algorithm-grinders would endure. Concerns about deteriorating credit quality, the ouster of Lending Club's CEO amid scandal and other factors led hedge funds, banks and other investors to curtail funding of marketplace loans.

As the year rolled on quarterly losses stacked up at a number of firms, job cuts spread and efforts intensified to lure back institutional money or the individual investors who had once been the lenders' mainstays. Shares at the industry's two public companies, Lending Club and OnDeck Capital, each were down more than 50% on the year in mid-December. Add to all that a Supreme Court decision that introduced uncertainty about state interest rate caps, and the hints at or outright calls by federal and state legislators for more regulation, and it was a tough year.

Members of the old guard such as Goldman Sachs, Wells Fargo and Quicken seized on the opening to launch their own online lending products and play catch-up. New Lending Club CEO Scott Sanborn downplayed the threat, saying: "We've been competing with deep-pocketed large players since we started." Time will tell whether 2017 was a slight bump in marketplace lenders' meteoric rise, or the beginning of a major industry shakeout.

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Gottfried Leibbrandt, CEO of Swift

In February criminals gained access to the payments-related messaging system Swift by hacking into the Bangladesh central bank, and they exploited that breach to steal $81 million from the bank's account at the Federal Reserve Bank of New York. The event became a lightning rod for cybersecurity debates that continued the rest of the year. Perhaps the biggest challenge that Swift CEO Gottfried Leibbrandt and fellow executives faced in 2016 was, ironically, in getting across their message to critics. They said repeatedly that Swift wasn't hacked - its client banks were. Thieves gained access by stealing the keys, not breaking a window. The firm has stepped up requirements on its clients and has introduced additional tools and controls intended to prevent further attacks. Still, in early December, Swift reported that a "meaningful" amount of additional attacks had been carried out over its system and that it expected such crime to continue.
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Steven Streit, CEO of Green Dot

Early in the year Green Dot CEO Steven Streit found himself in a public and often nasty campaign to hang onto his job. Harvest Capital Strategies, a hedge fund that described itself as Green Dot's largest shareholder, called him untrustworthy and poorly suited to lead a large, complex company. Following a bruising fight, Streit was narrowly re-elected to the company's board, but he gave up his role as chairman. Streit also endured a fiasco with customers, thousands of whom were unable to make transactions when efforts to migrate some of the company's payment processing services to Mastercard went awry. But it was not all bad news, as Green Dot's stock price was up by more than 30% since Feb. 24 when the company announced a plan to improve its financial performance.
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Subprime Auto Lenders

Underwriting standards in the car loan market have been loosening for some time, and 2016 was the year when subprime auto lenders started to pay a bigger price for their rapid post-crisis growth. In March, Fitch Ratings reported that more than 5% of securitized subprime auto loans were at least 60 days late, the highest delinquency rate in 20 years. In November, the Federal Reserve Bank of New York added its voice to the chorus of concerns. The deterioration in loan performance was validation of JPMorgan Chase CEO Jamie Dimon's warning that "someone is going to get hurt," and an affirmation for banks that have steered of car loans to consumers with damaged credit.
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Bank Buyers Who Hit Snags

What a way to close the year. New York Community Bancorp in Westbury, led by Joseph Ficalora, had been trying for 14 months to complete its $2 billion acquisition of Astoria Financial in Lake Success, N.Y. But they terminated the deal on Dec. 20. A regulatory delay, perhaps tied to concerns about the banks' combined concentration in commercial real estate loans, meant the banks were going to miss the Dec. 31 deadline in their agreement, and Astoria's share price had climbed in recent weeks. New York Community's next move is unclear. ...

BancorpSouth CEO Dan Rollins has been trying to complete the acquisitions of Ouachita Bancshares in Monroe, La., and Central Community Corp. in Temple, Texas, for nearly three years but has withdrawn the applications twice over compliance issues. The latest withdrawal came in October, two months after Tupelo, Miss.-based BancorpSouth's Community Reinvestment Act rating was retroactively downgraded from "satisfactory" to "needs to improve." The deals are still pending, and BancorpSouth made an investment in a minority-owned bank late December that could help its CRA record. ...

Canadian Imperial Bank of Commerce CEO Victor Dodig announced the biggest bank deal of 2016 in agreeing to pay $3.8 billion for PrivateBancorp in Chicago, but a surging stock market prompted PrivateBancorp to delay its shareholder vote until early next year amid concern that investors would reject the agreement.Industry observers have been divided over whether the delay will prompt CIBC and PrivateBancorp to renegotiate a new price.

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Taxi Medallion Lenders

Call it the Uber effect. As ride-sharing services such as Uber and Lyft continue to siphon business away from traditional taxicab operators, cab companies in major cities like New York and Chicago have struggled to make payments on the medallions they need to operate their fleets. And, in most cases, cab companies and drivers can't refinance their loans because medallion values have plummeted. Banks that are active in financing medallion purchases include Capital One Financial, BankUnited and Signature Bank, and all have reported substantial increases in delinquencies on medallion loans in recent quarters. The good news for those banks is that medallion loans make up just a fraction of total loans, so the overall damage is likely to be minimal. The pain is greater at some credit unions and firms like Medallion Financial, a New York firm that specializes in medallion financing. Melrose Credit Union in New York is now undercapitalized because so many of its medallion loans have soured. Medallion's profits and share price have been battered by rising delinquencies on medallion loans, and it has responded by diversifying into consumer lending and other business lines. It even changed its stock symbol from TAXI to MFIN.
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Ashton Ryan, President of First NBC Bank Holding

First NBC in New Orleans, founded by veteran Louisiana banker Ashton Ryan, started out as a phoenix story but now it's closer to the fire-sale stage. The bank, formed in 2006 and backed by local investors including football stars Peyton and Eli Manning, was one of several young Louisiana banks that sought to fund the recovery of New Orleans after Hurricane Katrina. And it did so, relying on a strategy of financing reconstruction projects that supplied it with lucrative tax credits. It went public in 2013, its stock was flying high at $37.39 at the end of 2015, and it approached $5 billion of assets. But last year it began to discover accounting problems tied to its tax-credit model, sustained blows from the energy crisis including a $30 million provision tied to an oil-and-gas-company loan, and in August of this year restated several years of financial results while reporting a $25.5 million loss for 2015. Its situation worsened in recent months as regulators categorized it as "troubled," it entered into a consent order to shore up capital, and Ryan was replaced as CEO. Its shares now trade at around $6.50, there were estimates that it needs to raise as much as $150 million to $300 million, and it reiterated this month that it is "actively pursuing strategic options to deliver enhanced shareholder value." Hancock Holding and IberiaBank, both based in Louisiana, are rumored to be possible buyers.
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Steven Sugarman, Chairman and CEO, Banc of California

Another CEO who had a rough year was Steven Sugarman at Banc of California in Irvine. The company, which has taken heat from a big investor over a decision to spend $100 million on the naming rights of a soccer stadium for a team with ties to Sugarman's brother, also launched an internal probe into claims of improper dealings that may have involved directors and senior executives.
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