Newsletter: California Inc.: Wells Fargo executive cued up for Senate grilling
Welcome to California Inc., the weekly newsletter of the L.A. Times Business Section.
I’m Business columnist David Lazarus, and here’s a rundown of upcoming stories this week and the highlights of last week.
Some good news on the home front: California employers quieted any lingering doubts about the state’s economy in August. We added a net 63,100 jobs during the month as the unemployment rate remained unchanged at 5.5%, according to data released Friday. Since last August, the state has boosted payrolls by 378,000 workers — a 2.3% gain. Party on, Wayne.
LOOKING AHEAD
Beverly Hills project: A plan to build 235 luxury condominiums and a 134-room hotel at 9900 Wilshire Blvd. will be considered Monday by the Beverly Hills Planning Commission. The $1.2-billion One Beverly Hills development, proposed by China’s Wanda Group, would be built on the former Robinsons-May store site. Wanda Group, the real estate and entertainment giant run by Chinese billionaire Wang Jianlin, owns the largest movie theater circuit in China and the AMC chain in this country. It bought the Wilshire property in 2014.
Reagan sale: On Monday, Christie’s auction house begins accepting online bids for more than 800 items that once belonged to former President Ronald Reason and his wife, Nancy. The sale features furniture, jewelry, decorative artwork, paintings, books and memorabilia from the Reagans’ home in Los Angeles. Estimates of the value of individual items range from $1,000 to $50,000. Some pieces will be sold through the online auction, which runs through Sept. 28, while others will be available in a live auction held in New York on Wednesday and Thursday.
Some ‘splaining to do: The Senate Banking Committee will hold a hearing Tuesday on aggressive sales tactics employed by Wells Fargo employees that led to a $185-million settlement package with federal and state regulators. Five senators requested a committee investigation into the bank’s pressure-cooker sales practices that pushed thousands of Wells Fargo employees to open as many as 2 million accounts that customers never asked for. Scheduled to testify at the hearing are John Stumpf, chief executive of the San Francisco-based bank, and Richard Cordray, director of the Consumer Financial Protection Bureau.
Interest rates: On Wednesday, Federal Reserve policymakers will conclude a two-day meeting and announce if they will raise their benchmark interest rate for the first time since December. The Fed is weighing whether the economy is strong enough for another small rate hike and whether they should act so close to the presidential election. Chairwoman Janet Yellen hinted that an interest rate is coming during comments she made in late August. Yellen will hold a news conference Wednesday to explain the board’s decision.
Disney discussion: Bob Iger, chief executive officer of Walt Disney Co., will participate Wednesday in a question-and-answer session at the 25th annual Goldman Sachs Communacopia Conference in New York. One topic that has been concerning Disney investors has been the health of the company’s ESPN sports channel, where subscriber growth has slowed. To adapt to the changing desires of sports viewers, Disney took a stake last month in BamTech, a video streaming company created by Major League Baseball. Wednesday’s session, which will begin at 8:20 a.m. Pacific time, will be webcast on Disney’s investor page.
THE AGENDA
Monday’s Business section looks at how the Federal Reserve faces the same conundrum every four years: how to manage the economy without appearing to favor either party’s presidential candidate. Those concerns will be front and center — and amplified — this week when Fed policymakers meet to consider a small hike in their benchmark short-term interest rate in the midst of a heated presidential campaign that has included sharp criticism of the central bank. The latest shot came recently when Republican presidential nominee Donald Trump said that Fed Chairwoman Janet Yellen “should be ashamed of herself” for keeping the rate near zero for so long.
STORY LINES
Here are some of the other stories that ran in the Times Business section in recent days that we’re continuing to follow:
Wells Fargo: The Justice Department is investigating Wells Fargo & Co.’s improper sales tactics. Federal prosecutors in San Francisco and New York are in the early stages of an investigation that could lead to criminal or civil charges. The San Francisco bank has agreed to pay $185 million to settle investigations by Los Angeles City Atty. Mike Feuer and federal regulators. The tactics were first reported by the Los Angeles Times in 2013.
Disney cuts: Walt Disney Co. is dominating at the box office this year, but the Burbank entertainment giant is still struggling to find its way in the competitive video games business. Reflecting changes to the company’s gaming strategy, Disney has laid off about 250 people in its Glendale-based consumer products and interactive media unit. The cuts represent a 5% reduction in the unit’s workforce and include people who work on video games and administrative staff.
Heading south: Ford Motor Co. is shifting all of its North American small-car production to Mexico. Ford currently makes its Fiesta subcompact in Mexico, but its Focus and C-Max small cars are made in suburban Detroit. Making them in Mexico would boost company profits because of low wages there. The company is building a $1.6-billion assembly plant in San Luis Potosi, Mexico. It plans to make small cars there starting in 2018.
Tesla update: Tesla Motors announced plans to roll out an update to its Autopilot driver-assistance feature. The new Autopilot will rely primarily on radar, not just cameras, to help the car “see” what’s going on around it and better avoid collisions. The update also includes more safeguards to ensure drivers remain alert while using Autopilot. If a driver ignores repeated warnings to take control of the wheel, he or she will have to park the car and restart it to engage the automatic steering function again.
Better wages: The economic recovery is finally providing relief to America’s long-running problem of stagnant middle-class incomes. The Census Bureau’s unexpectedly rosy annual report on poverty and incomes showed the biggest improvement in decades on both fronts. Healthy job growth, coupled with moderate wage gains, lifted the median household income to $56,500 last year, up 5.2%, or $2,800, from 2014. It was the sharpest annual increase on record.
WHAT WE’RE READING
And some recent stories from other publications that caught our eye:
Moving on up: Los Angeles magazine explores the gentrification of downtown’s Grand Central Market. “As Grand Central’s transformation took shape, with a different upscale merchant seeming to arrive each month, many of the legacy tenants began to fret.”
Money man: As Bloomberg tells it, Steven Mnuchin had it all. “He was publisher of the Yale Daily News, was tapped into Skull and Bones, made partner at Goldman, ran a hedge fund and invested in Hollywood blockbusters.” And if Trump wins, he could be the next Treasury secretary.
Heaps of hubris: Backchannel relates the story of a Bay Area venture capital firm that “was young, splashy, cutting-edge and loaded with investor cash.” Now, however, “it’s all come crashing down.”
Arm and a leg: The future is now for low-cost prosthetic devices. The Wall Street Journal spots a Japanese company “that is using three-dimensional printing to produce custom-made polymer limbs.”
Outward bound: Nice profile from the New Yorker on the “philospher-king” of clothing company Patagonia. Yvon Chouinard “has frequently disappeared for months, sometimes for half the year, to climb, kayak, surf, ski, fish and ramble around the planet’s wilder precincts.”
SPARE CHANGE
After reading that story about Patagonia, I don’t mind saying I too have always aspired to a rugged, outdoorsy image (in an urban, L.L.-Bean-catalog kind of way). So this guy is obviously a role model. This guy too. But not so much this guy.
For the latest money news, go to www.latimes.com/business. Until next time, I’ll see you in the Business section.
David Lazarus can be seen daily on KTLA-TV Channel 5 and followed on Twitter @Davidlaz. Send tips or feedback to david.lazarus@latimes.com.
