Wells Fargo CEO John Stumpf’s ‘few bad apples’ excuse for the bank’s fake accounts scandal hasn’t really held water. 5,300 employees may be a small proportion of its total headcount – but it’s still a lot of people.
Stumpf’s grilling at the hands of the Senate’s Banking Committee yesterday was among the most aggressive of any bank CEO in recent times. Senator Elizabeth Warren said he should resign and face criminal charges.
As Bloomberg points out it’s a long way from the treatment of Jamie Dimon over J.P. Morgan’s London Whale affair – the bank lost over $6bn in botched derivative trades, but the same committee “apologized for questioning him or sought his opinion on subjects including regulation and the national budget”.
But there’s one thing senior bankers do have in common during these grillings – memory loss. Business Insider says that Stumpf, Lloyd Blankfein, Dimon, and J.P. Morgan vice chair Douglas Braunstein have all played the ‘don’t recall’ when quizzed on some very memorable events.
But, hey, they’re only human and here there’s some science to back up their claims. The official term, according to research by professors Maryam Kouchaki at Northwestern and Francesca Gino at Harvard, is ‘unethical amnesia’.
“That is, people experience unethical amnesia: unethical actions tend to be forgotten and, when remembered, memories of unethical behavior become less clear and vivid over time than memories of other types of behaviors. Our findings advance the science of dishonesty, memory, and decision making,” they said.
Separately, London’s post-EU referendum woes are starting to add up. UK prime minister Theresa May might be meeting with large U.S. firms in New York to calm their fears about access to the single market, but there’s more to worry about than the Goldman Sachs of this world.
In fact, there are 330,000 passport licences held by around 5,500 UK and international firms based in London, according to the Financial Conduct Authority.
Understandably, there’s a lot at risk because of Brexit. As senior bankers have suggested, Britain needs a bespoke arrangement if it’s going to retain access to the single market for its financial services industry. But without the free movement of labour – the crux of the successful Leave campaign – this seems unlikely.
The Czech State Secretary for EU Affairs Tomas Prouza said there was “zero chance” that the UK could “have the cake and eat it at the same time” over Brexit. It’s the latest Eastern European nation to take a harder line on the free movement of its citizens.
However, the FCA report also revealed that 8,000 EU companies hold 24,000 passports to sell produces and services in the UK. There’s a lot to lose on both sides. Diplomacy is important, says the WSJ, and investment banks could benefit from ‘equivalence’ rules that come into force under MiFID II by 2018. However, banks in London would probably have to move commercial and retail operations outside of the UK anyway. All of this is uncertain and banks might start moving functions away to escape the risk of it going wrong.
Tony Blair is shutting his advisory firm, but keeping J.P. Morgan as a client (Financial Times)
Good news! Jefferies results suggest the third quarter wasn’t bad at all (Financial Times)
UBS is shifting 56 jobs from Luxembourg to Poland (Finews)
Deutsche Bank is the riskiest of all big banks because of its capital ratio – and it’s getting worse (Bloomberg)
David Harding’s onshore offshore centre for the UK: “We have all these industries, private equity, hedge funds, venture capital and we go off to some silly island. It could be Whitehaven [in Cumbria], which is the most depressed place I have been in the UK, actually ever. I would go to Whitehaven. You need lots of lawyers. Leeds has lots of lawyers, that would bring real jobs.” (Financial News)
Blue Diamond Asset Management is the best performing hedge fund of 2016 (Financial News)
The UK needs to embrace EU financial regulation if it wants diplomacy elsewhere, says Brexit-backing conservative Jacob Rees-Mogg (Bloomberg)
Women in middle office functions are paid 9.6% less than men. This is down from 20.8% last year (Financial News)
Goldman Sachs is beating J.P. Morgan in the ETF market (Bloomberg)
The man who could be Warren Buffett, or Todd Combs, has joined J.P. Morgan’s board (WSJ)
Asian technology professionals earn 20% than white people or Hispanics (The Information)
1,100 pubs have closed in Britain over the past year (Bloomberg View)