Saving Investment – K Sup Radio Tue, 15 Feb 2022 07:03:04 +0000 en-US hourly 1 Saving Investment – K Sup Radio 32 32 Rightsizing the Fed’s emergency lending powers Thu, 08 Apr 2021 10:09:05 +0000 Below is a lightly edited transcript of the podcast: JOHN HELTMAN: Are you driving? JIM DONLAN: No, I’m parked. HELTMAN: You’re ready? You good? DONLAN: I’m good now. Yes. HELTMAN: This is Jim Donlan. DONLAN: Yes, my name is Jim Donlan, And I’m the owner of SPH solutions. HELTMAN: And what’s SBH solutions? DONLAN: SPH […]]]>

Below is a lightly edited transcript of the podcast:

JOHN HELTMAN: Are you driving?

JIM DONLAN: No, I’m parked.

HELTMAN: You’re ready? You good?

DONLAN: I’m good now. Yes.

HELTMAN: This is Jim Donlan.

DONLAN: Yes, my name is Jim Donlan, And I’m the owner of SPH solutions.

HELTMAN: And what’s SBH solutions?

DONLAN: SPH solutions is a solar developer, owner-installer of solar arrays and renewable energy. We work mainly with nonprofits, schools, and religious entities, and other not for profits that need to put — or would like to put — solar on their roof to offset their electric cost to be carbon neutral at some point and to improve the environment.

HELTMAN: SPH Solutions — based near Columbia, Md. — found itself in a difficult spot last year.

DONLAN: A majority of our equipment comes from overseas, in China. And so shutting down imports impacted the flow of material. Some of the vendors shifted from a sort of pay-as-you-go to pay-upfront model to get things. And so it was more of the delivery of equipment — and some … some of our clients because of the pandemic restricted our ability to work on their spaces, just because they know a lot of …


DONLAN: … things were unknown. So people just said “No, we don’t want any anybody on campus, except for those that are required.” So we delayed a couple projects because of that.

HELTMAN: Donlan needed funding, and he ultimately got it directly from the Federal Reserve — or more specifically through the Fed’s Main Street Lending Program — a lending facility created a year ago, in the early days of the Coronavirus pandemic, to infuse capital into an economy that had suddenly ground to a halt.

DONLAN: I think there was four banks that were processing it on the East Coast that I contacted, and got some information from each one of them. And it depended — each one had a different criteria of requirements. Some were … because Main Street Lending Program went all the way down to $200,000 or $250,000, of lending up to a couple hundred … 100 million I believe. And I and some of those entities were, we’re not doing anything under this $5 million range, some were doing it starting at $20 million. And so the each one had a different on … on ramp, and I didn’t qualify, my business didn’t qualify for three of the four because we weren’t large enough. And Bank of America was one of those, and Bank of America looked at my portfolio of projects look at where we were financially and came up with a program when we went into the Main Street Lending Program with about $1.25 million.

HELTMAN: This episode isn’t about solar energy or the pandemic or the economy. It’s not even about the Main Street Lending Facility — not really. It’s about section 13(3) of the Federal Reserve Act, a section that empowers the Fed to make emergency loans beyond the banking system — to broker/dealers, cities and even nonfinancial companies like SPH Solutions. It’s a way for the Fed to inject money into whatever section of the economy needs help, and historically, the Fed had used that authority very rarely. But between the bailouts of the 2008 financial crisis and the various lending facilities that were established during the pandemic, questions are starting to emerge about what the appropriate range of motion should be for the Fed to effectively and accountably respond to unforeseen calamities in the financial system.

From American Banker, I’m John Heltman, and this is Bankshot, a podcast about banks, finance, and the world we live in.

HELTMAN: The Federal Reserve does a lot of things. It manages the Federal Funds Rate and the money supply, it conducts original economic research, it regulates many of the country’s largest banks, it operates and regulates the payments system, it has a surprisingly expansive art collection, oddly enough — and there’s more. But one power that the Fed has — and it’s more implied than explicit — is that it holds the fire extinguisher for when critical functions in the economy break down.
That power to intervene in the economy manifests itself in different ways. On the more incremental side, it raises and lowers interest rates through the Federal Open Markets Committee, tightening or loosening the availability of credit as the circumstances require. But when things go really wrong, it can serve as the lender of last resort. That means banks can trade cash for securities through what is known as the Fed’s discount window. And the Fed can do something similar for nonbanks according to section 13(3) of the Federal Reserve Act.
The Fed didn’t always have that power, though.

GEORGE SELGIN: It was added later. Yes. 13. Three was added in 1932, I believe, and then it was also another emergency lending provision that I’ve talked about that was added later in. I think … I want to say, ’34. It’s been a while since I checked. And but both of them date from the New Deal.

HELTMAN: Welcome back to the program George Selgin.

SELGIN: I’m George Selgin. I’m the director of Cato’s Center for Monetary and Financial alternatives. And we handle our monetary policy and banking policy work.

HELTMAN: Section 13(3) — or rather, part 3 of section 13 of the Federal Reserve Act — was added by Congress in 1932 in response to the Great Depression, and then amended again in 1935 (close enough, George). And the reason for that addition, in the context of the Great Depression, may seem obvious.

SELGIN: Nonbanks were said to be suffering for lack of credit. And there was a perception that the private marketplace — the private banks — were not able to, or not willing to, lend adequately to businesses. So the belief was that by having the Federal Reserve step in, it could fill the gap. There was another organization, the Reconstruction Finance Corporation, which had been created earlier, that also was lending to nonbank enterprises. But it was perceived also to have left some gaps. Anyway, in those days, the Fed was given original 13(3) powers. But the powers were interpreted very narrowly.

PETER CONTI-BROWN: And that didn’t really work in the … in the Great Depression.

HELTMAN: This is Peter Conti-Brown.

CONTI-BROWN: I’m Peter Conti Brown, Assistant Professor at the Wharton School of the University of Pennsylvania, and non-resident fellow in economic studies at Brookings. Congress pretty quickly decided that it preferred other kinds of institutions to take on that primary role. So this is when the Reconstruction Finance Corporation, for example, was created in 1932, and which continued to the mid-1950s. And so this 13 … Section 13(3) lending, essentially atrophied. We didn’t see any of it between the 1930s and 2008.

HELTMAN: That’s not because we didn’t have recessions over that time — or because nobody asked for the Fed’s help.

CONTI-BROWN: We did definitely have recessions — you know, there’s three during the Eisenhower administration, for example, and each one carries little echoes of “Oh, is this going to be 1929 all over again.” There were other kinds of failures where you know, it, entities and institutions and individuals would go to the Fed and say, “Please, lend us money, we can’t get lending from any other entity.” So most famously was Penn Central Railroad that collapsed. They went to the Fed, and they were denied. Cities — New York had some really intense fiscal pressures of the 1970s. They went to the Fed and were denied. And so it was this seen as a kind of Rubicon.

HELTMAN: Part of the reason it wasn’t really used has to do with the way the Fed works. When the Fed steps in — for a bank or anyone else — it doesn’t just give money away. It offers a loan, and takes collateral to secure that loan. But the type of collateral the Fed was allowed to accept limited the potential scale of 13(3) lending for most of the 20thcentury.

SELGIN: The original collateral requirement was basically something called commercial paper —commercial IOUs. And these were short-term IOUs that were meant to finance ongoing production, anticipating receipts for sales of goods, that sort of thing. Banks routinely lent on commercial paper, so they usually had the stuff on hand — particularly banks that were in commercial areas. There were some banks in the countryside that didn’t have any commercial paper. They found themselves somewhat out of luck trying to get help from the Fed as a result, but many banks did have it. Other business firms seldom did.

HELTMAN: That changed in 1991 with the passage of the FDIC Improvement Act, which was designed to change some of the ways the FDIC worked in the wake of the Savings and Loan crisis of the 1980s. But it also changed the Fed’s collateral requirements for 13(3) emergency lending, effectively allowing the Fed to provide emergency liquidity in exchange for whatever collateral it thought was appropriate.

CONTI-BROWN: So 2008 was remarkable for so many reasons. But one was because we broke the glass on this authority, beginning in March 2008, when a broker-dealer — not unlike Robin Hood, frankly — much older, Bear Stearns was, you know, it was threatening to pull with it the rest of the financial system. And so that’s when the Bernanke fed authorized this unusual power. And it became, you know … 13(3) entered the more mainstream political lexicon as this kind of Federal Reserve bazooka, with a lot of financial and economic power behind it, but also a lot of political controversy associated with it, too.

KAREN PETROU: It’s the same conversation we’re going to have to have again, which is moral hazard.

HELTMAN: Could you tell us who you are, please? And don’t forget to plug your book.

PETROU: Thank you. My publicist is trying to inculcate that on me. I’m Karen Petrou, managing partner, Federal Financial analytics, and I’ve got a new book coming out, my first: Engine of Inequality, the Fed and the Future of Wealth in America.

HELTMAN: When the Fed broke the glass on 13(3) in the 2008 financial crisis, it was because many of the largest financial institutions were facing an almost unprecedented liquidity shortfall, all at the same time. Policymakers believed — with good reason — that letting those firms collapse would irreparably tank the entire global economy. Bailing those firms out because they were too big to fail was and remains unpopular, because it rewards the kind of excessive risk-taking that led to the crisis in the first place. But Petrou says it also sent a signal to the financial world that the Fed won’t let anything really bad happen to them.

PETROU: The Fed errs on thi e side of markets. I have a good deal in my book about this because I think this is one of the ways the Fed makes American inequality much worse, because it views its mission as market stabilization, not a shared prosperity. We see over and over again when the Fed fears market turmoil, which is of course not a good thing. But there’s a lot of difference between market turmoil and financial instability. And there is a good deal to be said in favor of market discipline as opposed to moral hazard. But the Fed is sufficiently frightened of more than a little bit of market instability, or of a giant financial companies failing, particularly in a disorderly fashion that it has historically 2008 and 2020 just thrown trillions into the market to keep them whole. If you want to ask, why is the stock market going up so much? And why are financial companies getting bigger and bigger and bigger? And why is the American economy more and more, quote-unquote, “financialized,” you have the Fed to thank for that.

HELTMAN: In response to those concerns about moral hazard, Congress changed the Fed’s 13(3) authority in the 2010 Dodd-Frank Act. But Congress didn’t just change 13(3) back to the way it was before.

KATE JUDGE: Part of what’s actually interesting about the Dodd Frank changes is what didn’t change, right?

HELTMAN: This is Kate Judge, a professor at Columbia Law School.

JUDGE: There were aspects of Dodd Frank that were targeted efforts to prevent the Fed from doing again — what it had done during 2007 and 2008. And as you point out, one of the most significant interventions that nobody wanted to see repeated, were efforts to save particular institutions. So the efforts to save Bear Stearns and the efforts to save AIG were seen as things we do not want to have happen again. And so they put in this this new requirement, broad-based eligibility.

HELTMAN: In Dodd-Frank, Congress attempted to navigate a course between two competing concerns: on the one hand, getting rid of 13(3) altogether takes an important tool away from the Fed that it might wish it had if another crisis comes along. But it also didn’t want to create a scenario where the Fed was picking winners and losers. What Dodd-Frank did was to modify 13(3) such that emergency lending could only be made available to a broad class of potential borrowers, with at least five potential applicants. There were other restrictions, too, but they were more cosmetic.

JUDGE: So for example, after Dodd Frank, rather than acting alone, the Fed has to act in consultation with Treasury and to get the Treasury Secretary’s approval for 13(3) facilities. In practice, this was something the Fed had long done.

HELTMAN: The coronavirus pandemic was the first time this new iteration of 13(3) actually got tested, and the Fed approached this crisis by establishing several different 13(3) credit facilities designed to backstop different credit markets, including municipal bonds, corporate bonds and ordinary businesses through the Main Street Lending Program. They actually did a similar thing in 2008, but this time those facilities played a much more central role.

JUDGE: When Congress came in, they didn’t say, “Okay, now we’re going to give the Treasury Secretary the authority to provide capital or to buy up assets as needed to keep the system functioning well.” Instead, this 13(3) authority is going to be the mechanism through which we’re actually going to try to inject additional support to businesses and to municipalities. And so it was a very different use of 13(3). The Fed had, early in March, rolled out a number of the facilities they had used in ’08, so they kind of took the playbook immediately put it to use. But [cut] the real change was that when Congress came in, instead of saying, “Treasury, we trust you, and we want you to solve this. And we’re going to give you real money, and you have a lot of discretion over how to use to do it,” they instead said, “We’re going to give money for the Fed and Treasury to work together. And then to create these 13(3) facilities.” But then, of course, there’s legal limitations on what the Fed can do under 13(3), and there’s real limitations in the amount of credit risk that the Treasury Department seemed willing to take on. And so and there were institutional limitations in terms of where the Fed could readily inject additional support into the system.

HELTMAN: One of those institutional limitations is that the Fed doesn’t take losses — in other words, it won’t make a loan that it thinks will lose money.

CONTI-BROWN: If I’m a banker, and I tell you, shareholders, “We have never lost money on a loan,” you would know that either I’m a liar, or I’m a terrible banker. That’s not a thing you’d want to brag about. Because that means that if you’ve never lost any money on a loan, that means that you’re not taking enough risk, you’re only choosing high-performing loans, which means that there’s these there are not going to be people where you’re going to be making much money on interest. The Fed’s different. It’s not like a private bank. But it really takes pride in the fact that it’s never taken a loss. I said, I describe that in such a way, because I think the Fed is making a mistake here, I think it should be prepared to take losses on individual loans so long as its general income is positive. Because that way, we will know that they are taking the they’re being appropriately aggressive in an emergency and taking the risk they need to take to make sure that credit availability is going where it needs to go.

SELGIN: When we come to the 2020 crisis, we have two different kinds of reactions. I’d say they let’s just get the money out of the door reaction is a good description of the paycheck Protection Program lending done by the SBA. And we all know that money was dispersed through that program to a lot of borrowers who probably shouldn’t have gotten it — there has been a lot of abuse. On the other hand, it was quick, and the money did go out. It was exhausted very quickly for the first round, and they had to renew the program. In contrast 13(3) lending to businesses, particularly the main street lending, that was not quick. First of all, it took the Fed and the Treasury together months to … to come up with what they thought would be a workable program that would satisfy the law on one hand, and get money to the targeted businesses on the other. It took them months — there’s nothing fast about it. And then the program they came up with, instead of being like a fire hose, was more like just a little trickle and … and it was very, very disappointing.

HELTMAN: We’ll talk a little more about how those lending facilities performed after this short break.

HELTMAN: Back in November, the Treasury Department sent a letter to the Fed terminating many of the emergency lending facilities. And part of the reason the Treasury Department gave for ending those programs, only a few months after they got up and running, was because they weren’t doing very much lending. And it’s true that many of the Fed’s 13(3) facilities ended up making rather modest investments in the pandemic. When the Main Street Lending Program closed at the end of last year, it had made a little over $16.5 billion in loans, while the Corporate Credit Facility to shore up corporate bonds had roughly $14 billion in loans outstanding and the Municipal Liquidity Facility had $6.3 billion in loans outstanding. The the Money Market Liquidity Facility peaked early in the pandemic, with about $50 billion lent, and the Commercial Paper Funding Facility at its peak lent out about $13 billion. Part of the reason those investments were so modest is because they perform a service just by being there — markets can often start to function again if they know the Fed can step in if things go wrong.

And since the Fed facilities helped the markets function normally, there were many other ways for businesses to get credit in the pandemic — especially the kinds of creditworthy borrowers who would be eligible for Fed loans. Just ask Kevin Handley.

KEVIN HANDLEY: Yeah, Kevin Hanley. I’m a regional senior lender with Enterprise Bank in St. Louis. I manage a couple of portfolios within the bank, from a credit perspective, really, it’s a … it’s a credit approval, functional role within the bank.

HELTMAN: He also oversaw Enterprise’s administration of Main Street Lending Program loans — all 11 of them. That doesn’t sound like a lot, and frankly it isn’t. But the reason more businesses didn’t use Main Street is because they found more attractive credit elsewhere.

HANDLEY: I think our preference, frankly, was to find a traditional solution on our balance sheet for our customers. And, you know, in some cases, because of the uncertainty around when their business would return to normal. That was a difficult credit discussion for us.

HELTMAN: But the Main Street facility also allowed Enterprise to extend credit to companies that weren’t already customers and whose needs couldn’t be met in-house.

HANDLEY: We did do some new deals with … with companies that weren’t borrowers, and I would say it was a similar situation where, yeah, we can’t tell you what it’s gonna look like for the next 12 to 18 months, but we did believe that there was longer term … the prospects for the company were such that we were willing to kind of take that … take that risk, and the program only has us retaining 5% of the loan, as you know, so in the case of the new borrowers that we did, they also had very uncertain prospects. But we believed in the business long-term such that, you know, we were comfortable making a loan. If you look at the composition of the 11 deals that we did, they were frankly, in industries that were extremely hard hit by the pandemic. We did some and travel services, hospitality, event management — we had several and event management. And we closed all of these, by the way, in December of ’20. And so as we were looking at fiscal, our calendar 2021, it was very difficult for these companies to project their financial performance for the next 12 months. So in that respect, I think it would be difficult under traditional means to get financing.

HELTMAN: So if the Main Street facility was helpful for borrowers who couldn’t get traditional loans —even if it wasn’t a large number of borrowers — what’s the harm in making those facilities available? The answer to that question is that it isn’t really the right question. In this case, the question isn’t whether borrowers should be able to get loans so much as whether the Fed should be the ones doing the lending.

SELGIN: The solution, as I see, it is very simple. If it’s a question of giving money to potentially insolvent outfits, then the Fed is the wrong vehicle. It should be considered not only a fiscal policy operation, but one that fiscal authorities and Congress should handle and leave the Fed out of. The Fed, of course, could be involved in an administrative capacity, it has certain advantages to offer in that regard. But it shouldn’t be a source of funds. Because the Federal Reserve constitution is such that the Fed is inclined — correctly — to use its own funding powers only to the extent that it can do so without incurring big losses. That’s in the DNA of the Fed. And that rules out risky lending for the most part. In contrast, if firms are going to be helped, that could end up failing, even with help, the Treasury and Congress should do that, and the Treasury should … and together, they should fork up the necessary money, borrowing for the purpose, not with the Fed’s help, not leveraging through the Fed.

HELTMAN: It sort of sounds like what you’re saying is that, like, 13(3) would be better if it was … if that same sort of mechanism was housed at Treasury than at the Fed.

SELGIN: Except that … Yes, yes. You could put it that way, John, it would be a lot more transparent. And it would it wouldn’t involve any magic money creation or levering up or anything, it would simply be, let’s say the Treasury says, “We’d like to see … we’d like to see loans made to businesses that aren’t covered by the paycheck Protection Program. We’d like to see $600 billion in lending to such businesses.” They hope the Fed would do that with a $75 billion backstop. Didn’t happen. Instead they lent $17 billion.

HELTMAN: But there is also a view that, while the Fed facilities — particularly the Main Street facility — weren’t particularly robust, they could be made more robust with some tinkering.

JUDGE: One of the open questions is, could the Fed actually do this in a more effective way? It was clear to me at least right at the beginning that the Fed was going to be able to be much more effective for the largest corporations and the smallest corporations. Whether it could have done more for small businesses remains deeply contested. One of the big questions is how much credit risk should they have taken or could they have taken and there are concerns that they were being … whether it was the Fed or Treasury that the overall terms of the Main Street facility were such that they were not manifesting that much willingness to take on credit risk. And if you think that the aim of the facility was to stop corporations from ending up in liquidation unnecessarily, and therefore allow those companies to continue to be part of a productive part of output, you know, creating productive capacity whenever we get past the pandemic, and help feed demand by continuing to feed employees, there’s reasons to think you might have wanted, you know, the Fed and Treasury collectively through this portfolio to take on more credit risk, and that the Treasury could have eaten that up with the money Congress specifically allocated in the CARES act. We know that the Fed, you know, that was clearly not the Fed sweet spot, it’s never going to be the Fed sweet spot, whether they might someday be able to do more there is currently unknown. And thanks to the Toomey amendment is not something we’re going to figure out in the short run.

HELTMAN: That amendment she’s referring to is an amendment to the December COVID relief package offered by Sen. Pat Toomey, a Republican from Pennsylvania, that would have barred the Fed from creating any new 13(3) facilities without the express consent of Congress. That amendment was later toned down to apply only to CARES Act funding, but the question of whether the Fed has too much power to lend beyond the banking system is still very much alive.

CONTI-BROWN: This is really controversial, and not just controversial in the ways that are that Senator Toomey has made controversial. It’s controversial because up until the very end of its life, the Main Street Lending Program, and to a less … slightly lesser extent the municipal lending facility did not have a lot of takeup. So, does that mean that they didn’t succeed well? Some people say that’s exactly what it means — the Fed should have done more to intervene so that it was easier for mainstream firms to get access to credit. Others will say no, this functions exactly as you’d want, because private lenders could go forward and that they wouldn’t be left holding every bag at the end of that cycle — that the Fed would be there. And because of that assurance, then, you know, the private markets, we’re able to function much, much better. So who’s right between that? Should you valuate the success of 33 facilities by the amount of lending was undertaken? Or do you evaluate the success of these facilities by the amount of lending was undertaken by private institutions? And I think that’s a really hard question to answer. It really depends on how, what you think about government participation in emergency lending, more generally.

HELTMAN: is this going somewhere? Or is this just kind of like an academic exercise of, like …

PETROU: I don’t know. That’s a great question. I know Senator Toomey wants to take it somewhere. And these these are issues I think in which, if they want to, he and Senator Brown could genuinely agree. Because neither of them believes in moral hazard and market rescues. Senator Toomey doesn’t believe in them because he believes in market discipline and quote, “the free market,” red in tooth and claw, and Senator Brown doesn’t believe in them because he doesn’t think financiers deserve deserve safety nets. But the basic point they both won is a Federal Reserve that does not provide the ongoing promise of never ending market stability. That kind of a promise is the platform from which we’ve seen enormous speculation.

HELTMAN: Deciding how much power the Fed should have to lend in an emergency has hazards on both sides. If the Fed’s power to lend is too narrow, it doesn’t lend and crises bring down businesses that would otherwise be healthy and productive. And if the Fed’s power is too broad, it creates the impression in markets that the Fed can catch you no matter how far you fall. Dodd-Frank attempted to navigate those hazards, but as we learned in 2020, it wasn’t entirely successful.

PETROU: After Dodd Frank, when Congress said, in law, “We really don’t want you to keep stepping in and rescuing giant financial companies. But we’ll give you some authority to at least rescue the financial system. But we really don’t want you to use it.” And the Fed opposed that provision. Janet Yellen and Bernanke — to this day — have said they wish it wasn’t in Dodd-Frank. And they have been extraordinarily reluctant to pass the rules mandated by the law to recognize Congress’s instructions, just last year, in the CARES act, to use these facilities sparingly because the Fed wants to be in charge of the financial system. And that’s the fundamental thing. I think that’s wrong. You can understand why a central bank wants and needs significant tools, but it’s supposed to exercise those for monetary policy. And it’s not just backstopping the market — the Fed hasbecomethe market, because everyone expects it always to intervene. Little bitty losses, day in day out, come and go. But if anything really bad looks possible, the markets are so confident the simple step in and stabilize them, whether it’s through monetary policy with ultra-low rates that create more appetite for equity investors, or through new facilities.

CONTI-BROWN: It would be more useful for us to understand under what circumstances will we see non-bank, non-financial lending in a crisis. Well, the Fed would like to say is, “Let’s not offer any clarity right now, because we want to maximize freedom of movement.” I think that’s pretty problematic. I think it’s problematic because we need to have some sort of clarity. Otherwise, the moral hazard problems become real. You mentioned that, you know, in a pandemic, where’s the moral hazard? And the answer is in preparation for downturn. So the pandemic is … you can’t anticipate that we’re going to have, you know, for novel Coronavirus is one that takes root and then as they continue to mutate, grinding things to a halt, but preparation for exogenous shocks is not all or nothing. And if the expectation is that the Fed will be there to do everything that it can, whatever it takes, to keep the economy singing along, so the kinds of private preparations that you’d want to see for an exogenous shock will slip away. And that’s not good. It really is about socializing costs, while privatizing benefits.

BlackRock Borrows Against Diversity – Bloomberg Thu, 08 Apr 2021 09:50:38 +0000 Nice BlackRock The basic idea of green bonds is that some investors want to finance environmentally friendly projects, for reasons of their own, and they are willing to pay more to do so. So if a company can issue bonds at a 4% yield to finance its regular business, perhaps it can issue green bonds at […]]]>

Nice BlackRock

The basic idea of green bonds is that some investors want to finance environmentally friendly projects, for reasons of their own, and they are willing to pay more to do so. So if a company can issue bonds at a 4% yield to finance its regular business, perhaps it can issue green bonds at a 3.9% yield to finance its green projects. There is extra demand for sustainable finance — demand from individual investors who care about sustainability, or from institutional investors with sustainability goals in their mandates — and so issuers of green bonds can get a “greenium,” that is, get more money at lower interest rates than they could by issuing regular bonds.

In principle you could do the same thing with any other environmental or social goal that people care about. If investors care about diversity, for instance, you could issue a bond saying “we will use this money to create a more diverse workforce,” and investors would charge you a lower interest rate for it. Or, since that doesn’t exactly make sense — it’s easier to earmark specific money for green projects than it is for diverse hiring and promotion — you could issue a bond saying, like, “we will use this money for regular stuff, but we will also create a more diverse workforce.” One way to do that would be to have a contingent interest rate: “We’ll pay you 3.9% interest if we hit a set of diversity goals, or 4.1% if we don’t.” That way investors who care about diversity will get what they want (diversity) at the cost of giving up some economic return; also, the issuer will be incentivized to do what those investors want (become more diverse) in order to save money. 

That is the point of all socially responsible investing, really; the idea is that socially responsible investors provide cheaper capital to companies in exchange for those companies promising to do socially responsible things. This makes it more economically appealing for otherwise self-interested companies to be socially responsible. It uses the forces of capitalism to encourage good behavior; it translates investors’ social and environmental goals into financial rewards for companies.

The implicit theory here is that investors have social and environmental goals and issuers don’t. Companies, in this model, simply maximize shareholder value; they wouldn’t do socially or environmentally responsible things unless they had a financial incentive to do so. Investors, meanwhile, do not simply maximize financial returns; they will explicitly accept a lower return in exchange for getting what they want environmentally or socially.

But what is going on with this BlackRock loan?

Investment giant BlackRock Inc. will need to hit its staff-diversity targets and other sustainable-business goals to keep its corporate borrowing costs down.

The firm struck a financing deal with a group of banks that links its lending costs for a $4.4 billion credit facility to its ability to achieve certain goals, like meeting targets for women in senior leadership and Black and Latino employees in its workforce. …

BlackRock’s progress on growing assets in funds focused on companies with high environmental, social and governance ratings will also impact its lending costs. …

The loan is a five-year credit facility that gives BlackRock a ready pool to draw on in emergencies. The clauses were among other changes BlackRock negotiated recently with its banks that included a $400 million increase to the size of the facility. 

Here’s the loan amendment.

 The relevant provisions are in the new section 4.17, “Sustainability Adjustments.” Basically BlackRock’s interest rate can go up or down by 0.05%, and its commitment fee can go up or down by 0.01%, depending on how it performs on the sustainability metrics.

If you told me that BlackRock was selling sustainability-and-diversity-linked bonds to a group of socially responsible investment funds, I’d be like, sure, fine, makes sense. There is a lot of demand —  from BlackRock, as it happens, but also from other big investment firms — for green and socially responsible investments, and there’d be nothing surprising about BlackRock taking advantage of that demand by issuing bonds with interest rates tied to sustainability and diversity goals.

But in fact BlackRock is selling a sustainability-and-diversity-linked revolving credit agreement to a group of big banks. Socially responsible investment funds are not really in the business of doing unfunded revolvers; the lenders here are just regular old banks. Wells Fargo & Co. is the administrative agent, Citigroup Inc. is the syndication agent, and the list of lenders is a pretty standard assortment of giant global banks. In fact, in this amendment, BlackRock has added two banks to its list of joint lead arrangers, Industrial and Commercial Bank of China Ltd. and China Construction Bank Corp. It seems unlikely that they came into this loan on the condition that BlackRock improve its diversity practices.

In general, it seems unlikely that the big banks in BlackRock’s revolver wanted any of this. There might be some public-relations or investor-relations benefit to a big bank doing environmental or socially responsible things (though probably not for ICBC or CCB?), but that means things like stopping lending to coal companies or pushing IPO issuers to have diverse boards, not, like, charging BlackRock one basis point less on a revolver in exchange for being more diverse. I doubt this loan would check any boxes for any of these banks, that it would make any of their shareholders any happier, that it would solve any non-financial problem for them. Presumably they agreed to it not because they care about BlackRock’s diversity or sustainability, and not even because they are making some sort of economic bet against BlackRock achieving its diversity goals; they agreed to it because BlackRock is a giant global asset manager that does a ton of business with banks, so they can’t really say no to its weird whims.

Obviously BlackRock wanted it, though. In addition to being a borrower on this credit agreement, BlackRock is a gigantic investor with a lot of environmental and social-responsibility mandates, and with a general inclination toward this sort of thing. Its chief executive officer, Larry Fink, writes annual letters to other CEOs scolding them about being more socially responsible; it has announced plans to push clients into more sustainable investments; it has agreed with a shareholder proposal to do a racial diversity audit. It fits with BlackRock’s image, to make binding (well, binding-ish: one basis point!) promises to improve its diversity and sustainability.

Still it’s a weird place for it. BlackRock could have announced “we have some diversity and sustainability goals, and we will publish a report in a year about whether we meet them, and if we do we’ll have a party, and if we don’t we’ll donate $440,000 to charity.”

 That would be about as good an economic incentive as this weird revolver, and would leave the banks out of it.

But the goal here is presumably not (just) to bind BlackRock to its commitments; the goal is to create a precedent, to show other companies that it can be done, and to force banks to deal with this sort of thing. Banks will grudgingly agree to this weird deal because it’s BlackRock; they’ll get approvals and legal documentation and so forth in place to make loans with interest rates that vary based on sustainability goals. And then some other company can (try to) use the same template, and sustainability-goal-based financing can become more mainstream.

It does invert the usual theory, though. This is not a case of investors pushing companies to be more sustainable and diverse; this is a company (albeit a big investing company) pushing its investors to push it to be more sustainable and diverse. And why not? There’s no real reason to believe that most actual companies — most actual executives at companies, that is — are motivated solely by maximizing financial returns to shareholders. Some CEOs care about diversity and sustainability as goals in themselves. Why not get investors to pay for them, too?

Archegos timing

As of, let’s say, Monday, March 22, Bill Hwang’s family office Archegos Capital Management had total return swaps in place with a half-dozen banks that gave it economic ownership of giant gobs of ViacomCBS Inc., Discovery Inc., Baidu Inc., GSX Techedu Inc. and a half-dozen other stocks. As the week went by, those stocks went down, and Archegos’s swap counterparties sent it margin calls demanding that it post more cash to maintain the swaps. Archegos more or less declined to do that, and by, let’s say, the following Monday, March 29, it did not have those swaps anymore.


The banks that served as Archegos’s counterparties on the swaps hedged those swaps by owning the underlying giant gobs of stock. So for instance Goldman Sachs Group Inc. and Morgan Stanley are listed, on Bloomberg, as the top two holders of GSX Techedu, with a combined 32% of the American depositary receipts as of January, not because they are big GSX bulls but because they are (well, were) swaps counterparties for big GSX bulls like Archegos. When Archegos defaulted on its margin calls, the banks terminated its swaps, which means that they were no longer economically short enormous amounts of stock to Archegos. One result of this is that they were economically long enormous amounts of stock, unhedged: The huge quantities of stock that they had owned as hedges for their huge swaps were now just naked long positions; the banks were economically exposed to whatever happened to the stocks. Roughly speaking, they bought the stocks at the price of their financing to Archegos: If a stock peaked at $100 and a bank required 15% margin, then the bank got to seize Archegos’s $15 of cash and effectively owned the stock at $85.

This is bad. Mainly it is bad because banks do not want to be in the business of owning large unhedged blocks of stock. Owning $10 billion of one company’s stock to hedge a $10 billion swap is just good customer service and usually (not always!) does not expose you to much market risk. Owning $10 billion of one company’s stock outright is a weird proprietary position and exposes you to $10 billion of market risk.

But it is also bad because the stocks are going to go down. For one thing, the stocks already went down; the whole problem started because Archegos’s stocks went down, leading to the margin calls that blew it up. For another thing, the fact that all of Archegos’s banks suddenly owned big unhedged chunks of stocks, and didn’t want to, means that they were all going to sell those stocks as rapidly as possible. Something like $50 or $100 billion of stock moved instantly from the hands of a long-ish-term fundamental investor (Archegos) into the hands of short-term uncomfortable dealers (the banks) who wanted to sell immediately. If the biggest holders of a stock need to sell a ton of it all at once, the stock will go down.

This is all obvious stuff and if you are one of Archegos’s banks there are basically two ways of dealing with it. One is to wait. You say, look, we have terminated these swaps and now we are unhedged outright owners of giant blocks of Viacom and Baidu and GSX and other companies that we don’t particularly care about. Our job now is to be smart owners of those stocks. The stocks are going to go down a lot this week, because every other swap counterparty is going to be selling, but if we wait that selling pressure will subside and maybe the stocks will recover and we can sell them at less of a loss, or even at a profit.

That’s a hard thing to do. Again, if you work in prime brokerage or equity swaps at a big bank, you are just not in the business of holding billions of dollars of stock, unhedged, for long periods through huge mark-to-market losses. You have $10 billion of stock, it goes to $5 billion, you have a $5 billion mark-to-market loss, the chief executive officer calls you up and asks what on earth you think you’re doing, you say “oh it’s fine, I just found myself long $10 billion of stock and decided to hang onto it, we gotta wait for it to recover,” and the CEO instantly and publicly fires you.

 Your replacement is no dummy; she knows that if she sells the stock now she’ll have a huge loss and no one will blame her — this situation is all your fault — but if she hangs onto it and it keeps going down she’ll get fired too. So she will dump the stock. 

Also, separately, waiting might just be a dumb move from a fundamental perspective, if the stocks were overvalued in the first place. Presumably if you are the swaps trader who gave Archegos exposure to those stocks, you have only limited insight into the fundamentals of the stocks. You weren’t betting on those stocks; you were just facilitating Archegos’s bets. Maybe they’ll go up when the margin-call selling pressure subsides, but maybe they won’t.

Still, there is an obvious temptation to wait. Bloomberg News reported that when Archegos’s banks got together to discuss the situation, Credit Suisse raised the idea:

Underscoring the chaos of an escalating situation, representatives from Credit Suisse Group AG floated a suggestion as they met … to confront the reality of such an exceptional margin call and consider ways to mitigate the damage: Maybe wait to see if his stocks recover? Viacom, some noted, seemed artificially low after its run-up past $100 just two days earlier.

Not only that, but it seems like Credit Suisse did wait:

The bank’s latest trades came more than a week after several rivals dumped their shares to skirt losses. Credit Suisse hit the market with block trades tied to ViacomCBS Inc., Vipshop Holdings Ltd. and Farfetch Ltd., a person with knowledge of the matter said. The stocks traded substantially below where they were last month before Bill Hwang’s family office imploded.

And it “could see further impact from the Archegos Capital Management blowup this quarter as it winds down residual positions.” This did not go great for Credit Suisse, which has taken $4.7 billion of losses, but I’m not sure that waiting a week went terribly either; Vipshop and Farfetch both closed a little higher this Monday than they did last Monday, when many of the faster banks were blowing out their positions. (ViacomCBS closed lower.) And the Archegos portfolio has recovered, a little, this week. It wasn’t a terrible plan, to wait until some of the other sellers got out of the way. It does seem to have resulted in everyone involved being fired, though, which you have to expect in this situation. 

The other approach, of course, is to sell first, before everyone else sells and the stock drops. Morgan Stanley knows:

The night before the Archegos Capital story burst into public view late last month, the fund’s biggest prime broker quietly unloaded some of its risky positions to hedge funds, people with knowledge of the trades told CNBC.

Morgan Stanley sold about $5 billion in shares from Archegos’ doomed bets on U.S. media and Chinese tech names to a small group of hedge funds late Thursday, March 25, according to the people, who requested anonymity to speak frankly about the transaction. …

Morgan Stanley had the consent of Archegos, run by former Tiger Management analyst Bill Hwang, to shop around its stock late Thursday, these people said. The bank offered the shares at a discount, telling the hedge funds that they were part of a margin call that could prevent the collapse of an unnamed client.

But the investment bank had information it didn’t share with the stock buyers: The basket of shares it was selling, comprised of eight or so names including Baidu and Tencent Music, was merely the opening salvo of an unprecedented wave of tens of billions of dollars in sales by Morgan Stanley and other investment banks starting the very next day.

Some of the clients felt betrayed by Morgan Stanley because they didn’t receive that crucial context, according to one of the people familiar with the trades. The hedge funds learned later in press reports that Hwang and his prime brokers convened Thursday night to attempt an orderly unwind of his positions, a difficult task considering the risk that word would get out.

That means that at least some bankers at Morgan Stanley knew the extent of the selling that was likely and that Hwang’s firm was unlikely to be saved, these people contend. 

Yeah, well. If you know you are going to need to sell $50 billion of stock, and you start by selling $5 billion of stock, you will naturally not want to tell the buyers that there’s $45 billion more coming. Then, when the $45 billion more comes, the price will go down more, and your original buyers will feel betrayed. They were betrayed! That’s life as an arm’s-length counterparty: Sometimes you dump a lot of stock on a bank without telling it that you’ll be selling more; other times, the bank dumps a lot of stock on you without telling you that it’ll be selling more.

It was unsporting for Morgan Stanley to do this to those hedge funds, and those funds should be mad at Morgan Stanley and maybe refuse to trade with it for a little while, but also it was totally the right call for Morgan Stanley to do this, and they’d do it again if they had to. If you are looking at billions of dollars of potential losses, and you can avoid them by burning some clients, you burn the clients. And then they are justifiably mad at you, and they say mean things to the press and you lose some prospective business, but you save the billions of dollars. Seems better than the alternative.


Well I look forward to this lawsuit:

Credit Suisse Group AG is leaning toward letting clients foot the bill for eventual losses in funds that the bank ran with former billionaire Lex Greensill’s company, according to a person familiar with the matter.

The bank considers that the risks around Greensill were known and the funds were only marketed to investors able to assess such risks, the person said, declining to be identified discussing private matters. The Zurich-based lender didn’t take any substantial loss due to Greensill in the first quarter.

The bank’s stance runs counter to reports last month suggesting executives were considering compensating investors hit by the collapse of the funds. Credit Suisse marketed its popular supply-chain finance funds as among the safest investments it offered, because the loans they held were backed by invoices usually paid in a matter of weeks.

But as the funds grew into a $10 billion strategy, they strayed from that pitch and much of the money was lent through Greensill Capital against expected future invoices, for sales that were merely predicted. Now, investors in the frozen funds are left facing the potential for steep losses as the assets are liquidated.

I wrote yesterday that “one problem with ‘prospective receivables finance’ is that it is easy to confuse with fraud.” The popular perception of Greensill, the one that was regularly reported in the press and that Credit Suisse relied on in marketing, is that it was a supply-chain financing firm that made short-term loans secured by invoices. The fact that it was actually making long-term speculative loans secured by “expected future invoices” is … uh … maybe it’s fine … but it surprised a lot of people.

Did it surprise investors in those Credit Suisse funds? I don’t know, but I bet they’ll find some lawyers who’ll say it did! It is just hard to defend, you know? You go to trial, and the investors’ lawyer shows you loans against imaginary invoices and asks “did you know, when you marketed this safe supply-chain financing fund to investors, that these invoices were fake?” If you say “yes,” then you were in on a fraud; if you say “no,” then you failed in your due diligence. The correct answer is “well of course they’re fake, that’s how prospective receivables finance works, don’t be naive,” but that will not play well with a jury.

Speaking of that defense, here’s a letter from Greensill client Sanjeev Gupta to the Financial Times:

We note the allegation in the story written by Robert Smith and Cynthia O’Murchu (“Questions raised over Gupta invoices”, Report, April 3). Before the story was published you contacted us about an allegedly outstanding invoice to RPS Siegen GmbH. When we asked for that outstanding invoice to be produced, so that we could investigate, it was not provided. As has already been reported in the press, many of Greensill’s financing arrangements with its clients, including with some of the companies in the GFG Alliance, were “prospective receivables” programmes, sometimes described as future receivables.

As part of those programmes, Greensill selected and approved companies with whom its counterparties could potentially do business in the future. Greensill then determined, at its discretion, the amount of each prospective receivables purchase and its maturity. Therefore, although RPS Siegen GmbH was a company identified as a potential customer of Liberty Commodities, it is not one currently. 

“Of course it’s fake, that’s how prospective receivables finance works, don’t be naive.”

WSB DD alpha

If someone on Reddit’s Wallstreetbets forum tells you to buy a stock, should you buy that stock? I want to be clear that I do not give investing advice around here, and that I personally have never bought a stock based on a Reddit recommendation and probably never will. However, in my journalistic capacity, I must tell you that the answer might be yes?

We examine the market consequences of due diligence (DD) reports on Reddit’s Wallstreetbets (WSB) platform. We find average ‘buy’ recommendations result in two-day announcement returns of 1.1%. Further, the returns drift upwards by 2% over the subsequent month and nearly 5% over the subsequent quarter. Retail trading increases sharply in the intraday window following publication, and retail investors are more likely to be net buyers following reports that earn larger returns. Thus, in sharp contrast to regulators concerns that WSB investment advice is harming retail traders, our findings suggest that both WSB posters and users are skilled.

That is the abstract of “Place Your Bets? The Market Consequences of Investment Advice on Reddit’s Wallstreetbets,” by Daniel Bradley, Jan Hanousek Jr., Russell Jame and Zicheng Xiao. Wallstreetbets seems to be more influential than Seeking Alpha, though less so than professional analysts:

Our focus is exclusively on single firm ‘Due Diligence” (DD) reports, which are reports identified by the poster (and verified by moderators) as containing some type of analysis and a clear buy or sell signal. Our sample includes 2,340 DD reports issued between 2018 and 2020. The number of DD reports increase exponentially through time coinciding with the exponential growth in the WSB user base. Consistent with the view that WSB emphasize speculative investments, we find that DD reports tilt towards unprofitable, volatile stocks with low institutional ownership.

After examining the determinants of WSB reports, we turn to the investment value of DD recommendations. We find ‘buy’ DD recommendations (~80% of all DD reports) earn two-day abnormal returns of roughly 1.12% percent. These returns are statistically significant and economically large, albeit smaller than the average returns to sell-side analyst recommendations (Womack 1996; Crane and Crotty, 2020), but substantially larger than the returns to Seeking Alpha recommendations (Farrell, Jame, and Qiu, 2020). We do not however, find significant abnormal returns to ‘sell’ recommendations.

Incidentally one thing that people like to complain about is that something like three-quarters of all sell-side analyst recommendations are “buy” or “strong buy.” People take this to be proof that Wall Street research is biased by the need to maintain good relationships with issuers, and that is probably true, but it’s worth noting that pure hobbyist due diligence on Wallstreetbets skews even more toward “buys.”

 Being nice and enthusiastic is just more appealing than being negative!

Anyway in addition to being influential, Wallstreetbets research seems to be … good?

We next examine if this price movement is transitory (e.g., due to short-term uninformed price pressure) or permanent. We fail to find any evidence of reversals. In fact, the returns continue to drift in the same direction over the next month. For instance, we find Day (2,21) returns of 1.45%, which are highly statistically and economically significant. Further, the cumulative one-quarter return following buy DD recommendations exceeds 6%. …

Collectively, our evidence suggests that 1) WSB DD posters have skill and 2) retail investors may have some ability to discern report quality. Our evidence is in sharp contrast to the conventional view that WSB only attracts uninformed investors and to regulators fears that following the advice of user reports on WSB results in significantly less informative retail trading. 

Israel and Palestine must avoid actions that undermine final status (India) Thu, 08 Apr 2021 02:38:30 +0000 Reiterating that only a two-state solution will bring the lasting peace the peoples of Israel and Palestine deserve, India said this should be achieved through direct negotiations between the two parties on final status issues and that any unilateral action which could prejudice these issues should be avoided. . India’s Deputy Permanent Representative to the […]]]>

Reiterating that only a two-state solution will bring the lasting peace the peoples of Israel and Palestine deserve, India said this should be achieved through direct negotiations between the two parties on final status issues and that any unilateral action which could prejudice these issues should be avoided. .

India’s Deputy Permanent Representative to the UN Ambassador K Nagaraj Naidu said Friday during the UN Security Council meeting on the situation in the Middle East, including the Palestinian question ‘ that New Delhi reaffirm its support for the Palestinian cause and for the establishment of a sovereign, viable and independent Palestinian state living side by side in peace and security with Israel.

We firmly believe that only a two-state solution will bring about the lasting peace that the peoples of Israel and Palestine want and deserve. This should be achieved through direct negotiations between the two parties on final status issues. Both sides must avoid any unilateral action that could prejudice these final status issues, he said.

Naidu called recent diplomatic efforts to revive stalled peace talks encouraging and added that the Quartet’s meeting of special envoys was timely. India urged the Quartet to engage with Israeli and Palestinian leaders.

India welcomes all efforts to strengthen the collective commitment of the international community to resume direct negotiations and facilitate the peace process, Naidu said.

Special Coordinator for the Middle East Peace Process and Personal Representative of the Secretary-General Tor Wennesland told the Council meeting that the global community is working to help the parties return to the negotiating table.

Earlier this month, the League of Arab States reiterated its support for the establishment of an independent and sovereign Palestinian state on the basis of the 1967 lines, with East Jerusalem as its capital. Middle East Quartet envoys Russia, United States, European Union and United Nations gathered virtually on February 15 to discuss political developments, all agreeing to meet regularly.

Naidu also added that India is happy to note that preparations for the Palestinian elections are advancing. The Cairo agreement between the Palestinian parties on the conduct of legislative and presidential elections – respecting the electoral calendar, accepting election results and other arrangements related to the elections – is a positive step in the right direction, he said. -he declares.

Noting that the commitment made by all parties to release political detainees will also help build confidence between them, India acknowledged Egypt’s efforts to facilitate this agreement. The high percentage of Palestinians, who have registered to vote in the elections, reflects their desire to participate in the democratic process, he said.

Wennesland said holding free and fair elections in Palestinian territory would help pave the way for restoring a legitimate political horizon to achieve a long-sought two-state solution.

The elections will be a crucial step towards restoring Palestinian national unity and renewing the legitimacy of national institutions, including a democratically elected Legislative Council and government in Palestine, he said.

Naidu added that the opening of the Rafah border post is an important development, which will ease the humanitarian and health situation in Gaza.

India stressed that the impact of the pandemic on the people of Gaza has been particularly severe due to the fragile health care infrastructure.

Noting that COVID-19 vaccines are being made available to the Palestinian people, including in Gaza, Naidu said India strongly believes that equity in access to vaccines across the world is important to mitigate the impact of the pandemic.

India has provided essential drugs and medical supplies to Palestine as part of COVID-19 assistance and is now sending a second batch of drugs as a grant to the Palestinian people in the coming weeks. .

We will also facilitate a rapid supply of vaccines to Palestine, Naidu said.

Regarding the prospects for vaccination against COVID, Wennesland welcomed the announcement of the Palestinian vaccination strategy and the initial allocation to the Palestinian Ministry of Health of 37,440 doses of vaccine by the COVAX-AMC facility. .

(Only the title and image of this report may have been reworked by Business Standard staff; the rest of the content is automatically generated from a syndicated feed.)

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Vineland Public Library Trustees Vote To Lay Off Employees Before Reopening | Local News Thu, 08 Apr 2021 02:38:19 +0000 Amberths said salary and compensation have sometimes exceeded the library’s budget (115% in 2019) and accounted for 87% of all costs at the start of 2021. “I have no doubts that our two talented and experienced full-time librarians can cope with all librarian duties in our library,” Amberths wrote. “I am also convinced that our […]]]>

Amberths said salary and compensation have sometimes exceeded the library’s budget (115% in 2019) and accounted for 87% of all costs at the start of 2021.

“I have no doubts that our two talented and experienced full-time librarians can cope with all librarian duties in our library,” Amberths wrote. “I am also convinced that our two full-time bilingual employees can successfully provide excellent service to clients in our diverse community. “

The library’s two full-time senior administrative staff will take care of the library’s bookkeeping, maintenance, human resources and general support, ”Amberths said.

Located on Landis Avenue, the Vineland Public Library serves the needs of its more than 60,000 residents. Serving New Jersey’s largest city geographically, the library offers more than just books. The two-story building is a center for community engagement and tutoring services, in addition to providing access to technology, news and language courses.

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Initially closed when the pandemic struck in March 2020, the library reopened in October, only to close again in November for fear of a resurgence of the virus. It’s now rescheduled to open Monday, but with just six full-time employees.

Speaking at the public portion of the January 28 meeting, Helen Margiotti, library manager for children and young adults, described the additional workload that would be created.

Employer help with student loan debt is a huge draw for millennials Thu, 08 Apr 2021 02:38:09 +0000 Like millions of her peers, Nicole Read graduated with thousands of dollars in debt. Unlike most of them, she receives direct help from her employer to reimburse him. (Read more: Advisors step up efforts to help clients manage student loan debt) The 26-year-old’s job at event organizer Live Nation Entertainment in Beverly Hills, Calif. Comes […]]]>

Like millions of her peers, Nicole Read graduated with thousands of dollars in debt. Unlike most of them, she receives direct help from her employer to reimburse him.

(Read more: Advisors step up efforts to help clients manage student loan debt)

The 26-year-old’s job at event organizer Live Nation Entertainment in Beverly Hills, Calif. Comes with a benefit that may start to be felt in American businesses: contributions to her bills. student loan. Providing such an incentive helps companies attract potential employees as they grapple with tense labor market conditions marked by an unemployment rate close to its lowest in nearly five decades.

In Ms. Read’s case, it’s $ 100 per month. As a result, “I’m paying about $ 30 more than my minimum payment each month, which has allowed me to pay my interest a little faster,” she said. “It just gives me a little leeway.”

Such plans are spreading. They were offered to staff around 8% of U.S. employers in 2019, more than double the 2015 level, according to an April survey by the Society for Human Resource Management.

Another study by business consultant Willis Towers Watson found that 32% of companies plan to introduce a similar benefit by 2021.

“If you have a young population, offering benefits like paying off student loans might be the way to go,” said Alex Alonso, knowledge manager for SHRM.

The fierce competition for talent and the high debt burden for a generation of Americans entering the workforce are driving the change. Millennials make up more than half of Live Nation’s U.S. workforce.

The outstanding student loan balance reached $ 1.6 trillion at the end of the first quarter, and more than a quarter of that amount is held by people under the age of 30. The effects spill over into their social and economic lives, making it harder to start a family, buy a house or buy expensive items, research finds.

The federal government is considering giving businesses a break to help employees get into debt.

The Employers’ Reimbursement Participation Act, introduced in the House and Senate in February, would provide tax relief to companies that do so. It has bipartisan sponsors, including Democratic presidential candidates Seth Moulton and Amy Klobuchar.

Other Democratic candidates, like Senators Bernie Sanders and Elizabeth Warren, have offered more sweeping fixes that include canceling loans.

“Helping employees get out of debt faster is a win-win solution, both for the employee and for our productivity,” said Katie Wandtke, director of human resources at Cybrary, a college park-based cybersecurity company, in Maryland.

It’s not just small stores that benefit. Large companies, including the professional services center PricewaterhouseCoopers, are also grabbing hold of it.

(Following:What Advisors Need To Know About Working With Student Loan Debt)

Live Nation began offering this benefit in early 2017 and has helped employees save over $ 4 million. More than 80 of the company’s employees have been able to repay their loans in full, according to Live Nation.

The event organizer is working with the startup, which specializes in helping businesses set up such programs and has clients like Fidelity Investments and Staples. There are also other platforms on the market, including Goodly, which works with Cybrary, and Gradifi, used by PwC since 2016.

Paying $ 30 more per month than the minimum, as Ms. Read says she does with the help of her employer, makes a difference.

For example, for a loan of $ 50,000 at 5% over 10 years, this would save almost $ 1,000 in interest over the life of the loan, which would allow the borrower to liquidate the slate eight months longer. early.

“Jobs in the entertainment industry like this aren’t necessarily well-paying jobs,” Ms. Read said. “So that kind of help makes up for that difference in salary and it’s really helpful for people like me. “

SBA triples maximum loan amount for businesses affected by COVID Thu, 08 Apr 2021 02:37:53 +0000 The Small Business Association (SBA) announced that starting April 6, small businesses and nonprofits can apply for up to two years of relief with a maximum loan amount of $ 500,000. The COVID-19[female[feminine The Economic Injury Disaster Loan (EIDL) program provides businesses with 30-year fixed rate loans providing capital for rent, health benefits, utilities, and […]]]>

The Small Business Association (SBA) announced that starting April 6, small businesses and nonprofits can apply for up to two years of relief with a maximum loan amount of $ 500,000.

The COVID-19[female[feminine The Economic Injury Disaster Loan (EIDL) program provides businesses with 30-year fixed rate loans providing capital for rent, health benefits, utilities, and debt repayment. However, unlike the Paycheque Protection Program (PPP), these loans are non-repayable.

The EIDL program has been essential for small businesses and non-profit organizations. Over three million loans worth $ 200 billion have been approved until March 2021. According to CNBC, 80% of loans treaty were for less than $ 100,000

Small businesses and qualifying nonprofits can apply for the loans until the end of the year and can continue to apply for funds after the December 31 deadline. The maximum previous loan amount for EIDL was $ 150,000 for six months.

Certain loans that were or will be approved before April 6 may benefit from an increase according to the new amounts.

“More than 3.7 million businesses employing more than 20 million people have found financial assistance through SBA Economic Disaster Loans, which provide low-interest emergency working capital for help save their businesses. However, the pandemic has lasted longer than expected and they need larger loans. Many have called on the SBA to remove the $ 150,000 cap. We are here to help our small businesses and that is why I am proud to more than triple the amount of funding they can access, ”said Isabella Casillas Guzman, Director of the SBA. Release.

Businesses looking for an increase in loan amounts will not have to contact the SBA. Instead, the agency will contact businesses via email around the start date with information for those who wish to request a raise. Those who received funding under the old guidelines will have up to two years to apply for an increase.

The Senate is also considering extending the PPP program until May 31. The program is currently scheduled to end on March 31.

A COVID-19 cluster identified at Harrah’s Cherokee Casino Resort Thu, 08 Apr 2021 02:37:29 +0000 TThe Jackson County Department of Public Health (JCDPH) and the Eastern Band of Cherokee Indians Public Health and Human Services (EBCI PHHS) have identified a COVID-19 cluster at a local business. Five employees in the table games section of Harrah’s Cherokee Casino Resort have tested positive for COVID-19. All positive employees follow isolation orders. The […]]]>

TThe Jackson County Department of Public Health (JCDPH) and the Eastern Band of Cherokee Indians Public Health and Human Services (EBCI PHHS) have identified a COVID-19 cluster at a local business.

Five employees in the table games section of Harrah’s Cherokee Casino Resort have tested positive for COVID-19. All positive employees follow isolation orders. The investigation is ongoing.

The North Carolina Division of Public Health (NCDPH) defines clusters of COVID-19 in the workplace, education, and other community settings as: 1) a minimum of five cases with onset of illness or initial positive results over a 14-day period and, 2) plausible association between cases where cases were present in the same setting during the same period (e.g., same shift, same classroom, same physical work area); that the time corresponds to the probable time of exposure; and that there is no other more likely source of exposure for the identified cases (eg household or close contact with a confirmed case in another setting).

Symptomatic persons who test positive should remain isolated under the following conditions: 1) at least 10 days have passed since the onset of the first symptoms and, 2) at least 24 hours have passed since the last fever without the use of antipyretic drugs, and 3) symptoms (such as cough and shortness of breath) improved. Asymptomatic people who test positive should remain isolated under the following conditions: 1) At least 10 days have passed since their positive test, assuming they have not subsequently developed symptoms since their positive test.

JCDPH, EBCI PHHS and other local health departments are working to identify any additional close contact from these employees. The CDC defines close contact as being about 6 feet from a person infected with COVID-19 for an extended period of 10 to 15 minutes during their period of infectivity. Based on the information provided by employees, county health authorities will assess the risks of exposure, determine if further measures are needed, quarantine and / or testing.

“Harrah’s Cherokee Casinos remains committed to the well-being of its employees and customers,” said Brooks Robinson, regional general manager of Harrah’s Cherokee Casino. “The improved health and safety protocols in place since the reopening include training our entire team of more than 3,000 employees on cleaning and disinfection techniques, the proper use of PPE and the mandatory wearing of face masks by employees and customers. Based on information provided by employees and CCTV recordings, no other employee or customer has been identified as a close contact as defined by the CDC. In addition, all employees who tested positive, showed symptoms or had close contact with a person who tested positive were ordered not to come to work and to isolate themselves. “

Senior Chef Richard G. Sneed declined to comment at this time.

– Jackson County Public Health Department statement, One Feather staff contributed to this report

Repeat “canceled clown” three times in these Burger King bathroom mirrors and Ronald McDonald will appear Thu, 08 Apr 2021 02:37:00 +0000 Looking to summon something spooky this Halloween season? Head to a Burger King in Sweden or Denmark. Brave souls who venture into the fast food chain’s restroom (which takes a certain level of bravery to begin with) can go straight to the mirror, repeat the words “canceled clown” three times, and be presented with the […]]]>

Looking to summon something spooky this Halloween season? Head to a Burger King in Sweden or Denmark.

Brave souls who venture into the fast food chain’s restroom (which takes a certain level of bravery to begin with) can go straight to the mirror, repeat the words “canceled clown” three times, and be presented with the vision of none other than Ronald McDonald.

But how can Burger King practice such witchcraft? Well, Business Insider Reports that the beloved burger joint installed voice recognition software that automatically dims the bathroom lights and allows the image of the clown to appear in the mirror (which is, in fact, a smart mirror, too) .

This spooky stunt is part of Burger King’s Halloween marketing initiative. It is also one of many jibes the chain has launched against longtime rival McDonald’s.

Readers may also recognize that this storyline is very similar to the urban legend of Bloody Mary. For those unfamiliar with it, many children and teens across the country will go to a dark bathroom to repeat “Bloody Mary” in the mirror. If they do it correctly, the terrifying spirit of Bloody Mary will appear.

It is not known where the legend of Bloody Mary came from, although many theories have surfaced over the years. Depending on how the stuff works, some theorize that the story comes from Queen Mary I of England who was notoriously considered “Bloody Mary” after she sentenced so many Protestants to their graves for heresy. Given that fact, it looks like Ronald McDonald is a much less harmless appearance.

One can only assume that McDonald’s response next year will somehow involve the Burger King haunting perpetually broken ice cream machines.

SBA announces it will triple disaster loan amount limit effective today Wed, 07 Apr 2021 23:17:44 +0000 SBA announces it will triple disaster loan amount limit effective todayThe Small Business Administration (SBA) has announced it will increase the amount of loans small-sized businesses can get in COVID-19 Economic Disaster Disaster (EIDL) loans beginning on Monday, April 6. The move comes following the call of US senator to Colorado John Hickenlooper. The Trump administration unintentionally set the previous limit far below the maximum limit […]]]> SBA announces it will triple disaster loan amount limit effective today

The Small Business Administration (SBA) has announced it will increase the amount of loans small-sized businesses can get in COVID-19 Economic Disaster Disaster (EIDL) loans beginning on Monday, April 6.

The move comes following the call of US senator to Colorado John Hickenlooper. The Trump administration unintentionally set the previous limit far below the maximum limit of $ 2 million permitted by lenders in my neighborhood, and Hickenlooper last month demanded the new administration to permit small-sized companies to borrow the maximum amount allowed by the program.

SBA is expected for a tripling of loan amounts for businesses hurt by Covid

From April 6 onwards Small businesses and non-profits are eligible for up to 24 months of financial relief, with a maximum amount of $500,000, according to the Small Business Administration announced Wednesday.

The prior limit for these companies was six months with a maximum loan of $150,000. “More than 3.7 million companies with greater than 20 million workers have found financial relief via the economic Injury Disaster Loans, which provide emergency working capital at low interest to help them save their businesses,” SBA Administrator Isabella Casillas Guzman stated in an announcement. “However the epidemic has been more severe than was expected and requires bigger loans.”

Prior to that there was a limit to prior to the change, SBA limit for COVID-19 EIDL loans was set by six months’ economic loss as well as the maximum amount allowed for loans of $150,000. “I am delighted with the fact that the SBA has listened to our request to increase the limit on loan amounts to cover the possibility of a economic catastrophe, which would have upset small-scale businesses that needed loans larger that were not permitted,” Hickenlooper said. “While the increase is certainly a great improvement but the SBA should consider raising the limit even higher – to $2 million in loans, according to the current law.”

In addition the SBA has also announced that it will notify small businesses who were granted loans under the lower cap directly and provide instructions on how to request an increase in the amount of their loan. Loans made to new customers will automatically contribute to the new limit. Hickenlooper is himself was a small-business owner in the past is on the US Senate Committee on Small Business and Entrepreneurship that is responsible for the SBA.

Knowing the details of A.B.A.’s Economic Injury Disaster Loans (EIDL) program for COVID-19

The Small Business Administration’s (SBA’s) Economic Injury Disaster Loan (EIDL) program provides relief to small-sized businesses as well as nonprofits affected by COVID-19. This includes charities like religious institutions and private schools. The loans were previously limited up to $150,000 SBA released in the middle of March in 2021 that it would increase the maximum loan amount of $500,000 starting on April 6.

The limit was raised in September of 2021. the amount was raised by $2 million. This change is part of a series of policy revisions that took effective Sept. 8. The update also included new permissible uses for the loan funds as well as extended timeframe for deferment and much more. SBA stated that it would start approval of loans that exceed $500,000 from October. 8th, 2021.

SBA has stated that the last date for applications to be considered is December. 31st 2021 (or the time that funds expire the funds are exhausted, whichever occurs first) So interested companies should submit their applications as soon as they can to allow enough time to process and approve.

Businesses are eligible for COVID-19 catastrophe loans, regardless of the extent to which they’ve sustained damages to their property, and they can utilize the funds to meet the needs for working capital and operating expenses while they recuperate from the effects of the pandemic.

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DOF chief cites rapid multilateral funding for PH vax program Wed, 07 Apr 2021 23:17:42 +0000 Finance Secretary Carlos Dominguez III MANILA – Finance Secretary Carlos Dominguez III said on Monday that the “rapid and substantial” funding provided by the Philippines’ multilateral partners for its 2019 coronavirus disease (Covid-19) vaccination program will help achieve the goal government to inoculate 70 million Filipinos or 100 percent of the adult population. Dominguez said […]]]>

Finance Secretary Carlos Dominguez III

MANILA – Finance Secretary Carlos Dominguez III said on Monday that the “rapid and substantial” funding provided by the Philippines’ multilateral partners for its 2019 coronavirus disease (Covid-19) vaccination program will help achieve the goal government to inoculate 70 million Filipinos or 100 percent of the adult population.

Dominguez said the government is fully committed to accelerating the rollout of its national immunization program in order to safely reopen the economy and restore jobs lost since Covid-19 triggered a pandemic last year.

“On behalf of the Philippine government, I express my deepest gratitude to the World Bank (WB), Asian Development Bank (ADB) and Asian Infrastructure Investment Bank (AIIB) for providing funding total of $ 1.2 billion for the purchase of safe and effective Covid-19 vaccines for the Filipino people, ”Dominguez said during the virtual launch of these loans via Zoom.

Under the terms of the loans, Dominguez said multilateral institutions would help the Philippine government buy the vaccines through their strict purchasing rules and guidelines, and then pay the vaccine suppliers directly.

The financial packages will also follow global best practices in safeguard measures, he added.

Dominguez said the rapid response of the WB, ADB and AIIB to the Philippines’ call for support reflects their confidence in the government’s ability to effectively implement its Covid-19 response measures, including including the national immunization program.

The government, through the Ministry of Finance (DOF), has secured the following loans totaling $ 1.2 billion (approximately PHP 58.4 billion) for the purchase of Covid vaccines -19: $ 500 million for the Philippines Covid-19 emergency response project – Funding Supplement (PCERP-AF) from the WB; US $ 400 million Second Health System Enhancement to Address and Limit Covid-19 (HEAL 2) as part of AfDB’s Asia Pacific Vaccine Facility; and a $ 300 million HEAL 2 loan from AIIB.

“We appreciate the responsiveness and flexibility of our multilateral partners to provide appropriate and timely financial support to meet our specific needs during this pandemic. They have been by our side throughout this battle giving us the sufficient ammunition we need to recover quickly from this health crisis, ”said Dominguez.

AfDB Vice President Ahmed Saeed said AfDB, along with WB and AIIB, “will need to work with our developing member countries and vaccine suppliers to ensure equitable and timely access to vaccine supplies. vaccines “.

He said the government rollout of the vaccine “has gone well in recent weeks” but that Covid-19 remains a “powerful and formidable enemy”.

“The world just doesn’t have enough vaccines, and on top of that, rich countries are building up stocks by committing in advance most of the production that will become available over the next six months. This made it difficult for developing countries to procure vaccines and led to a slowdown in vaccine deployment, ”Saeed said.

WB Vice President for East Asia and the Pacific, Victoria Kwakwa, said the goal of the additional PCERP funding “is to provide the country with additional resources to deploy vaccines on a large scale by as an important new layer of protection to save lives, maintain livelihoods, and enable Filipinos to gradually return to their jobs, schools, and be surrounded by friends and family. “

“At the Bank, we are honored to be a part of this effort, honored to be alongside the Philippines and its partners in moving this effort forward,” she added.

AIIB Vice President for Investment Operations DJ Pandian said his co-financing with AfDB for HEAL 2 “aligns with AIIB’s commitment to support its members in responding to the Covid-19 crisis “.

“It is an essential part of the Philippines’ public health response to the Covid-19 pandemic by providing rapid access to eligible vaccines that would help accelerate the country’s economic and social recovery,” Pandian said. (RP)