Banks: Lawmakers grill Wells Fargo CEO
Wells Fargo CEO John Stumpf faced “bipartisan wrath” at a Capitol Hill hearing this week, said Jim Puzzanghera in the Los Angeles Times. Members of the Senate Banking Committee “pilloried” Stumpf over revelations that thousands of the bank’s employees created 2 million fake accounts in order to meet sales quotas. Lawmakers pressed Stumpf about why some 5,300 low-ranking employees were recently fired over the scandal, while executives have escaped punishment. “You should resign,” Sen. Elizabeth Warren (D-Mass.) told Stumpf. “You should give back the money you took while this scam was going on, and you should be criminally investigated.”
“As we well know from the past seven years of bank executives evading any criminal charges, this is not going to happen,” said Darrell Delamaide in USA Today. Despite accepting “full responsibility” for the debacle, Stumpf laid nearly all of the blame on “rogue” employees. He also refused to commit to clawing back any of the pay given to executives during the years the sham accounts were opened. That includes the $155 million he earned from 2012 to 2015— nearly as much as the record $185 million fine the bank must pay over the scandal. Stumpf may have taken a rhetorical beating, but that kind of money “can assuage a lot of hurt feelings.”
Federal Reserve: No interest rate hike, again
The Federal Reserve is grappling “with an economy that appears to be stuck in first gear,” said Ylan Mui in The Washington Post. Responding to mixed economic signals—including a slower August jobs report—the Federal Reserve opted once again not to raise interest rates this week, likely making its December meeting the best chance for a rate hike this year. Despite laying out a plan to gradually raise interest rates from near zero—starting with last December’s modest 0.25 percentage point increase—the central bank has struggled to justify raising rates this year.
Autos: Self-driving cars get federal endorsement
The U.S. government is “betting the nation’s highways will be safer with more cars driven by machines and not people,” said Cecilia Kang in The New York Times. Federal auto safety regulators released “long-awaited” guidelines this week for the burgeoning autonomous vehicle industry, a “clear signal” to automakers and tech companies that the road is open to driverless cars. The Department of Transportation’s new guidelines include a 15-point safety standard for the design and development of self-driving vehicles, and call for states to adopt uniform regulations for driverless cars.
Retail: More store closings for Kmart
Kmart is shuttering more stores, “as the struggling department store chain continues to shrink its footprint,” said Suzanne Kapner in The Wall Street Journal. Parent company Sears Holdings said this week that it’s closing 64 Kmart locations in addition to the 68 closings announced in April, meaning there are now plans to shut about 14 percent of Kmart stores nationwide. Sears Holdings has closed more than 400 Kmart discount stores and super centers over the past five years. Kmart posted a $292 million loss in its most recent fiscal year, bringing its total operating losses over the past three years to $1.1 billion.
Companies: Unilever to buy Seventh Generation
Unilever is looking to carve out an environmentally friendly image, said Nick Turner and Thomas Buckley in Bloomberg.com. The Anglo-Dutch consumer goods juggernaut, which owns brands such as Dove soap and Axe body spray, announced this week that it’s buying Vermont-based Seventh Generation, which is known for eco-conscious household products like dish cleaners and detergents. Unilever is pushing “to claim more of the natural section of supermarket aisles,” partly to appeal to Millennial shoppers. Unilever is said to be paying between $600 million and $700 million in cash.
Silicon Valley’s restaurant desert
It’s getting harder to find a decent place to eat in Silicon Valley, said Nicole Perlroth in The New York Times. Between soaring commercial rents and tech companies hiring away the best chefs, servers, and line cooks to staff gourmet corporate cafeterias, restaurateurs in Palo Alto, Calif., “say that staying afloat is a daily battle.” “Help wanted” signs are now “ubiquitous,” with restaurants unable to beat the likes of Facebook, Apple, and Google on pay and benefits. For diners who don’t receive free farm-to-table cuisine at work, the choice is increasingly between understaffed fastcasual chains offering serve-yourself salad stations and poké bars, or a $500 meal at a high-end restaurant. “Restaurants as we know them will no longer exist here in the near future,” said Howard Bulka, owner of Howie’s Artisan Pizza, which opened in 2009. “Palo Alto is just too tough a row to hoe.”