Acting US Comptroller of the Currency Michael Hsu delivered an interesting speech today at the Brookings Institution. He warned that monetary fines aren't correcting longstanding problems at big banks because they're extremely complex and that the only solution may be to break them up.
"Control failures, risk management breakdowns, and negative surprises occur too frequently,” Hsu said. “Not because of weak management, but because of the sheer size and complexity of the organization.”
The Comptroller of the Currency oversees about 1100 banks as part of the Treasury Dept and is pushing back against regional bank mergers and the growth of large Wall Street firms.
The WSJ suggests that his comments are directed at Wells Fargo and its inability to sort out longstanding problems despite repeated enforcement actions and billions in fines.
“In short, effective management is not infinitely scalable,” he said.
I'd also note that Goldman Sachs shares are down 7% today after a poor quarterly report. It's baffling to me how a firm like this could recruit the best-and-brightest people in the country for decades and still fail to outperform the S&P 500.
