Today's Top Stories Also Noted: Spotlight On... Bank protests planned during Democratic convention News From the Fierce Network:
Today's Top News1. More intense media scrutiny of Wells Fargo
Now that Wells Fargo, in the mind of the many retail customers anyway, is becoming the bank of America, it can expect a step-up in media scrutiny. The bank is active in more retail markets and has more residential mortgage market share than its retail peers, so it is the big cheese now. That will bring more media scrutiny, something Bank of America knows all about it. I raise this issue in light of a recent report out of North Carolina about resident Cindi Davis, who has stage four cancer and is possibly facing foreclosure by Wells Fargo. Wells Fargo told a local news channel that "the first option is to try to keep people in their homes" but then turned Cindi's "delinquent loan over to a foreclosure attorney. The letter stated they are now in 'active foreclosure.' " Wells Fargo issued a statement in response: "Our thoughts are with Mrs. Davis during her courageous battle with cancer. It is important to note that her mortgage loan has not been foreclosed, nor has she been asked to leave her home. Wells Fargo works hard to help our customers maintain home ownership whenever possible, and we view foreclosure as a last resort. As part of our continuing efforts to work with the Davis family, we have reached out to nonprofit organizations that might be able to offer assistance." The bank is in a tough spot. Whatever it decides to do, it will have to get ready for more of these kinds of media situations. For more: Read more about: Public Relations, Media Relations
There's no real succession controversy at Blackstone Group, at least not one that has exploded into public headlines. But there is always a succession plan, if the board is doing its job anyway. At this point, the plan may be to set up a horse race, one that will stretch until the point that CEO Stephen Schwarzman, who is now 65, decides to step down. Reuters notes the appointment of Joe Baratta, a 41-year-old deal maker credited with building up the firm's European buyouts practice, as the new head of global head of private equity. That "was the latest step in a wider succession plan, Blackstone insiders said. Baratta joins five other senior Blackstone executives from whose ranks the successor to Schwarzman, 65, will eventually emerge, the sources said. The others are Jonathan Gray, 42, real estate chief; Bennett Goodman, 54, co-founder of the credit business; Tom Hill, 63, who runs the hedge fund team; Laurence Tosi, 44, the chief financial officer; and Joan Solotar, 47, who spearheads investor relations." Certainly, "were Schwarzman to step down in the next few years, President and Chief Operating Officer Tony James, 61, would likely take the reins at the firm." But that might prove to be short-term. As it stands now, Schwarzman seems ensconced where he is. One executive was quoted: "Steve will never retire. He will die at his desk." Unless perhaps he's confident the next CEO is in place. For more:
Read more about: Private Equity 3. Reconsidering the quiet period
The vaunted quiet period after an IPO, during which underwriters stay silent about the new stock, has been thrown up in the air in confusing fashion by recent events. One huge events was the passage of the JOBS Act, which is designed to make it easier for banks to provide research about the new stock inside of the traditional 40 day quiet period. The problem was that investment banks were wary of the new rule. Rather than applaud, banks held back out of fear that the JOBS Act relaxation of the quiet period rules conflicted with the vaunted Global Settlement on tainted stock research, which was passed in 2003. Banks say the deal is still in force. What evolved just recently is a 25 day quiet period, a kind of compromise that banks can live with. To make things even more complicated, the SEC is looking into whether the quiet period is still relevant. The impetus for the move was the botched Facebook IPO, during which some institutional investors were said to get relevant information from the underwriters ahead of retail investors. SEC chairman Mary Schapiron wrote to a congressman, as noted by Reuters, "We should review our communications rules and the application of the quiet period in light of the changes in both the way the market functions and the changes in communications technology that have occurred since our last major reform in 2005." The recipient, Rep. Darryl Issa "has pushed for a regulatory overhaul after Facebook's IPO showed 'substantial flaws' in the process. The long-awaited offering in May was hit with a slew of problems, including trading glitches on Nasdaq and allegations that the underwriters' research analysts passed on new earnings estimates to top investor clients."
Read more about: IPO, IPOs 4. Goldman Sachs CEO contender buys $27M apartment
One negative about being a serious candidate to become CEO of an august investment bank is that everything you do is filtered through that prism. So it goes with J. Michael Evans, who is definitely a candidate to replace Goldman Sachs CEO Lloyd Blankfein someday. He is thus an instant newsmaker, and you can only imagine his chagrin and his family's chagrin when it was reported that he has just purchased a new home, an apartment at 995 Fifth Avenue, for whopping $27 million. "Spanning the entire 16th floor, the 14-room apartment is 8,360 square feet and has 10-foot ceilings. There is a six-room master-bedroom suite, and nine-and-a-half bathrooms," notes DealBook. "Who needs that much space? Well, if anyone does — and has the money to afford it — it's Mr. Evans. He and his wife, Lise Evans, have eight children (each has three children from prior marriages, and they have two children together). The apartment, is in the former Stanhope Hotel across from the Metropolitan Museum of Art. Mr. Evans paid $27,376,940, about 9 percent less than the $30 million listing price, according to real estate records. The Stanhope was converted into residences several years ago." Life at the top of Goldman Sachs means life in a fishbowl. It comes with the territory. For more: Related articles: Read more about: Goldman Sachs, CEO succession 5. Deutsche Bank's new clawback provision raises brows
Clawbacks are at the top of the agenda all over again thanks in part to the JPMorgan London Whale "hedging" fiasco. The bank has decided to clawback bonuses from the executives that had direct oversight of the disastrous trading. In the unfolding Libor scandals, we may see some clawbacks as well. Ditto on the AML scandals. Every bank board at this point has to be aware that the public will clamor for such a move in the wake of any scandal, which brings up the very interesting move by Deutsche Bank, whose board has tightened its compensation rules recently, "enabling it to take back unvested shares that newly hired senior staff received in exchange for stock earned at another bank," reports the Financial Times. That would appear to be a first. "At Deutsche Bank, Anshu Jain, its new co-chief executive, recently said he wanted to position the lender 'at the forefront" of a cultural change that includes reforms to investment bankers' pay.' " He was quoted saying that, "We firmly believe that the industry as a whole will have to change its compensation model." One big issue here is the extent to which other banks, notably banks in the U.S., will follow suit. It's fair to say that such a move would be exceedingly unpopular, and I can't see any big banks passing a similar measure. But it is interesting, and you never know. For more:
Read more about: clawbacks Also NotedSPOTLIGHT ON... Bank protests planned during Democratic convention Bank of America and Wells Fargo will be among the targets for demonstrations at the Democratic National Convention, which is scheduled to get underway in Charlotte next week. The convention has already been tricky for the banks. Normally, they would have been visible contributors to the event. Bank of America has managed to contribute in some ways, and it remains the party's official bank. It remains to be seen how large the anti-bank protest will be. It's a tricky issue for the Democrats. Article Company News: And Finally…Siri for businesses. Article
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Wednesday, August 29, 2012
| 08.29.12 | Goldman Sachs CEO contender buys $27M apartment
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