Two leaders worth watching are in this morning’s news:
-Goldman Sachs chief Lloyd Blankfein may be making low-key but significant strategic changes at the company. Yesterday, it announced a new online banking operation open to one and all, with no minimum deposit, no transaction fees, and a 1.05% interest rate on accounts. Banking for the masses is pretty much the opposite of Goldman’s business model since it began, but it could make sense today. Regulators recently rejected the first draft of Goldman’s living will for unwinding itself if it failed, and retail deposits are the least risky source of funds. Online banking is the cheapest way to attract such deposits. Goldman isn’t launching the business from scratch; it bought the business from General Electric, which CEO Jeff Immelt is also taking in a new strategic direction by divesting most of its vast GE Capital business.
The online bank probably won’t be an important business for Goldman soon; it doesn’t offer checking accounts, and you can’t get at your money at ATMs. But it’s a platform that Goldman could expand in order to modify its model. Yesterday, as Goldman was announcing the new bank, analyst Dick Bove was issuing a report arguing that Goldman “needs to rethink its strategy and consider transformational changes in every aspect of its operations.” Bove says the company has suffered “a lost decade,” which happens to coincide with the tenure of Blankfein, who became CEO in 2006 after predecessor Hank Paulson became Treasury Secretary. Blankfein has shown no indication that he’s even thinking of retirement. It isn’t too late for him to redirect even so large a ship as Goldman.
-New York City Mayor Bill de Blasio may be in the early stages of a major scandal. I say “may be”—some facts are still muddled, and de Blasio so far hasn’t been personally connected to any disastrous revelations. But the signs are troubling. Let’s put it this way: When one of the city’s major daily newspapers runs an editorial headlined “Bill de Blasio is a liar who’s put City Hall up for sale,” as the New York Post did yesterday, things are not going well for the mayor. The Post is a strident foe of de Blasio and can be counted on to put the worst face on any news, but it was able to cite substantive evidence. The state Board of Elections has alleged illegal fundraising by a group called Team de Blasio and referred the matter to Manhattan D.A. Cyrus R. Vance Jr. The board’s report says Team de Blasio evaded campaign donation limits to individual candidates for the state legislature by channeling hundreds of thousands of dollars for them through party committees; when the committees then transferred the money to the candidates, some of the checks had “donation per Mayor” on the memo line.
A number of potential corruption incidents have also come very close to de Blasio. This is shaping up as a classic case of accelerating investigations by regulators, prosecutors, and the media, probably leading to more revelations. How de Blasio manages the incipient crisis will influence, and may even define, his performance as leader of America’s largest city.
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What We're Reading Today
Regulators approve Charter’s $78B deal for Time Warner Cable
The merger will create the second largest cable company in the U.S. It comes after Brian Roberts‘ Comcast had failed to secure a bid for TWC with regulators almost a year ago. Tom Rutledge, Charter Communication’s CEO, will run the combined company. In order to get past anti-trust regulators, Charter can’t use data caps or charge based on usage for at least seven years. The FCC still must also hold one more vote on the deal, but it’s considered a formality at this point.
Mitsubishi used wrong fuel tests since 1991
The improper methods were used to test cars for Japan’s emission standards. Also, instead of testing certain vehicles, it provided data based on calculations. President Tetsuro Aikawa said his company was still investigating the matter, which could mean other instances of faulty testing could surface. Last week, the company announced that it had falsified emissions information for 600,000 vehicles.
China suspends Disney’s digital efforts
Bob Iger‘s company has a joint venture with Alibaba’s Tmall shopping platform to provide Disney content online. China, however, suspended the content only four months after the initial launch. It follows President Xi Jinping‘s suspension of Apple iBooks and iMovie services last week, and heeds a warning to tech and content firms looking to make inroads into the country.
Valeant hires Joseph Papa as CEO
The troubled pharmaceutical company hired Papa to replace J. Michael Pearson. Pearson led the company through a historical run, before seeing much of the gains crumble after a drug pricing controversy and questionable accounting practices were uncovered. The former Perrigo CEO will take over in May, as Valeant now tries to fix a company at risk of defaulting on $30 billion worth of debt.
Building a Better Leader
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Appeals court sides with NFL against Tom Brady
The “deflategate” 2-1 ruling that came down yesterday backed the NFL commissioner’s ability to punish players, which was given to Roger Goodell during the collective bargaining process. But Goodell did not walk away unscathed, as a dissent in the decision from Chief Judge of the Second Circuit U.S. Court of Appeals Robert Katzmann described Goodell as using his “own brand of industrial justice.” It’s unclear if Brady will appeal the decision.
Walmart cuts ties with Wild Oats
It’s a big shift for Walmart’s organic food strategy. Two years ago it teamed up with Wild Oats to strengthen its organic offerings. But now Doug McMillon‘s company will look to shelf its stores with more fresh products and increase its own food label’s organic offerings.
500,000 people protest Target’s bathroom policy
Last week, Brian Cornell‘s company said that transgender people could use any bathroom they prefer. This incited backlash from conservative Christian groups, including the American Family Association, which says it has collected over 500,000 signatures of people who have vowed to boycott the store. This has not swayed Target, which says it will stand by its position.
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Amazon continues its attack on fake reviews
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Japanese golfers can get drones to deliver…
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