Week in Review

Trump administration

  • President Donald Trump intends to nominate Jay Clayton, the head of the Securities and Exchange Commission, to be the top prosecutor for the Southern District of New York, replacing U.S. Attorney Geoffrey Berman, but Clayton’s nomination faces an uncertain path after the administration was accused of attempting to oust a prosecutor because his office has been investigating Trump associates. Senate Judiciary Chairman Lindsey Graham (R-S.C.) said he would follow the committee’s usual policy to receive support for a nominee from both home state senators, who in this case would be New York Democrats Chuck Schumer and Kirsten Gillibrand, before allowing a nomination to move forward.

Stimulus

  • A second report by the bipartisan Congressional Oversight Committee, which oversees $500 billion in coronavirus relief funds, found that the aid from the Federal Reserve and Treasury Department has been beneficial for large companies, while “there is less evidence” that the department and central bank have been as much help for small and mid-sized businesses, as well as state and local governments. According to the report, Fed Chair Jerome Powell and Treasury Secretary Steven Mnuchin said they will monitor how funds from the Main Street lending program, which launched last week, help the economy recover, instead of tracking “on a borrower-by-borrower basis.” 
  • A lack of transparency on how $2.4 trillion in bailout money is being spent is creating obstacles to the Pandemic Response Accountability Committee’s efforts to ensure the funds are being used correctly, the oversight board said in its inaugural report. The report pointed specifically to the Treasury Department and Small Business Administration, saying that recipients have gotten relief funds “without agreements or terms and conditions establishing requirements for the use of funds and reporting on such uses, among other things,” and warned that the government could take a financial loss on the Paycheck Protection Program if unqualified borrowers get loans and can’t repay. 
  • The Treasury Department and SBA have cut the amount of paperwork that small businesses need to complete to have loans from the PPP forgiven, releasing a three-page “EZ” form that certain borrowers can use, down from the initial 11 pages, along with a shorter version of the full forgiveness application. Borrowers who are self-employed or have no employees and those that didn’t reduce salaries by more than 25 percent can use the EZ form. 

Housing

  • The Federal Housing Finance Agency has extended moratoriums on federal foreclosures and evictions for borrowers with mortgages backed by Fannie Mae and Freddie Mac by one month until Aug. 31. The agency said it will keep monitoring the coronavirus pandemic and update policies “as needed.”

Banks

  • Marilyn Booker, former global head of diversity at Morgan Stanley, is suing the bank for racial discrimination and retaliation, saying she was fired in December because she pressed senior executives in the wealth management division to change a program for training black financial advisers in a way she believed would further those advisers’ careers. A spokesperson for Morgan Stanley said that the bank rejects the allegations and that it will address the lawsuit “in the appropriate forum.”
  • Federal Deposit Insurance Corp. Chair Jelena McWilliams said the agency is monitoring bank dividends, adding that the FDIC has “supervisory tools” to ensure that banks “are not risking their balance sheets or risking safety and soundness” by issuing too-high dividends. Lenders reported profits of $18.5 billion in the first quarter, a nearly 70 percent drop from the year-earlier period, and dividends of $32.7 billion, according to a quarterly FDIC report.
  • The House Select Subcommittee on the Coronavirus Crisis is investigating the practices of several large banks, including JPMorgan Chase & Co., Bank of America Corp., Wells Fargo & Co. and Citigroup Inc., in issuing the Paycheck Protection Program loans, specifically the reported “two-tier system” that the lawmakers said gave wealthy, large clients “access to a personalized application process that ensured their applications were processed first.” Republicans on the subcommittee did not sign the committee’s letters, which asked the Treasury Department and SBA for all communication with lenders about the handling and prioritizing of the loans and the banks for all records about the applications they received and the information they got from the Trump administration on the program.

Fed

  • Powell testified in front of the Senate Banking Committee that the U.S. economy isn’t likely to fully recover from the coronavirus pandemic “until the public is confident that the disease is contained.” Powell also said the impact of the coronavirus pandemic is hitting low-income workers, especially minorities and women, the hardest, which could exacerbate pre-existing socioeconomic trends. 

What’s Ahead

  • The Senate is in session and the House is operating remotely. 
  • Mnuchin, among others, will speak at the Bloomberg Invest Global event being held Monday to Wednesday.
  • The Federal Reserve will publish the results of its Dodd-Frank Act stress tests and Comprehensive Capital Analysis and Review on Thursday. 
  • The Federal Deposit Insurance Corp. is set to approve changes to the Volcker Rule trading limits and swap margin requirements on Thursday.

Events Calendar (All Times Local)

06/22/2020
Bloomberg Invest Global
06/23/2020
Bloomberg Invest Global
Collision: A Web Summit Event
06/24/2020
Bloomberg Invest Global
Collision: A Web Summit Event
06/25/2020
Collision: A Web Summit Event
CFTC Open Meeting 10:00 am
Brookings Papers on Economic Activity semiannual conference: COVID-29 and the Economy 10:00 am
PIIE event: “COVID-19, the Financial Stability Board, and the G20 Financial Reform Agenda” 11:00 am
House Financial Services Committee hearing: “Capital Markets and Emergency Lending in the COVID-19 Era” 12:00 pm
Bipartisan Policy Center event: “Supporting Student Borrowers in the Next COVID Response Bill” 2:00 pm
FDIC Board Open Meeting 2:30 pm
New York Fed event: “An Update from the Experts on COVID-19’s Impact on Housing” 3:00 pm
06/26/2020
House Financial Services Committee meeting: “Insuring Against a Pandemic: Challenges and Solutions for Policyholders and Insurers” 12:00 pm
View full calendar

New Report: The Role CEOs are Expected to Play Today

Now more than ever, companies, employees and consumers are paying close attention to how corporate leaders are navigating today’s top issues.

To help organizations better understand the role their leaders should play, Morning Consult surveyed thousands of consumers, investors, and public opinion leaders on what they expect from CEOs today, and how that is evolving as new challenges emerge at a rapid pace.

Download the full report here.

Morning Consult Finance Top Reads

Morning Consult