Facebook shakes off the new regulations, Wells Fargo in trouble again, and is Deutsche Bank leaving the US?

 By Jack J. Kelly  April 26, 2018  compliancex  

After too many years of watching and writing about corporate and Wall Street misdeeds and shenanigans, I’ve noticed a definitive pattern. If you are a large corporation (it could be in banking, tech, pharmaceuticals, or any other industry), have really deep pockets filled with money, politically connected to the right Senators and Congressmen, and committed some sort of dastardly deed, it doesn’t matter. The press will jump all over you, social media will be abuzz, and regulators will pounce. History shows that investigations will run their course, the company will write a very big check (which is basically a tax paid to the Government), and everyone happily returns to business as usual.

For example, we all forgot about how mad we were over Facebook’s wanton invasion of our privacy and then selling our data to the highest bidding advertisers. Facebook CEO, Mark Zuckerberg, was dragged before the Senate and Congress to be verbally berated. Also, they used this time to ask simple internet questions of Mark, so they wouldn’t have to keep asking their grandchildren pesky questions about SnapFaceGramChatBook. It’s worth noting that Facebook contributed heavily to a large number of his political inquisitors.

The sturm und drang lasted a couple of days and it looked like Facebook and other Internet companies would be subjected to Draconian regulations. Facebook’s stock price fell 13 percent, which meant a loss of more than $70 billion. The techies in Silicon Valley were getting nervous and shaking in their flip flops.

It didn’t last long. Today, the social media site released quarterly earnings and Facebook’s quarterly profit rose a dramatic 63 percent and revenue skyrocketed 49 percent due to ad sales. Instead of being concerned about our data, advertisers took away from Zuckerberg’s testimony that advertising works really well on Facebook. Data and privacy be damned, let’s advertise! Users of Facebook increased 13 percent to 2.2 billion, completely crushing any concerns that the data scandal and the launch of a #DeleteFacebook tag would lead to users leaving the social network, and the emergence of new regulatory oversight.

This country acts like a petulant kid; we yell, scream, stomp our feet, then quickly forget and go back to playing with our toys.

Some other companies are not doing as well. Deutsche Bank, the huge German-based bank, is starting to end its nightmare on Wall Street. The newly installed Chief Executive, Christian Sewing, is retreating from the US in many business areas. In particular, the bank is cutting back on its bond and equities trading divisions.

Sources say that 300 U.S. based investment bankers have been already shown the door and another 100 are targeted. To add insult to injury, the bank reported a 79 percent fall in its first-quarter net profit. German newspaper, Frankfurter Allgemeine Zeitung reported that Deutsche Bank will cut more than 1,000 jobs in the United States.

The new head of the Consumer Financial Protection Bureau (who is not a big fan of the agency he runs) doesn’t want consumers to have access to complaints about financial institutions.  Republicans have never wanted the Consumer Financial Protection Bureau, the brainchild of then-Harvard professor Elizabeth Warren in the wake of the financial crisis, to exist. But now that they’re running the federal government, they’re finding some new and innovative ways to shill for banks and other financial institutions. Since becoming CFPB director in November, former South Carolina Congressman Mick Mulvaney has gone out of his way to make sure the Consumer Financial Protection Bureau is rendered absolutely useless when it comes to the goal of protecting consumers from predatory financial institutions. In December, the CFPB changed its mission statement to read that the purpose of the agency was to “help consumer finance markets work by regularly identifying and addressing outdated, unnecessary, or unduly burdensome regulations.”

FinTech companies have their fair share of problems. A U.S. regulator, the Federal Trade Commission, sued online lender, Lending Club Corp, for allegedly overcharging consumers and misleading them on hidden fees. The FTC said in a complaint that the LendingClub deducted hidden fees from the loans it issued to borrowers, despite promising no “hidden fees.”

LendingClub also allegedly deducted payments automatically from consumers’ bank accounts even when they had paid off their loans or had canceled automatic payments, according to the complaint. Some consumers were allegedly charged double payments, the complaint said.

 Bloomberg News reported that Standard Chartered Bank’s head of compliance, Neil Barry, is being investigated by the bank after allegations of misconduct by colleagues. Mr. Barry was previously placed on leave in March. It was alleged that he was the subject of multiple complaints from staff for behavior that was perceived as harassment.

The bank has been struggling to resolve misconduct issues- past and present- during his three-year tenure at the Asia-focused lender- from violating U.S. sanctions on Iran to allegations of lax oversight over international private client transfers. In 2016, the CEO introduced a tighter code of conduct, saying senior staff had been flouting ethics rules and saw themselves as “above the law.”

Barclays, the Britain-based bank, is following the trend of most other big banks and moving people from expensive New York City locations. Over the last several years, banks have been aggressively moving employees to lower-cost locations, such as Salt Lake City, Utah, Raleigh, North Carolina, Jacksonville, and Florida among other places. For Barclays, employees will be relocated from Midtown Manhattan to Whippany, New Jersey. It has been reported that about 7% of Barclay’s New York workforce will be impacted.

The exodus started earlier this month when the company said 440 back-office employees would be relocated from its U.S. headquarters on Seventh Avenue to a corporate campus in Whippany, N.J. The bank said the transfers would be complete by Sept. 7, according to a filing with the New York state Department of Labor.

Another day and we have yet another whistleblower and, yes, another federal probe- this time concerning Wells Fargo 401(k) practices. The Labor Department, which enforces laws protecting retirement savings, is investigating whether employees at the bank were pressured to push customers into more expensive individual retirement accounts. The bank has been beset by probes related to its sales practices and previously fined a whopping $1 billion last week for misconduct in its auto finance and mortgage-lending businesses.

The investigation also explores whether the bank’s retirement unit pushed customers to opt into funds managed by Wells Fargo, which would mean more revenue for the bank, according to the report.

In case you are worrying about the CEO and other executives at Wells Fargo, don’t. They are all doing just fine and dandy. Wells Fargo CEO, Tim Sloan, was rewarded with a 36% raise after one of the worst years in the bank’s history. He has been the Chief Executive Officer (CEO) of Wells Fargo since October 2016, when he succeeded John Stumpf, having previously been Chief Operating Officer (COO) and President. Sloan’s total compensation climbed to $17.4 million. Last year, he earned about $13 million. He still took home a hefty base salary of $2.4 million, received $87,203 worth of installation and upgrades to his home security system (I wonder why), and stock bonuses in February 2017 that are currently valued at $15 million (up 50% from his 2016 stock awards).

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