Banking

Wells cleared in racial hiring inquiry; Goldman’s changing corporate culture

Wall Street Journal

Case closed

The Labor Department under the Trump administration last October closed an inquiry into Wells Fargo “after it responded to questions about [its] plans to hire more Black employees,” the Office of Federal Contract Compliance Programs, a division of the agency, said.

“Wells Fargo responded to the inquiries with in-depth descriptions, materials, and data. OFCCP was satisfied with the response, and the inquiries are closed,” Labor said. Wells Fargo “pledged to double its Black leadership.” It also “agreed to a multimillion-dollar settlement” over hiring that was separate from the inquiry.

“Wells Fargo is committed to and taking action to become a more diverse and inclusive company. Numerous efforts are under way to implement changes at all levels of the company, and we are confident that they comply with U.S. employment laws,” a bank spokesman said.

Not so fast

A U.S. tax court judge ruled that a Connecticut man and his wife who earned more than $310,000 in credit card rewards by buying more than $6 million in gift cards and money orders must pay income tax on some of those rewards.

“Judge Robert Goeke’s decision last month largely affirmed longstanding Internal Revenue Service practice, which says credit-card rewards are usually nontaxable rebates. But the judge also offered the IRS avenues for tougher enforcement, issuing a split ruling. Rewards earned on purchases of Visa gift cards aren’t taxable, he ruled, because the cards are products. But rewards earned on purchases of money orders or reloading debit cards are taxable, the judge determined. The IRS already says rewards can be taxable if they are earned without spending, such as a bonus for opening a bank account.”

“The two sides still must calculate what additional taxes” the couple might owe.

Financial Times

End in sight

The U.K.’s Financial Conduct Authority said “Libor will formally cease at the end of the year for most currencies, a step that will raise the pressure on banks and asset managers to move off the tainted lending benchmark.” The regulator said “publication of Libor would finish on December 31 for sterling, euro, Swiss franc and Japanese yen. One-week and two-month U.S. dollar settings will also end at that time.”

“Global authorities have pushed banks, asset managers and companies to stop using the rate, which measures the cost of unsecured borrowing between banks, in favor of benchmarks based on overnight rates.”

Good timing

UBS CEO Ralph Hamers “has been paid SFr4.2m ($4.5 million) for his first four months of work, more than his entire annual earnings during his time as the head of Dutch bank ING. The bumper payout, which was revealed on Friday by the Swiss bank in its latest annual report, puts him on course to contend with his predecessor, Sergio Ermotti, as one of Europe’s highest-paid bankers and chief executives.”

“Profits at UBS surged in 2020 despite the economic turmoil caused by the coronavirus pandemic, as the bank’s super-wealthy clients moved to protect their assets and take advantage of dislocations, earning huge fees for their advisers. Hamers started at UBS on September 1, and took over from Ermotti as chief executive on November 1.”

New York Times

Exodus

Since last year “at least nine senior executives” at Goldman Sachs “have left or intend to leave soon,” including the head of its consumer banking business, “an unusually large number for a firm long defined by its tight-knit partnership culture. All in all, five members of the firm’s management committee, its topmost governing body, have left or given notice within the past five months — roughly a sixth of the entire group.”

The exodus is partly a reflection of the approach taken by [David] Solomon … who became chief executive late in 2018. He has sought to refashion Goldman, which went public more than two decades ago, into a more traditional public company. That has produced a more top-down, hierarchical culture in which the institution is bigger than its people and Goldman’s old-fashioned partnership structure — which imparts not only added pay and benefits but also a sense of family to the firm’s top players — is less relevant.”



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