DealBook Briefing: Wells Fargo Faces Another Huge Fine. Is That Too Much?

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Why Wells Fargo is about to be punished again

With Wells Fargo about to face a $1 billion fine over misdeeds like forcing customers to buy unnecessary auto insurance, Jim Stewart raises a provocative question: Is this too much punishment?

To recap: Wells Fargo has already paid $185 million over its fake accounts scandal and set aside $4.25 billion for liabilities tied to other infractions. And the Fed has prevented the bank from expanding its balance sheet.

Yes, the upcoming $1 billion fine is the most stringent bank penalty imposed by the Trump administration to date. (The C.F.P.B., under pressure from Mick Mulvaney to go easier on financial firms, is involved here.)

But Mr. Stewart writes, “At this point it’s hard to imagine what more Wells Fargo can do (or how much more it can spend) to make amends.”

Elsewhere in banking: British financial regulators fined Barclays’s C.E.O., Jes Staley, over his efforts to identify a whistle-blower. Deutsche Bank mistakenly paid $35 billion to Deutsche Börse. (It got the money back.)


Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York and Michael J. de la Merced and Amie Tsang in London.


AT&T’s C.E.O. defends his ‘vision deal’

On the stand yesterday, Randall Stephenson argued that his company’s planned takeover of Time Warner would create a business no different from the Silicon Valley giants AT&T sees as its rivals. “The FAANG are all focused on premium video,” Mr. Stephenson said. “All of them are vertically integrated.”

The Justice Department, which wants to block the deal, argued that AT&T is different because it’s also a broadband internet provider, and that relations with Silicon Valley are chummier than Mr. Stephenson asserts.

Andrew says: If you read one smart thing today, make it this thread by Matthew Ball, the former head of strategy at Amazon Studios. This point is especially insightful:

Elsewhere in big media: CBS investors can continue their lawsuit over whether Sumner Redstone improperly received more than $13 million in bonuses after becoming incapacitated.

The bidding war for Shire that wasn’t

After what briefly looked like a potential bidding war between Takeda and Allergan — until Allergan dropped out — the question now, Michael writes, is what price will Shire fetch? (Takeda has informally offered over $60 billion.)

A big takeover would give Takeda more scale — the combined company would have some $30 billion in annual sales — and a bigger international footprint. But it would also be the company’s biggest takeover by far, and perhaps too expensive.

The Japanese drug maker said it intended to maintain its credit rating, which could be difficult if it bids too high — or is pressured to do so by yet another suitor.

Critics’ corner: Neil Unmack and Robert Cyran of Breakingviews say Takeda needs a deal, but risks overpaying. Chris Hughes and Max Nisen of Gadfly aren’t sure a bidding war for Shire is warranted.

Elsewhere in deals: WPP pushed back against calls to break itself up. Qualcomm needs a better Plan B if its NXP takeover fails. Connecticut Water has rejected a $748 million takeover bid by Eversource. Saudi Arabia’s solar project deal with SoftBank exposed infighting between the kingdom’s energy ministry and its sovereign wealth fund.

Is the E.U. bending to Trump on trade?

With its $16 trillion economy and reputation for tough negotiating, the E.U. could have been the immovable object in President Trump’s trade fight. But that is looking less likely, Peter Eavis writes.

Why? The WSJ reports that the E.U. is prepared to offer concessions to avoid Mr. Trump’s threatened tariffs on imported steel and aluminum that Mr. Trump has threatened — perhaps reducing tariffs on American cars and industrial parts, and joining the U.S. in pressuring China on trade and investment rules.

Among the lessons if the E.U. concedes: The U.S.’s large trade deficits can give it leverage.

Beijing appears keenly aware of the risks here and is sure to press its case at a China-E.U. summit in July.

Elsewhere in trade: Global policymakers in Washington for I.M.F. and World Bank meetings appear worried about a trade war. The Export-Import Bank has been sidelined despite its potential usefulness in trade fights. And how a Chinese boycott of U.S. goods could backfire.

The political flyaround

• Rudy Giuliani and two other former federal prosecutors have joined President Trump’s legal team to “quickly” resolve Robert Mueller’s investigation. Rod Rosenstein reportedly told Mr. Trump that he’s not a target in either the Mueller investigation or the case involving Michael Cohen.

• The F.B.I. has released James Comey’s memos about his interactions with Mr. Trump, one of which recorded the president expressing frustration with Michael Flynn. The Justice Department’s internal watchdog referred its findings about Andrew McCabe to prosecutors.

• The Republican fund-raiser Elliott Broidy pushed for Mr. Trump to meet with the Malaysian prime minister, who was under investigation from U.S. prosecutors — and had business dealings with Mr. Broidy. (NYT)

• The Kushner Companies has been subpoenaed in an investigation into its treatment of rent-regulated tenants. (WSJ)

Palantir wants to go more mainstream

The sometimes controversial data consultant cut its teeth working for the Pentagon and the C.I.A. Now it’s hoping that its latest product will attract more commercial clients.

But here’s the company’s biggest problem, according to Bloomberg’s Peter Waldman, Lizette Chapman and Jordan Robertson:

How will a Russia-focused V.C. firm fare?

Now might not seem the ideal time to start a venture capital firm that aims to help U.S. start-ups break into the Russian market. But Fort Ross Ventures, which has opened for business in the U.S. with a $200 million fund, is making a go of it.

Victor Orlovski, Fort Ross’s founder and managing partner, told Michael that the current state of U.S.-Russian political relations should not affect his firm’s ability to operate. “The nature of start-ups is all about risk,” he said. “There is a political tension, but not when you’re talking to start-ups.”

The tech flyaround

• A PWC audit of Facebook last year found sufficient data privacy protections, despite the Cambridge Analytica incident. New European privacy rules could eliminate the book-length user agreements that most people don’t read.

• G.E. is scaling back its digital ambitions. (NYT)

• A.I. salaries are skyrocketing, even at nonprofit organizations. (NYT)

• Venture capitalists and entrepreneurs have lobbied regulators not to classify virtual currencies as securities. (NYT)

• Iceland’s cool climate and geothermal steam have made it a home for data centers, but its environment is under stress. (WSJ)

• Disappointing sales forecasts from TSMC, one of Apple’s main chip suppliers, weighed on Asian tech stocks. (Bloomberg)

• Vitalik Buterin, Ethereum’s creator, on recently minted cryptocurrency millionaires: “It’s the luck of the draw, where everyone who won the draw seems to feel like they deserved it for being smarter.” (FT)

‘Fearless Girl’ is moving — and the bull may follow

The girl statue is set to move to a new spot facing the N.Y.S.E., out of concerns for the safety of crowds that gather around her. And if N.Y.C. has its way, the totemic bull statue she faces could move as well.

The only potential obstacle: Arturo Di Modica, the artist who made the bull, doesn’t want it moved.

Revolving door

• Warren Buffett will step down from the board of Kraft Heinz next week, citing a desire to travel less. (FT)

• Mattel named Ynon Kreiz, the former head of Maker Studios, as its C.E.O., replacing Margo Georgiadis. (WSJ)

• Macerich’s chairman and C.E.O., Arthur Coppola, plans to step down at year end. (Bloomberg)

The speed read

• The F.A.A. had been considering rules that might have affected the Southwest Airlines flight in which engine failure led to a passenger’s death. And there are fears that increasingly powerful and complex engines may be becoming more vulnerable to faults.

• The F.D.A. has recommended the approval of a cannabis-based drug for epilepsy. (NYT)

• Opioid prescriptions are declining. Prescriptions to tread opioid addiction are increasing. (NYT)

• Lance Armstrong will pay $5 million to settle claims that he defrauded the federal government by doping when the United States Postal Service sponsored his cycling team. (NYT)

• Donte Robinson and Rashon Nelson, the two black men whose arrests at a Starbucks prompted protests and bias training at the company, have spoken about what happened. (NYT)

• The E.U. is set to reject a U.K. idea about how to handle the Irish border after Brexit. (Bloomberg)

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