with Brent D. Griffiths

California was still sifting through the wreckage of the housing crisis in January 2012 when Kamala Harris, then the state’s attorney general, placed a call to JPMorgan Chase CEO Jamie Dimon.

In Harris’s telling, the leader of the country’s biggest bank was steamed about the terms of the settlement she was demanding from his firm and others for their role in the mess. He got straight to the point. “You’re trying to steal from my shareholders!” Dimon yelled, Harris wrote in her memoir, “The Truths We Hold.”

And Harris, now the presumptive Democratic vice-presidential nominee, writes that she “gave it right back. 'Your shareholders? Your shareholders? My shareholders are the homeowners of California! You come and see them. Talk to them about who got robbed.’ It stayed at that level for a while. We were like dogs in a fight.” 

Harris’s confrontation with the industry – and depiction of herself as a champion of the people – became a touchstone of her own presidential campaign. Presumptive Democratic nominee Joe Biden clearly sees her prosecutorial style as an asset, citing Harris's history “taking on the big banks” as one of the reasons he picked her as a running mate in his announcement tweet. 

But Wall Street isn't scared of Harris in the same way they feared the more iconoclastic Elizabeth Warren or Bernie Sanders who pledged to break up the big banks. Harris has long sought to thread the needle, courting the financial industry in her own run even with tough talk about new taxes on large financial institutions. The combination makes her a broadly acceptable choice among Democrats across the spectrum: Her former rivals both embraced her pick, alongside a number of boldfaced Democratic financiers. Industry analysts called her a relatively moderate choice. 

Wall Street is registering no alarm over the pick. 

“Financial advisory firm Signum Global is already telling its clients that the choice of Harris reinforces the notion that the Democratic ticket is more moderate than progressive,” CNBC’s Brian Schwartz reports.

Cowen Washington Research Group’s Jaret Seiberg said Harris joining the ticket represented “modestly negative” news for the financial services sector. He notes she has opposed the Trump administration’s push to roll back restrictions on the industry and argues she will advocate for a more muscular Consumer Financial Protection Bureau. But those positions merely align her with the direction the Biden campaign was already taking, “so having her on the ticket does not change the direction that we already expected for a Biden administration,” Seiberg wrote in a Tuesday note.

And Terry Haines, founder of Pangaea Policy, called the selection a “small market negative,” but summed it up this way: “It could have been worse.”

Many in the industry also touted her fundraising prowess, which seems natural since during her campaign last year, Harris “continued to target Wall Street, saying she would levy a new tax on large financial institutions to pay for proposed tax breaks” even as she sought the financial industry's backing, the Wall Street Journal reported last July. At one fundraiser on Manhattan's Upper East Side that raised more than $100,000, "she told the audience of about 80 people that as president she would continue to be "tough on banks," the Journal reported.

And the party's left flank seeking to take banks to task also praised the choice. 

Sanders (I-Vt.) and Warren (D-Mass.), the Senate’s liberal pacesetters, wasted no time in embracing her addition to the Democratic ticket.

Warren, herself a long-shot candidate for the role of Biden’s No. 2, called out Harris’s work confronting the banks as California attorney general in a statement endorsing her selection:

And here was Sanders:

Harris stepped into a crucible with the big banks when she took her first statewide job.

Harris had been in her post for only a year when she placed the call to Dimon. But she was one of five state attorneys general who had already walked away from negotiations with a handful of major banks — Bank of America, Wells Fargo, Citigroup, and Ally Financial, in addition to JPMorgan — after deeming the terms of the emerging deal insufficiently tough. 

“I'll never know what happened on Dimon's side. But I do know that two weeks later, the banks gave in,” she writes. A JPMorgan representative declined to comment. The ultimate settlement delivered $20 billion in aid to California homeowners, up as much as tenfold over what the banks initially offered and the biggest pot any state attorney general brought home.

The showdown proved fateful: It forged a friendship between Harris and the late Beau Biden, the former vice president’s eldest son then serving as Delaware’s attorney general, which brought her into the family’s orbit. Biden invoked that shared history in his tweets: “Back when Kamala was Attorney General, she worked closely with Beau,” Biden wrote. “I watched as they took on the big banks, lifted up working people, and protected women and kids from abuse. I was proud then, and I'm proud now to have her as my partner in this campaign.”

Some consumer advocates are challenging Harris's reputation, criticizing her for not holding an even harder line against the banks. 

Some advocates said the agreement Harris negotiated fell short by not ensuring relief for the most vulnerable homeowners, including those with limited English, widows and the disabled, and not holding individual bank executives to account.

“Her office declined to sue OneWest, the California bank whose CEO was now-Treasury Secretary Steven Mnuchin, an architect of the Republican tax cut law that Harris and other Democrats deride as being a giveaway to the wealthy,” the San Francisco Chronicle’s Joe Garofoli and Tal Kopan wrote last year. “Attorneys in her office had singled out the bank for allegedly stacking foreclosure proceedings against homeowners, but Harris says she was hamstrung by legal rules protecting financial institutions from state legal action.”

Others fault Harris for not doing more to scrutinize how the settlement money was distributed. “California real estate economist Christopher Thornberg, an expert on the financial crisis, credits Harris with bringing needed reforms to the state's mortgage and foreclosure systems,” per Reuters. “But she politicized a complicated problem, he said. And because the state did not keep track of individual consumers and what happened to them, there is no way to know how well her solutions really worked.”

Latest on the federal pandemic response

White House admits Trump was wrong on weekly assistance number.

The president's executive order continues to be a mess: “Trump’s senior aides acknowledged that they are providing less financial assistance for the unemployed than the president initially advertised amid mounting blowback from state officials of both parties,” Jeff Stein, Tony Romm and Erica Werner report.

“On Saturday, Trump approved an executive action that he claimed would provide an additional $400 per week in expanded unemployment benefits for Americans who have lost their jobs during the pandemic. By Tuesday, senior White House officials were saying publicly that the maneuver only guarantees an extra $300 per week for unemployed Americans — with states not required to add anything to their existing state benefit programs to qualify for the federal benefit.”

Meanwhile, employers cast wary eye on payroll-tax deferral. One of Trump's other executive actions from the weekend is drawing skepticism from the employers meant to carry it out. “Employers’ biggest worry: If they stop withholding taxes without any guarantee that Congress will actually forgive any deferred payments, they could find themselves on the hook. That is a particular risk in cases where employees change jobs and employers can’t withhold more taxes from later paychecks to catch up on missed payments,” the Wall Street Journal's Richard Rubin reports.

“Employers and their lawyers are waiting for the Treasury Department and the IRS to issue formal rules to turn the president’s weekend statements and directives about the payroll-tax collection suspension into action. Those details will be crucial as companies decide whether and how to implement the plan, and many employers might not even bother if they have a choice … Every day that passes without those rules will make it harder to make any changes by Sept. 1, the start date set by [Trump].”

Coronavirus fallout

From the U.S.:
  • Florida and Georgia set record for single-day death tolls: “More than 1,300 coronavirus-related deaths were reported nationwide Tuesday," Antonia Noori Farzan reports.
  • At least 5,112,000 cases have been reported; at least 161,000 have died.
  • State and local spending cuts drag on recovery: “State and local governments reduced spending at a 5.6% annual rate in the second quarter as they laid off workers and pulled back on services to offset plunging tax revenues. More cuts are on the way,” WSJ's Kate Davidson and David Harrison report. “Moody’s Analytics estimates that without additional federal aid, state and local budget shortfalls will total roughly $500 billion over the next two fiscal years. That would shave more than 3 percentage points off U.S. gross domestic product and cost more than 4 million jobs, said Dan White, head of fiscal policy research at Moody’s.”
  • Big Ten and Pac-12 cancel fall seasons: The two major conferences' decisions “were the latest steps toward the full cancellation of an American sporting staple that has unfolded every autumn for 150 years,” Adam Kilgore reports.
  • South Dakota health officials watch for coronavirus amid Sturgis rally: “The 80th Annual Sturgis Motorcycle Rally, at which officials expected a crowd of some 250,000 people, was happening anyway, and Smash Mouth’s lead singer, Steve Harwell, offered his thoughts on bringing people together even as health officials urge them to stay apart. ‘We’re being human once again,’ he said, before making an expletive-riddled declaration,” Chelsea Janes reports.
  • Facebook says it has taken down 7 million posts for spreading misinformation: “The company also put warning notes on 98 million covid-19 misinformation posts on Facebook during that period — labeling posts that were misleading but not deemed harmful enough to remove,” Rachel Lerman reports.
More from the corporate front:
  • No one is tracking the small business carnage: “This wave of silent failures goes uncounted in part because real-time data on small business is notoriously scarce, and because owners of small firms often have no debt, and thus no need for bankruptcy court,” Bloomberg News's Madeleine Ngo reports. “Yelp Inc., the online reviewer, has data showing more than 80,000 permanently shuttered from March 1 to July 25. About 60,000 were local businesses, or firms with fewer than five locations."
  • Retail chains abandon Manhattan: “In the heart of Manhattan, national chains including J.C. Penney, Kate Spade, Subway and Le Pain Quotidien have shuttered branches for good. Many other large brands, like Victoria’s Secret and the Gap, have kept their high-profile locations closed in Manhattan, while reopening in other states,” NYT's Matthew Haag and Patrick McGeehan report. “The city is home to many flagship stores, chains and high-profile restaurants that tolerated astronomical rents and other costs because of New York’s global cachet and the reliable onslaught of tourists and commuters. But New York today looks nothing like it did just a few months ago.”
  • Cruise ship owners left workers adrift for months: The rush to get passengers off of ships at the start of the outbreak was only the beginning for some 125,000 crew members. "Long after passengers were gone and the cruise-ship story had faded from the headlines, thousands of employees were still stuck on the vessels, far from their homes in India, Indonesia, the Philippines and other far-flung nations and largely barred from boarding commercial jets to return,” the Wall Street Journal's Rebecca Smith, Jacquie McNish and Suryatapa Bhattacharya report.
  • Boeing order cancellations outpace new sales for sixth straight month: The company “last month said it would cut production targets for some of its aircraft including the 737 Max and the 787 Dreamliner … This year through July, Boeing has net negative orders of 836 planes, including aircraft the company took out of its backlog of orders awaiting fulfillment,” CNBC's Leslie Josephs reports.
  • Grocery worker morale plummets: “Overwhelmed employees are quitting mid-shift. Those who remain say they are overworked, taking on extra hours, enforcing mask requirements and dealing with hostile customers,” Abha Bhattarai reports. “Most retailers have done away with hazard pay even as workers remain vulnerable to infection, or worse. Employees who took sick leave at the beginning of the pandemic say they cannot afford to take unpaid time off now, even if they feel unwell.”
Around the world:
  • Russia insists its vaccine is safe: “Many scientists — in the United States and elsewhere — have raised the alarm about Russia’s willingness to approve a potentially risky vaccine that has not been widely studied. Anthony S. Fauci, the nation’s top infectious-disease expert, said that he had serious doubts that the experimental vaccine was safe and effective,” Antonia Farzan reports.
  • Britain officially in recession: “The British economy shrank by 20.4 percent between the months of April and June, compared to the first three months of the year. The dip is the biggest slump since ONS records began in 1955 and follows a 2.2 percent contraction in the first quarter of the year,” Jennifer Hassan reports from London.
  • New Zealand tries to figure the source of its first case in more than 100 days: “The previously virus-free nation reported four new cases after more than three months without any community transmission. All were found in one family, and Director General of Health Ashley Bloomfield said that health officials were ‘working hard to put together pieces of the puzzle’ and figure out the source of the new infections,” Antonia Farzan reports. Officials are looking at whether it could be linked to freight shipments from overseas.

Market movers

Stocks close down amid relief package worries.

The S&P 500 snapped a seven-session winning streak: “The index had opened modestly higher and flirted with record levels for most of the session, before pulling back in the final hour of trading. It ended the day down 26.78 points, or 0.8 percent, at 3333.69. The S&P is off just 1.5 percent from February’s high,” WSJ's Sam Goldfarb and Joe Wallace report.

“The Dow Jones Industrial Average slipped 104.53 points, or 0.4 percent, to 27686.91, while the technology-heavy Nasdaq Composite Index slid 185.53 points, or 1.7 percent, to 10782.82. Shares of companies that are particularly sensitive to the direction of the U.S. economy—such as banks, energy firms, cruise operators and airlines—had helped pull indexes higher for much of the session.”

Stocks “broadly turned lower on reports that lawmakers remained at an impasse over economic aid following [Trump’s] executive actions on jobless benefits and other relief over the weekend.”

From Bloomberg's Steven Dennis: 

Pocket change

Walmart and Instacart partner for same-day delivery. 

America's largest retailer wants to take more of the fight against Amazon's Whole Foods: “Walmart’s partnership comes at a key time. Consumers are relying on grocery delivery at an unprecedented rate due to the pandemic, and some analysts believe customers will continue to shop online even as things go back to normal,” CNBC's Jessica Bursztynsky reports.

“Instacart already partners with or delivers goods from Aldi, Target, Costco, Albertsons, Kroger and Walmart’s Sam’s Club, along with smaller grocers and drug stores. By offering quick delivery, big chain grocers have a stronger position against Amazon, which offers grocery delivery services Amazon Fresh and Amazon Prime Now from its own warehouses and Whole Foods stores.” (Amazon CEO Jeff Bezos also owns The Washington Post.)

Airbnb plans to file for IPO: The company “plans to file paperwork for a stock market listing in the next few weeks paving the way for its shares to start trading as soon as the fourth quarter,” Bloomberg News's Olivia Carville, Katie Roof, and Crystal Tse report.

The long-awaited move would represent a swift comeback for the home-sharing startup after the coronavirus pandemic sent the travel industry into a tailspin… Airbnb is working with Morgan Stanley and Goldman Sachs Group Inc. on its IPO.”

U.S. appeals court throws out antitrust ruling against Qualcomm: “The San Francisco-based Ninth U.S. Circuit Court of Appeals ruled unanimously that the Federal Trade Commission hadn’t shown that Qualcomm’s core business practices related to its cellphone chips and patents were anything more than lawful attempts at profit maximization,” WSJ's Brent Kendall and Asa Fitch report.

“The decision served as a major victory for Qualcomm after years of litigation, and its shares initially jumped more than 4 percent, then ceded some of those gains during a broader market decline.”


Chart topper

Via Columbia University economist Adam Tooze: 




The funnies

Bull session