Trump Should Be a Better Boss

“The Deep State,” on the other hand, is a description of the millions of bureaucrats immune from the political ebbs and flows. The term is meant to suggest that these men and women are pursuing agendas that run contrary to the preferences of the president, the peole who voted for him, or the nation at large.

.. We can debate whether and how much the Deep State is actually countering Trump’s agenda. But one thing that is not debatable is that the anonymous author is not part of such a group. Anonymous is, rather, a “senior administration official” who, based on what his  op-ed reveals, serves at the pleasure of the president. Trump could get rid of him, if he knew who he was.

.. Instead of rebuking Anonymous with the same complaints many conservatives have lobbed at the career officials at the Department of Justice, we could instead see his op-ed as an illustration of the inherent principal–agent problem that every president must confront. And the essay strongly suggests that Trump is struggling with this problem.

.. Simply stated, the principal–agent problem arises whenever any principal deputizes an agent to do his bidding. How can the principal make sure that the agent is actually doing what he has been tasked to do? Well, it requires monitoring and sanctions — both of which are costly to the principal.

.. Indeed, the differences between presidential success and failure often come down to how the president handles the monitoring of his staff. Jimmy Carter, for instance, was an unsuccessful president in no small part because he was a micromanager.

.. Dwight Eisenhower, on the other hand, imported organization structures from the military to great success. More recently, in Confidence Men, Ron Suskind reported that Barack Obama instructed U.S. Treasury Secretary Tim Geithner to draw up a plan to dissolve Citigroup; however, Suskind claimed, Geithner ignored the order, and Obama never followed up. That is the principal–agent problem in action.

.. These are all symptoms of an executive branch that is suffering from a lack of sufficient management.

.. If Trump does not have a good handle on what his agents are up to, then his power necessarily is going to decline, as the principal–agent problem grows. We can bemoan the fact that his political appointees are undermining democratic accountability by ignoring or circumventing Trump’s dictates, but that misses the point. The principal–agent problem exists just about everywhere. It is a consequence of human nature, whereby people are prone to put their own judgments and interests first. That’s why principals must monitor their agents.

Facebook to Banks: Give Us Your Data, We’ll Give You Our Users

Facebook has asked large U.S. banks to share detailed financial information about customers as it seeks to boost user engagement

The social media giant has asked large U.S. banks to share detailed financial information about their customers, including card transactions and checking account balances, as part of an effort to offer new services to users.

Facebook increasingly wants to be a platform where people buy and sell goods and services, besides connecting with friends. The company over the past year asked JPMorgan Chase JPM +0.33% & Co., Wells Fargo & Co., Citigroup Inc. C +0.28% and U.S. BancorpUSB +0.43% to discuss potential offerings it could host for bank customers on Facebook Messenger, said people familiar with the matter.

Facebook has talked about a feature that would show its users their checking-account balances, the people said. It has also pitched fraud alerts, some of the people said.

.. Facebook has told banks that the additional customer information could be used to offer services that might entice users to spend more time on Messenger
.. Facebook said it wouldn’t use the bank data for ad-targeting purposes or share it with third parties.
.. Banks face pressure to build relationships with big online platforms, which reach billions of users and drive a growing share of commerce. They also are trying to reach more users digitally. Many struggle to gain traction in mobile payments.Yet banks are hesitant to hand too much control to third-parties platforms such as Facebook. They prefer to keep customers on their own websites and apps.

.. As part of the proposed deals, Facebook asked banks for information about where its users are shopping with their debit and credit cards outside of purchases they make using Facebook Messenger,

.. Alphabet Inc.’s Google and Amazon.com Inc. also have asked banks to share data if they join with them, in order to provide basic banking services on applications such as Google Assistant and Alex
.. Bank executives are worried about the breadth of information being sought, even if it means not being available on certain platforms that their customers use. It is unclear whether bank customers would need to opt-in to the proposed Facebook services or what other privacy protections might be offered.
.. In recent years, Facebook has tried to transform Messenger into a hub for customer service and commerce,

White House Probes Loans to Kushner’s Business

Citigroup, Apollo loans totaling over $500 million were made after top executives of both firms met with Jared Kushner

The Office of Government Ethics told a Democratic lawmaker in the letter that the White House is probing whether a $184 million loan from the real-estate arm of Apollo Global Management LLC and a $325 million loan from Citigroup Inc. may have run afoul of the rules and laws governing the conduct of federal employees.

.. Mr. Kushner had been running the Kushner business before the election. After Mr. Trump won, Mr. Kushner resigned from the company and sold his personal stake in some projects and assets to family members and others, but he retains a stake in multiple Kushner Cos. properties, including those that received the Apollo and Citigroup loans.

Kushner’s Business Got Loans From Companies After White House Meetings

Apollo, the private equity firm, and Citigroup made
large loans last year to the family real estate business
of Jared Kushner, President Trump’s senior adviser.

.. Even by the standards of Apollo, one of the world’s largest private equity firms, the previously unreported transaction with the Kushners was a big deal: It was triple the size of the average property loan made by Apollo’s real estate lending arm, securities filings show.
.. It was one of the largest loans Kushner Companies received last year. An even larger loan came from Citigroup
.. There is little precedent for a top White House official meeting with executives of companies as they contemplate sizable loans to his business, say government ethics experts.
.. “This is exactly why senior government officials, for as long back as I have any experience, don’t maintain any active outside business interests,”
.. Mr. Kushner steers American policy in the Middle East, for example, but his family company continues to do deals with Israeli investors.
.. Mr. Kushner’s firm has sought investments from the Chinese insurer Anbang and from the former prime minister of Qatar.
.. “Why does Jared have to take the meeting?” he asked. “Is there not somebody else who doesn’t have these financial entanglements who can brainstorm freely with these folks?”
.. All of the executives who met with Mr. Kushner have lots to gain or lose in Washington.
Apollo has sought ways to benefit from the White House’s possible infrastructure plan. And its executives, including Mr. Harris, had tens of millions of dollars personally at stake in the tax overhaul that was making its way through Washington last year.

Citigroup, one of the country’s largest banks, is heavily regulated by federal agencies and, like other financial companies, is trying to get the government to relax its oversight of the industry.

.. he is not required to disclose the lifeblood of any real estate firm’s business: its lenders and outside investors.

.. Mr. Harris, a co-owner of the Philadelphia 76ers and the New Jersey Devils

.. Early last year, the White House enlisted Mr. Harris and other executives to advise the administration on infrastructure policy.

.. One of the largest investors in Apollo’s real estate trust is the Qatari government’s investment fund, the Qatar Investment Authority.

.. Mr. Kushner’s firm previously sought a $500 million investment from the former head of that Qatari fund for its headquarters at 666 Fifth Avenue in Manhattan.

.. Shortly after Kushner Companies received the loan from Apollo, the private equity firm emerged as a beneficiary of the tax cut package that the White House championed. Mr. Trump backed down from his earlier pledge to close a loophole that permits private equity managers to pay taxes on the bulk of their income at rates that are roughly half of ordinary income tax rates. The tax law left the loophole largely intact.

Kushner Cos. in Talks to Buy Remaining Stake in 666 Fifth Ave.

Kushner Cos. is negotiating to buy the portion it doesn’t already own of 666 Fifth Ave., the financially ailing Manhattan office tower that last year became a lightning rod for criticism of conflicts between a senior member of the Trump administration and his family’s business interests.

.. The building has faced financial problems for much of the last decade because of the 2008 downturn, rising vacancy and its $1.2 billion debt, which comes due next year.

.. the proposal sparked controversy after it was revealed that Kushner was close to forming a partnership with Anbang Insurance Group, a Chinese insurer with connections to the government in Beijing.

.. Jared Kushner has taken steps to insulate himself from conflicts, selling his stake in 666 Fifth and other properties to a trust controlled by other family members.

.. The building is about 30% vacant, partly because Kushner was trying to empty it to prepare for redevelopment.

.. She noted that Kushner has written down the value of its stake in the building to less than 5% of the family’s net worth.

.. the family may face difficulty moving ahead with a redevelopment of the scale of last year’s plan partly because it has opted to shut itself off from major capital sources. For example, the company already has stopped doing deals with sovereign governments or funds because of appearances, according to people familiar with the matter.

.. Kushner also is no longer going after financing for its projects through the federal program known as EB-5, which grants green cards to foreigners

.. Lenders to Kushner projects include JPMorgan Chase & Co., Citigroup Inc. and CIT Group Inc.

Women Say a “Rigged” System Allows Wall Street to Hide Its Sexual-Harassment Problem

There is little doubt that finance has had just as many cases of sexual predation as other industries, and perhaps more. Finance is a male-dominated industry and the few women who manage to enter it, and to climb its ranks, often become the targets of the men who work there.

.. Renée-Eva Fassbender Amochaev, a broker who successfully sued Smith Barney for gender discrimination in a subsequent case when it was part of Citigroup, told me that the way Wall Street firms resolve sexual harassment cases continues to protect perpetrators and firms. Large settlements are paid, but the men who either committed the bad behavior or who effectively condoned it, often remain. “No one gets fired,” she said. “Everyone on the inside knows the system is rigged.” And, because the settlements are confidential, the incidents are kept quiet.

.. members of her department went to Scores, a topless dance club in Manhattan, to celebrate a colleague’s promotion.

.. Managers placed all the women’s desks together, and that part of the floor was known as the “pink ghetto.” The rest of the office was decidedly more masculine. “It was a locker room,” she said. “It was horrible, but I just sucked it up for a year.”

.. Carnoy said she thought about suing Bear Stearns because what went on there was so “despicable,” but then she thought better of it. “I remember thinking, ‘Wow, I can sue them but I want to be in this industry for the next thirty years’,”

.. An executive’s annual bonus can be in the millions of dollars and if a woman experienced egregious harassment or criminal sexual assault on Wall Street, the settlement would also be in the millions.

.. Pao told me that she thought part of the reason might be because that while women had won a few legal victories—and had received cash settlements—their careers had stalled afterward.

.. the broader #MeToo moment is strengthening an “underground” movement, or whisper network, where women who work in finance help each other. “What Wall Street still underestimates is that the ‘underground’ is still alive and well and growing stronger with this new movement,” she said. “These women find me, contact me, call me—for twelve solid years now. We plot, we organize in secret and effect change through an underground, which is how you, and countless women, have found me. It’s all we have right now.

IMF Identifies Nine Big Banks Likely to Struggle With Profitability

Projects Deutsche Bank, Citi, Barclays and others could deliver subpar profits by 2019

The International Monetary Fund said some of the world’s largest financial institutions—including Deutsche Bank , DB -0.38% Citigroup , C +0.05% Barclays BCS -0.36% and a few Japanese institutions—could struggle in coming years to remain sufficiently profitable.

“About a third of banks by assets may struggle to achieve sustainable profitability, underscoring ongoing challenges and medium-term vulnerabilities,” the IMF said, referring to the world’s most important financial institutions.

 The report named nine financial institutions in all—

  1. Barclays BCS 
  2. Citigroup, 
  3. Société Générale , SCGLY -0.43% 
  4. UniCreditUNCFF -0.54% Group,
  5. Deutsche Bank, Barclays, 
  6. Standard Chartered , STAN -0.30%
  7. Sumitomo Mitsui Financial Group , SMFG +0.25% 
  8. Mizuho Financial Group MFG +0.00%and 
  9. Mitsubishi UFJ Financial Group MTU +0.45% 

as likely to deliver subpar profits.

 

.. “Institutions that are not profitable might not be able to generate enough capital in the future should adverse shocks hit,” Tobias Adrian, the director of the IMF’s monetary and capital markets department, told reporters. “It might become a financial stability risk not to be profitable.”

.. The IMF said the consensus among private-sector bank-industry analysts was for a return on equity of less than 8% for each of those nine banks in the year 2019.

.. Deutsche Bank’s stock, for example, trades at less than half of its book value, or net worth, and has traded well below this level since 2010.