|Bid||92.10 x 1300|
|Ask||92.11 x 800|
|Day's range||92.00 - 94.10|
|52-week range||76.91 - 141.10|
|Beta (5Y monthly)||1.17|
|PE ratio (TTM)||10.36|
|Earnings date||14 Jul 2020|
|Forward dividend & yield||3.60 (3.79%)|
|Ex-dividend date||02 Jul 2020|
|1y target est||109.75|
As previously announced, JPMorgan Chase & Co. (NYSE: JPM) ("JPMorgan Chase" or the "Firm") will host a conference call to review second-quarter 2020 financial results on Tuesday, July 14, 2020 at 8:30 a.m. (Eastern). The results are scheduled to be released at approximately 7:00 a.m. (Eastern). The live audio webcast and presentation slides will be available on www.jpmorganchase.com under Investor Relations, Events & Presentations.
(Bloomberg) -- Earlier this year, thousands of lenders rushed to arrange loans under the U.S. government’s Paycheck Protection Program. Now, some of them will be rewarded handsomely.More than 30 banks across the country, including dozens of community banks and some lenders with more than $1 billion in assets, could generate fees that surpass their 2019 net revenue before set-asides for loan losses, according to a study distributed Tuesday by S&P Global Market Intelligence. The firms that will reap the biggest gains are the ones that punched above their weight in arranging loans for the rescue program.The Small Business Administration’s $669 billion Paycheck Protection Program was launched in April as part of the $2 trillion CARES Act passed by Congress to help the U.S. economy through the coronavirus pandemic. The program was initially marred by confusion and technological glitches as banks large and small raced to secure loan funding for their clients.As of June 30, lenders arranged almost 4.9 million loans supporting more than 51 million jobs, according to the SBA. Fees range from 1% to 5% for each loan, depending on its size.Cross River Bank, a Fort Lee, New Jersey-based firm with $2.5 billion in assets at the end of the first quarter, arranged more than $5 billion in PPP loans, making it the 13th-most-active lender, according to the SBA. S&P estimates that Cross River will pull in $163 million in related fees, more than double its pre-provision net revenue last year.JPMorgan Chase & Co., Bank of America Corp., Truist Financial Corp., PNC Financial Services Group Inc. and Wells Fargo & Co. were the top five PPP lenders by volume, arranging a combined $91 billion as of June 30, SBA figures show. JPMorgan could make $864 million in related fees, according to S&P, but that will “represent a modest boost to the top line.” And JPMorgan is among the lenders, also including Bank of America and Wells Fargo, that plan to donate the fees.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- As the U.S. deals with social unrest and the focus on fairness and equality grows, many public and private leaders have asked a simple question: “How can we do better?” It’s a fair question, one which got me thinking about the public finance sector, long considered among the most diverse and inclusive areas in investment banking. While this sector has seen many positive developments over the 30-plus years since I started my career on Wall Street, there is clearly much work to do.As of late, my phone has been ringing off the hook with calls from other chief executives wanting to know what they can do better when it comes to promoting diversity and inclusion. We have heard this narrative before, yet never with this great a sense of urgency. Some major banking institutions have gone beyond simple lip service and begun to hold leaders directly accountable for diversity goals and objectives. Major cities such as New York, Chicago, Atlanta and Washington have been consistent leaders in not just a broad commitment to inclusion, but have gone the extra mile to ensure equality as well. They have made the deliberate choice of involving minority- and women-owned business enterprise banking firms, and other diverse professional-services firms, in leading and meaningful roles. This is not just about offering small monetary compensation to appear inclusive. These cities further a broader mission of building trust, respect and reputation in these firms — in an industry where those characteristics mean everything. It has been through the responsibility shown by many entities in the public sector that we have started to see real change trickle into other areas of finance, such as corporate banking and the buy-side of the industry. Institutions and organizations in other areas should be commended as well. They include sub-sectors such as transportation, water and sewer, housing and K-12 education. However, one sector has had a poor and often erratic record with regard to inclusion and diversity: higher education. It is a disappointing irony that an industry whose institutions have often been the most vocal promoters of tolerance, inclusion and diversity, should be one so lacking in the tangible promotion of those values within the financial industry.The higher education sector has issued a record volume of debt since the Covid-19 shock began in March — over $12 billion. While some major universities and colleges have an open-door policy in terms of inclusion and equity for professional-services providers, others have been shockingly closed, seemingly inconsistent with their core mission. For example, in the mighty Ivy League, only Penn, Princeton, Columbia and Cornell regularly have minority- and women-owned firms in their bond underwriting syndicates, along with other professional-services providers for bond transactions. Harvard, Yale, Brown and Dartmouth rarely, if ever, have such companies. Almost none have included minority law firms. We’ve seen much the same disappointment at other prestigious institutions, including the Massachusetts Institute of Technology, Johns Hopkins, the California Institute of Technology, Notre Dame and Boston College, to name a few.Harvard says its mission is to educate its citizens into leaders of our society. Yale takes it one step further: Its mission is to educate leaders who serve "all sectors of society." I suspect Yale didn’t apply that principle to its $1.5 billion transaction priced in early June, one in which the school used no minority-led law firms and just three major firms — Barclays Plc., Goldman Sachs Group Inc. and JPMorgan Chase & Co. — for its underwriting syndicate. And remember, Yale is located in New Haven, Connecticut, a city where almost two-thirds of the residents are people of color.But this is not just about the Ivy League or private schools. Ohio State has beaten Michigan eight straight years in football, and it appears that the Buckeyes beat the Wolverines in the inclusion area as well. Michigan issued almost $1 billion in debt recently and failed to include a single minority-owned law firm or underwriter. Whereas Ohio State recently executed a $187 million transaction that did include a minority underwriter — it joins fellow Big Ten members Northwestern and Purdue, which have also recently completed deals with minority- and women-owned businesses in their transaction teams. Unfortunately, Michigan State, Indiana, Nebraska and Penn State have not, and each executed transactions that exceeded $500 million. We have seen similar inconsistencies out west. The University of Southern California, the University of California Regents, the Cal State System and the Universities of Washington and Colorado have been very inclusive. On the other hand, Stanford, Arizona, Arizona State, Oregon and Oregon State have lacked minority participation. Elsewhere, major systems that should be commended for their inclusion policies include the University of Texas, Texas A&M and the Universities of Massachusetts and Connecticut. Private institutions such as Temple, the University of Chicago and Kent State deserve solid marks as well. Some of the least inclusive schools have been in southern states. Georgia Tech, Emory, Duke, North Carolina, North Carolina State, Vanderbilt and Wake Forest have not used minority firms. These are institutions which have never failed to be inclusive on the gridiron or hardwood, but this “inclusivity” would seemingly stop at professional services.More broadly, in the municipal and not-for-profit sectors — which in many respects are not dissimilar from the nation as a whole — there has been much progress, but much work remains. Many of our municipal issuers understand this and have been inclusive and equitable, with positive results. New York City’s first deal after the onset of Covid-19 was senior-managed by a minority firm, to spectacular results. The State of Ohio recently did the same for an $800 million taxable and tax-exempt transaction that generated over $360 million in much-needed budgetary and cash-flow savings. Finally, many minority- and women-owned business enterprise firms have formed partnerships with large banks to provide additional liquidity to universities. The argument that an institution only uses so-called “credit banks” is no longer valid. Minority- and women-owned firms have time and again shown the capability to provide outstanding execution on some of the largest and most complex financial transactions in the country. It is time that grand American institutions such as Harvard, Yale, Stanford, Duke, Michigan and the like give their coveted stamps of responsibility and trust to minority firms that can help universities build a capital structure worthy of their academic prowess.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Jim Reynolds is the chairman and chief executive of Loop Capital.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Transparency and public trust are essential to effective bank regulation. These guiding principles were severely compromised in the years leading up to the 2008 financial crisis. Instead of simple, straightforward metrics of bank solvency, capital requirements became an exercise in gamesmanship. Regulators deferred to banks’ own opaque and incomprehensible models of risk to determine how much capital they needed, deeming them “well-capitalized” when the banks were anything but. Reforms adopted after the crisis wisely added simpler, objective capital standards, complemented by stress tests that publicize whether large banks have sufficient capacity to weather severe economic conditions.Unfortunately, last month’s confusing and vague pronouncements by the Federal Reserve of this year’s stress test results undermined those principles. Instead of reassuring the public, they have created more uncertainty as to the strength of the banking system.Much criticism has centered on the failure of the Fed to publish bank-specific results under its “enhanced sensitivity analysis,” which took into account worsening economic scenarios caused by the Covid-19 pandemic. The stress scenarios the Fed had announced in February were not as severe as the path the economy is on now. But the Fed only published bank-specific results under February’s now essentially irrelevant assumptions.Less noticed, but we feel equally important, was the failure of the Fed to publish an enhanced sensitivity analysis using a simpler, more reliable measure of financial strength called the leverage ratio. Instead, the Fed relied solely on banks’ “risk-based ratios,” which seek to measure capital adequacy in relation to judgments about the riskiness of banks’ assets. Risk-based ratios failed spectacularly in the lead up to the financial crisis as large banks took huge, highly leveraged stakes in securities and derivatives tied to mortgages because they and their regulators deemed those assets low risk.After the crisis, global consensus emerged that regulators should backstop risk-based capital rules with leverage ratios, which proved to be more reliable indicators of solvency during the financial crisis. For the largest banks, these supplemental leverage ratios require a minimum of 5% equity funding for the banking organization, and 6% for subsidiaries insured by the Federal Deposit Insurance Corp.A review of the bank-specific results published by the Fed using February’s pre-pandemic assumptions shows that some large banks would be operating with thin capital margins even under those more benign scenarios. For instance, Goldman Sachs’s supplemental leverage ratio dipped as low as 3.5%; Morgan Stanley, 4.5%; JPMorgan Chase, 5.1%. Unfortunately, we don’t know how these and other large banks will fare under the more-distressed conditions caused by the pandemic. The Fed’s enhanced sensitivity assessment only disclosed aggregate risk-based ratios. These ranged from 9.5% for a “V-shaped” recovery to 7.7% for a more severe “W,” with the bottom 25th percentile of banks going as low as 4.8% in a “W” scenario. Leverage ratios are typically less than half of banks’ risk-based measures. Indeed, a major concern about risk-based ratios is that they imply capital levels greater than they actually are. Thus, it is likely there were a number of banks with stress leverage ratios below 3% in the Fed’s sensitivity analysis, far too thin to keep them lending and solvent without government support.The failure to disclose leverage ratios in the pandemic sensitivity analysis is consistent with the Fed’s rulemaking in March to eliminate leverage requirements from their stress tests. Unfortunately, it is not the only step regulators have taken to marginalize leverage ratios. They have also allowed large banks to remove “safe assets” such as Treasury securities and reserve deposits from the supplemental leverage ratios calculation. But the relatively low requirements were calibrated based on the assumption that they would apply to all of a banks’ assets, including safe assets as well as risky exposures such as uncleared derivatives and leveraged loans. Removing safe assets without raising the required ratio will eventually lead to significant reductions in capital minimums, according to regulators’ estimates: $76 billion for banking organizations and more than $55 billion for their insured subsidiaries.Regulators have said this step was necessary to “support credit to households and businesses.” But this is hard to reconcile with their refusal to request suspension of bank dividend payments. (They did finally impose a modest cap, which will still permit most banks to continue paying dividends at their first quarter levels.) Retaining that capital would give banks the ability to expand support for the real economy without weakening their capital position. FDIC-insured banks paid $30 billion in dividends to their holding companies in the first quarter. If that $30 billion had stayed on banks’ balance sheets, it could have supported nearly a half trillion dollars in additional capacity to take new deposits and make loans.Moreover, we challenge whether this change will further its stated goal to increase Main Street lending. It will instead create incentives to reduce lending. A number of banks will most likely need to improve their capital ratios as a result of the Fed’s continued stress assessments. But to do so, they can simply cut back on loans, which have relatively high risk-based capital requirements, and shift into U.S. Treasuries, which now have no capital requirements. They will be able to boost their risk-based ratios without having to curb dividends or issue new equity.Regulators have said removing Treasury securities and reserve deposits from the leverage ratio calculation is temporary, but bank lobbyists are expected to seek legislation making it permanent as part of the next stimulus package. Banking advocates are also pushing regulators to finalize pending changes to the supplemental leverage ratios which would reduce required capital at the eight largest FDIC-insured banks by $121 billion, or 20% on average. If the banking lobby is successful, we fear there won’t be much left of meaningful leverage restrictions.Bank capital funding requirements are not unnecessary red tape as bank lobbyists try to portray them. They are essential to financial stability. Studies show that highly capitalized banks do a better job of lending than highly leveraged ones, especially during economic stress. The previous financial crisis demonstrated how unreliable risk-based ratios can be and the need to backstop them with overarching leverage constraints on large financial institutions. Greater reliance on simpler, transparent leverage ratios was central to regaining public trust in the solvency and resilience of the banking system. Their demise will force the public to rely on the Fed’s and big banks’ complex and nontransparent risk models. Bank capital levels will once again become an insiders’ game.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Sheila Bair was chair of the Federal Deposit Insurance Corp. from 2006 to 2011.Thomas Hoenig was vice chair of the Federal Deposit Insurance Corp. from 2012 to 2018.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Neither Uber Technologies Inc. nor Postmates Inc. are profitable. They’re hoping that a combination of the two businesses will somehow get them there.Uber said Monday it will spend $2.65 billion for the San Francisco-based food delivery company Postmates. The all-stock transaction is a bid to accelerate a path to profitability set by Uber Chief Executive Officer Dara Khosrowshahi and deliver growth rates once typical of Uber’s ride-hailing operation. Both aspects of that strategy rely on food delivery, which has gotten a boost from the coronavirus pandemic.The deal is a relatively modest outcome for Postmates, a pioneer of the gig economy that was outmaneuvered by deep-pocketed competitors. The privately held company had been valued at $2.4 billion in an investment last year, a person with knowledge of the matter said at the time.For Uber, the purchase comes at a reasonable price and could help lead to a rational—and perhaps someday, profitable—market, said Benjamin Black, an analyst at Evercore ISI. “You had four players who were very aggressive on price and were essentially giving away food for free,” said Black. “Rational pricing will start to kick in after consolidation.”Uber estimates that it will issue about 84 million shares of common stock for 100% of the fully diluted equity of Postmates, the company said in a statement Monday. Shares of Uber rose about 5% during trading Monday.Early this year, Uber was expecting to turn its first quarterly profit by the end of 2020. The virus forced a swift reassessment of that plan. Uber revised the estimate in May targeting a quarterly profit in 2021.Since the start of the pandemic, Uber has cut more than a quarter of its staff and exited or pared back some businesses, such as electric bikes and financial services, so it could focus on core areas: ride-hailing and food delivery. Growth in Uber’s core rides business was slowing even before the pandemic drove a first ever decline in bookings in the first quarter. Global rides plummeted 70%, Khosrowshahi said in June.Uber Eats has been a bright spot for the company as stay-at-home orders and restaurant closures have prompted more customers to order in. Food-delivery bookings more than doubled for Uber in the second quarter and rose about 67% for Postmates, Khosrowshahi said in the statement Monday.The company sees advantages from the Postmates deal beyond meal delivery. Postmates was a pioneer in so-called delivery-as-a-service, complementing Uber’s efforts in shuttling groceries, essentials and other goods, the company said. Restaurants and other retailers will benefit from tools and technology to connect with a bigger customer base, according to the statement.“Platforms like ours can power much more than just food delivery—they can be a hugely important part of local commerce and communities, all the more important during crises like Covid-19,” Khosrowshahi said.Postmates wasn’t Uber’s first choice. A proposed acquisition of Grubhub fell through last month when European rival Just Eat Takeaway.com NV bought it instead for $7.3 billion. Uber’s bid for Grubhub, one of the larger players in the U.S. food delivery market, was likely to have raised antitrust concerns, according to industry analysts. The two together would have controlled more than half the U.S. market.An acquisition of Postmates is less likely to raise regulatory scrutiny because it wouldn’t change the market as much. Postmates, a distant fourth, would give Uber a firm lead over Grubhub, but the combined company would still trail SoftBank-backed DoorDash Inc., the nationwide leader. Postmates would strengthen Uber’s position in Los Angeles and the American Southwest, two markets where the brand is strongest.Still, the deal has drawn some criticism. “Uber and Postmates’s business model is built on the exploitation of restaurants, workers, and consumers,” said Sarah Miller, executive director of the anti-monopoly group American Economic Liberties Project. “The Federal Trade Commission should refuse to rubber stamp this power grab.”Uber executives have been vocal for months about wanting to drive consolidation in the food delivery market. JPMorgan Chase & Co. was the financial adviser to Postmates, and Latham & Watkins LLP was its legal counsel. Uber’s legal counsel was Wachtell, Lipton, Rosen & Katz.In addition to competitive threats, the industry faces regulatory risks relating to worker classification. Uber and Postmates sued California last year, alleging a state law that took effect this year designed to give gig workers unemployment protections is unconstitutional.The acquisition of Postmates is expected to close in the first quarter of 2021, pending regulatory approval, Uber said. Pierre-Dimitri Gore-Coty, the head of Uber’s food-delivery business, is expected to remain in that role, a person with knowledge of the plan said Sunday night. Under their agreement, Postmates co-founder Bastian Lehmann and his team will stay on to manage the Postmates service, said another person, both of whom asked not to be identified discussing a private deal.In its statement, Uber said it plans to keep the Postmates app running separately, supported by a more efficient, combined merchant and delivery network.(Updates with profit context in the sixth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- A rally in the shares of Square Inc. over the past few months has pushed the market valuation of the digital-payment company into the ranks of some of the biggest U.S. banks.Square has a market capitalization of about $55 billion after doubling since May, making it worth more than Truist Financial Corp. and all but four banks in the KBW Bank Index. While it’s still dwarfed by JPMorgan Chase & Co. and Bank of America Corp., Square is less than $20 billion shy of Goldman Sachs Group Inc.’s market valuation, which stands at $74 billion.Square shares have continued to set records in recent weeks as optimism swells over the growth of digital payments, and as the coronavirus pandemic changes consumer and corporate spending behavior.The San Francisco-based company has benefited in particular from positive sentiment about its popular cash app, its handling of pandemic-related government stimulus payments and its ability to garner deposits from traditional banks with fewer digital offerings.Technology stocks have soared this year, while banks have sunk. The tech-heavy Nasdaq 100 Index has gained 21% and the KBW Bank Index has fallen 35%.Square rallied as much as 13% on Monday after an analyst suggested it could eventually win as much as 20% of U.S. direct deposit accounts.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Starting in October, the bank will have to maintain a common equity tier 1 capital ratio of 11.3%, up from its current 10.5% requirement.
JPMorgan Chase & Co <JPM.N> is eliminating terms like "blacklist," "master" and "slave" from its internal technology materials and code as it seeks to address racism within the company, said two sources with knowledge of the move. The terms had appeared in some of the bank's technology policies, standards and control procedures, as well in the programming code that runs some of its processes, one of the sources said. Other companies like Twitter Inc <TWTR.K> and GitHub Inc adopted similar changes, prompted by the renewed spotlight on racism after the death of George Floyd, a Black man who died in police custody in Minneapolis in May.
The Zacks Analyst Blog Highlights: Visa, JPMorgan Chase, Bank of America, Chevron and Eli Lilly
Former CFPB head Richard Cordray says Monday's Supreme Court ruling would mean quick removal of the agency's Trump-appointed director if the Democrats win the White House.
While JPMorgan (JPM) is likely to be able to maintain the current dividend payout in the near term, further worsening of the economic environment might compel it to cut the same.
(Bloomberg) -- The value of mergers and acquisitions fell 50% in the first half from the year-earlier period to the lowest level since the depths of the euro-zone debt crisis, as the coronavirus pandemic brought global dealmaking to an abrupt halt.Every region was hit by the economic impact of Covid-19, which gripped markets in March and sparked countrywide lockdowns. This situation has made face-to-face meetings, a lifeblood of M&A, all but impossible. Little more than $1 trillion of deals have been announced this year, making for the slowest first half since 2012, according to data compiled by Bloomberg.The sharpest fall has been in the Americas, where the value of deals is down 69% in the first half. While every major industry has been hurt, the financial sector fared better than most. It was boosted by insurance brokerage Aon Plc’s $30 billion offer for Willis Towers Watson Plc and Morgan Stanley’s proposed $13 billion acquisition of E*Trade Financial Corp. The top three advisers on deals targeting the Americas so far in 2020 were Morgan Stanley, Goldman Sachs Group Inc. and JPMorgan Chase & Co., the Bloomberg-compiled data show.Deals involving targets in Europe, the Middle East and Africa are down 32%. Large transactions that helped prevent a more dramatic drop include the $19 billion leveraged buyout of Thyssenkrupp AG’s elevator unit by Advent International and Cinven. There was also a recent flurry of activity in the Middle East, including Abu Dhabi’s sale of a $10.1 billion stake in its gas pipeline network that ranks as the biggest infrastructure transaction of the year. Goldman Sachs, JPMorgan and Rothschild & Co. were the busiest advisers on EMEA deals.Asia Pacific has held up better, with overall volumes falling just 7% and most sectors seeing smaller declines than in other parts of the world. The technology, media and telecommunications industry reported a 13% increase, helped by Indian billionaire Mukesh Ambani’s digital arm attracting $15 billion of investments from the likes of Facebook Inc. and KKR & Co. Another landmark transaction was Tesco Plc’s sale of Asian businesses to Thai billionaire Dhanin Chearavanont for more than $10 billion. The most active banks on deals in the region were Morgan Stanley, HSBC Holdings Plc and JPMorgan.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- China is attempting to create its own JPMorgan Chase & Co. The ambitions could prove hard to satisfy.Regulatory authorities may allow some of the largest commercial lenders into the brokerage industry to perform services that include investment banking, underwriting initial public offerings, retail brokering, and proprietary trading, local media outlet Caixin reported. With capital markets flailing and direct financing struggling to take hold as debt rises across the economy, what better way than to bring in its trillion-dollar whales to boost the financial sector?There is logic to this. Size matters, and the volumes could lead to success. China’s banks have more than $40 trillion in assets; the securities industry’s amount to around 3% of that. The largest lender, Industrial & Commercial Bank of China Ltd., had 32.1 trillion yuan ($4.5 trillion) in assets and 650 million retail customers as of March, according to Goldman Sachs Group Inc. The biggest broker, CITIC Securities Co., had 922 billion yuan and 8.7 million retail clients. Banks have thousands of branches with deeper distribution channels.But banks are the load-bearing pillars of China’s financial system. Regulators have asked lenders to show leniency with hard-up borrowers and to forego profits in the name of national service, in both tough and normal times. Granting brokerage licenses could help them create another channel of (small) profits.Banks stepping in where brokers have failed could help the broader capital markets. In theory, commercial lenders know how to deal with different types of risk, like with the ups and downs in the value of a security and market movements. They’re already big participants in bond markets and have access. Bringing banks into mainstream brokering could help reduce the intensity of risk associated with the trillions of dollars of credit being created in China every month. It may also help solve a persistent problem: the inefficient allocation of credit that has led to mispriced assets.All of this is contingent upon the banks pulling their weight. Going by past experiments, they haven’t brought the heft that Beijing had hoped. Consider China’s life insurance industry. It took bank-backed players in this sector a decade to build a foothold. Their market share grew to 9.2% last year from 2.5% in 2010. The brokerage arms of Chinese banks in Hong Kong have fared little better. Bank of China International Securities, set up in 2002 by Bank of China Ltd., remains a mid-size broker by assets and revenue, Goldman Sachs says. Top executives come from the bank; related-party transactions with the parent account for just about 14% for underwriting business and around 39% for income from asset management fees.Catapulting ICBC to the same stature as JPMorgan — a full service bank with a 200-year history — may take a while. The American financial giant has hired big, and opportunistically built out businesses. It bought and merged with firms like Banc One Corp. and Bear Stearns Cos. and is in consumer banking, prime brokerage and cash clearing. The services it offers run the gamut of credit cards, retail branches, investment banking, and asset management. Shareholders have mostly rewarded the efforts.For China’s biggest lenders, conflicting and competing priorities will make this challenging. They’re already being required to take on more balance sheet risk, lend to weak companies and roll over loans while maintaining capital buffers, keeping depositors happy and essentially martyring themselves. Now, they’ll be adding brokering at a time when traditional revenue sources are shrinking in that business. And it won’t happen overnight, or even in the next two years. As for brokers? Their stock prices dropped on the news that banks would be wading into their territory.Beijing’s efforts to shore up its capital markets may look OK on paper, but they’re increasingly muddled and interests aren’t aligned. As China attempts to make its financial sector more institutional and less fragmented while it’s also letting in foreign banks and brokers, allowing the big homegrown institutions to do more, with additional leeway, doesn’t necessarily make for a stronger system. As I’ve written, experiments like these can have unexpected results.Over time, it won’t be surprising to see China’s large brokers and banks start looking very similar; for instance, big securities firms becoming bank holding-type companies, as one investor suggested. That may be a laudable goal for Beijing, but is it realistic? And does it take into account the problems on the financing side, such as misallocation and transmission? Ultimately, none of this really gets at one big problem: unproductive credit.All the while, regulators are inviting in the likes of the actual JPMorgan Chase and Nomura Holdings Inc. and giving them bigger roles. China won’t be ready. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Anjani Trivedi is a Bloomberg Opinion columnist covering industrial companies in Asia. She previously worked for the Wall Street Journal. For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
JPMorgan Chase & Co. (NYSE: JPM) ("JPMorgan Chase" or the "Firm") announced today that it has completed the 2020 Comprehensive Capital Analysis and Review ("CCAR") stress test process. Information can be found on the Firm’s Investor Relations website at www.jpmorganchase.com/press-releases.
(Bloomberg Opinion) -- New York’s Metropolitan Transportation Authority has a lot of problems, but bankruptcy isn’t one of them.That’s not because the MTA couldn’t use the debt relief. Far from it: The agency has more than $40 billion of municipal bonds outstanding, borrowed $1.1 billion in early May to pay down maturing notes, issued an additional $525 million two weeks later for infrastructure needs, secured a $950 million credit agreement with JPMorgan Chase & Co. and Bank of China, and won approval to tap the Federal Reserve’s emergency liquidity facility. Debt is as much a part of the lifeblood of the nation’s largest public transit system as the subway tunnels themselves. Rather, the MTA is legally barred from filing for bankruptcy. This doesn’t get discussed much — perhaps to avoid evoking New York City’s own brush with insolvency in the 1970s. For instance, neither Moody’s Investors Service nor S&P Global Ratings mentioned the word “bankruptcy” in reports this year explaining why they downgraded the agency’s debt. Fitch Ratings, which gives the MTA a higher grade than its two competitors, also cut the MTA’s rating after the Covid-19 pandemic roiled the New York metropolitan area. But it specifically cites the lack of bankruptcy risk as a key strength. Here’s the provision in full, from a recent MTA bond sale:No Bankruptcy. State law specifically prohibits MTA, its Transit System affiliates, its Commuter System subsidiaries or MTA Bus from filing a bankruptcy petition under Chapter 9 of the U.S. Federal Bankruptcy Code. As long as any Transportation Revenue Bonds are outstanding, the State has covenanted not to change the law to permit MTA or its affiliates or subsidiaries to file such a petition. Chapter 9 does not provide authority for creditors to file involuntary bankruptcy proceedings against MTA or other Related Entities.“We’re very clear that their legal structure and their inability to file for bankruptcy protection is an important criteria,” Michael Rinaldi, Fitch’s lead analyst on the MTA, told me in a phone interview. “Absent that protection, it would have an adverse ramification for how we view the MTA’s financial leverage, which is quite substantial.”Or as I’d put it: If the MTA could file for bankruptcy, the move couldn’t be ruled out.To be clear, the MTA is hardly out of options, even though it faces a potential $10.3 billion deficit through 2021. As I wrote in April, the agency’s leaders know public transit is vital to moving people around the New York City area, which accounts for almost 10% of the nation’s gross domestic product, and have successfully used that as leverage to secure federal funds. However, it’s burning through that money fast: It has about $1 billion remaining of the $3.8 billion that Congress approved to help cover the sharp drop in ridership and the cost of extra cleaning and disinfecting. MTA officials say they need $3.9 billion more.There’s every reason to expect it’ll get those funds — Congress isn’t about to repeat Gerald Ford’s “drop dead” moment by denying federal aid. But digging deeper into the MTA’s operating framework, it’s clear that the coronavirus pandemic has set the agency back in such a way that it’ll have no choice but to rely on federal help and more debt for the foreseeable future. That’s probably enough to scrape by, but it raises doubts about whether the MTA will ever have enough cash to truly revitalize the system’s aging infrastructure.The MTA borrows under something known as the “Transportation Resolution,” which allows it to issue additional bonds without meeting any specific debt-service-coverage level as long as the securities are used to fund approved capital projects and the MTA certifies to meeting a “rate covenant” for the year the bonds are sold.This is the rate covenant:MTA must fix the transit and commuter fares and other charges and fees to be sufficient, together with other money legally available or expected to be available, including from government subsidies — to pay the debt service on all the Transportation Revenue Bonds; to pay any Parity Debt; to pay any Subordinated Indebtedness and amounts due on any Subordinated Contract Obligations; and to pay, when due, all operating and maintenance expenses and other obligations of its transit and commuter affiliates and subsidiaries. Take note of the “including government subsidies” clause. As the MTA eventually explains, it’s the entire game:The Transit, Commuter and MTA Bus Systems have depended, and are expected to continue to depend, upon government subsidies to meet capital and operating needs. Thus, although MTA is legally obligated by the Transportation Resolution’s rate covenant to raise fares sufficiently to cover all capital and operating costs, there can be no assurance that there is any level at which Transit, Commuter and MTA Bus Systems fares alone would produce revenues sufficient to comply with the rate covenant.That puts all the cards on the table. Notably, this language is based on the MTA’s adopted budget from February, before any Covid-19 impacts were even considered. In April, ridership compared with a year earlier fell 92% on MTA subways, 94% on the Metro-North Railroad and 97% on the Long Island Rail Road.Clearly, either the federal, state or city government (or all three) will have to pay up. The MTA alone has no chance of raising enough money itself to satisfy the rate covenant. If it doesn’t get aid, it can’t issue more bonds and would most likely have to slash operating expenses. And if the MTA can’t borrow, there’s no money to finance infrastructure projects. This is the domino effect that has halted the agency’s $51.5 billion five-year capital program.“This is a four-alarm fire,” Pat Foye, the MTA’s chief executive officer, said last week. “We are facing the most acute financial crisis in the history of the MTA.”Bloomberg News’s Michelle Kaske reported that the MTA was set to spend $13.5 billion this year for infrastructure upgrades, but the agency has awarded only $2.3 billion. Without federal aid, it may need to freeze wages, fire workers and divert more money from the capital budget. Foye said he would ask the U.S. government for more cash in 2021.To some extent, “every mass transit system needs to be subsidized,” says Howard Cure, head of municipal research at Evercore Wealth Management. For the MTA in particular, “it’s almost a thought of too big to fail. The New York metropolitan area cannot function without a strong transportation system. They need access to the capital markets — you cannot let the system deteriorate.”Yet the MTA will be hard pressed to squeeze more money out of the city, which itself is considering 22,000 layoffs and furloughs to cut $1 billion of expenses. At the state level, some studies suggest tax revenue could tumble by 40%, the most in the nation. In theory, both the state and city can require the MTA to redeem its bonds as long as they provide sufficient funds.(1) If that didn’t happen during good economic times, though, it’s not happening now. If push came to shove, Cure says, the state could move to backstop the MTA’s borrowing with its own credit rating, just one step below triple-A. That would presumably lower borrowing costs and provide some budgetary flexibility.All that is to say, the MTA will have to subsist on federal payments throughout the coronavirus crisis, with perhaps some short-term financing from the Fed sprinkled in. Without question, the U.S. government should do more to help support state and local governments, including public transit agencies, through this economic downturn. Congress will likely provide at least some aid in its next relief package, and the MTA will probably get what it wants again. Still, it’s tough to project the MTA’s financial situation over the next several years and come up with a scenario in which the agency does any better than muddle through. More than likely, it will continue to lean heavily on government assistance while maxing out its debt. Maybe that’s a better alternative than bankruptcy and the stigma that comes with it, or maybe not. Regardless, New Yorkers can only hope there’s some money for much-needed infrastructure improvements without huge fare hikes.(1) See Article IV: Redemption at Demand of the State or the City. Except as otherwise provided pursuant to a Supplemental Resolution, either the State or the City may, upon furnishing sufficient funds therefor, require the Issuer to redeem all or any portion of the Obligations as provided in the Issuer Act.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
European stock markets are set to open lower Monday, with investors displaying a cautious tone as the ever-rising number of Covid-19 cases threatens the global economic recovery. At 2:05 AM ET (0605 GMT), the DAX futures contract in Germany traded 0.8% lower. France's CAC 40 futures were down 0.8%, while the FTSE 100 futures contract in the U.K. fell 0.5%.
(Bloomberg) -- Wall Street banks will soon be able to boost investments in venture capital funds and pocket billions of dollars they’ve had to set aside to backstop derivatives trades as U.S. regulators continue their push to roll back post-crisis constraints.The Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. approved changes to the Volcker Rule Thursday that let banks increase their dealings with certain funds by providing more clarity on what’s allowed. The regulators also scrapped a requirement that lenders hold margin when trading derivatives with their affiliates.Read More: Wall Street’s Win Streak With Trump Regulators Dangles by ThreadThe revisions will complete what watchdogs appointed by President Donald Trump have referred to as Volcker 2.0 -- a softening of one of the most controversial regulations included in the 2010 Dodd-Frank Act. Last year, the Fed, FDIC, OCC and other agencies eased the better-known aspect of Volcker that restricts lenders from engaging in proprietary trading -- the practice of making market bets for themselves instead of on behalf of clients.Thursday’s separate reversal of the interaffiliate margin requirement for swaps trades could free up an estimated $40 billion for Wall Street banks, though regulators added a new threshold that limits the scale of margin that can be forgiven.The KBW Bank Index rose 3.4% Thursday, with Bank of America Corp. and JPMorgan Chase & Co. among the gainers.Key DetailsVolcker 2.0 allows banks to take stakes in venture-capital funds that were previously banned in an effort to provide “greater flexibility in sponsoring funds that provide loans to companies.” The change is mostly similar to what regulators proposed last year.The Volcker Rule changes were also approved by the Securities and Exchange Commission and Commodity Futures Trading Commission.The FDIC board passed the new rule in a 3-1 vote, with Chairman Jelena McWilliams saying the changes “should improve both compliance and supervision.” Democratic board member Martin Gruenberg opposed the move, saying it leaves Volcker “severely weakened” and “risks repeating the mistakes” of the 2008 financial crisis.Volcker 2.0 didn’t include all of the industry’s demands for relief. In a March comment letter, Goldman Sachs Group Inc. had urged regulators to eliminate certain Volcker interpretations that have “restricted our ability to invest in certain incubator companies that provide capital and ‘know-how’ to startup companies and entrepreneurs.” The agencies didn’t act on that request.In scrapping the requirement that banks post margin for trades between affiliates, regulators did add a new threshold to prevent banks from abusing the relief: If a firm operating under the old rule would have had to set aside initial margin exceeding more than 15% of its so-called “Tier 1” capital, then it still has to set aside margin that surpasses that amount. The demand, which is meant to boost the safety and soundness of the new approach, will force banks to continue calculating on a daily basis what their margin requirements would have been under the rule that’s been eliminated.The industry and regulators argued that requiring margin for interaffiliate transactions made it difficult banks to manage their risks. But critics say forcing banks to maintain an extra cushion against losses helped protect subsidiaries that are backed by the federal government, including through deposit insurance.The FDIC’s Gruenberg opposed the change to swaps rules, arguing that it removes a critical protection for banks. Fed Governor Lael Brainard reiterated that concern, saying in a statement that she dissented from the Fed’s approval because she fears the deregulatory move “could again leave banks exposed to the buildup of risky derivatives.”Read MoreWall Street’s Win Streak With Trump Regulators Dangles by ThreadTrump Regulators Hand Wall Street Banks a Big Win on Swaps Rule(Updates with index price in fifth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The Fed will bar big banks from increasing their dividend payments, following the central bank’s annual stress tests that included a “sensitivity” analysis incorporating the impact of the COVID-19 crisis.
(Bloomberg) -- Bob Michele bet on U.S. yields sinking to zero last year, and reaped the rewards of a historic rally. Now, he says the gains are looking exhausted.The chief investment officer and head of global fixed income at JPMorgan Asset Management has slashed the firm’s holdings of U.S. government bonds to the smallest since September 2018. He expects stagnant returns for the safest government bonds as global economies recover from coronavirus-induced recessions, and has pivoted into securities like corporate bonds and emerging markets debt pegged to growth.Central bankers in the U.S., U.K., Germany and Australia are turning government debt into “zombie” bonds -- depriving them of the yield and volatility that makes them alluring to traders, Michele contends.“We are going to be stuck with low yields for a long period of time,” Michele said in an interview. “Central banks are going to just control the level of yields in those markets and there are other things to us that look more attractive where we still get high quality and protection on the downside.”The Federal Reserve and other central banks have pledged trillions in quantitative easing program to underpin economies hit by the pandemic. It’s possible that yields could fall further, Michele said. A spike in infections, election risk or even another rate cut would spark a flight to quality back to government bonds.JPMorgan Fund That Sold Junk Debt Before Crash Is Diving Back InThe writing was on the wall for Michele in July 2019. While he didn’t warn a pandemic would bring global economies to a screeching halt, he did expect central banks to “cut rates as far as they can and expand balance sheets” to stave off a downturn.Bob Michele Warns the 10-Year Treasury Yield Is ‘Headed to Zero’Though the firm’s absolute holdings of Treasuries are the lowest in two years, duration, or exposure to rate risk though long-dated debt, is little changed.“We are still holding roughly the same duration because we still expect yields to continue to come down,” Michele said. “Although we expect this recovery to continue and policy makers to ensure that it does, when you go back and look at the previous crises, there were fits and starts along the way.”JPMorgan Asset now sees an 80% probability of above-trend global growth in the third quarter, compared with zero in the previous three months. The firm has also revised down a chance of a recession to 10% from 55%.Growth OptimismHis optimistic view on the economy is one reason Michele favors securitized credit -- a choice he said surprised some of the company’s clients because it’s tied to consumer loans.“Although the unemployment data looks horrific now, because of the policy response there’s enough cash coming to those collecting unemployment insurance that they are able to make payments on all the borrowing they have, and by and large they are doing it,” said Michele. “That’s been a pleasant surprise to us.”Renewed trade tension between the U.S. and China poses the biggest threat to growth, overshadowing the risk of a second wave of Covid-19 and the U.S. election, he said.“Elections come and go. They can be disruptive and create some political headwinds, but the market learns to reprice and adjust,” Michele said. “The world’s two biggest economies entering a feared cold war and the knock-on effects on the global economy is a long-term risk I am most concerned about.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- With tax revenue plummeting by $8 billion in April, New York needed cash, quickly.At the end of May, the state needed to pay $4 billion to school districts and $1.8 billion to Medicaid. Borrowing money in a public offering didn’t seem like a good option, with record volatility having shut down much of the market as investors yanked out their cash. So the state at the epicenter of the coronavirus pandemic borrowed $1 billion directly from JPMorgan Chase & Co., the country’s biggest bank.It came at a price. The 2.05% tax-exempt interest rate JPMorgan charged New York for the seven-month loan was more than what three other states with similar -- or lower -- credit ratings paid to borrow from rival banks to cover temporary cash shortfalls.In April, Bank of America Corp. purchased $600 million of Hawaii’s taxable notes maturing in 12 and 18 months for yields of 1.46% and 1.76%, respectively, the equivalent of 1.15% and 1.39% if the securities were tax-free like New York’s.In March and April, Rhode Island arranged $300 million in credit agreements with Bank of America and Santander Bank at floating-tax exempt rates that haven’t exceeded 1.65%. And last month, Massachusetts secured a $1.75 billion credit line with a syndicate of lenders led by Bank of America at a minimum taxable rate of 2.25%, or 1.78% on a tax-exempt basis, according to a spokesman for Massachusetts Treasurer Deborah Goldberg.Still, New York, which has a AA+ credit rating, was able to get lower borrowing costs than its neighbor, New Jersey, which at A- has the second-lowest rating among US states. It is paying 4% on $1.5 billion of notes purchased by Bank of America and The Vanguard Group that mature in September.The outcomes illustrate the divergent pricing in the business of extending direct loans to states and cities, which boomed as governments raced to raise cash just as the economic havoc caused by the coronavirus was rattling the public bond markets.Had New York borrowed at Hawaii’s tax-exempt equivalent rates of 1.15% and 1.39%, it would have saved $6.6 million to $9 million, enough to pay the annual salaries of 78 to 107 teachers, based on New York’s average teachers’ salary of $84,230. New York would have saved $2.7 million borrowing at the same rate as Massachusetts.JPMorgan provided the best terms to the Dormitory Authority of the State of New York, which issued the $1 billion notes and solicited bids from nine banks in the agency’s underwriting syndicate, said Jeffrey Gordon, a spokesman for the agency.Gordon didn’t provide the terms offered by the other banks. He said it was misleading to compare other states to New York, which received a competitive rate given the size of the deal and market conditions, and that the state is eligible to be reimbursed for the interest under federal stimulus legislation.“New York State was the epicenter of the coronavirus pandemic, with more deaths and cases than any other state, and it is terribly misleading to compare New York’s much larger transaction in May to smaller borrowings done in in March and April by states that were not similarly situated,” Gordon said in a email.Jessica Francisco, a JPMorgan spokeswoman, declined to comment.New York is among cash-strapped governments, hospitals and universities that turned directly to banks to cover temporary cash shortfalls and boost liquidity in the months after states shuttered non-essential businesses to contain the pandemic. In mid-March, yields on municipal bonds maturing in one year skyrocketed to 2.8%, only to then tumble back toward zero as the Federal Reserve’s emergency lending program restored investors’ confidence.The number of municipal securities filings that report new financial obligations -- a category that includes bank loans -- has increased dramatically this year to 471 in May, according to Municipal Securities Rulemaking Board data, more than twice what it was in February.New York needed the money primarily because of a revenue shortfall driven by a three-month delay in the income-tax filing deadline to July 15. New York state’s tax revenue plummeted 68.4% in April and 19.7% in May from the prior year -- or $8.7 billion -- as the coronavirus lockdowns and the filing extension took a toll on state coffers.To bridge the gap, New York lawmakers authorized $11 billion in new state borrowing for the fiscal year that began April 1, consisting of as much as $8 billion in tax-backed revenue or bond anticipation notes and $3 billion in credit lines or revolving loans.In a sign of how much the municipal market has healed since March and April, earlier this month, New York’s Dormitory Authority issued $3.4 billion notes maturing in nine months in a public offering at an interest rate of 0.55%.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Indonesian bonds appear more promising than India’s in a contest between Asia’s high-yield heavyweights, according to two of the world’s biggest investment funds.The archipelago’s debt is more attractive due to a superior fiscal outlook and the greater potential for currency strength, says JPMorgan Asset Management, which oversaw $1.9 trillion globally at the end of March. Indonesia’s bonds also have more upside than India’s after suffering more heavily in the virus sell-off, according to BNP Paribas Asset Management.“We favor Indonesian debt since we reckon that fiscal challenges are less severe there,” said Julio Callegari, lead fund manager for Asia local rates and currencies at JPMorgan Asset in Hong Kong. “We hold a small position in India debt that we don’t intend to increase. In Indonesia we hold a larger position and our bias is to increase it.”The debate among investors over the relative merits of Indonesian and Indian bonds illustrates the shift in markets that has taken place in recent weeks. Risk assets largely rallied across the board in April and May as sentiment rebounded from coronavirus sell-off. That period has now given way to one of greater caution where buyers are more discerning about where they put their money.One of those places is Indonesia. The nation’s local bonds have returned 22% this quarter in dollar terms, reversing the 17% decline from January to March, according to Bloomberg Barclays indexes. Indian securities have gained just 3.3% in the current quarter, following a 1.4% loss in the prior three months. Indonesia’s rupiah has rallied almost 15% since the start of April, while India’s rupee has lost 0.4%.JPMorgan Asset already had an existing bias in favor of Indonesian bonds over Indian debt, and this was reinforced by the impact of the virus pandemic, Callegari said.“The recession in India is likely to be deeper than in Indonesia and the fiscal deterioration larger,” he said. “Given India’s already larger debt and fiscal deficit and lower credit ratings, this contributes to our relative preference for Indonesian debt.”Some investors still see value in both Indian and Indonesian bonds.India’s high foreign-exchange reserves bode well for its bonds during times of risk aversion, while its efforts to gain inclusion in JPMorgan Chase & Co.’s global indexes will attract more investors, according to Emso Asset Management, a $5.5 billion asset management firm focused on emerging markets fixed income“Indonesia has strong risk-on properties, whilst India has strong risk-off buffers,” said Shikeb Farooqui, a senior economist and macro strategist at Emso Asset in London. “It is encouraging that India is looking to diversify its investor base with JPMorgan index inclusion.”Hit HarderAt the start of the pandemic crisis, Indonesian bonds fell further than India’s amid concern the Southeast Asian nation would be more vulnerable due to its reliance on foreign flows. With the Federal Reserve and other global central banks providing extraordinary support, the crisis has eased and the trend is now turning in favor of Indonesia.Indonesia’s debt has attracted $1.1 billion of overseas funds this quarter, while India has lost $4.8 billion, according to data released by the two nations. Combined net withdrawals from both markets totaled $18.4 billion in the first quarter, data compiled by Bloomberg show.BNP Paribas Asset said it’s hard to be positive about Indian bonds because a recovery in oil prices is likely to boost inflation. The South Asian nation relies on imports for about 80% of its crude requirements.“We now think that real rates are more appealing in Indonesia,” said Jean-Charles Sambor, head of emerging-market debt in London at BNP Paribas Asset, which oversaw the equivalent of $457 billion at the end of March.(Updates to add currency performance in 5th paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Investing.com -- Crude oil prices drifted slightly lower on Monday, after rallying last week to a level that many think is at far as it can convincingly go in the near term.
(Bloomberg) -- The Trump administration, following a backlash, said it would release details about companies that received loans of $150,000 or more from a coronavirus relief program for small businesses.Treasury Secretary Steven Mnuchin said last week the firms that got billions of dollars in taxpayer-funded aid wouldn’t be disclosed, sparking fury from Democrats and others. In a joint statement on Friday night, the Treasury Department and the Small Business Administration said the company names, addresses, demographic data and other information would be disclosed in five ranges -- starting with $150,000 to $350,000, and going up to between $5 million and $10 million. For loans below $150,000, only totals will be released and will be aggregated by zip code, by industry, by business type, and by various demographic categories, the agencies said. The loans above $150,000 account for almost 75% of the total loan dollars approved, they said. The statement didn’t say when the data would be released.Lawmakers demanded the disclosure of details about Paycheck Protection Program loans after Mnuchin said at a Senate committee hearing on June 10 that the names of companies that received forgivable loans and the amounts were proprietary or confidential. The administration had previously said the details would be disclosed, and the PPP application said such data would “automatically” be released.Officials had expressed concerns about releasing the details because a company’s payroll is used to determine the loan amount, and some independent contractors and small businesses use their home addresses that would then be disclosed.“We have been able to reach a bipartisan agreement on disclosure which will strike the appropriate balance of providing public transparency, while protecting the payroll and personal income information of small businesses, sole proprietors, and independent contractors,” Mnuchin said in a statement on Friday. Critics said the public has a right to know how taxpayer dollars were being spent, and that more detail was needed to know whether PPP was serving businesses that need help. Eleven news organizations, including Bloomberg News, sued to make details of the loan recipients public.The SBA reported that as of Friday night, loans had been approved for almost 4.7 million small businesses totaling $514.5 billion. As of June 12, there were 3.9 million loans of less than $150,000 totaling $136.7 billion and almost 650,000 larger loans worth $375.6 billion.Not Far EnoughReleasing details about companies with loans of more than $150,000 is a step in the right direction but doesn’t go far enough because it means the identities of more than 85% of loan recipients will still be withheld, said Democratic Representative James Clyburn of South Carolina, chairman of the Select Subcommittee on the Coronavirus Crisis.“This is far from the full transparency that American taxpayers deserve,” Clyburn said in a statement.Democrats on the House panel have sent letters to several banks, including JPMorgan Chase, Bank of America, Wells Fargo & Co and Citigroup Inc., asking whether they favored larger, well-connected companies over smaller firms from rural or minority communities when making PPP loans. The Democrats also demanded that the Trump administration release the names of all PPP borrowers.Friday’s action “is an overdue step toward securing the transparency needed to ensure struggling small businesses, particularly minority, women and veteran-owned businesses, are getting the vital assistance they need to survive and retain their workers,” House Speaker Nancy Pelosi said in a statement on Saturday. Republican Senator Marco Rubio of Florida, chairman of the Small Business & Entrepreneurship Committee, said the public deserves to know how effective the PPP has been, but that there are legitimate concerns about disclosing information about small firms.“Today’s announcement strikes a balance between those concerns and the need for transparency,” Rubio said in a statement.Lawmakers have also called on Treasury and the SBA to provide details about its coronavirus relief loans to the Government Accountability Office, which is preparing a report about how relief dollars were spent.(Updates with Clyburn comment from tenth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.