THE TICKER

The threat Elizabeth Warren presents to Wall Street will survive the end of her presidential bid.

The question, for both Warren and the industry, is what shape it takes now.

The senator from Massachusetts will begin to answer it in the days ahead as she decides whether to endorse one of the two major remaining Democrats in the field. Backing Sen. Bernie Sanders (I-Vt.) makes sense, considering their ideological alignment. But former vice president Joe Biden may have built an insurmountable lead for the nomination in delegates and momentum and his supporters may be more similar to hers than many people think.

Warren's team had been in talks with both campaigns before she announced her decision Thursday to suspend her bid. Warren gave no timeline for announcing a decision in an interview with MSNBC's Rachel Maddow. 

“Not inconceivably, Warren could be tapped as Biden’s running mate,” Capital Alpha’s Ian Katz writes in a note. “But much more likely she could find herself in a key Cabinet position. We’re getting way ahead of ourselves, but the words Treasury Secretary Elizabeth Warren would make a lot of financiers shudder.”

That’s because Warren built her bid on a foundation of white papers. They detailed with unrivaled specificity how she would seek to bring what she framed as rogue industries to heel, focusing in particular on the financial services sector.

Her plans called for big legislation that stood little chance of passage, including breaking up the big banks by restoring the Glass-Steagall Act. Arguably more of it could advance with executive action that Warren might still oversee from a key administration post. That includes, as we’ve noted here: ramping up pressure on the big banks through the living wills process; applying new scrutiny to credit ratings agencies via the Securities and Exchange Commission; and cracking down on non-bank financial companies, including by reviving the designation of some as systemically risky, subjecting them to stricter federal oversight.

“Above all else she’s interested in enacting her policy agenda, period,” one Warren adviser tells me. “She flows like water to pressure points to exert influence over policy, and she will continue to do that.” 

Warren and Biden would have to reconcile a history of clashing on financial services issues. The two spent years locked in a feud over rewriting bankruptcy protections beginning when Warren was a Harvard Law professor, as Politico’s Theodoric Meyer chronicled. The fight came to a head in 2005, when Biden — then a Delaware senator representing MBNA, a leading credit card issuer at the time — helped pass a law making it more difficult for Americans to shed debt from credit cards, medical bills and private student loans.

Warren made a name for herself studying bankruptcies and became a public face of the opposition to the bill. As Meyer notes, at times she singled Biden out, writing in the Harvard Women’s Law Journal that “he supports the financial industry’s legislation because there is no political disadvantage to supporting it.”

Biden secured the legislative win. But Warren continued her criticism of his role in it. After the measure was signed into law, she blasted him in a blog post for “twisting arms to get the bankruptcy bill through Congress.”

Warren nodded to that fight in her interview with Maddow. “We go back a long way,” she said of her history with Biden. "We were in the bankruptcies wars against each other. When he was vice president, I got to do some work with him… He is exactly who he says he is. He’s a decent guy… and it comes through.” (See those comments here.)

Of their policy differences, Warren said her focus has always been on working families. “I believe that the vice president has the same goal. We may have come at it from different directions and may continue to come at it from different directions. But I don’t have any doubt about the sincerity of the goals.”

Biden has been vague about how he would approach regulating financial services. His website prominently features a quote from the candidate: “This country wasn’t built by Wall Street bankers and CEOs and hedge fund managers. It was built by the American middle class.” But he doesn’t spell out a plan for the industry, even in broad strokes. 

And if the stream of contributions from Wall Street wallets now pouring into his campaign is any indication, industry leaders don’t believe Biden would bring the sort of systemic change that Warren made a centerpiece of her campaign.

Then again, “the party has really shifted left,” Jason Rosenstock, a financial services lobbyist at Thorn Run Partners, tells me. And Biden has proposed some $3 trillion in new programs needing new sources of revenue. Some of that could come from a financial transactions tax, which Biden endorsed in an interview last year, or another Wall Street-focused levy.

“Warren may ultimately win the ideas primary,” Rosenstock says. “And a lot of the stuff she’s proposed may find its way into platform.”

In an email to supporters announcing her decision Thursday, Warren highlighted her inclination to draw bright lines: 

Some of you may remember that long before I got into electoral politics, I was asked if I would accept a Consumer Financial Protection Bureau that was weak and toothless. And I replied that my first choice was a consumer agency that could get real stuff done, and my second choice was no agency and lots of blood and teeth left on the floor. In this campaign, we have been willing to fight, and, when necessary, we left plenty of blood and teeth on the floor.

And the now-former presidential hopeful, in her interview with Maddow, reminded viewers her website hosting her plans is still up, and she encouraged people to read them.

“The only we make change is we get back up tomorrow and we get back in the fight,” she said

MARKET MOVERS

Coronavirus response in the United States:

  • Cruise ship off coast of California awaits test results: “Military helicopters delivered testing kits to a cruise ship being held off the coast of California, as officials in Washington faced angry questions about whether the vessel is set to become the latest breeding ground for the deadly novel coronavirus,” my colleagues Reed Albergotti, Hannah Sampson and Brady Dennis report.
  • Maryland declares state of emergency: “Maryland Gov. Larry Hogan said that three people from Montgomery County have been diagnosed with the coronavirus: a husband and wife in their 70s and a woman in her 50s," my colleagues Ovetta Wiggins, Jenna Portnoy and Rebecca Tan report. “Hogan (R) declared a state of emergency to speed the delivery of funding and other resources to address the virus. So far, no cases of the coronavirus have been diagnosed in Virginia or the District.”
  • Trump continues to be his own administration's greatest obstacle on a clear message: “As leading public health experts from across the government have tried to provide clear and consistent information about the deadly coronavirus, they have found their messages undercut, drowned out and muddled by [Trump’s] push to downplay the outbreak with a mix of optimism, bombast and pseudoscience,” my colleague Toluse Olorunnipa reports. “Speaking almost daily to the public about an outbreak that has spread across states and rocked the markets, Trump has promoted his opinions and at times contradicted the public health experts tasked with keeping Americans safe.”

 

 

 

 

Corporate fallout:

  • Markets tank as outlook worsens: “The Dow Jones industrial average closed down almost 970 points as investors fled stocks and headed for the safety of U.S. debt," my colleagues Taylor Telford and Thomas Heath report. "The Dow’s 3.6 percent drop canceled out most of Wednesday’s eye-popping rally, and was in line with the punishing sell-offs that have dominated trading over the past two weeks as the outbreak threatens to grind down global economies. The tech-heavy Nasdaq composite also closed down 3.10 percent.”
  • 10-year Treasury yield hits all-time low: “The yield on the benchmark 10-year note sank to a new record low of 0.899 percent around 12:40 p.m. ET, below its former all-time low of 0.906 percent hit earlier in the week. The yield was last seen at 0.91 percent,” CNBC's Thomas Franck and Michael Sheetz report.
  • The airline industry is getting hammered: “Airline stocks dropped sharply on Thursday as investors reckoned with the prospect of canceled flights, lost sales and substantial reductions in service for months to come. Several carriers — including United Airlines, JetBlue and Lufthansa — announced new route closings in recent days,” the New York Times's David Gelles and Niraj Chokshi report. “An industry trade group said the coronavirus could wipe out between $63 billion and $113 billion in worldwide airline revenues this year.”
  • Global shipping is tied in knots. “The coronavirus epidemic is upending the carefully calibrated logistics of global shipping, as plunging exports from China disrupt the trade of American goods, especially farm products such as fruit and meat destined for Asia,” WSJ's Jesse Newman and Jennifer Smith report. “The traffic jam is pushing up transportation prices for U.S. exporters and sowing turmoil on the heels of a painful trade war.”
  • JPMorgan moves traders to backup offices: “The bank plans on moving approximately half its sales and trading staff in New York and London to a pair of backup locations near each city, retaining the other half at the main headquarters, according to a person with knowledge of the situation. Employees in New York may be sent to offices in Brooklyn or New Jersey, the person said,” CNBC's Hugh Son reports.

International fallout:

  • WHO chief urges “action”: “As the global rate of infection surpassed 98,000 cases on Thursday, the world’s leading health official implored the international community to unleash the full power of their governments to combat the new coronavirus outbreak,” the Times reports. “'This is not a drill,' said Dr. Tedros Adhanom Ghebreyesus, director general of the World Health Organization. ‘This is not a time for excuses. This is a time for pulling out all the stops.’”
  • IOC discussed holding Olympics without fans: “Last week, the World Health Organization participated in a conference call with dozens of medical officers for the international sports federations that run the competitions at the Olympics,” the Times's Matthew Futterman, Tariq Panja and Andrew Keh report. “The discussion turned to worst-case scenarios for the Olympic Games, and the risks and benefits of a fan-free Olympics, according to several people familiar with the nearly two-hour call, all of whom requested anonymity because they were not authorized to speak about a conversation the W.H.O. deemed private. Holding fan-free competitions, with only sports officials and broadcasters as spectators, was one of a number of options suggested for managing large sporting events in the weeks and months before the Games.”
Last month’s employment report is expected to show strong gains before the coronavirus outbreak took hold.
WSJ

MONEY ON THE HILL

— Senate approves coronavirus funding bill: “The Senate voted nearly unanimously to approve $8.3 billion in emergency spending to combat the coronavirus outbreak, sending the measure to the White House for enactment,” my colleague Erica Werner reports.

“The vote was 96 to 1. The House voted on an identical measure Wednesday and approved it 415 to 2. The Senate’s sole dissenting vote came from Rand Paul (R-Ky.) … Even as lawmakers came together in an unusual show of bipartisanship on the spending bill, partisan sniping continued over the coronavirus, as House Democrats pressed administration officials in a closed-door briefing over comments from [Trump] that seemed to blame former president Barack Obama for the situation.” 

— Waters calls on Wells Fargo board members to resign: “Citing the results of a year-long investigation, Rep. Maxine Waters called for two of Wells Fargo’s board members to resign, signaling that the bank’s woes are deepening as it struggles to repair its image,” my colleague Renae Merle reports.

“A report by the House Financial Services Committee found widespread problems with how Wells Fargo and its board have responded to more than three years of scandals in its operations. The bank’s regulators were aware of the bank’s problems for years before acting, and Wells Fargo was slow to address them, the more-than-100-page report states. Meanwhile, the bank’s board of directors failed to hold senior executives accountable and appeared reluctant to become directly involved in resolving matters, the committee found." 

  • Waters may refer former Wells chief Tim Sloan to DOJ “for making ‘misleading’ statements last year about whether the bank was in compliance with regulators’ orders on a plan to repay harmed consumers.”
  • The bank's new CEO, Charles Scharf, is set to testify before the committee next week. The two board members called out in the report, Elizabeth Duke and James Quigley, are also scheduled to appear. 
  • The Duke and Quigley testimony will be “extraordinary.” Per CapAlpha:The mere fact of Duke and Quigley testifying will send a chill up the spines of board members around the country. The financial crisis made it clear that being on a corporate board no longer meant jolly outings on the golf course to rubber-stamp the CEO’s bonus… No board member wants to have to explain their actions to angry lawmakers trying to make a point.”

2020 WATCH

— Bloomberg plans group to support Democratic nominee: “Former New York mayor Mike Bloomberg has decided to form an independent expenditure campaign that will absorb hundreds of his presidential campaign staffers in six swing states to work to elect the Democratic nominee this fall,” my colleague Michael Scherer reports.

“The group, with a name that is still undisclosed because its trademark application is in process, would also be a vehicle for Bloomberg to spend money on advertising to attack [Trump] and support the Democratic nominee, according to a person familiar with the discussions, who spoke on the condition of anonymity to reveal internal deliberations … The new group, operating with the same potentially limitless bankroll that funded Bloomberg’s campaign, could play a major role in shaping the race this fall. "

  • Bloomberg's advisers are focusing on a set of states: “Bloomberg’s advisers have identified Wisconsin, Michigan, Pennsylvania, Arizona, Florida and North Carolina as the six states that will decide the electoral college winner this year. Staffers in each of those states have signed contracts through November to work on the effort.”
  • The group may go beyond the top of the ballot: “The new group also could serve as a vehicle for Bloomberg to support Democratic candidates for the House and Senate. In 2018, Bloomberg gave $20 million to Senate Majority PAC to support Democratic senatorial candidates. A separate group he founded, Independence USA, spent $38 million to help Democrats retake the U.S. House.” 

TRUMP TRACKER

TRUMP WATCH:

New docs show Secret Service paid even more to Trump Organization.: “Trump’s company charged the Secret Service $157,000 more than was previously known — billing taxpayers for rooms at his clubs at rates far higher than his company has claimed, according to a new trove of receipts and billing documents released by the Secret Service,” my colleagues David A. Fahrenthold, Joshua Partlow, Jonathan O'Connell and Carol D. Leonnig report.

“When added to dozens of charges already reported by The Washington Post, the new documents show that Trump’s company has charged the Secret Service more than $628,000 since he took office in 2017. The payments show Trump has an unprecedented — and still partially hidden — business relationship with his own government. The full scope of that relationship is still unknown because the publicly available records are largely from 2017 and 2018, leaving huge gaps in the data.” 

POCKET CHANGE

— Dimon has emergency heart surgery: “JPMorgan said that CEO Jamie Dimon underwent emergency heart surgery … but he is recovering,” the Associated Press reports.

“The nation’s largest bank by assets said in a message to its more than 250,000 employees that Dimon was awake and alert following the surgery. The New York bank said Dimon was stricken Thursday morning by an acute aortic dissection. That is when blood leaks through a tear in the inner layer of the aorta, the large artery that carries blood away from the heart to the rest of the body … The bank’s co-presidents, Daniel Pinto and Gordon Smith, will lead its operations while Dimon recuperates, JPMorgan said.”

Boeing tries to make amends over 737 Max crashes: “The grieving families of the 157 dead want to mark that ground with a permanent memorial and a paved road to reach it. They envision a hospital or school to benefit local people who helped collect pieces of the wreckage and remains. Many will travel on Boeing Co.’s dime to Addis Ababa to commemorate the first anniversary of the crash next week,” the Wall Street Journal's Alison Sider and Alexandra Wexler report of the Flight 302 crash.

“The result is that families are caught in a grim partnership with the two companies that have been the source of their pain. Nobody involved has a playbook to follow. The families, spread over some three dozen countries, are still reeling from their losses. Ethiopian has never had to deal with a tragedy of this magnitude, and Boeing has little experience working directly with families of crash victims.” 

Former UAW president charged in corruption probe: “ Former United Auto Workers (UAW) President Gary Jones was charged … with embezzling more than $1 million of union funds amid a U.S. corruption probe that has raised the specter of a federal government takeover of the union,” Reuters's Ben Klayman reports.

“Jones, 62, of Canton, Michigan, was charged in an information, a court document typically used when the government has reached a plea deal with a defendant. J. Bruce Maffeo, a lawyer for Jones, declined to comment. The documents were filed previously and unsealed on Thursday.” 

HP rejects Xerox's takeover offer again: HP Inc. “rejected Xerox Holdings Corp’s raised takeover bid of about $35 billion, saying it undervalued the personal computer maker,” Reuters's Akanksha Rana reports.

“The U.S. printer maker last month increased its offer by $2 to $24 per share, after its previous buyout offers were rejected by the PC maker for the same reason. Chip Bergh, chair of HP’s board, said the offer would leave shareholders with an investment in a combined company that is burdened with an irresponsible level of debt.” 

Safeway union reaches deal to avoid strike: “The owner of Safeway has reached a tentative agreement with a union representing workers at more than a hundred grocery stores in Washington, Maryland and Virginia, union representatives confirmed, staving off a possible strike at the last minute,” my colleague Aaron Gregg reports.

“The two parties did not come to an agreement until 2 a.m. on the eve of a planned strike vote. The contract was ratified by a majority of the members in a vote Thursday afternoon. United Food and Commercial Workers Local 400, which represents workers at Safeway and Giant, had taken issue with the company’s stance on retirement obligations. The negotiations continued for six months as the two parties struggled to reach an agreement.” 

Santelli, who is widely credited with helping spark the Tea Party movement in 2009, made the comments during CNBC’s “The Exchange” in a conversation with anchor Kelly Evans, who asked him what the catalyst was for the recent chaos on Wall Street.
MarketWatch

CHART TOPPER

From the WSJ:

DAYBOOK

Today:

  • The Labor Department reports the latest job numbers

THE FUNNIES

From The Post's Tom Toles:

BULL SESSION