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Jeffrey Goldstein Treasury Richard Cordray CFPB Tom Miller Iowa

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									8    MONDAY, JANUARY 3, 2011                                                                                                                                                AMERICAN BANKER




People to
      WATCH
regulators
                               Jeffrey Goldstein
                               Treasury
                                                                                       2011
                                   One of the most important policy releases due this year
                                                                                               Tom Miller Iowa
                                                                                                  Tom Miller, the attorney general of Iowa and a leading
                                                                                               law enforcer against mortgage fraud, gained even more
                                                                                               national prominence as the head of a 50-state coalition
                               is the Obama administration’s housing reform plan. Jeffrey      investigating servicer practices.
                               Goldstein, under secretary for domestic finance at the             Miller, who is serving his seventh term, has been lead-
                               Treasury Department, is the architect of that effort.           ing a national effort to investigate foreclosure cases that
                                   Goldstein, a former managing director at the Hellman        was prompted by reports of “robo-signing” of documents.
                               & Friedman LLP private-equity firm, in 2010 became a            The probe’s results, which are due this year, could heavily
                               top adviser to Treasury Secretary Tim Geithner on several       influence regulators and lawmakers.
                               crisis-related matters.                                            “We’re trying to move as fast as we can,” Miller said




                                                                                                                                                                                         Bloomberg News
                                   Arguably the most crucial is his role in drafting the       in a recent interview with American Banker. “These issues
                               long-anticipated plan to reform Fannie Mae and Freddie          need to be resolved for a host of reasons. But we have
                               Mac, as well as the housing market in general. The admin-       to take the time to do it right. We’ve started talking to
                               istration has vowed to issue its plan in January — and          the companies, had good meetings with the five largest
                               lawmakers sought to reinforce that deadline by mandating        servicers, and that’s been constructive. We are talking months — we are not talk-
                               it in the Dodd-Frank Act.                                       ing years.”
                                   Though Geithner will likely take the early lead in pro-        In his own state, Miller, with the help of U.S. Attorney Nicholas Klinefeldt, set
                               moting and defending the plan, expect Goldstein to share        up a task force to combat mortgage fraud by combining state and federal enforce-
                               the hot seat as lawmakers dissect it.      — Donna Borak        ment efforts. Doing so, they said, would intensify efforts to deter mortgage fraud
                                                                                               by adding the possibility of criminal charges.                     — Donna Borak

                               Richard Cordray                                                 Leslie Seidman FASB
                               CFPB
                                                                                                  When it comes to public exposure, the Financial
                                   Former Ohio attorney general Richard Cordray will be        Accounting Standards Board enjoys all the celebrity of a
                                bringing his aggressive consumer protection philosophy         corps of offensive linemen. Each is a group of players that,
                                to the enforcement division of the Consumer Financial          despite their facelessness, strongly influence the outcome
                                Protection Bureau.                                             of their game.
                                   During his two years as Ohio attorney general, Cordray         But Leslie Seidman, who was named chairman Dec.
                                cracked down on areas such as mortgage and financial           23, will command the spotlight in 2011. Seidman takes
                                fraud and foreclosure practices. He also played a large        charge of the accounting standards-setter as it prepares to
                                role in the 50 state attorneys general’s investigation of      expand to seven members from five and tries to complete
                                foreclosure and servicer practices.                            a controversial fair-value proposal by June.
                                   Cordray accused Bank of America Corp. of improperly            Banks have broadly objected to the proposal, arguing
                                concealing losses and bonuses at Merrill Lynch & Co.,          that abandoning the amortized-cost model they currently
      which it acquired during the crisis; took action against the foreclosure practices       use for loans held to maturity would unfairly subject their
      of GMAC Mortgage LLC and its parent Ally Financial and settled a securities fraud        valuations of core, long-term assets to the vagaries of the
      class action against American International Group Inc. for $735 million. His actions     market.
      against financial companies have resulted in more than $2.5 billion of settle-              Seidman, a former bank executive, has acknowledged the pressure — the lion’s
      ments.                                                                                   share of the 2,800 letters received during a public comment period “wasn’t fan
         Though he lost his re-election contest to Republican Mike DeWine, Cordray is          mail,” she said in November — but has avoided tipping her hand.
      set to play a pivotal role as head of enforcement at the CFPB. The agency’s full            Her role on a body whose changing dynamics are hard to gauge will be pivotal.
      powers do not take effect until July 21, but he has already been vocal. In December,     Seidman, a former J.P. Morgan & Co. accounting policy executive who became a
      Cordray sent a letter to the Federal Reserve Board, urging it to maintain its practice   FASB board member in 2003, was in the minority on several crucial 3-2 votes that
      of letting homeowners undo loan agreements when material disclosures were not            shaped the fair-value proposal. Her predecessor, Robert Herz, was a strong propo-
      made in accordance with the Truth in Lending Act. “The Federal Reserve’s proposed        nent of applying fair-value accounting to financial instruments. Yet she expressed a
      regulations … would actively discourage and heavily burden consumers from exer-          preference for using amortized cost-based accounting for instruments such as loans
      cising their rights.”                                          — Cheyenne Hopkins        that banks intend to hold to term.                                  — Dean Anason
AMERICAN BANKER                                                                                                                                                      MONDAY, JANUARY 3, 2011        9



bankers
                                  Heidi Miller                                                     use what chances it gets for possible expansion.
                                                                                                     “We’re always looking for opportunities,” he told analysts on the earnings call.
                                  JPMorgan Chase                                                   “Especially in Texas and California.”                             — Jeff Horwitz

                                     JPMorgan Chase & Co. ended the recession as the
                                  world’s top investment bank. Now it is out to become the         Jack Barnes People’s United
                                  top bank — period. Heidi Miller’s job is to figure out how.
                                     As president of international operations, she has a              When Jack Barnes took the helm of People’s United
                                  broad game plan for fulfilling those ambitions overseas. It      Financial, expectations were high that he could pick up the
                                  aims to use the cachet of its powerful investment bank to        pace of deploying excess capital.
                                  establish a pipeline of large and midsize clients in emerg-         So far, so good: Barnes, who joined People’s in April,
                                  ing markets like India, China and Africa. It also seeks to       has two bank deals under his belt and the momentum to
                                  ensure that its other overseas businesses — asset man-           sign more agreements this year.
                                  agement and treasury services — know how to cross-sell              “We are optimistic that we will continue to make prog-
                                  services offered by other parts of the bank.                     ress on the acquisition front,” he said in an interview.
                                     The specifics of JPMorgan Chase’s global expansion               The $22 billion-asset Bridgeport, Conn., firm is particu-
                                  plan will come into focus in 2011.                               larly interested in deals that would expand its operations
                                     Since the company moved Miller into the newly created         in Boston and on Long Island, both of which have strong
                                  role in June, it has sent out signals that it is serious about   retail consumer demographics, Barnes said. Heading into
         investing overseas. The company bought a new headquarters for its global invest-          the new year, it was eyeing targets as big as $15 billion
         ment bank in London and announced plans to hire 200 bankers worldwide during              of assets but remained open to smaller deals such as
         the next two years, among other things.                                                   the recent purchases of the $2.3 billion-asset Smithtown
            The pressure is on. Rivals such as Bank of America Corp. and Goldman Sachs &           Bancorp Inc. and the $800 million-asset LSB Corp.
         Co. are taking back the investment banking market share they lost in the downturn.           With several billion dollars left over from its second-
         In the U.S, tighter regulation and a tepid economy are squeezing everything from          step conversion in 2007, People’s has ample capital. But Barnes said there is no
         credit cards to business lending.                                                         rush. “We have to balance between what opportunities present themselves … and
            That is why Jamie Dimon, the company’s chief executive, has stressed that some         making sure that any deals we get involved with create value for our shareholders.”
         of the best growth prospects may be overseas. He turned to Miller because of her                                                                           — Kate Davidson
         deft management of the treasury and securities services unit from 2004 until early
         2010. This division’s steady, robust profits are a key reason JPMorgan Chase is
         emerging from the recession stronger than it went in.            — Matthew Monks          mergers & acquisitions
                                  Bill Demchak PNC                                                 Don Adam
                                     Whether he becomes chief executive officer this year          TAC Capital
                                 or not, Bill Demchak at PNC Financial Services Group Inc.
                                 will be worthy of attention in 2011 as he helps orchestrate          Don Adam is proof that the activist investor is ready to
                                 the continuing integration of National City Corp. and puts        rumble in 2011.
                                 his stamp on key decisions about capital deployment and              Adam, a banking veteran who owns 90% of American
                                 acquisition opportunities.                                        Momentum Bank in Tampa, Fla., is embroiled in a proxy bat-
                                     The heir apparent to CEO James E. Rohr, Demchak solid-        tle with Sterling Bancshares Inc. in Houston. In November,
                                 ified his “likely successor” status in 2010 when his senior       he launched a bid to elect five directors, including himself,
                                 vice chairman role was expanded to include oversight of           at this year’s annual meeting.
                                 all of PNC’s business, which added responsibility for asset          If successful, it would be the first major activist victory
                                 management and retail banking to his corporate banking,           since the financial crisis. For Adam, it is just a way of pro-
                                 institutional banking and asset and liability management.         tecting an investment that his investment firm, TAC Capital
                                     He joined the Pittsburgh company in 2002 from                 LLC, made several years ago. Sterling has been plagued by
         JPMorgan Chase & Co., where he was a highly regarded structured-finance                   deteriorating credit and a depressed stock price.
         executive. Analysts compared his demeanor and perspective with those of another              “I do believe we would have better knowledge as to how to dispose the assets
         JPMorgan Chase executive held in great esteem: Jamie Dimon.                               or properly manage them,” he said in an interview last month. “All of my other
           Demchak “is refreshingly up-front and direct about what the key challenges and          endeavors are doing well.”
         opportunities are for PNC and for the banking industry,” said Andrew Marquardt,              That includes American Momentum, where Adam injected $50 million into the
         an analyst at Evercore Partners. “Those executives who have been up-front about           already well-capitalized bank for the purpose of acquisitions. The bank is interested
         what they know and what they don’t know … stand out.”             — Heather Landy         in failures and traditional deals, mainly in Florida and Texas. “I spend virtually all of
                                                                                                   my time calling on institutions,” he said.                       — Rachel Witkowski

                                  Ralph Babb Comerica
                                                                                                   Wilbur Ross
                                     “We believe we have a business model that cannot be
                                  replicated overnight,” Ralph Babb said at the opening of         W.L. Ross & Co.
                                  his company’s third-quarter earnings call — a fair state-
                                  ment for a CEO who spent years revamping Comerica Inc.’s            Billionaire Wilbur Ross, who had a busy 2010, is not
                                  product lines and geographical focus before relocating the       showing any sign of slowing down.
                                  company headquarters from Michigan to Texas.                        His W.L. Ross & Co. has emerged as one of the most
                                     In 2010, Comerica became the first sizable banking com-       active private-equity firms looking to recapitalize the
                                  pany to increase its dividend — and though the doubling          banking sector, a place that has not been exactly hospi-
                                  of a 5-cent per share payout was not a massive financial         table to such investments.
                                  commitment, it conferred first-through-the-gate status on           Ross has not only succeeded but also diversified his
                                                                                                                                                                                               Bloomberg News




                                  the bank in the minds of investors and analysts. Through         bank holdings by geography and level of health. Now,
                                  consistent reinvention, Babb and Comerica’s leadership           many industry observers expect him to leverage those
                                  have positioned the company to play in sectors that are          acquisitions with organic growth or more deals in the year
         considered relative economic bright spots. On his third-quarter call he observed          ahead.
         signs of a turnaround in overall C&I, as well as strength in energy industry lending.        In April, he led a $200 million infusion into the tiny First Michigan Bank in Troy
         In recent conference appearances, Babb has not expressed much confidence in a             in its bid to take over the $1.6 billion-asset CF Bancorp in Port Huron, Mich., from
         broader economic recovery. But he has made it clear that the company intends to                                                                                        See page 10
10               MONDAY, JANUARY 3, 2011                                                                                                                                                  AMERICAN BANKER




                  Continued from page 9                                                                         MetLife has been one of the fastest-growing players
                                                                                                             in mortgage banking. Two areas to watch in 2011: cor-
                  the Federal Deposit Insurance Corp. First Michigan has since crossed state lines           respondent and warehouse lending. Hale is responsible
                  to pick up the $750 million-asset First Banking Center in Burlington, Wis., from the       for all areas of MetLife’s residential production, including
                  FDIC in November.                                                                          reverse mortgages, retail, consumer direct and marketing.
                     In 2009, Ross also was one of John Kanas’ backers in the former North Fork              He will be looking for ways to expand MetLife’s products
                  Bancorp leader’s bid to take over Florida’s BankUnited from the FDIC.                      beyond plain-vanilla mortgages, the key strength of a
                     In the second half of 2010, Ross began helping struggling banks. In November,           pure-play monoline strategy.
                  he led a $107 million capital infusion into Sun Bancorp Inc., a $3.6 billion-asset            Still, MetLife may encounter some headwinds. Federal
                  company in Vineland, N.J. And late last month shareholders of Cascade Bancorp in           officials began an investigation last month to determine
                  Bend, Ore., approved the sale of $177 million of common stock to a group of inves-         whether MetLife, along with 21 other lenders, discrimi-
                  tors that included Ross.                                           — Robert Barba          nated against minority borrowers by setting higher credit
                                                                                                             score thresholds for Federal Housing Administration-
                                                                                                             insured loans. The Department of Housing and Urban
                                                             William Hickey,                                 Development is doing the probe.              — Kate Berry
                                                             Brian Sterling
                                                             Sandler O’Neill                            technologists
                                                              If all the talk about industry consolida- Jack Dorsey Square
                                                              tion turns into action this year, William F.
                                                              Hickey and Brian R. Sterling will probably        When Jack Dorsey launched Square Inc., a company
                                                              be right in the middle of it. As co-heads      that lets smartphone users accept payments through a
                                                              of investment banking at Sandler O’Neill       plug-in card reader, many experts quickly concluded that
                                                              & Partners LP, Hickey and Sterling preside     the payments startup bit off more than it could chew.
                  over a merger advisory business that has been moving quickly up the league tables.            Though Dorsey’s company encountered hardware
                    Last year, in terms of total dollar value, only Citigroup Inc. and Bank of America       shortages and complaints about its transaction limits last
                  Corp. advised on more financial sector deals under $1 billion — the predicted              year, it overcame these challenges to prove that it has
                  sweet spot for future consolidation. Sandler leapfrogged over Keefe, Bruyette &            staying power.
                  Woods Inc., Moelis & Co. and Goldman Sachs Group Inc. to move from the No. 6                  “We realized very quickly, given a lot of feedback, that
                  spot in 2009 to No. 3 in 2010, according to Dealogic data. Going by the number of          those sorts of [transaction] limits just weren’t going to
                  deals, Sandler’s 21 engagements ranked second only to Keefe Bruyette, which did            work with how people wanted to use Square,” Dorsey
                  22 deals but with a lower aggregate value.                                                 said in an interview. “We took a month and a half, maybe
                    Hickey, at Sandler since 1989, has worked extensively with community banks.              two months … and figured out how to remove those
                  Sterling, who came to Sandler in 2002 from Merrill Lynch & Co., has advised on             limits so that people could accept any amount while still
                  several big regional deals of late, including the merger that put the “BBVA” in BBVA       getting the necessary data that we need.”
                  Compass.                                                             — Heather Landy          Dorsey would not disclose the number of people using the service but said they
                                                                                                             span a spectrum from one-person enterprises to chain retailers. He attributed the
                                                                                                             response to the company’s listening to feedback and learning from setbacks.
nonbank lenders                                                                                                 About two months ago Square completed a pilot test with 50,000 customers,
                                                                                                             who used its small, square-shaped card reader to process payments with Apple
                                                                                                             Inc.’s iPhone, iPad and iPod touch, as well as mobile devices running on Google
                                            John Thain CIT                                                   Inc.’s Android operating system. Square charges 2.75%, plus 15 cents, for swiped
                                                                                                             card transactions and 3.5%, plus 15 cents, for keyed in or card-not-present transac-
                                                Forget the office redecorations. After a brutal 2009,        tions. It does not charge activation, gateway or monthly service fees.
                                             in which he was unceremoniously ousted from Bank of                Square plans to add other mobile platforms, Dorsey said. — Andrew Johnson
                                             America Corp, John Thain landed well in 2010. Taking the
                                             top job at reformulated business lender CIT Group Inc.
                                             after the company’s prepackaged bankruptcy, he spent            Chuck Davidson Starbucks
                                             the year slashing costs, filling in the company’s executive
                                             suite, selling noncore business lines and paying down the          Chuck Davidson and Starbucks Corp. showed that you
                                             ultra-expensive debt the company issued to bondholders          do not need to wait for future technologies to make mobile
                                             during the bankruptcy.                                          payments happen.
                                                Those are the sorts of moves that instill confidence            While some banks, payments networks and device
                                             in regulators, and that is not a coincidence — CIT’s            manufacturers are building services that will rely on
Bloomberg News




                                             long-term performance is closely tied to its ability to win     future cell phones equipped with special chips to make
                                             regulatory approval for financing its operations through        payments, the Seattle coffee-store chain moved forward
                                             its banking unit. In the company’s most recent earnings         with a service that made the most of existing software
                                             call, Thain suggested that CIT was making progress. In the      and hardware.
                  third quarter, “almost all of our U.S. corporate finance loans were originated by the         “We’re not willing to wait for a [near-field communica-
                  bank,” he said. If it can keep that up, CIT’s business lending expertise should make       tions] ecosystem to mature and reach scale before offer-
                  it a formidable competitor.                                                                ing our customers the fastest way to pay using a mobile
                     Perhaps none of this progress should be surprising. It is worth remembering that        phone,” said Davidson, the manager for the Starbucks
                  Thain’s downfall at Bank of America was due at least in part to what was arguably          Card program who has helped spearhead the system’s
                  his greatest executive coup: taking over a battered Merrill Lynch & Co., performing        rollout.
                  triage before the Lehman bankruptcy and then selling it to Bank of America at a               Starbucks’ mobile payments system comes in the form
                  price that B of A would live to regret. As CIT shareholder Carl Icahn noted at the         of an application available on Apple Inc.’s iPhone and iPod touch and some of
                  time of Thain’s appointment, the CEO “has a pretty good history of operations and          Research In Motion Ltd.’s BlackBerry devices. The app generates a bar code on a
                  making things happen.”                                                 — Jeff Horwitz      user’s phone screen, which a cashier can scan at the point of sale. The bar codes
                                                                                                             draw funds from customers’ prepaid Starbucks card accounts.
                                                                                                                Because users can fund their prepaid accounts within the app, the service has
                  Brian Hale MetLife                                                                         helped cut down the amount of time it takes to move customers through the lines
                                                                                                             at stores that have it. The company recently added eBay Inc.’s PayPal service as a
                    Since Brian Hale landed at MetLife early last year, some have been calling               funding option for users of the iPhone app. Starbucks began testing the service in
                  MetLife the new Countrywide Financial Corp. (which is now a unit of Bank of                a handful of stores on the West Coast in 2009 and later expanded it to about 1,000
                  America Corp.) The former senior managing director and president of Countrywide            Starbucks stores inside Target Corp. sites and about 300 stores in New York and
                  Home Loans brought some of his former lieutenants with him and is injecting heady          on Long Island. It is working to expand the service to about 6,800 company-owned
                  competition into the market for residential mortgages.                                     stores by the end of March.                                    — Andrew Johnson

								
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