Wells Fargo CEO Stumpf Retires Following Fake Accounts Scandal

John Stumpf

The embattled Wells Fargo Chief Executive John Stumpf has resigned from his position, with immediate effect, in the wake of the sham account-opening scandal rocking the bank.

Wells Fargo announced on Wednesday that Stumpf will retire from his roles as the bank’s CEO and chairman. It said the retirement was to become effective immediately.

The announcement comes weeks after it was revealed that employees working in the bank’s community banking division had opened around two million accounts without authorization from customers. The accounts were allegedly created as part of drive by the employees to meet the prohibitive sales targets set by management.

While being grilled by congressional panels on the sham account openings, Stumpf defended Wells Fargo’s sales practices, shifting the blame to junior employees. He was widely criticized for failing to hold himself and other top-level executives responsible for the scam.

“While I have been deeply committed and focused on managing the company through this period, I have decided it is best for the Company that I step aside,” the 63-year-old said in a statement.

Representatives repeatedly asked Stumpf to resign while testifying before the House Financial Services Committee in September. He had insisted, however, that he did not have any plan of resigning, saying he intended seeing the bank through the scandal by executing reforms.

Stumpf, who has been with Wells Fargo for 34 years, became its CEO in 2007. His roles as the chief executive and chairman will now be split following his retirement.

The dual roles played by Stumpf had caused lawmakers to question why the bank hadn’t acted faster to deal with the unauthorized accounts scandal.

Wells Fargo Chief Operating Officer Tim Sloan is set to replace Stumpf as the CEO. He had been the head of the bank’s unit that handles loans to large corporations. There is no report of him being connected to the alleged account scam. He has also been recommended by Stumpf, who said he knew “no better individual to lead this company forward than Tim Sloan.”

The new chief executive has been elected to the board as well.

Stephen Sanger, who has been a Wells Fargo board member since 2003, will become the non-executive chairman of the board. He previously served as a president of Yoplait USA.

A bank spokesman said Stumpf would not be given a severance payment. But he said the former CEO will receive some retirement benefits which are not to become accessible until after a standard lag time of six months.

USA Today reports that Stumpf will receive $134.1 million in retirement benefits, quoting executive-pay tracking firm Equilar. The package would have been larger had he not agreed to relinquish $41 million in unvested stock last month, following questioning by the Senate Banking Committee.

The scandal has come at great cost to investors in Wells Fargo, which was previously the most valuable bank in the U.S. They have lost $23.1 billion in market value in the wake of the scandal, according to USA Today.

The bank has also been made to pay $185 million in penalties for the unauthorized account openings.

China Auto Sales Gain Momentum in September

China auto salesLast month saw continued improvement in auto sales in China, driven by rising demand for sport utility vehicles (SUVs) in the Asian powerhouse as buyers rush to take advantage of a tax cut.

Data made available by the China Association of Automobile Manufacturers on Wednesday showed sales of passenger vehicles, such as cars, SUVs and minivans, surged by approximately 29 percent in September. The figure marks an improvement on the 26.3 percent expansion seen in August.

Sales for last month were driven significantly by demand for SUVs, which are considered an ideal family vehicle in a country with many bumpy roads. The Chinese automotive industry group said these improved by 54.2 percent to 879,000.

Total vehicle sales in the month jumped 26.1 percent 2.6 million, as buyers rush to make the most of a tax cut that is set to expire at the end of this year.

“The expiration of the current purchase tax cut is encouraging consumers to catch the last bus and bring forward their car purchases,” analysts Huang Xiaowei told Bloomberg. “Dealers are preparing stocks for the surging demand at the year-end.”

The tax cut was introduced by China’s government to boost the local auto market, which experienced a significant slump last year. It is not clear yet if the cut would be extended beyond Dec. 31 this year.

Demand was strong for more affordable sedans and SUVs in September, with this helping local brands gain more market share from foreign, multinational brands. Chinese auto manufacturers experienced a 39.1 percent jump in sales to 975,000 vehicles. The performance helped them control 42.7 percent of the market, an expansion of 2.4 percentage points over the share controlled in August.

The state-backed CAAM said sedan, minivan, SUV, and multipurpose vehicle deliveries to dealerships across China jumped to 2.27 million last month. A vehicle inventory measure also dropped for the third consecutive month.

Geely Automobile Holdings Ltd posted an 82 percent jump in deliveries in September from a year ago, with this making it to revise up its sales target for the full year. Fellow small car maker Mazda Motor Corp. recorded a 49 percent surge in sales year-on-year, helped by its Axela compact car model.

American automaker General Motors Co. disclosed that sales of GM brand vehicles increased by 16 percent in China last month. Deliveries expanded to 343,773 vehicles. The company said sales of Cadillac sedans accelerated by 63 percent to 12,539 units. Total sales made in the first three quarters of 2016 expanded to 2.7 million – a rise of 9 percent over what was recorded over the same period last year.

Another U.S. automaker, Ford, reported a 24 percent rise in sales to 109,277 vehicles. The Dearborn, Michigan-based multinational company saw its year-to-date sales surge by 11 percent to 879,559 units.

The Chinese government has kept mute on whether it has intention of extending the tax cut it offers on purchases of vehicles fitted with smaller engines beyond 2016.

Analysts have predicted that growth in the market would drop to single digits in the event of the purchase tax doubling to 10 percent in 2017.

Trump Win Could Negatively Impact Aussie Dollar

trumpAccording to news reports, a Trump Presidential win could negatively impact one world currency. Reports indicate that the Australian dollar would suffer if Trump were elected U.S. President. One foreign exchange strategist calls the Australian dollar a “surprise trade” in the economic arena.

Boris Schlossberg, who is a managing director at BK Asset Management, said that the Mexican peso has been an “inverse proxy for Trump’s political fortunes in the currency market . . . .” It appears the currency rises and falls, depending on Trump’s popularity at the polls.

Trump, who has made global trade a major issue in his election campaign, does not like the fact that the US imports goods from Mexico. So, if he is elected President, his policies are expected to hurt the economic system in the country. Schlossberg commented that China is also looked upon with economic disregard by Trump.

He said that Trump has continuously suggested that China is a problem for the economy of the US. In turn, he has proposed to implement higher taxes on Chinese imports. Trump also says that US leaders should take a hard stance on managing China’s currency.

That is where Australia comes into play. The country supports almost all the commodity products that go to China. If Trump wins the Presidential election, it will create a backlash on Australia’s economic efforts. In fact, China is Australia’s biggest trading partner and Australia is China’s sixth-biggest partner in this regard.

Schlossberg added, “. . . [S]ince the Australian dollar benefits from the rate differential with the U.S. dollar, the Aussie currency could suffer if Trump were to clinch the win and likely raise rates. . . .”

According to an NBC news survey and poll, just over 50% of potential voters believe Democratic nominee Hilary Clinton won the first Presidential debate while just over 20% thought Trump was the winner. During the debate, the Mexican peso strengthened significantly against the US dollar. The Australian dollar also rose slightly.

Planning for travel during the holiday should begin in October

TravelIf you are planning to travel during the holidays, news reports indicate that now is the best time to put together a travel package. Doing so will enable consumers to travel on a budget, which will give them the latitude to find the best and cheapest holiday packages for Thanksgiving, Christmas, and New Year’s. While you are comparing prices, you do not want to overlook certain travel savings strategies.

  1. Use the 47-day Plan Ahead Rule

While you are planning for your holiday trips, remember the 47-day plan ahead rule. When it comes to holiday bookings, you need to book ahead 47 days. Recent analyses of airfares found that the best time to book a cheap air flight is 47 days ahead of the planned travel date.

  1. Travel on a Holiday, if You Can Do So

If you travel on Thanksgiving, Christmas, or another holiday, you will pare down your costs for travel. Most people travel the day before or after a holiday. Therefore, these are the most expensive travel days.

  1. Reserve in Bulk

If you purchase a series of holiday trips, you may be eligible to receive a discount.

  1. Use Hotel Loyalty Points or Rewards

If you book reservations in a hotel in which you previously stayed, you may be eligible to use previously earned reward or loyalty points.

  1. Reserve Your Own Car Rentals

Even though many travel booking platforms give you the alternative to include a car rental in the purchase, you generally get a better deal if you book your own car rental.

  1. Buy Travel Insurance

Don’t gamble on your travel plans for the holidays. Never skip buying travel insurance as it can be a financial lifesaver if your trip is detained because of the weather or another unanticipated event.

  1. Use Your Smartphone to Save Money

Shop on travel sites that offer mobile-only special deals. Installing an app can help you save especially on hotels – a savings that is not available for non-mobile customers.

  1. Make Use of Cash-back Retail Sites

Use sites on the Internet that permit you to receive a cash back when you book reservations at hotels or use the services of car rental companies or airlines.

  1. Take Flights during Off-Peak Hours

The best time of the day to catch a flight or to save money is between 5:00 a.m. and 7:00 a.m. If you are willing to get up that early, you can realize a large savings in costs.

Millennials who took out payday loans overconfident about finances

Millennials Earlier this year, it was estimated by tax and consulting firm PricewaterhouseCoopers and the George Washington University’s Global Financial Literacy Excellence Center that 42 percent of United States millennials took out a payday loan as well as other alternative financial products.

Millennials – those born between 1980 and 2000 – are cash-strapped, wary of the stock market, faced with ballooning student loans and can’t find well-paying employment opportunities. These are the reasons why millennial consumers are turning to the likes of short-term, high-interest loans to get by.

For financial neophytes or money experts, this is a recipe for a long-term disaster.

Despite this, a new report suggests that millennials are overconfident about their finances.

The Wall Street Journal reported that their overconfidence can seriously harm them when an economic downturn transpires. With 73 percent of millennial participants conceding that they paid their bills late, took out payday loans and maxed out their credit cards, they feel confident in their personal financial situation, even though a recession could negatively impact them like past generations.

Some may view this as a positive, but millennials are not preparing to weather a storm. A growing number of millennials have overdrawn on their checking account, 20 percent have taken a loan against their savings and many millennials are still utilizing payday loans.

Of course, there are still some millennials who are taking their finances seriously. Sixty percent have a retirement account, one-quarter have investments in stocks or mutual funds and nearly half own a home. Whether or not they’re over leveraged or deeply indebted is something we all worry about.

But why exactly are millennials overconfident? It seems because their parents are bailing them out. The newspaper found that nearly two-thirds (59 percent) of parents are financially supporting their adult children – this is concerning, too, since one-quarter of parents took on additional debt.

Here is what the WSJ notes:

“As a society we have to understand that the challenges are more than just debt. We must help millennials understand that financial capability is a balance of managing assets and liabilities, and planning for challenging circumstances. Ultimately, we have to empower them to do it on their own.”

This past spring, the Globe and Mail profiled an avid millennial payday loan user, who recently broke out of the never ending debt cycle. The Vancouver woman admitted that it was “a struggle,” but through dedication, planning, some hard work and a dramatic change in her spending habits she was able break through the chains of payday loans and debt.

What was interesting inside that G&M piece? Despite constantly using payday loans, the millennial was confident in her financial abilities. A financial expert cited in the piece averred that many millennials are concentrating on today as opposed to tomorrow. This is perhaps the cause of their overconfidence. If you see $250 in your hand today then you think you’re doing very well at the present.

All kinds of people from all demographics are taking out payday loans. But a lot of them don’t behave with a great degree of pecuniary confidence. Is it time for millennials to take a step down from that pedestal and be given the reality of their monetary situation? Not right now because they have to take out a payday loan to help pay their student loan, new iPhone and trip to Starbucks.