The news at a glance
The Fed: Yellen will let economy ‘coast’
The Federal Reserve’s era of aggressive economic stimulus is “coming to an end,” said David Harrison in The Wall Street Journal. Speaking at the University of Michigan this week, Fed chair Janet Yellen said the central bank is moving past its recession-era efforts to reinvigorate the economy. Going forward, the bank will focus on maintaining recent gains, and will gradually raise interest rates unless the economy suffers a major setback. “Where before we had our foot pressed down on the gas pedal, trying to give the economy all the oomph we possibly could,” Yellen said, “now [we’re] allowing the economy to kind of coast and remain on an even keel.”
Part of this shift in strategy involves unwinding the Fed’s massive balance sheet, said Ana Swanson in The Washington Post. At its March meeting, the central bank discussed plans to start “paring back” the $4.5 trillion in Treasury bonds and mortgage-backed securities it amassed during the financial crisis. The process, however, could take years, because the Fed wants to avoid roiling markets by selling off assets too quickly. “I think the operative word here is going to be ‘gradual,’” said Josh Feinman, global chief economist for Deutsche Asset Management. “They’re not going to want to go cold turkey.”
Banks: More pay clawbacks at Wells Fargo
Wells Fargo will claw back $75 million in compensation from two former executives for their role in the bank’s sham accounts debacle, said Nathan Bomey and Kevin McCoy in USAToday.com. The bank said this week that it’s clawing back an additional $28 million in pay from former CEO John Stumpf, and $47.3 million from community banking leader Carrie Tolstedt; both had already been ordered to give back millions. The move comes after the release of the bank’s internal investigation, which found that the former executives “acted too slowly to investigate allegations of ‘improper and unethical behavior’” by employees opening fake accounts.
Japan: Toshiba’s future in doubt
“Toshiba may not survive its deepening crisis,” said Sherisse Pham in CNN.com. The Japanese industrial conglomerate said this week there is “substantial doubt” about whether it can continue after last month’s bankruptcy of its American nuclear power business, Westinghouse Electric, which could leave Toshiba with a $9.2 billion loss for the current fiscal year. To survive, Toshiba may have to sell its lucrative computer chip business. Taiwan-based Foxconn has reportedly offered $27 billion for the chip unit, but the Japanese government is hoping to rally potential buyers to keep it in the country.
Banks: Barclays CEO tried to unmask whistleblower
Barclays could be in more legal trouble, said Gregory Katz in the Associated Press. The British bank said this week that CEO Jes Staley is under investigation by regulators in the U.S. and U.K. for trying to learn the identity of a whistleblower who wrote anonymous letters to the company’s board in 2016 that raised concerns about the bank’s recruitment practices. The inquiry “follows other run-ins with authorities by Barclays,” including the 2012 Libor rate-rigging scandal.
Food: Panera gobbled up by European coffee empire
Europe’s JAB Holding Co. is continuing its food business buying spree, said Stephanie Strom and Chad Bray in The New York Times. JAB last week purchased fast-casual chain Panera in a deal worth $7.5 billion. Over the past several years, JAB has spent some $40 billion on American coffee brands Peet’s Coffee, Caribou Coffee, and Keurig Green Mountain, and on Krispy Kreme doughnuts and Einstein Brothers bagels. JAB is the investment arm of the immensely wealthy and extremely private Reimann family of Germany. The firm appears to be betting that its brands can take on Starbucks and Nestlé.