Five big banks in diversity pledge; SBA works to fix PPP obstacles

Receiving Wide Coverage …

Flag on the play

The Small Business Administration said it is working to make fixes to its Paycheck Protection Program after “lenders said many small businesses applying for additional help under the government’s coronavirus relief program are finding that efforts to combat fraud are throwing up obstacles to getting money they need to help stay afloat,” the Wall Street Journal reported.

“The issue is tied to flags the SBA placed on roughly 240,000 initial PPP recipients for everything from clerical errors to indications of possible wrongdoing. Those flags are blocking lenders’ ability to move forward second loans for the borrowers, after the program reopened this month. The SBA says it is working to remove the roadblocks. The agency also plans to issue additional guidance to lenders, and it is telling field offices how to help borrowers and lenders that experience the holdup with second-time applications. Once the flags are resolved, those applications will be given priority in the approval process, an incoming SBA official said.”

The third round of the PPP “has steadily grown to top 400,000 loans worth about $35 billion in its first two weeks,” the Washington Post said. “The government’s new phased approach to distributing the $284 billion in recently-allocated PPP funds means it’s unlikely that the money will run out, as it did last April.”

Take that

Goldman Sachs CEO David Solomon took a $10 million, or 36%, pay cut for 2020 as “punishment for the bank’s admission last year that it broke U.S. laws” in the 1MDB scandal, the Journal reported. “Mr. Solomon received a $17.5 million compensation package for 2020, down from the $27.5 million he got for 2019.”

“Mr. Solomon’s diminished pay places him well behind his peers in the salary league tables,” the Financial Times noted. “James Gorman, chief executive of Morgan Stanley, and Jamie Dimon of JPMorgan Chase, earned $33 million and $31.5 million for 2020, respectively.”

While Solomon was not “involved in or aware of the firm’s participation in any illicit activity at the time . . . the board views the 1MDB matter as an institutional failure, inconsistent with the high expectations it has for the firm,” Goldman said.

Standing his ground

HSBC CEO Noel Quinn “defended the British bank’s actions in Hong Kong, including supporting a controversial national security law and freezing the accounts of activists, during questioning by U.K. politicians who accused it of ‘endorsing’ China’s erosion of democracy in the city.”

Quinn told the MPs he was “not in a position as a banker to be able to judge the motives or validity of [a] legal instruction from a law enforcement authority” nor was it his “position to make a moral or political judgment on these matters. As a CEO I cannot cherry pick what law to follow or not.”

“I also care deeply about Hong Kong,” Mr. Quinn told the lawmakers, who had accused him “of appeasing China and ignoring the erosion of democracy and rule of law in Hong Kong, where the bank was founded nearly 156 years ago,” the Journal said. “I can only do what I do as a bank, and as a CEO of a bank, to continue to support our customers,” he said.

Meanwhile, “fund managers and bankers leaving Hong Kong for alternative financial centers have been asked to explain their decision to a range of [Chinese] government agencies amid concerns that Beijing’s national security law could cause departures from the Asia finance hub to multiply.”

Meet the new boss

Andrea Orcel, “one of Europe’s best-known bankers, has been picked to lead Italy’s UniCredit, marking a surprise comeback amid his continuing legal fight with Spanish lender Banco Santander,” the Journal reported. “The pick, which still needs to be approved by the board, ends a months-long search during which the bank scrambled to find a replacement for Frenchman Jean Pierre Mustier, who in November said he would step down after a rift with the board over future strategy. Mr. Orcel had been keen on getting the UniCredit job, flying frequently to Italy from London over the past weeks to lobby for the position.”

“For Mr. Orcel, the appointment represents a return following a very public clash with Santander and its powerful executive chairman, Ana Botin, who in 2018 offered Mr. Orcel the CEO post only to cancel it months later. Mr. Orcel is suing the bank for €100 million, equivalent of $121 million.”

“Mr. Orcel has been involved in some of the continent’s biggest M&A deals over the past two decades,” the FT said. “The Italian bank’s international shareholders favored Mr. Orcel for his global banking experience. He was also the preferred choice of some Italian backers, including the billionaire businessman Leonardo Del Vecchio, a top 10 shareholder at UniCredit and an influential voice among its other investors.”

Wall Street Journal

Diversity commitment

“Five of the largest U.S. banks publicly committed to mandating a diverse slate of applicants when hiring employees, part of a push to diversify an industry whose top ranks remain largely white and male. JPMorgan Chase, Bank of America, Citigroup, Wells Fargo and U.S. Bancorp all said they would either adjust policies for considering job candidates or disclose the ones they already have in place.”

“Their policies mirror the so-called Rooney Rule, which started in the National Football League as a way of making sure people of color are considered for coaching jobs. Banks say they already had interview policies to diversify their ranks, but the public agreements are meant to add an element of accountability for their progress. The commitments came about after the AFL-CIO sent proposals to the banks in its capacity as a shareholder.”

Washington Post


The Consumer Financial Protection Bureau, “the watchdog created after the 2008 financial meltdown and largely muzzled in the Trump era, is poised to start barking again. The agency will focus first on enforcing legal protections for distressed renters, student borrowers and others facing growing debt that its previous leadership has been lax about imposing during the pandemic. But the CFPB is also likely to take an unprecedentedly tough line against industry giants it finds engaging in abusive practices.”


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“There’s been diversity at lower levels of the financial services industry, but you have something of a glass ceiling when it comes to senior management.” — Brandon Rees, deputy director of corporations and capital markets at AFL-CIO, which wants banks to increase diversity hiring at the top.

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