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Westlake Legal Group > Goldman Sachs Group Inc

Banks Want Efficiency. Critics Warn of Backsliding.

WASHINGTON — A decade after big banks needed government support to dig out of the financial crisis, the Federal Reserve is slowly, but steadily, making a series of regulatory changes that could chip away at new requirements put in place to prevent a repeat of the 2008 meltdown.

Some of the changes, seemingly incremental and technical on their own, could add up to a weakening of capital requirements installed in the wake of the crisis to prevent the largest banks from suffering the kind of destabilizing losses that imperiled the United States economy.

Fed officials and others who support the changes, including big banks, say the Fed is engaging in what they call “tailoring” — a regulatory correction that will bring greater efficiency to standards written in the heat of a meltdown. They say the tweaks will not weaken the ability of banks to withstand financial losses but will reduce burdensome regulations that could have unintended consequences, like encouraging risk-taking.

But some current and former Fed officials worry that the central bank and its fellow regulators are giving large banks, which are making big profits, an unnecessary gift that could leave the economy exposed in the next downturn. They say the overseers should be forcing banks to maintain or even build up their defenses given the strong economy, which is in its longest expansion on record, rather than eroding those buffers.

“No individual thing jumps out, but if you look at the sum total, the direction of travel is not entirely encouraging,” Jeremy Stein, a Harvard professor and former Fed governor, said on a recent panel. “You need to be incredibly vigilant, and really understand this stuff very well. It’s very opaque, in many ways.”

The changes, some put into place and others still under consideration, range from making it easier for big banks to pass the Fed’s annual “stress test” of their financial health to allowing some to borrow more. One idea being floated could quietly reduce capital levels at the biggest American banks over the course of the business cycle.

The tinkering is being driven by Randal K. Quarles, the Fed’s vice chair for supervision, whom President Trump nominated in 2017, and the effort has earned the consideration of Jerome H. Powell, the Fed chair. At a news conference last month, Mr. Powell said the Fed was weighing a proposal that might have the effect of reducing average capital levels at big banks over time.

Bolstering capital at large banks was a centerpiece of postcrisis efforts, as regulators looked for ways to ensure that banks would have stable sources of financing in the event of another downturn. In a crisis, depositors and creditors may demand that a bank return their money, destabilizing the financial system. Indeed, that helped to fell Lehman Brothers, the investment bank that collapsed in 2008.

But capital — money raised from shareholders or retained as profits — does not have to be repaid. The 18 biggest banks, which include American firms like JPMorgan Chase, Goldman Sachs, Citigroup and Bank of America, added more than $650 billion in common equity capital from the beginning of 2009 through the end of last year.

Bankers acknowledged that capital needed to be higher after the 2008 crisis, but increasingly say enough is enough. Big banks have complained of measures that might increase capital from current levels or that could make year-to-year requirements fluctuate more, and have criticized United States rules for being more demanding than international standards.

Bank lobbying groups like the Bank Policy Institute have pushed back on calls to lift capital requirements, saying that stricter regulations “would harm economic growth with little benefit to the safety and soundness of the financial system.” And the country’s large banks have been working for more than a year to persuade the Fed to avoid putting more stringent capital rules in place.

Representatives from each of the biggest banks have met multiple times with Fed officials to talk about the stress capital buffer, a measure that would condense and streamline capital requirements, according to two people familiar with the matter. Each bank also used a public comment period in 2018 to send letters detailing specific suggestions for changes the Fed could make when it enacts the new standard.

“We’re comfortable with the capital regime that we’re operating under,” John Shrewsberry, Wells Fargo’s chief financial officer, said on a call with reporters last month.

Executives have a reason for opposing tougher capital requirements. They force banks to limit stock buybacks and dividend payments, curbing moves that help lift share prices. A big chunk of senior bank executives’ compensation is made up of stock. Yet existing capital requirements have not stopped banks from returning large amounts of excess capital to their shareholders. Last year, the eight largest American banks spent $104 billion on stock buybacks and dividend payments, up nearly a fourth from $84 billion in 2017.

Some Fed officials say capital requirements are already on the low side and should be beefed up, and careful watchers of financial regulation warn that current regulatory tweaks could bite into capital over time.

Lael Brainard, a Fed governor who was appointed by President Barack Obama, has now dissented on six separate regulatory matters, and has said that the Fed must be “especially vigilant to safeguard the resilience of our financial system in good times when vulnerabilities may be building.”

The president of the Federal Reserve Bank of Dallas, Robert Kaplan, and Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, have warned against making changes that reduce capital requirements.

ImageWestlake Legal Group merlin_154870338_c593db35-50f9-4dea-9d48-569d369d703c-articleLarge Banks Want Efficiency. Critics Warn of Backsliding. Yellen, Janet L United States Economy Subprime Mortgage Crisis Stein, Jeremy C Regulation and Deregulation of Industry Quarles, Randal K Powell, Jerome H Liang, Nellie Lehman Brothers Holdings Inc Kashkari, Neel T Kaplan, Robert S JPMorgan Chase&Company Goldman Sachs Group Inc Federal Reserve System Citigroup Inc Brainard, Lael Banking and Financial Institutions Bank of America Merrill Lynch Bank of America Corporation

Randal Quarles, the Fed’s vice chairman for supervision, has been driving many of the proposals aimed at changing post-crisis bank rules. Mr. Quarles, who was appointed by President Trump, has said many of the rules need to be tweaked to make them more efficient and effective.CreditJonathan Ernst/Reuters

Fed research shows that bank capital should be in a range of 13 percent to more than 26 percent of a bank’s assets, adjusted for risk, to best balance threats that emerge during downturns against costs to economic activity during times of expansion. Capital ratios at the eight biggest American banks stood at about 12.3 percent early this year.

“The biggest banks need substantially more capital,” Mr. Kashkari said in an interview, calling changes that could weaken requirements “concerning.”

Mr. Powell and Mr. Quarles often say that capital levels are “about right” at the moment. But an idea being floated by Mr. Quarles has the potential to lower capital levels at the biggest banks over the course of the business cycle.

Mr. Quarles has said the Fed should revisit what’s known as the “countercyclical capital buffer” — a fancy name for an extra level of capital that the Fed can require banks to add during robust economic times. The buffer, created by an international statute, allows regulators to respond to economic conditions — turning it down to unleash money and encourage lending when the economy needs it and raising it when the economy is running hot.

The Fed has never turned on the capital buffer, though Ms. Brainard and Janet L. Yellen, the former Fed chair, have been advocating that the Fed should consider enacting it now, when the economy is strong.

The other Fed governors have resisted enacting it, arguing that capital levels are high enough and that financial risks are not elevated. Mr. Quarles has gone a step further, saying that the extra layer is essentially always “on” because the Fed and its fellow regulators require American banks to maintain much higher capital levels than their global peers.

Mr. Quarles has suggested that the countercyclical buffer should be counted toward existing capital requirements. The move could reduce capital requirements over time, relative to the status quo, because banks would face lower standards during downturns, analysts say.

Mr. Powell indicated on July 31 that the Fed was contemplating such a change.

“The idea of putting it in place so that you can cut it — that’s something other jurisdictions have done, and it’s worth considering,” Mr. Powell said. “This isn’t something we’ve decided to do. It’s just under consideration.”

Critics say that treating the countercyclical buffer as part of current requirements, instead of as a cherry on top, even risks permanently lowering capital requirements.

“I’ll believe it when I see it, that a Federal Reserve constituted like we have now will ever voluntarily turn on the capital buffer,” said Jeremy Kress, a former Fed regulator who now works at the University of Michigan. “It’s a backdoor reduction of capital.”

A proposal already underway will lower capital slightly, while making a hard cap on how much the biggest banks can borrow more flexible. Known as the “enhanced supplemental leverage ratio,” the measure was put in place to ensure that the eight largest United States banks did not overextend themselves with borrowed money, as some did in the lead-up to the financial crisis. The changes would give banks more room to borrow and bring United States rules in line with global standards.

Mr. Quarles has called it a “modest recalibration” that will ensure that banks’ capital requirements better reflect the risks to which they are exposed. Bank executives support the change, which could free $400 million of bank holding company capital — 0.04 percent of the total — for dividend payouts and buybacks, according to staff estimates.

Not all of the tweaks act on capital directly. For example, the Fed has also begun disclosing more information about its stress tests, which critics equate to giving banks the answers ahead of the test. Mr. Quarles takes objection to that characterization, saying the point of stress testing is to encourage strong capital standards, not to punish banks.

“Like a teacher, we don’t want banks to fail. We want them to learn,” he said in a July speech.

The Fed has also cut a qualitative component from most banks’ tests, one that checks in on their processes, rather than assessing numbers alone. Ms. Brainard voted against the move.

The Fed is also expected to soon approve changes to the Volcker Rule, which was ushered in after the crisis to limit banks’ investment activities. The revised rule, which must be approved by the Fed and four other financial regulators, could give banks more flexibility to invest in private equity and hedge funds and will probably be “helpful to the big banks, especially in terms of making compliance easier,” Ian Katz, an analyst with Capital Alpha, wrote in a note previewing the move. The Federal Deposit Insurance Corp. will discuss the proposal on Tuesday.

The risk with all the fiddling, experts say, is less that any individual change will burn down the house — in fact, banks and some lawmakers have urged the Fed to move faster. It is more that this gradual drip of deregulation points in one direction for the largest banks, and could undermine standards just as the expansion hits record length and the economy faces challenges.

Mr. Stein, the former Fed governor, said in an interview that his concern was partly about the message sent to bank supervisors in the field.

“What is the tone that you’re setting?” he said.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Dear Walmart C.E.O.: You Have the Power to Curb Gun Violence. Do It.

The following is an open letter to Doug McMillon, the chief executive of Walmart.

Dear Mr. McMillon,

The massacre at your store in El Paso over the weekend was a tragedy.

So were the shooting deaths, days earlier, of two Walmart employees, at a Walmart store in Mississippi. So, too, was the mass shooting early Sunday in Dayton, Ohio — and the multitude of others in recent years.

It is clear that this country is suffering from an epidemic that law enforcement and politicians are unable or unwilling to manage.

In the depths of this crisis lies an opportunity: for you to help end to this violence.

You, singularly, have a greater chance to use your role as the chief executive of the country’s largest retailer and largest seller of guns — with greater sway over the entire ecosystem that controls gun sales in the United States than any other individual in corporate America.

What happened over the weekend is not your fault — but it is your moral responsibility to see that it stops.

The legally purchased weapons that were used in the mass shootings did not come from Walmart. But guns in America travel through a manufacturing and supply chain that relies on banks like Wells Fargo, software companies like Microsoft, and delivery and logistics giants like Federal Express and UPS. All of those companies, in turn, count Walmart as a crucial client.

ImageWestlake Legal Group merlin_158904741_d92bd717-b8c9-4a44-9613-a2c4690e76fb-articleLarge Dear Walmart C.E.O.: You Have the Power to Curb Gun Violence. Do It. Wells Fargo&Company Walmart Stores Inc National Rifle Assn McMillon, C Douglas mass shootings JPMorgan Chase&Company gun control Goldman Sachs Group Inc firearms El Paso, Tex, Shooting (2019) Dimon, James Cook, Timothy D Apple Pay Apple Inc

A Walmart in Arizona. The company is the country’s largest seller of firearms.CreditQ Sakamaki/Redux

Economists have a term for the kind of influence you wield: economic leverage.

Walmart has used this leverage for years over its suppliers, partners, distributors, rivals — even cities and states.

Now you have the chance to use that clout to help fix a system that is clearly broken, to solve a crisis whose costs are measured in lives, not just in profits and losses.

Other chief executives are already stepping up. For example, Marc Benioff of Salesforce recently pushed his company to stop working with retailers that sell automatic and certain semiautomatic firearms, high-capacity magazines for ammunition and a wide variety of accessories.

You have already stopped selling handguns and assault-style weapons and raised the age limit to 21 to buy a gun from your stores (though you still sell rifles and certain other types of guns). I commend you for that.

Some critics have suggested that Walmart stop selling guns entirely, but you can use your influence over gun makers for good.

You could threaten gun makers that you will stop selling any of their weapons unless they begin incorporating fingerprint technology to unlock guns, for example. You could develop enhanced background checks and sales processes and pressure gun makers to sell only to retailers that follow those measures.

You have leverage over the financial institutions that offer banking and financing services to gun makers and gun retailers as well as those that lend money to gun buyers. You could use your heft to influence banks and credit card systems to change their processes around tracking gun sales. They have none.

El Paso’s Walmart Supercenter, is a popular destination for shoppers from Ciudad Juarez, Mexico.CreditCelia Talbot Tobin for The New York Times

Jamie Dimon, chief executive of JPMorgan Chase, wrote an email to his employees Monday calling on them to “recommit ourselves to work for a more equitable, just and safe society.” Call Mr. Dimon. Tell him you need his help to use the financial system’s plumbing to create a world-class method of tracking gun sales with built-in safeguards. He has resisted — but you are one of his clients.

Then call Tim Cook, Apple’s chief executive, who says he is heartsick about the violence. “It’s time for good people with different views to stop finger pointing and come together to address this violence for the good of our country,” he wrote on Twitter on Sunday.

Mr. Cook should listen to you — after all, Walmart sells vast quantities of his company’s products. Apple already bans the use of Apple Pay to buy guns and ammunition online, but it hasn’t extended that policy to in-store purchases. Shouldn’t it? And now Apple is preparing to launch a credit card with Goldman Sachs and Mastercard. They could establish a policy from the get-go not to conduct transactions with retailers that sell guns or only those that follow a best-practices protocol.

And what about calling C. Allen Parker, Wells Fargo’s interim chief executive? Wells Fargo is the bank to the National Rifle Association, the leading force against reasonable gun laws.

Now that there have been killings at your stores, you have a business interest in telling Wells Fargo that as long as the bank works with the N.R.A., you won’t work with it. Wells Fargo boasts on its website about a Walmart-sponsored arrangement to provide financing to your suppliers. Maybe it’s time to reconsider that partnership. Or you could go further and consider no longer accepting Wells Fargo-issued credit and debit cards in your stores. Give Mr. Parker the stark choice between working with the N.R.A. and doing business with the country’s largest retailer.

Over the past decade, Walmart has spent tens of millions on lobbying efforts in Washington, much of it to push for lower corporate taxes, which have juiced your profits. You’ve also lobbied to combat the opioid epidemic and to support veterans.

It would be easy for you, and other chief executives, to argue that controlling the gun violence epidemic is Washington’s responsibility, not yours. But in an era of epic political dysfunction, corporate executives have a chance to fill that leadership vacuum.

The 22 people who died in your store this past weekend deserve more than words of consolation to their families. They deserve a leader who is going work to make sure it never happens again.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Foreign-Owned Banks’ Results Could Sweeten Further Under Tax Law

WASHINGTON — President Trump’s tax cuts have been very good to big banks. For foreign-owned banks, they could get even better.

The cuts allowed America’s largest banks to save an estimated $16 billion collectively in taxes last year, a windfall that helped those firms reward shareholders through stock buybacks and dividend payments.

The savings flowed largely from changes to the corporate rates, which fell to 21 percent from 35 percent under the new law. For years, domestic banks’ effective tax rates had been higher than those of many other companies’, so when they fell, those institutions enjoyed outsize benefits.

Foreign-owned banks reaped benefits as well, though the structure and reporting of their global financial operations make them more difficult to quantify. Late last year, they won a potentially lucrative victory in a proposed Treasury Department regulation that puts into effect a part of the 2017 tax law that established a global minimum tax on multinational corporations. Analysts say the proposed regulation, which companies must apply even though it has not been made final, could allow foreign banks to largely avoid the minimum tax.

[Earnings reports this week showed that the five biggest banks in the United States continue to benefit from the tax cuts.]

The regulation effectively provided a carve-out that would allow foreign banks to reduce or avoid a new tax, known as the base erosion and anti-abuse tax or the BEAT. Treasury’s rule would allow foreign banks to minimize their tax liability by sending large payments back to their headquarters in the form of interest payments, which would not be counted toward the minimum tax.

Many foreign banks, and an industry lobbying group, welcomed the proposal — and quickly pushed Treasury to expand it further, by exempting even more transactions between banks and their overseas affiliates from the tax. The final regulations will be decided this summer.

“There’s a lot of uncertainty” about the anti-abuse tax, said Andrew J. Silverman, a tax analyst at Bloomberg Intelligence. “But a lot of companies are taking comfort from the fact there are a lot of big exceptions to it.”

Financial filings, corporate earnings call transcripts, and industry and company letters to Treasury officials underscore the degree to which the tax cuts have helped banks financially. Some of the ways appear to go against the intention of the Republicans in Congress who drafted and approved the law in a two-month flurry at the end of 2017.

The favorable treatment for banks is contributing to a steep decline in corporate tax revenues, which has helped sharply increase the federal budget deficit. Corporate receipts were down more than 25 percent, or nearly $60 billion, through June for the 2019 fiscal year, compared with the 2017 fiscal year, before the tax cuts took effect. The budget deficit is on track to top $1 trillion in 2019, a 28 percent increase from 2018.

The 10 largest United States banks — a group that includes JPMorgan Chase, Wells Fargo and Goldman Sachs — had a combined income tax expense of $35 billion last year, equivalent to 20 percent of their pretax earnings. Their average effective rate in the five years through 2016 was 29 percent. If last year’s pretax income had been taxed at that rate instead of the post-tax-cuts rate, the banks’ income tax expense would have been $51 billion, or $16 billion more.

Money saved from having a lower tax rate helped pay for a surge in stock buybacks and dividend payments to shareholders. Last year, the 10 largest American banks distributed over $104 billion to their shareholders in these two ways, an increase of 25 percent from nearly $84 billion in 2017.

ImageWestlake Legal Group merlin_156105849_d23b994f-50e9-4edd-b379-09a2a607851f-articleLarge Foreign-Owned Banks’ Results Could Sweeten Further Under Tax Law Wells Fargo&Company United States Trump, Donald J Tax Cuts and Jobs Act (2017) JPMorgan Chase&Company Income Tax HSBC Holdings PLC. Goldman Sachs Group Inc Federal Taxes (US) Federal Budget (US) Corporate Taxes Banking and Financial Institutions

Proposed rules from the Treasury Department could allow foreign banks to reduce what they owe under a global minimum tax included in the 2017 tax law.CreditPatrick Semansky/Associated Press

Some banks are reporting tax rates well below the 21 percent statutory rate. Wells Fargo said this week that its effective tax rate — the rate reported on financial statements — was just over 17 percent in the second quarter. JPMorgan’s rate for the period was just shy of 15 percent, in part because the bank enjoyed a tax benefit after tax audits were resolved.

Those savings continued to pad bank profits in the second quarter, according to financial filings released this week, and helped to offset weakness in trading revenue. Citigroup’s larger-than-expected earnings per share, for example, were almost entirely the result of the corporate rate cut and its stock repurchases.

Large foreign banks doing business in the United States disclose income tax expenses for their American subsidiaries, but it is not clear how useful they are for assessing whether the United States tax bill has had an effect on their tax rates. That’s partly because they don’t have to break out, in public disclosures, their liability under the BEAT.

Those banks received what many analysts saw as a break from Treasury in December, when it issued preliminary regulations governing the BEAT., which is part of the tax law’s overhaul of how the United States taxes companies that operate in more than one country. That overhaul has taken a political and public-opinion back seat to the corporate rate cut and changes in individual taxes, but it has drawn intense activity from business lobbyists seeking to shape the new rules to minimize their tax bills.

The BEAT is meant to curb a practice known as “earnings stripping,” in which multinationals avoid American taxes by shifting profits to other branches of the company operating in lower-tax countries overseas — often in the form of interest payments.

It is a sort of minimum tax, forcing companies that send their profits offshore to pay at least some American tax on them.

But in its December regulations, which provided nearly 46,000 words of details on how the provision applies to companies, Treasury essentially said certain interest payments made by foreign-owned banks are not subject to the calculations that determine that minimum tax. The move alarmed some former congressional aides who were involved in the tax effort. They said the exemption ran afoul of lawmakers’ intent in passing the tax overhaul.

The law’s authors tried to balance the international provisions to favor neither American-based companies nor foreign-owned ones. Throughout its drafting, they repeatedly asked the congressional Joint Tax Committee to run tax models to simulate the effects on both types of companies, eventually finding a near-50-50 balance. The Treasury regulations, which included the exemption that foreign banks had pushed for, could upset that balance.

Foreign banks received the regulations warmly but asked Treasury to go even further, in the name of fairness. The Institute of International Bankers, an industry lobbying group, told Treasury officials in a letter that it “wishes to express its appreciation for the strides made by the proposed regulations.”

The institute went on in the letter to push Treasury for further tweaks, in final regulations, that would reduce potential bank liability under the tax even more. Those highly technical changes would, if adopted, essentially exclude an even broader set of payments between banks and their foreign affiliates from the minimum tax calculations.

Bank reactions to the December regulations have been mixed, in part because some foreign banks are structured in ways that expose them to more BEAT issues than others. UBS officials reported that they expected not to incur any liability under the minimum tax, in light of the regulations. Credit Suisse said in February that it expected to still have to pay the tax, which it expected would add about 2 percentage points to its effective tax rate.

Treasury is expected to issue final regulations this summer, and the banks are still trying to win favorable changes to the preliminary rules.

“We continue to have discussions with Treasury about the unique nature of foreign banks operating in the U.S. and how various aspects of the proposal impact our U.S. operations,” said Chris Rosello, United States head of public affairs for HSBC.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Big Banks Are Earning Billions of Dollars. Trump’s Tax Cuts Are a Big Reason.

Westlake Legal Group 17banks1-facebookJumbo Big Banks Are Earning Billions of Dollars. Trump’s Tax Cuts Are a Big Reason. Wells Fargo&Company United States Politics and Government United States Economy United States Taxation Stock Buybacks Moynihan, Brian T JPMorgan Chase&Company Interest Rates Goldman Sachs Group Inc Federal Taxes (US) Federal Reserve System Donofrio, Paul M Credit and Debt Company Reports Citigroup Inc Banking and Financial Institutions Bank of America Corporation

The five largest banks in the United States reaped tens of billions of dollars in profits in the first half of the year, thanks in part to a strong economy and to the lingering effects of President Trump’s tax cuts.

Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase and Wells Fargo have all seen their tax rates decline to 22 percent or less as a result of the cuts, compared with rates of around 30 percent three years ago, one of the most consistent sources of strength apparent in quarterly earnings reports issued this week.

JPMorgan’s tax rate fell to just under 15 percent in this year’s second quarter, although the bank said it would probably inch higher later in the year. Wells Fargo’s tax rate for the quarter was just over 17 percent, and Bank of America’s was 18 percent.

The reduced rates helped offset a general decline in Wall Street trading revenue and added some pep to what would have otherwise been unremarkable quarterly performances by most of the banks.

Bank of America had the strongest results across the board among the five. It earned $7.3 billion from April through June, 8 percent more than it did during the same period last year. It also reported growth in deposits and loans to consumers.

“We see solid consumer activity across the board,” Bank of America’s chief executive, Brian Moynihan, said in a statement. He added that the country’s economy still appeared to be “steadily growing.”

JPMorgan’s overall results were strong, too: It earned $9.7 billion for the quarter, 16 percent more than in last year’s second quarter. Its credit card business boomed, but revenue from other kinds of loans fell.

Activity on Wall Street has faltered recently, with investors unsure of how to plan for fallout from Mr. Trump’s continuing trade war and the increasing likelihood that the Federal Reserve will begin to cut interest rates after a brief period of increases.

“We don’t know what kind of rate cut we’re going to get and we don’t know why,” Paul Donofrio, Bank of America’s chief financial officer, said. “That’s important.”

Lower interest rates could cause banks to earn less in interest on loans. Bank of America and JPMorgan both warned that the Fed’s likely shift toward lowering rates meant that they would probably earn less in the second half of the year than they originally anticipated.

Goldman Sachs was the only one of the five big banks to declare some type of win on Wall Street, although it was a partial one: an increase in revenue from trading stocks and certain kinds of derivatives. At $9.5 billion, Goldman’s overall quarterly profit was down 2 percent from the same period last year. It was the only one of the five to report a decline.

Citigroup may have gotten the most significant lift from a lower tax rate. The bank’s chief financial officer, Mark Mason, said the strength in Citi’s adjusted per-share earnings — $1.83, higher than Wall Street analysts’ expectations — was mostly a result of the lower rate and of a decline in its outstanding shares. The decline stemmed from Citi repurchasing shares.

Citi, Bank of America, JPMorgan and Wells Fargo said last month that they planned to repurchase a combined $105 billion in shares over the next year.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Being Transgender at Goldman Sachs

Goldman Sachs’s trading floors are vast rooms crammed with rows of tightly packed workstations, four monitors for every trader. The two-by-two grids tower over and swallow up their users, so that the only way someone can be identified from across the room is by the decorations affixed to the tops of the screens.

At one desk, a toy vulture peers down, held in place by wire feet. A stuffed eagle in a sports jersey sits atop another monitor. Flags: Brazil, Canada, Norway. A lacrosse stick juts out like a severed head on a pike.

One Wednesday in May, Maeve DuVally walked the rows in a pair of low-heeled black leather pumps, her ankles wobbling slightly. Her pink lipstick popped against her blonde hair, dark jacket and the pearls at her neck. Her eyelashes were full and inky.

Ms. DuVally, a spokeswoman for the bank, passed the flags and the lacrosse stick. She passed the vulture and the eagle. She passed one desk where a little tented card floated at eye level, bearing the Goldman Sachs logo, a rainbow-colored rectangle and the word “Ally.”

She approached the doorway to a senior executive’s office and leaned in. Its occupant, a man in gray dress pants, looked up at her quizzically.

“Hello,” she said, and waited.

“Maeve DuVally,” she said, after a moment.

“Hello,” the man said, blinking.

ImageWestlake Legal Group merlin_155599548_9f1f1c3f-1e22-41f8-8cae-7b6fbdfe2dab-articleLarge Being Transgender at Goldman Sachs Wall Street (Manhattan, NY) Transgender and Transsexuals Goldman Sachs Group Inc DuVally, Maeve Banking and Financial Institutions

Ms. DuVally, a managing director in the Goldman communications department, on her first day as Maeve.CreditGabriella Angotti-Jones for The New York Times

Michael DuVally,” Ms. DuVally said. “I’ve changed genders.”

“I did not recognize you!” the man said.

Ms. DuVally explained that she had not yet gotten around to telling all of her colleagues of her decision to come out as transgender. She told a story: One person she had shared the news with was a fellow member of a Goldman working group; he had replied, “Great — now we have another woman on the committee.” Ms. DuVally and the man in the office laughed at that. Then she said goodbye, and that she was looking forward to seeing him again at a meeting later that day. The man said softly, “New experiences for all of us.”

Wall Street has had a hard time kicking its reputation as a dismal place for people who aren’t straight white men. Gone — mostly — are the days when investment banks would pick up strip-club tabs and female employees were harassed as a matter of course. It may be harder now to find a trader nicknamed “Porno Ray” (he worked at Bear Stearns), and the Volcker Rule has taken the swagger out of the guys who used to walk away from a day’s work with enough cash to buy a new Lamborghini — or acted like it, anyway. Despite these advances, a fleece-vested bro culture remains, and there are still plenty of obstacles to success for minorities and women.

The group photo of Goldman’s 2010 managing director class, for example, is a sea of men with a sprinkling of women at the front. Ms. DuVally was in that class; she keeps the photo, in which her face appears above a suit and tie, on her desk. When she arrived for work as Maeve on the Tuesday after Memorial Day, only the second employee to use official channels to manage her transition at Goldman, she was testing just how tolerant and accepting a big American bank could be.

Goldman presents itself as being ahead of the curve on lesbian, gay, bisexual and transgender issues. It has offered health and relocation benefits to same-sex couples since 2000. It expanded its employee medical plan to cover gender reassignment surgery and hormone therapy in 2007, years ahead of JPMorgan Chase and Citigroup. This year, Goldman’s former chief executive, Lloyd Blankfein, received the Ally Award from the Lesbian, Gay, Bisexual & Transgender Community Center, a 35-year-old institution that supports the L.G.B.T. community in New York City.

Employees can choose to display posters and cards in their work areas that identify them as allies dedicated to “encouraging the use of inclusive language” and “mentoring and being a resource for L.G.B.T. people.” A giant rainbow pride flag is affixed to a window high above the equities trading desk, beside the office of R. Martin Chavez, the co-head of Goldman’s securities division and the firm’s most senior openly gay executive.

Goldman still has problems. On June 5, William Littleton, a former vice president who is gay, sued the bank for discrimination. He said his direct supervisors had failed to act when other bank employees undermined him, including when one colleague explained that he had been kept off a conference call because he sounded “too gay.” One supervisor, he said, had belittled him with comments like, “You look so Miami today.”

A shelf decorated with trophies and books in Ms. DuVally’s office.CreditGabriella Angotti-Jones for The New York Times

There is one other Goldman employee who has formally transitioned at work (that is, involved the human resources department, changed names, made an announcement and so on): Katie Krasky, an associate on Goldman’s regulatory policy team. She was hired in February 2017, told her bosses that June of her intention to transition, and debuted her new name and pronouns that October.

Ms. Krasky said in an interview that she had not known she was a pathbreaker. She assumed there must have been other employees like her. “While I wasn’t able to find or connect with anyone who identified as transgender during that process, I felt it was probably foolish to assume I was the first, just because of the math,” she said. “It didn’t seem like it was very likely.”

A 2017 study published in the American Journal of Public Health estimated that 0.39 percent of adults in the United States are transgender. If that proportion were applied to Goldman’s ranks, there would be as many as 140 transgender employees among the bank’s 36,000.

Goldman’s head of human resources, Dane Holmes, said Ms. DuVally and Ms. Krasky weren’t the only two transgender employees at Goldman, they’re just the only ones who have formally transitioned while at work. “There’s a lot of fluidity around how you think about sexual identity,” Mr. Holmes said. “We’ve had people who came into the firm at some different stages of their transition.”

One employee, Mr. Holmes said, had a name that befitted both a man and a woman, so she simply transitioned without any official announcement. “There are certainly people who work here who are transgender who have chosen not to self-ID,” he said. He declined to say exactly how many.

In the Goldman Sachs communications department, Ms. DuVally and her colleagues are concerned to an extreme with the stories they tell, and with what they are and are not allowed to say. Recently, while visiting the bank, I made an idle comment about Goldman’s relaxed new dress code. Ms. DuVally replied, “You can’t put this in your story, but my assistant wears jeans every day now.” Another co-worker, who has worked with Ms. DuVally for years, told me he had never seen her happier. A few hours later, he emailed to say he could not be quoted saying that.

Ms. DuVally’s old suit closet at Goldman Sachs.CreditGabriella Angotti-Jones for The New York Times

Ms. DuVally, who has worked at Goldman for 15 years, is 58 and twice divorced, with three children. In an interview, she said that she had been unhappy for most of her life. “I drank too much in the past, and I was extremely self-critical,” she said. “In retrospect, I can say now I didn’t like the fact that I was a male.”

Before she started dressing in women’s clothing, she said, she could not remember looking at herself in the mirror and feeling anything other than disgust. “I believe from a very early age I’ve wanted to be a woman,” she said. Somehow, she added, the sense was both vague and strong. “I did not like anything that was masculine about me. But I never, on a conscious level, thought that there was anything I could do about that.”

Last year, Ms. DuVally said, she discovered that she liked wearing women’s clothing. She did so on weeknights, at her apartment on the Upper East Side. She found a support group for transgender people and made new friends.

At first, the thought of expressing herself in this way at Goldman did not cross her mind. But then, beginning late last year, she occasionally wore light makeup to work. Sometimes she would appear before her colleagues wearing bright red or pink lipstick. A few nights before Thanksgiving, she wore makeup along with a tuxedo to a black-tie event, where she mingled with other bank employees and journalists.

Ms. DuVally saw herself as living two lives throughout the fall and winter. One, where her new friends knew her as Maeve, was exciting and filled with a happiness she had never before experienced. The second, her life at work, where she had to keep being Michael, was grinding away at her.

In December, on the mornings she went to work from yoga class, she began showing up in flowy yoga pants and boots with heels. She would ride the two elevators it took to get to her office on the 29th floor and then change into a suit. The form of Michael felt stifling. Sometimes she couldn’t even last the whole day downtown in the unnatural feeling of her men’s clothing. She’d get dressed in women’s clothes and makeup while still at work, in preparation to leave at the end of the day.

“I believe from a very early age I’ve wanted to be a woman,” Ms. DuVally said.CreditGabriella Angotti-Jones for The New York Times

Then, in March, an invitation went out to the bank’s employees: Goldman’s L.G.B.T. network was hosting a panel on “how to be stronger allies to the transgender and gender non-conforming community.” Ms. DuVally showed up to the event, in Goldman’s auditorium, in a wig and makeup, and afterward she introduced herself to some bank employees.

Ms. DuVally found the event encouraging. One co-worker, who watched it remotely from London, took copious notes and emailed them to the communications group afterward. Everyone who attended received laminated cards explaining correct pronoun usage. Ms. DuVally realized, she said, that it was time to come out as transgender at Goldman.

The bank is a place of rigid protocols, and she knew her debut as Maeve would require weeks of preparation. After Ms. DuVally informed her bosses of her decision, a human resources specialist was assigned to handle her case. Ms. DuVally got new business cards, a new ID badge, a new email address. She got a new profile in Goldman’s internal directory, so that when she joined work discussions digitally, the meeting software would display to all participants her smiling, feminine face.

A co-worker of Ms. DuVally’s in London used her access to the bank’s employee website to change Ms. DuVally’s name in past internal articles from Michael to Maeve. The bank’s security team let her into their offices to have her new-look photograph taken at a time when no one she knew and hadn’t told about her transition would chance upon her.

Ms. DuVally and her colleagues in the communications department knew her decision would be of interest to journalists, and they discussed how to keep it a secret until the last minute. In mid-May, Ms. DuVally attended a happy hour Goldman hosted for reporters at a bar overlooking New York Harbor. She was still calling herself Michael, still dressed as a man. Tucked into her jacket, out of sight for most of the evening, was a large, bubblegum-pink wallet. I noticed it when she took it out at the bar, and Ms. DuVally hurried me away from the group. Only out of earshot, and after stipulating that it was a secret, did she explain why.

In the corporate sphere, Ms. DuVally imagined that her transition would be a binary thing — that a switch would be flipped. But word was getting out. People outside her immediate circle learned of her transition plan. On May 22, when I interviewed Asahi Pompey, Goldman’s global head of corporate engagement, she gushed about the name “Maeve.” Later that day, when I told Ms. DuVally, she was surprised Ms. Pompey was aware of it.

Ms. DuVally’s new ID.CreditGabriella Angotti-Jones for The New York Times

On May 28, Ms. DuVally arrived at Goldman shortly after 7 a.m. in an outfit assembled from items she’d bought at Theory: A white shirt with thin, black, vertical stripes that fanned out at the waist, slim black slacks and a black jacket. On the 29th floor, a colleague greeted her: “What did you get up to this weekend?”

“Oh, manicure, pedicure, eyelash extensions,” Ms. DuVally said. “You know.”

“Honestly, I should have done all that stuff, too,” the woman said.

Everyone seemed to be focusing more on clothes, nails, hair and the other aspects of the traditional female corporate uniform than they might have on a less consequential day. It didn’t read as shallow; it was just the easiest way to connect with Ms. DuVally, to convey warmth and support.

Andrew Williams, a Goldman spokesman, stuck his head into Ms. DuVally’s office soon after she arrived. “Welcome, Maeve,” he said, smiling. Ms. Krasky sent an email: “I’m so glad to know the big day is finally here.” Another woman hugged Ms. DuVally in the hallway, saying, “Oh, wow, you look gorgeous.”

“I’ve been hugging a lot of people,” Ms. DuVally said. “Before I decided to come out, I don’t think I had ever hugged anyone at work.”

That first day, Ms. DuVally discovered a secret the rest of the women on the 29th floor already knew: The women’s bathroom had a cushioned leather bench. She used the space for the first time, bringing her purse with her to check her makeup.

There were hiccups. The badges Goldman’s security apparatus printed out for her visitors still referred to her as Michael, and at one point, Mr. Williams accidentally used the wrong pronoun. Ms. DuVally said she had prepared herself for little slips like those. She knew some younger transgender people who got angry every time someone misgendered them, she said, but she had decided not to let it bother her too much.

She received gifts, including a makeup bag. The commodities trading team sent flowers, a tightly packed cluster of white orchids. “During this important point in your life, we wanted to let you know how happy we are for you,” a card read. “We are full of genuine admiration and respect for your bravery and choice to be happy.”

On the evening of June 6, Ms. DuVally, in dress slacks and a soft blue blouse, was one of a dozen Goldman Sachs volunteers at the Children’s Museum of Manhattan’s Pride Night. They looked on as 30 or so kids raced around the museum after hours, splashing in its water exhibit and painting a giant pride flag on a canvas spread across the floor.

Like many of the other volunteers, Ms. DuVally did not know exactly what to do. She eventually sat down at a child-sized table arrayed with paper and art supplies. A girl of perhaps 6 sat down across from her, and they both began to draw. The girl wrote her name, “Amelia,” in light blue. Ms. DuVally chose a different color — blue, red, pink, green and crimson — for each of the letters in MAEVE.

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Bank of America Will Lift Minimum Wage to $20, as Lawmakers Spotlight Inequality

Westlake Legal Group bank-of-america-will-lift-minimum-wage-to-20-as-lawmakers-spotlight-inequality Bank of America Will Lift Minimum Wage to $20, as Lawmakers Spotlight Inequality Wells Fargo&Company Wages and Salaries State Street Corporation Morning Joe (TV Program) minimum wage JPMorgan Chase&Company House Financial Services Committee Goldman Sachs Group Inc Citigroup Inc Banking and Financial Institutions Bank of New York Mellon Corporation Bank of America Corporation
Westlake Legal Group 09BANKOFAMERICA-facebookJumbo Bank of America Will Lift Minimum Wage to $20, as Lawmakers Spotlight Inequality Wells Fargo&Company Wages and Salaries State Street Corporation Morning Joe (TV Program) minimum wage JPMorgan Chase&Company House Financial Services Committee Goldman Sachs Group Inc Citigroup Inc Banking and Financial Institutions Bank of New York Mellon Corporation Bank of America Corporation

A day before he was to appear at a congressional hearing focused on the biggest banks in the United States, Bank of America’s chief executive, Brian Moynihan, said on Tuesday that the bank planned to raise its minimum wage to $20 an hour from $15 over the next two years.

It was another example of how big banks are trying to deal with shifting political winds in Washington, where they face new scrutiny under the Democrats, who now control the House of Representatives.

Income inequality has become a key focus of some liberal lawmakers, some of them part of the tide of Democrats swept into office in last year’s midterm elections. And now the banks’ leaders must explain to progressive representatives like Maxine Waters of California and Alexandria Ocasio-Cortez of New York why they are paid more than 700 times what low-wage workers, including some tellers in their branches, earn each year.

Appearing on the MSNBC show “Morning Joe,” Mr. Moynihan said that starting next month, Bank of America’s lowest-paid employees would earn $17 an hour. The hourly rate would increase incrementally over the next two years until it reached $20, the highest minimum wage paid by any of the country’s largest banks.

JPMorgan Chase said last year that it was using some of the savings it had realized as a result of the Trump administration’s corporate tax cuts to raise its minimum wage to $15 an hour.

Mr. Moynihan is set to appear before the House Financial Services Committee, where he and leaders of Bank of New York Mellon, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and State Street Corporation are expected to be questioned on issues like executive pay, diversity, fair lending and the financial services industry’s ties to gun makers.

For years under Republican control of the committee, members focused on the effects of Dodd-Frank financial regulations. Now, instead of lamenting the constraints of stricter regulations, banks are being forced to respond to lawmakers’ inquiries about compensation and fair competition. Ms. Waters, who is chairwoman of the committee, recently harangued Wells Fargo’s chief executive, Timothy J. Sloan, for receiving a $2 million bonus even as regulators continued to criticize the bank’s performance. (Mr. Sloan resigned on March 28.)

The change is reflected in the topics that banks and trade groups choose to address at industry events. Discussions of income inequality are popping up in places like the Bank Policy Institute’s annual New York conference and the World Economic Forum’s retreat in Davos, Switzerland.

“Meet the new hyper-attuned bank C.E.O.s.,” said Mike Mayo, an analyst for Wells Fargo who covers Bank of America and other big banks. “If the top levels of the financial industry were tone-deaf around the financial crisis, this is the opposite.”

Big banks face growing pressure to show they are treating their less-powerful customers and employees well. On Tuesday at Bank of New York Mellon’s annual shareholder meeting, the Rev. Jesse L. Jackson, the civil rights leader, was in the audience. During a question-and-answer session, he first praised the bank’s chief executive, Charles W. Scharf, “on your efforts to achieve diversity across the United States in a fundamental way.”

But, he added, the bank still has work to do. “There’s too much disparity, too little transparency,” he said. “Are you preparing to raise the wages of workers, for example?”

Across the country, workers in low-wage jobs often find they need government assistance even though they have full-time employment, or even several jobs. A 2015 report from the Center for Labor Research and Education at the University of California, Berkeley, found that bank tellers were among those who struggled to earn enough.

A spokeswoman for Bank of America said the new wage would affect tellers as well as workers in consumer banking, technology and operations and staff support, among other areas. The bank has over 200,000 employees.

At Wells Fargo, which has been working to repair its culture and its standing with regulators after a series of scandals, some employees have had their pay stagnate or shrink as the bank reshaped its incentive plans so that they no longer encouraged cheating. Some rank-and-file employees have reported difficulties making ends meet. In 2017, Wells Fargo set its minimum wage at $15 an hour, up from $13.50.

Mr. Scharf said at Tuesday’s meeting that Bank of New York Mellon had recently raised its minimum wage to $15 an hour.

Another source of pressure is an effort by the wealth management company Arjuna Capital to get several big banks, including Bank of America and Bank of New York Mellon, to disclose comparisons of the pay for men and women, and for white employees and minorities.

“The most striking feature of these banks is that they’re run by white men, and that there isn’t a balance of gender and racial equity in the top jobs,” Arjuna’s managing partner, Natasha Lamb, said in an interview on Tuesday. “Really, the goal of our proposal is to create a more diverse, balanced leadership.”

Bank of America and Bank of New York Mellon both advised shareholders to vote against Arjuna’s proposal this year, as did Wells Fargo and JPMorgan. Citigroup revealed last year that the median pay gap between its male and female employees was 29 percent — women earned that much less — while the gap between white and minority workers was 7 percent.

Mr. Mayo said the wage increase announced by Bank of America also reflected a trend among large banks toward employing fewer low-wage employees like tellers in favor of more highly skilled workers like financial advisers and technologists who help operate digital banking services. Mr. Moynihan was paid more than $26 million in 2018.

The Committee for Better Banks, an activist group that promotes employee unions, reported on Tuesday that in 2018, the six largest banks — JPMorgan, Citibank, Wells Fargo, Bank of America, Goldman and Morgan Stanley — laid off more than 3,000 employees in total, an increase from 349 the previous year. Last year also had record annual profits for the banks.

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Bank of America to Raise Minimum Wage to $20 an Hour

Westlake Legal Group 09BANKOFAMERICA-facebookJumbo Bank of America to Raise Minimum Wage to $20 an Hour Wells Fargo&Company Wages and Salaries State Street Corporation Morning Joe (TV Program) minimum wage JPMorgan Chase&Company House Financial Services Committee Goldman Sachs Group Inc Citigroup Inc Banking and Financial Institutions Bank of New York Mellon Corporation Bank of America Corporation

A day before he was to appear at a congressional hearing focused on the biggest banks in the United States, Bank of America’s chief executive, Brian Moynihan, said on Tuesday that the bank planned to raise its minimum wage to $20 an hour from $15 over the next two years.

Appearing on the MSNBC show “Morning Joe,” Mr. Moynihan said that starting next month, Bank of America’s lowest-paid employees would earn $17 an hour. The hourly rate would increase incrementally over the next two years until it reached $20, the highest minimum wage paid by any of the country’s largest banks.

JPMorgan said last year it was using some of the savings it realized as a result of the Trump administration’s corporate tax cuts to raise its minimum wage to $15 and $18 an hour.

Mr. Moynihan’s announcement came as he prepared to appear before the House Financial Services Committee, where he and leaders of Bank of New York Mellon, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and State Street Corporation are expected to be questioned on issues like executive pay, diversity, fair lending and financial services industry’s ties to gun makers.

After years of Republican control of the committee, when members focused on the effects of Dodd-Frank financial regulations, the Democratic takeover of the House is placing the country’s biggest banks under new scrutiny. Instead of lamenting the constraints of stricter regulations, they are being forced to respond to lawmakers’ inquiries about whether they are too big and crowding out smaller lenders.

The change is reflected in the topics that banks and trade groups choose to address at industry events. Discussions of income inequality are popping up everywhere from the Bank Policy Institute’s annual New York conference to the World Economic Forum’s retreat at Davos.

“Meet the new hyper-attuned bank C.E.O.s.,” said Mike Mayo, an analyst for Wells Fargo who covers Bank of America and other big banks. “If the top levels of the financial industry were tone deaf around the financial crisis, this is the opposite.”

Mr. Mayo said that the wage increase announced by Bank of America also reflected a trend among large banks toward employing fewer low-wage employees like bank tellers in favor of more highly skilled workers like financial advisers and technologists who help operate digital banking services.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com