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(Bloomberg) -- Crude posted the worst weekly decline in more than a year on concern that the spread of China’s coronavirus will cripple fuel demand. Brent futures sank 2.2% in London on Friday. Deaths from the coronavirus rose to at least 26 and China expanded travel restrictions for about 40 million people in an attempt to halt contagion. The U.S. is monitoring more than 60 people for potential infection and lawmakers said health authorities are expected to confirm a third case.The Asian virus has spooked traders even as the World Health Organization stopped short of declaring a global health emergency. The contagion is disrupting travel during the Lunar New Year holiday, when hundreds of millions normally fly or ride home. The selloff has accelerated as trend-following funds turned bearish, according to TD Securities.“Contagion fears are spiking ahead of the biggest yearly migration ahead of new year,” said Daniel Ghali, a commodities strategist at TD Securities. “The fear factor is the risk of contagion, synonymous to what happened in 2003 with SARS which led to a 2% drop in Chinese economic growth.”The fast-spreading virus is the latest challenge for a market that’s been buffeted this year by geopolitical turmoil in the Middle East and North Africa, as well as the phase-one trade deal between Beijing and Washington. Goldman Sachs Group Inc. said earlier this week that, if the coronavirus has an impact similar to the 2003 SARS epidemic, demand could be curbed by 260,000 barrels a day. While this is not the first time global oil markets contend with an epidemic threatening demand, the current supply environment could worsen the situation.“The slightest fear of any economic slowdown will spur a long wave of liquidations because the market is so oversupplied,” said Walter Zimmermann, chief technical strategist at ICAP Technical Analysis.Some businesses in China including McDonald’s Corp. and Starbucks Corp. temporarily shut some stores in efforts to contain the virus.See also: China’s Economy Was Brightening This Month Before Virus Fear HitBrent crude for March settlement fell $1.35 to settle at $60.69 a barrel on the ICE Futures Europe exchange in New York putting its premium over WTI for the same month at $6.50 a barrel. Brent futures fell 6.4% this week.West Texas Intermediate futures for March delivery slipped $1.40 to end the session at $54.19 a barrel on the New York Mercantile Exchange, the lowest level since October. Meanwhile, based on the commodity’s relative strength index, WTI is sitting in oversold territory and is due for a rally.Options traders are paying the most since Oct. 31 for protection against price swings, according to the CBOE/CME WTI volatility index.\--With assistance from James Thornhill, Grant Smith and Saket Sundria.To contact the reporter on this story: Jackie Davalos in New York at email@example.comTo contact the editors responsible for this story: David Marino at firstname.lastname@example.org, Jessica Summers, Mike JeffersFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Consumer groups had worried that the Trump administration's pick to lead the Office of the Comptroller of the Currency (OCC), Joseph Otting, would do little to change its reputation for leniency. A former chief executive of California's OneWest Bank, Otting as comptroller has referred to lenders as his "customers" and pursued rule changes pushed for by bank lobbyists. One person with knowledge of the matter said Wells Fargo's failure to swiftly fix systemic misconduct has angered Otting, precisely because he spent decades as a banker and felt he was held to high standards.
The Department of Justice is looking into whether executives withheld details about fake accounts to the Wells Fargo board of directors and the Office of the Comptroller of the Currency, the lead regulator for national banks, Reuters has reported. Consent orders: Wells Fargo is currently operating under roughly 14 consent orders with various regulators including the OCC, SEC, and the Consumer Financial Protection Bureau.
(Bloomberg) -- As Goldman Sachs Group Inc. moves to increase diversity on corporate boards, the investment bank isn’t extending the initiative to a particularly challenged region: Asia.Chief Executive Officer David Solomon revealed this week that starting in July the bank won’t handle initial public offerings for companies that lack either a female or diverse director. But the rule applies only to IPOs in the U.S. and Europe. Asia’s exclusion is striking, given how common all-male boards are in the region. Other bastions of male dominance, including Latin America and the Middle East, also went unmentioned.A Goldman spokeswoman said the bank will consider implementing the plan in Asia and other regions over time after consulting with its clients, as diversity awareness improves in those areas and that it will consult with its clients in those areas to improve board diversity.“Nowadays there’s no excuse for companies to have non-diverse, all-male boards,” said Fern Ngai, CEO of Community Business, a Hong Kong-based group that advocates for responsible and inclusive business practices. Goldman “should include Asia. I don’t see why they don’t.”Goldman is initially targeting regions where corporations have come further in making women a part of top-level decision-making. In California, new legislation mandates board diversity, with fines for noncompliance. Asia lags behind not just the U.S. and Europe, but also global leader Africa in the proportion of women on company boards, McKinsey Global Institute reported late last year.A study by index provider MSCI Inc. of companies in its global benchmarks last month showed about 33% of firms in Japan had no female board members, one percentage point worse than China and Hong Kong. By comparison, that figure was 1% in the U.S., while it was 94% in Saudi Arabia.Recent high-profile IPOs in Asia showed a paucity of female representation, with no women on the boards of Xiaomi Corp. and Meituan Dianping, which raised almost $10 billion combined in 2018. Goldman had a leading role in both those offerings.The bank was the biggest underwriter of IPOs in the U.S. and Europe last year. It had a more modest market share in Asia, coming in 19th, according to Bloomberg league tables. Goldman was an adviser on 86 IPOs in 2019, ranking sixth globally among underwriters.Last May, Hong Kong’s stock exchange issued a non-binding guidance letter to new IPO applicants, asking them to disclose their board-diversity policies and give an explanation if their directors are all of a single gender.\--With assistance from Zhen Hao Toh and Jeff Green.To contact the reporters on this story: Kiuyan Wong in Hong Kong at email@example.com;Julia Fioretti in Hong Kong at firstname.lastname@example.org;Cathy Chan in Hong Kong at email@example.comTo contact the editors responsible for this story: Candice Zachariahs at firstname.lastname@example.org, Jonas Bergman, Daniel TaubFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The company would offer team associates, a role it recently created, a starting wage of $12 an hour, Walmart spokeswoman Jami Lamontagne said. The team associates would be cross-trained in several functions and will have more responsibility, Lamontagne said. The big-box retailer last raised its entry-level wages for U.S. hourly employees to $11 in early 2018 and trails rivals, including Costco Wholesale Corp, Amazon Inc and Target Corp on the minimum wage front.
(Bloomberg) -- The era of the white, all-male board is coming to an end.Goldman Sachs Group Inc. Chief Executive Officer David Solomon issued the latest ultimatum Thursday from Davos. Wall Street's biggest underwriter of initial public offerings in the U.S. will no longer take a company public in the U.S. and Europe if it lacks a director who is either female or diverse. Asia is not yet included in the firm’s new policy.The mandate is the latest in a series of signals that non-diverse boards and management are unacceptable. BlackRock Inc. and State Street Global Advisors are voting against directors at companies without a female director. Public companies with all-male boards based in California now face a $100,000 fine under a new state law. “It’s what big investors are looking for these days,” said Fred Foulkes, a management professor at the Boston University Questrom School of Business. “If the board has all white males, that’s a big negative.”Goldman Sachs acknowledged that “diversity” has other meanings around the world — including in Asia, where racial dynamics are different and gender disparities are sometimes even more glaring. The company said in a statement Friday that it intends to eventually expand its board-diversity mandate beyond the U.S. and Europe.The corporate board has become a rare bright spot for gender and racial diversity at the highest echelons of corporate America. Almost half of the open spots at S&P 500 companies went to women last year, and for the first time they made up more than a quarter of all directors. In July, the last all-male board in the S&P 500 appointed a woman. Still, new boards are less diverse: Among the top 25 IPOs by value each year from 2014 through 2018, 10 companies had no female directors, said Malli Gero, co-founder and senior adviser to 2020 Women on Boards, an organization that pushes for the Russell 3000 index to have at least 20% women directors on its boards. Last year, Goldman Sachs was hired to underwrite WeWork’s IPO, which only added a female director after its initial prospectus prompted criticism of its all-male board.“Starting on July 1st in the U.S. and Europe, we’re not going to take a company public unless there's at least one diverse board candidate, with a focus on women,” Solomon told CNBC Thursday. He didn't mention Asia, which continues to lag behind other regions when it comes to board diversity. Next year, the bank will raise the threshold to two diverse directors, which includes diversity based on sexual orientation and gender identity, Goldman said in a statement. The bank said the decision came after it learned more than 60 U.S. and European companies in the last two years went public without a woman or person of color on the board. Goldman Sachs has four women on its 11-member board.Among the IPOs where Goldman Sachs was an underwriter over the last two years in the U.S. and Europe, fewer than 10% currently have a board lacking a diverse candidate, the company said. Data was not available for the composition of those boards at the time of the IPO, the company said. “We realize that this is a small step, but it’s a step in a direction of saying, ‘You know what, we think this is right, we think it’s the right advice and we’re in a position also, because of our network, to help our clients if they need help placing women on boards,’” Solomon told CNBC. “So this is an example of us saying, ‘How can we do something that we think is right and help moves the market forward?’”JPMorgan Chase & Co. doesn’t have a similar policy to the new Goldman Sachs rule, but since 2016 has had a director advisory service that works to help companies find diverse candidates for their board, the company said in a statement. Morgan Stanley did not respond to requests for comment. For now, Goldman’s step is “pretty amazing,” said Boston University’s Foulkes, who was previously a director at Panera Bread Co. and Bright Horizons Family Solutions. “It's a seismic change.”(Clarifies second paragraph to show change refers to IPOs only. Adds quote in 7th paragraph. Adds reference to global diversity in 5th graf.)To contact the author of this story: Jeff Green in Southfield at email@example.comTo contact the editor responsible for this story: Rebecca Greenfield at firstname.lastname@example.orgFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- It’s easy to be cynical about the good intentions of a company caught up in one of the biggest frauds in history: the 1MDB scandal in Malaysia. Yet Goldman Sachs Group Inc.’s new stance on boardroom diversity shows how even the most profit-oriented of finance titans can — when pushed — further the virtues of stakeholder capitalism.Speaking at the World Economic Forum in Davos, where global leaders vowed to save humanity from climate change, Goldman’s chief executive officer, David Solomon, set forth a vision for his bank’s role in imposing better governance on its clients. From July it won’t manage the initial public offerings of American and European companies unless they have at least one non-white or non-straight male board candidate, Solomon said (the focus will be on women). In 2021, he’s going to “move toward… requesting two.”The move carries weight. Goldman is one of the top three IPO underwriters of the past decade, alongside Morgan Stanley and JPMorgan Chase & Co. It has an authority that wannabe public companies won’t be able to ignore.Going public is one of the critical junctures in a company’s history. It’s the moment when a century-old, family-owned widget maker, an upstart venture capital-backed tech unicorn, or a state-controlled behemoth, sets out on a course that will define its role in society for years to come. Getting the composition of its leaders right at the start sets the standard for what a company expects of itself just as it embarks on what’s often a period of rapid growth.Tech startups especially have been criticized for fostering a “bro’” culture that can be a hostile place for women, exemplified by Uber Technologies Inc. under the previous leadership of Travis Kalanick. But it’s not just about staff and society; shareholders will also benefit, according to Solomon. Companies with more diverse boards score better on measures of sustainability — an issue that’s increasingly important for asset managers. Broader representation has also been associated with higher profits and performance, although the empirical data is mixed.Goldman’s reputation could also use a little sprucing up, not only from the probes into its role raising money for the Malaysian investment fund 1MDB, but also around the subject of IPOs. It’s no coincidence that Solomon’s declaration follows two listing flops of epic proportions. Last year, his bank was one of the IPO underwriters for WeWork, which only added a female director after its first prospectus was pilloried. The deal was pulled eventually in part because of lingering governance concerns.International investors also spurned the biggest IPO of all time, Saudi Aramco, in part over concerns about controls and governance. Riyadh punished Goldman and its ilk by relegating them to the second-tier behind local banks, paying them considerably less after scrapping roadshows outside the Middle East.The two deals were embarrassments that Goldman will be keen to move on from by putting a more positive gloss on this part of the empire. What’s more, it’s unlikely to lose out on any big IPO business given the relatively modest ambition of its pledge. Of the listings managed by Goldman in the past two years in the U.S. and Europe, fewer than 10% had a board lacking a diverse candidate (many countries already enforce quotas). Half of the bank’s top-10 IPOs in 2018 and 2019 took place in Asia and the Middle East, regions not covered by Solomon’s promise. By flagging the more ambitious two-person target for 2021 now, Goldman is giving clients time to prepare. It’s also shrewdly reading where the “environmental, social and governance” trend is headed. Its first mover advantage may win it admirers among more enlightened startup companies and executives who have been weighing direct listings as alternatives to costly IPOs.It will take time for the “vampire squid” to shed its image as a pure opportunist, especially with 1MDB rumbling on. But whatever the motivation, pushing for greater diversity ups the collective pressure on other financiers to use their power for good. Over to you Morgan Stanley and JPMorgan.To contact the author of this story: Elisa Martinuzzi at email@example.comTo contact the editor responsible for this story: James Boxell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Verizon (VZ) collaborates with financial services company, Synchrony, to offer exclusive credit card services to its customers, which are expected to be launched in the first half of 2020.
(Bloomberg) -- Sign up here to receive the Davos Diary, a special daily newsletter that will run from Jan. 20-24.European Central Bank President Christine Lagarde warned investors not to assume that current monetary policy is locked in for the foreseeable future just because officials are focused on reviewing their strategy.“To those who think it’s on autopilot, that’s ridiculous,” she said in a Bloomberg Television interview at the World Economic Forum in Davos, Switzerland. “Let’s look at the facts. Let’s look at how the economy evolves.”Lagarde spoke a day after announcing the first reappraisal of the ECB’s inflation goal and tools since 2003, in a process that won’t conclude until around December. With the euro-area economy stabilizing and a stimulus package already in place, few analysts see much chance of a change in policy any time soon.Economists predict the quantitative-easing program, which was resumed by former President Mario Draghi just before he handed over to Lagarde in November, will run until the end of next year, with interest rates on hold until early 2022. Markets aren’t pricing a change in rates until at least mid 2021.Still, the economic threats haven’t entirely subsided. Data published Friday showed private-sector activity remained muted at the beginning of 2020, despite signs of a pickup in Germany. In its policy meeting, the ECB continued to describe the risks to its outlook as tilted to the downside, if less pronounced. U.S. President Donald Trump used his appearance in Davos to revive the prospect of tariffs on Europe’s car industry.“The ECB is still far from bringing inflation to its target and we believe it will act in the next few months,” said Nick Kounis, an economist at ABN Amro in Amsterdam. “I don’t think a central bank like that can close the shop for a year.”Read more: Euro-Area Economic Growth Remains ‘Muted’ at Start of 2020Lagarde said the rethink will be separate from the monetary-policy decisions that the Governing Council takes every six weeks.Policy “will be conducted irrespective of the strategy review,” she said. “So to those who say it’s going to be completely static and stable for 12 months, I say ‘ah, watch out,’ because things change and we might have different signals and we might reconsider. We might. I don’t know at this point in time.”Scant DetailsDetails on precisely what policy makers will study in their review were scant on Thursday, beyond general observations that it will be wide-ranging and focus on topics such as financial stability and climate change. The key question for the ECB is why it has fallen short of its inflation goal of “below, but close to 2%” for years.Lagarde has her own views on what needs to be done but says she doesn’t want to disclose them for fear of influencing the debate before others have had their say. The intention is to reach out to academics and the wider public via national central banks.“I know some people are disappointed that we didn’t say much more,” Lagarde said. “But a strategy review starts here and finishes there, and you cannot say here what you’re going to do there -- otherwise you don’t do a strategy review.”Bank of France Governor Francois Villeroy de Galhau told Bloomberg Television in Davos that he believes the inflation goal must be “symmetric, flexible and credible” -- reflecting the debate over whether to set a precise 2% goal with a range of tolerance either side.His Dutch counterpart Klaas Knot said in a panel discussion alongside Villeroy that the ECB must be “honest and open” about its failure to hit its target, and “at a minimum, I would say that it needs to be clarified.”For some ECB watchers, officials have effectively hinted that there is little urgency to share their thinking, and that they’re in no hurry to getting back to tweaking their current monetary stance either.“I get the sense that until the review is complete, or at least until you have some idea of what’s going to come out of it, it doesn’t make sense to be very activist,” said Peter Dixon, an economist at Commerzbank AG.The ECB also has less ammunition than it used to, giving it cause for caution before attempting more easing. Resorting to more QE, for example, might mean confronting self-imposed limits on the volume of purchases that could reopen wounds from a bitter showdown among policy makers last year. The program is particularly disliked by the Bundesbank, and indeed faces a ruling on its legality in Germany’s top court in March.The central bank isn’t alone in benefiting from what is, for now, a relatively benign economic outlook. Economists including those at Goldman Sachs Group Inc. predict most major central banks, including the Federal Reserve, which meets next week, is likely to keep its monetary policy on hold for the rest of the year.Lagarde will discuss the global growth outlook at Davos later on Friday with a panel of luminaries including her Bank of Japan counterpart Haruhiko Kuroda, as well as U.S. Treasury Secretary Steven Mnuchin, and Kristalina Georgieva, her successor as head of the International Monetary Fund.(Updates with comment from Knot in 13th paragraph)\--With assistance from Carolynn Look and Jana Randow.To contact the reporters on this story: Paul Gordon in Frankfurt at email@example.com;Francine Lacqua in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Alaa Shahine at email@example.com, Craig Stirling, Fergal O'BrienFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
'We’re not going to take a company public unless there’s at least one diverse board candidate with a focus on women,' CEO David Solomon said during a TV interview.
(Bloomberg Opinion) -- There’s never a good time for the outbreak of a deadly virus, but this one is particularly bad. China’s Lunar New Year is often dubbed the world’s largest migration, a stretch of weeks when hundreds of millions of people visit their families. Before the pandemic started spreading, officials were expecting 3 billion airplane and train trips during the holiday rush between Jan. 10 and Feb. 18. Millions more have gone abroad.Little wonder, then, that the travel industry is suffering. With the death toll up to 25 and more than 800 infected, tourists are staying home. Some have no choice: The government has put seven cities on lockdown and airports are stepping up screening measures. On Friday, China ordered all travel agencies to suspend sales of domestic and international tours.Shares of China Southern Airlines Co. – the carrier most exposed to the site of the outbreak – have slid 14% since the second death from the virus was confirmed, while Cathay Pacific Airways Ltd., which said it would waive fees for tickets to and from the mainland, has slumped 7.6%. The country’s largest online travel agency, Trip.com Group Ltd. has tumbled 12%.If the SARS outbreak of 2003 is any guide, things could get even worse. In May of that year, Chinese air passenger traffic fell 71%, according to Goldman Sachs Group Inc. Bernstein Research cited concerns of a repeat outcome when it cut Trip.com’s rating one notch to “market perform” earlier this week. The Nasdaq-listed company, which changed its name from Ctrip.com last year, issued a statement Thursday saying it would refund travelers who’ve been diagnosed, or those in close touch with them.The hope is that, like SARS, the turbulence will eventually pass. For Trip.com, however, the business challenges are bigger than the coronavirus. In recent years, the company has struggled to keep up with competition from digital rivals like Meituan Dianping and Alibaba Group Holding Ltd.Few travel companies have benefited more from China’s transition to the world’s biggest source of tourists in 2012. Despite the trade war and Hong Kong’s protests,(3) China’s outbound tourism numbers have continued to rise. According to Euromonitor International, 108.39 million overseas trips were taken last year, a 9.5% gain, after surging 11.7% in 2018. Trip.com now makes up a quarter of its total sales from outbound Chinese visitors, from under 15% five years ago, reckons Bloomberg Intelligence analyst Vey-Sern Ling.But the hotel-booking sector is getting crowded. Meituan Dianping has recently overtaken Trip.com as China’s top site, just five years after the food-delivery giant started dabbling in the business. Meituan now has 47% of China's market, ahead of Trip.com, with 34%, according to TrustData. Now, Meituan is moving further into Trip.com’s territory with luxury hotels, while chains like Marriott International Inc. are pushing for direct booking on their China websites. Alibaba said part of the $13 billion it raised from its Hong Kong listing in November would go toward fliggy.com, its online travel group site.If there’s any lesson to be gleaned from all this, it’s the benefit of diversification. While China’s superapp business model has arched some eyebrows (how can one company possibly provide digital payments, taxis, food delivery, massages and pet grooming?) there’s a decent case to be made for having some crisis-proof subsidiaries. Consider AirAsia Group Bhd, Southeast Asia's most successful budget airline, which is setting up a regional fast food franchise.Plans could already be underway for Trip.com to diversify its investor base, with the company discussing plans to go public in Hong Kong, Bloomberg News reported earlier this month. Here, Alibaba is a successful model. With its second listing, the company is now closer to its Chinese end-users, and Alibaba’s New York-listed stock has soared 14%.The four-month span of the SARS outbreak shows how quickly things can turn around: While China’s growth dipped in the second quarter of 2003, it swiftly resumed in the following months. Given how much more important the Chinese shopper is to the economy now, the damage could be more painful. A 10% fall in discretionary transportation and entertainment could shave 1.2 percentage points from China’s growth domestic product, according to “back of the envelope” estimates by S&P Global Inc. Hong Kong retailers and restaurants, just coming off the pain of last year's protests, were already suffering. For those companies that enjoyed the fast-rising Chinese consumer, it may be time to devise a plan B. (Updates to include China’s measures to suspend travel-agency sales.)(1) Hong Kong, followed by Macau, are the top two destinations of mainland Chinese travelers.To contact the author of this story: Nisha Gopalan at firstname.lastname@example.orgTo contact the editor responsible for this story: Rachel Rosenthal at email@example.comThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Seven years ago, Wells Fargo & Co.’s security chief opened a few “undercover” bank accounts to aid law enforcement. Within 24 hours, two employees tacked on debit cards, claiming they each personally spoke to the new -- fictional -- customers.“All I could do was shake my head,” the security chief told a senior executive in an email.The exchange was among dozens of behind-the-scenes moments of frustration and fear cited by U.S. regulators Thursday seeking to impose a record $59 million in fines on the bank’s former leaders for allowing sales abuses to pervade its nationwide branch network. Three settled, including ex-Chief Executive Officer John Stumpf, who agreed to be banned from the industry and pay a $17.5 million penalty -- an unprecedented sanction of a former U.S. bank leader. Five others are fighting the case.The bank’s aggressive targets for opening new accounts “caused hundreds of thousands of employees to engage in numerous types of sales practices misconduct,” the Office of the Comptroller of the Currency wrote in its complaint against them.The bank’s staff confronted a stark dilemma every day for 14 years, according to the regulator: “They could engage in sales practices misconduct -- much of which was illegal -- to meet their goals, or they could struggle to meet their goals and face adverse consequences, including losing their jobs.”The OCC faulted Stumpf for failing “to respond to numerous warning signs.” Former chief administrative officer Hope Hardison and onetime risk chief Michael Loughlin also resolved its claims.‘Forced to Walk’The agency is looking to levy the heftiest penalty -- $25 million -- against former community banking chief Carrie Tolstedt. She and four other former executives -- general counsel Jim Strother, chief auditor David Julian, audit director Paul McLinko and community banking risk officer Claudia Russ Anderson -- are facing a public hearing before an administrative law judge. The regulator said it could decide to increase the civil penalties based on the evidence presented.An attorney for Russ Anderson didn’t respond to messages seeking comment. Representatives for the other four said the executives acted with integrity, sought to tackle problems and expect to clear their names once all of the facts are heard.The OCC laced its 100-page complaint against them with emails, internal memos and testimony, arguing that for years Wells Fargo’s management refused to ease off sales targets despite repeated warnings about abuses.“The bank had better tools and systems to detect employees who did not meet unreasonable sales goals than it did to catch employees” engaging in misconduct, the regulator said. Some were allegedly told that if they missed targets, they would be “transferred to a store where someone had been shot and killed” and if they did not make enough appointments they would be “forced to walk out in the hot sun around the block.”Gulf War StressWorkers warned bosses about the fallout of that pressure in impassioned memos.“The termination ax is suspended over our head one way or another,” an employee wrote in a complaint sent to Tolstedt’s office in 2012, according to the OCC. “Meet unreasonable goals or you will be terminated, cheat to meet the unreasonable goals and you will be terminated when caught.”“I was in the 1991 Gulf War,” another employee wrote to Stumpf’s office. “This is sad and hard for me to say, but I had less stress in the 1991 Gulf War than working for Wells Fargo.”Senior executives also heard about the trouble directly from affected customers. A former operating committee member’s wife received two debit cards in the mail that she hadn’t requested. The executive raised it with Tolstedt, who eventually told him to stop telling the story “because she thought it reflected poorly on the community bank,” the OCC wrote.The scandal erupted in September 2016, setting off a national furor. It prompted congressional hearings, Stumpf’s exit and more probes, including still-pending investigations by the Justice Department and Securities and Exchange Commission. The ire has spanned the political spectrum from Democratic Senator Elizabeth Warren to Republican President Donald Trump.The OCC previously seized unusual control over hiring and firing the bank’s leaders and, with other regulators, inflicted billions of dollars in fines and other costs on the company. But Thursday’s case was the agency’s first targeting executives over the matter. And it contrasts with the years after the financial crisis, when no CEO of a major U.S. bank was punished for faulty mortgage-bond sales and home foreclosures that upended the economy and hurt millions of Americans.Stumpf’s successor, Tim Sloan, stepped down last year after lawmakers and the agency expressed frustration with the pace of the bank’s cleanup. His replacement, Charlie Scharf, took over in October.“We are reviewing today’s filings and will determine what, if any, further action by the company is appropriate with respect to any of the named individuals,” Scharf told employees on Thursday, noting the bank won’t make any remaining compensation payments to the individuals during the review. “This was inexcusable. Our customers and you all deserved more from the leadership of this company.”To contact the reporters on this story: Hannah Levitt in New York at firstname.lastname@example.org;Jesse Hamilton in Washington at email@example.comTo contact the editors responsible for this story: Michael J. Moore at firstname.lastname@example.org, ;Jesse Westbrook at email@example.com, David Scheer, Dan ReichlFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Wells Fargo & Co's U.S. regulator on Thursday announced it had banned former Chief Executive John Stumpf from the banking industry and charged him and seven other former executives combined more than $58 million in civil penalties for their roles in the bank's multi-year sales practices scandal. The action by the Office of the Comptroller of the Currency (OCC) marks a rare example of senior executives being held personally accountable for failing to put a stop to misconduct at their bank. It also broke new ground for the regulator, which forced Stumpf to pay $17.5 million (13.3 million pounds) to settle the charges against him - the largest ever penalty it has secured from an individual.
From June 30, Goldman Sachs Group Inc will only help take a company public if it has at least one diverse board member, as such companies perform better after listing, Chief Executive David Solomon said on CNBC on Thursday. The policy will apply to U.S. and European companies and will increase over time, with the bank requiring two diverse board members starting in June 2021, Goldman Chief Executive David Solomon said on CNBC. "We're not going to take a company public unless there's one diverse board candidate with a focus on women," he said.