If at first you don’t fail … fail again
Barclays boss Jes Staley is still digging himself out of the hole he jumped into… TWICE. Staley is likely to face harsh questions at the bank’s annual meeting tomorrow about the investigations his actions sparked by his actions when he tried to identify a whistleblower who had been critical of one of Staley’s friends.
I cover a lot of issues related to compliance in this space, so it is important to point out that in this case, Barclays’ compliance team did its job. When they found out Staley was trying to “unmask” the whistleblower, the compliance team instructed him to stop. Staley stopped; but then re-started his inquest and even expanded it.
This Financial Times piece is very entertaining in that it includes quotes from not one, not two, but three people identified at “top 20 investors” in the bank. They sound like they know Staley should be fired, but feel like keeping him is simply the less bad option.
“There seems to be an issue about his ability to separate the personal from the professional, particularly for someone at that seniority of position. … It makes him look somewhat rash and emotive in his judgments.”
So it sounds like Barclays has a board and a bunch of major investors who don’t like to make tough decisions. Conversely, the compliance department had the courage to tell the CEO to stop. But what good is a competent compliance team, if the CEO is going to ignore it and not suffer any consequences?
Lloyd Blankfein discusses the basics of “last in-first out”
In asset management, the term “last in, first out” refers to a valuation method whereby assets acquired last are the ones used, sold or disposed of first. The common acronym is LIFO.
Goldman Sachs boss Lloyd Blankfein might as well have shoplifted the term today when he noted his firm was well-positioned to navigate a world in which Glass-Steagall was reborn and big banks were mandated to break into smaller banks. Goldman Sachs was the “last in” when it comes to universal banking, so it makes sense that it would encounter fewer entanglements in the race to be the “first out.”
Even on Wall Street, good things come to those who wait.
New thinking on homeownership
For years – and across multiple presidents from both parties – the idea that increased homeownership benefits America has been sacrosanct. This deep dive from The New York Times throws cold water on that belief.
The history of why the Orderly Liquidation Authority shouldn’t be history
One of the biggest changes offered up by Rep. Jeb Hensarling, R-Texas, and his proposed Financial Choice Act is the elimination of the Orderly Liquidation Authority (OLA) put in place by Dodd-Frank. OLA is set up to help handle the collapse of a major firms if a regular bankruptcy filing won’t do the trick.
Before eliminating OLA, Hensarling and his pals should ask the one guy who has actually had to handle the collapse of a major firm what he thinks about OLA. That one guy, former Treasury Secretary Hank Paulson, has stated time and again that the one tool he wishes he had during the financial crisis was the power to liquidate a firm like Lehman Brothers in an orderly fashion. I don’t know anyone who thinks the demise of Lehman Brothers was an orderly event. Some say the disorder exacerbated the crisis. Now that such a tool exists, someone should ask Hensarling why he wants to give the Hank Paulsons of the future fewer options instead of more.