How Wall Street Won a Fight on Class-Action Suits: DealBook Briefing

How Wall Street Won a Fight on Class-Action Suits: DealBook Briefing


From Jessica Silver-Greenberg, NYT:

In recent months, financial firms and their Republican allies in Congress mobilized to defeat the rule. Some credit unions and community banks also weighed in, lodging calls to lawmakers in their home states.

What people are saying about the vote

• “Tonight’s vote is a giant setback for every consumer in this country,” Richard Cordray, the director of the consumer bureau, said in a statement. (NYT)

• “Today’s vote puts consumers first rather than class-action lawyers,” said Rob Nichols, president of the American Bankers Association. (WaPo)

• The Credit Union National Association said the rule “was just the latest example of the one-size-fits-all rule-making coming from the CFPB, and thankfully Congress acted to remedy the situation.” (WaPo)

The unlikely return of Klaus Kleinfeld

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Brendan Smialowski/Getty Images

Tongues were wagging when Mr. Kleinfeld took the stage at the Vision 2030 in Riyadh to announce that he would lead Saudi Arabia’s new $500 billion economic zone, NEOM. After all, he had been fired as the C.E.O. of Arconic for “poor judgment,” including a baffling threat to Paul Singer of Elliott Management, which had been waging an activist campaign against Arconic.

Some at the conference were floored that Mr. Kleinfeld had clearly landed on his feet with such large responsibility and oversight. Others dismissed the role as being a sort of exile in the desert.

The smart take: During his time at Arconic (and its predecessor, Alcoa), Mr. Kleinfeld had invested a lot of time — and his then-employer’s money — in the region to become a trusted adviser to the Saudi royal family. The only other major Western C.E.O. with that kind of clout is Andrew Liveris of Dow Chemical.

(Bloomberg cheekily wrote that Mr. Kleinfeld, a mainstay of the World Economic Forum, may have proved the value of going to Davos every year.)

More in businesses courting the Saudi royals

• The head of Saudi Arabia’s Tadawul stock exchange wants his market to be the “exclusive” listing venue for Saudi Aramco. (FT)

• See if you can follow this: Masayoshi Son of SoftBank said that his $93 billion Vision Fund — in which Saudi Arabia is the biggest investor — would invest in the kingdom’s power utility, which will in turn build the world’s biggest solar power project in NEOM. (WSJ)

• Citigroup plans to hire about 20 bankers in Saudi Arabia, marking its return to the kingdom after 13 years. (Bloomberg)

The latest obstacles to a tax overhaul

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Well, there’s the fight between President Trump and Senator Bob Corker of Tennessee.

But there’s a potentially bigger problem for Republicans. At least three House lawmakers who oppose eliminating the income tax deduction for state and local taxes said they would vote against the Senate’s budget proposal unless some sort of deal were reached, according to the WaPo. At least 218 votes are needed to pass the resolution. An initial version passed earlier this year with only 219 votes.

Other tax points

• The Republican tax plan is a bit like having a baby to save a failing marriage, Jim Tankersley of the NYT reckons.

• Senate Minority Leader Chuck Schumer told Politico’s Ben White that Democrats will oppose any approach to taxes that doesn’t rely on a bipartisan approach. “There is a path forward, but only after this tax bill fails,” Senator Schumer said.

That’s one way to decide on a Fed chair nominee …

At a policy lunch for Senate Republicans yesterday, Mr. Trump asked for a show of hands on which potential pick they preferred. The results were, shall we say, unclear.

Senator Tim Scott of South Carolina reckoned that John Taylor won, while Senator Mike Rounds of South Dakota said that most of his colleagues declined to raise their hands. And then there was Senator Corker, who told Bloomberg, “I don’t think that’s a very good way to pick a Fed chair so I declined to participate.”

The White House press secretary, Sarah Huckabee Sanders, said, “The president is taking that decision very seriously.”

Don’t expect Saks to get the Lord & Taylor treatment

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Benjamin Norman for The New York Times

The Hudson’s Bay Company, which owns both retailers, has absolutely no intention of selling even a piece of Saks’s famed Fifth Avenue store, as it did with Lord & Taylor’s flagship building. “The Saks store is way too productive in the luxury retail business to handle any other uses,” Richard Baker, the C.E.O. of Hudson’s Bay, told Michael de la Merced yesterday.

But that doesn’t mean that Mr. Baker won’t do more with the real estate in the Hudson’s Bay portfolio. He began his career as a real estate investor, and at Hudson’s Bay has struck several deals, including sale-leaseback agreements and the formation of two real estate investment ventures.

So expect Hudson’s Bay to consider other property deals, just nothing involving Saks.

How the WeWork deal was made: Mr. Baker began conversations with WeWork’s C.E.O., Adam Neumann, months ago about the future of retail and office spaces. And Mr. Baker was already leaning toward selling the Lord & Taylor building; he told Michael that the average Lord & Taylor department store had between 125,000 and 150,000 square feet of floor space, while the Manhattan flagship had 676,000 square feet.

One other fact about the WeWork deal: A mortgage appraisal of the Lord & Taylor flagship conducted last year valued the building at about $655 million. WeWork’s property joint venture bought the building for $850 million — about 30 percent higher — just over a year later.

What Xi’s Lock on China politics means for business

Now that President Xi Jinping has a hold on Chinese politics unseen since the days of Mao Zedong, expect his policies to continue without serious opposition. His supporters argue that major initiatives like the Belt and Road infrastructure plan and efforts to curb pollution will advance swiftly.

Major conglomerates like Wanda Dalian and HNA have already rallied around Mr. Xi in a show of fealty. But more entrepreneurs are squirming under already-tightening regulations, and as the NYT points out, analysts say they think that private-sector investment has been weakening.

Worth noting: Wang Qishan, the head of Mr. Xi’s anticorruption campaign who previously spearheaded the Chinese government’s response to the global financial crisis, was not reappointed to the Central Committee.

Revolving Door

Mike Hopkins, the chief executive of Hulu, is leaving to become chairman of Sony Pictures Television. Randy Freer, a member of the Hulu board, will succeed him. (NYT)

The Speed Read

M.&A.

• Cerberus Capital Management has approached Alitalia about a bid that would allow the Italian flag carrier, which collapsed in May, to remain independent, according to people close to the talks. (FT)

• The Federal Trade Commission can and should investigate Facebook’s acquisition of TBH, Ben Thompson asserts. (Stratechery)

Policy and Legal

• The Weinstein Company has been sued by an actress who accuses it of knowing about Harvey Weinstein’s misconduct and failing to control him. (Bloomberg)

• The British Parliament is asking Facebook, Twitter and other internet companies for information about Russian efforts to influence the “Brexit” vote. (NYT) Twitter has said it will bring more transparency to ads on its site, allowing users to see information about who created an ad and to whom it was targeted. (NYT)

Banks and Banking

• Large banks in the United States are starting to pay to keep depositors from moving their money, saying customers are becoming increasingly demanding as the stronger economy nudges interest rates higher. (WSJ)

• Goldman Sachs has another idea to make up for its trading funk: It is going to ramp up private equity investments, according to three people familiar with the effort. (Reuters)

Private Capital (P.E. and V.C.)

• SoftBank has asked Uber shareholders not to discuss with peers how many shares they might sell and at what price, but the shareholders view the request as a gag order, according to several people. (Axios)

I.P.O.s and Offerings

• The parent company of the payday lender Speedy Cash has filed for a $100 million initial public offering. (Axios)

• Overstock.com is planning to sell 500 million digital tokens in an initial coin offering next month that would be the largest offering of its kind. (Axios)

Money Managers

• -David Einhorn said value investing may be dead, citing Amazon and Tesla as examples of stocks that made him question the strategy. (CNBC)

Business and Economy

• More than 130 representatives from different industries met with senators on Tuesday to ratchet up pressure on lawmakers to keep the North American Free Trade Agreement intact. (NYT)

• Instead of leaving a tip, Einstein scribbled down his theory on how to live a happy life. His notes have sold for $1.8 million. (WaPo)

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