News : The reckoning ahead for corporate America — How the White House blew it on Tanden

Wednesday, February 24, 2021

The reckoning ahead for corporate America — How the White House blew it on Tanden — Banks bounce back

Feb 24, 2021

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Quick Fix

The reckoning ahead for corporate America — Many large corporations announced temporary pauses on political contributions following the Jan. 6 insurrection attempt by Donald Trump supporters.

A lot of those pauses will run out at the end of the first quarter of the year on March 31. And CEOs and boards across the nation will have to decide how they approach campaign funding for the 2022 cycle given much of the GOP still supports Trump and the completely and irrevocably debunked idea that the 2020 election was "stolen."

Many CEOs tell MM they want to get back to bipartisan giving and would like to see Republicans retake the House and prevent further tax increases and regulation. But they know they risk alienating both employees and customers if they are seen to back Republicans who supported Trump's efforts to overturn the election results.

MM spoke with Daniella Ballou-Aares, who served in the Obama administration and is CEO of the Leadership Now Project , a consortium of over 250 business leaders and academics working on democracy protection efforts.

"There are multiple levels for executives to think about including not doing bad things and asking whether there is a proactive way for them to contribute to fixing the system … And step one is transparency …

"In a lot cases there is still no strategic oversight from the board level on how contributions contribute to their broader strategy … There need to be some minimum bar criteria and that could be support for strong electoral integrity and voter access and non-partisan redistricting.

Making a distinction — Ballou-Aares also noted that moderate, non-Trump Republicans are eager for corporate America to use its significant influence to encourage the party to move away from Trumpism and truth denial.

"Within moderate Republican circles, they would say that the fact that companies don't differentiate … is very bad for the GOP. … A clear, firm statement that has a critical mass of business leaders around some fundamental asks they have of political leaders around democracy protection would be a very legitimate thing for business to do."

Top Tweet: Stimulus vote coming Friday — Via House Majority Leader Steny Hoyer: "The House will vote on Friday on @POTUS' #AmericanRescuePlan to end this pandemic and deliver urgently needed relief to America's families and small businesses. The American people strongly support this bill, and we are moving swiftly to see it enacted into law."

GOOD WEDNESDAY MORNING — Email me on bwhite@politico.com and follow me on Twitter @morningmoneyben. Email Aubree Eliza Weaver on aweaver@politico.com and follow her on Twitter @AubreeEWeaver.

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Driving the Day

Fed Chair Jerome Powell is back for a second day of testimony at 10:00 a.m. before House Financial Services. He's unlikely to say anything different beyond the central bank's commitment to easy money and his desire to see Congress pass Covid stimulus soon … President Biden will issue an executive order on U.S. supply chains (more below) …

BIDEN ON SUPPLY CHAINS — Via our Gavin Bade: "The president … will sign an executive order instituting 100-day reviews of the supply chains for four industries: semiconductors, large-capacity batteries for electric vehicles, pharmaceuticals and their active ingredients, and critical minerals used in electronics.

The reviews will study whether those sectors are overly reliant on competitor nations, particularly China, as well as environmental threats and other risks. 'Clearly we are looking at the risks posed by dependence on competitor nations, but that is only one of a range of risks we are looking at,' a senior official told reporters last night."

HOW THE WHITE HOUSE BLEW IT ON TANDEN — Our Natasha Korecki and Burgess Everett: "Just about everyone in Washington, D.C., could see that Neera Tanden's nomination to head the Office of Management and Budget was beleaguered from the beginning — everyone, that is, except the White House.

"At the time her nomination was announced, Democrats didn't even control the Senate and Tanden's history of sharp-elbowed politics and highly personal Twitter attacks had made her enemies on the left and right. But Biden and his team, headed by White House chief of staff Ron Klain, felt strongly that they could sway Republicans to back her. … Today, the White House can't even get all Democrats on board. And Mitch McConnell is urging the GOP to band together to take Tanden down.

BANKS BOUNCE BACK — Our Victoria Guida: "Bank profits suffered last year as the coronavirus pandemic led them to set aside billions in anticipation of losses on their loan books, but by the fourth quarter those profits had recovered to near-record highs, according to the Federal Deposit Insurance Corp.

"Aggregate net income in the banking sector was $59.9 billion during the fourth quarter of 2020, back in line with booming profit levels during 2018 and 2019, even though net interest income declined for the fifth straight quarter. By contrast, annual net income was only $147.9 billion, a 36.5 percent decline from the year before."

POWELL ON CLIMATE RISK DISCLOSURE — Also via Victoria: "Powell … said there should eventually be some standardization in how financial institutions disclose the risks they face from climate change, though he did not say whether such disclosures should be mandatory.

"At a Senate Banking Committee hearing, Powell said disclosure requirements are the purview of the Securities and Exchange Commission but said 'financial institutions everywhere' are working on these issues."

ADEYMO FACES BIG TASKS AT TREASURY — Our Zachary Warmbrodt: "Senators … gave Adewale 'Wally' Adeyemo … Biden's pick for the No. 2 job at the Treasury Department, a long list of tasks, from rescuing the economy and taking on China to combating climate change.

"Once in office, though, one of the biggest challenges that Adeyemo, 39, will face is rebuilding an agency that saw key divisions hollowed out in the Trump era. Reconstituting Treasury's staff, in addition to leading the administration's economic relief efforts in the pandemic, will be Adeyemo's top responsibility once he's confirmed to serve as the department's deputy secretary, becoming the first Black American to ever hold that job."

Markets

LATE GAINS REVERSE MOST OF MARKETS' EARLY SLIDE — AP's Damian J. Troise and Alex Veiga: "A late-afternoon burst of buying on Wall Street helped reverse most of a stock market sell-off Tuesday, nudging the S&P 500 to its first gain after a five-day losing streak.

"The benchmark index eked out a 0.1 percent gain after having been down more than 1.8 percent earlier. The Nasdaq lost 0.5 percent as technology stocks fell for a sixth straight day. The tech-heavy index had been down nearly 4 percent. The Dow Jones Industrial Average, which is less exposed to tech stocks than the two other indexes, managed to rise 0.1 percent."

WHAT THE BOND MARKET IS TELLING US ABOUT THE BIDEN ECONOMY — NYT's Neil Irwin: "While Washington debates the size of a new economic rescue plan, the bond market is sending a message: A meaningful acceleration in both growth and inflation in the years ahead looks more likely now than it did just a few weeks ago.

"That would be mostly good news, suggesting an economy recovering quickly from the pandemic. Interest rates remain very low by historical standards, even for the longest-term securities. Bond prices imply that inflation will be consistent with the Federal Reserve's target of 2 percent annual rises in consumer prices, not a more worrisome spiral."

HAPPENING TODAY - A PLAYBOOK INTERVIEW WITH REP. SEAN PATRICK MALONEY : Democrats clinched control of the House in November but did not achieve their expected gains, making it trickier to push forward with President Joe Biden's agenda. Rep. Sean Patrick Maloney (D-N.Y.), the Democratic Congressional Campaign Committee chair, joins Playbook co-authors Rachael Bade and Eugene Daniels to discuss his plans for protecting Democrats' slim majority in 2022, lessons learned from the November campaign cycle, and the continued fallout from the Jan. 6 insurrection. REGISTER HERE.

Fly Around

POWELL SAYS RECOVERY IS STILL INCOMPLETE — AP's Christopher Rugaber and Martin Crutsinger: "Federal Reserve Chair Jerome Powell underscored the U.S. economy's ongoing weakness Tuesday in remarks that suggested that the Fed sees no need to alter its ultra-low interest rate policies anytime soon. 'The economic recovery remains uneven and far from complete, and the path ahead is highly uncertain,' Powell said in testimony to the Senate Banking Committee.

"Powell's comments are in contrast to the increasing optimism among many analysts that the economy will grow rapidly later this year. That outlook has also raised concerns, though, about a potential surge in inflation and has fueled a sharp increase in longer-term interest rates this year."

But he won't say if he's cool with more fiscal aid — Reuters' Ann Saphir: "With a heated political debate underway over the Biden administration's $1.9 trillion proposed pandemic relief package, it was entirely predictable that U.S. lawmakers would jump at the chance to ask Federal Reserve Chair Jerome Powell to weigh in.

"But in contrast with his repeated calls last year for additional fiscal support and the dire consequences of skipping it, Powell declined to do so on Tuesday during the first of two days of congressional testimony."

COMPANIES PUT THE BEST FACE ON COVID-19'S FINANCIAL IMPACT — WSJ's Jean Eaglesham and Nina Trentmann: "After its business was hit by the pandemic, retailer Ulta Beauty Inc. appears to have used some accounting cosmetics to add a gloss to its financial results.

"Operating income at the once-fast-growing chain, which temporarily closed stores during the health crisis, plummeted to $13 million for the nine months through October, a fraction of the $613 million earned in the same period in 2019. Two coronavirus-related items affected the math: a $40 million impairment charge for the value of some stores that reduced the operating income, and $51 million of federal tax credits that increased it."

ROBINHOOD CEO CRITICIZES 'RUNAWAY CHAIN REACTION' OF SHORT SALES — Bloomberg's Misyrlena Egkolfopoulou and Spencer Norris: "Robinhood Markets Chief Executive Officer Vlad Tenev said short selling the same shares multiple times is creating a chaotic dynamic for markets and investors.

:When a stock is being borrowed over and over it 'creates some sort of runaway chain reaction,' Tenev said at the New York Times DealBook DC Policy Project virtual conference Tuesday. 'How many times should we let the same share be shorted? I think there's an argument that the answer should be one.'"

JPM ON THE FIRST 100 DAYS — The JPMorgan Chase PolicyCenter today "is releasing a series of policy suggestions on how to drive an inclusive recovery, The First 100 Days and Beyond, which we are sharing with key Hill and Administration officials in the coming days.

"The paper uses unique research from our JPMorgan Chase Institute to underpin data-driven analyses and policy recommendations regarding both the continued financial impact of the pandemic on households, small businesses, and communities, as well as longer-term needs to ensure an equitable recovery."

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