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JPMorgan pressures clients on climate; Goldman partner list gets more exclusive

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Go green

JPMorgan Chase “is pledging to use its financing weight to push clients to align with the Paris climate agreement and work toward global net zero-emissions by 2050,” the Wall Street Journal reported. “The bank said it would invest in technologies that help reduce carbon emissions and will work with clients to cut their own carbon footprints. The bank plans to argue to clients that combating climate change opens the door to more capital from investors and reduces their risk of becoming outdated.”

“JPMorgan won’t fire its oil-and-gas companies, saying the sector remains too important to the economy, and it isn’t promising to jettison clients that don’t agree with the bank. But the move shows an understanding from the bank that its own carbon footprint extends to the dollars it lends. It plans to focus its new environmental efforts on its clients in energy, automotive manufacturing and electricity generation, where it said it can do the most good.”

“The announcement followed longstanding criticism from activists who have targeted JPMorgan,” the Financial Times said. “This year the bank said it would replace Lee Raymond, the former chief executive of ExxonMobil, as lead independent director, in a move heralded as a win by sustainable investment advocates.”

Banks can profit from climate change by helping companies minimize their environmental impact by making loans and offering other banking services to achieve that goal, American Banker’s Laura Alix writes.

More exclusive club

Goldman Sachs is reducing the number of people it plans to name partner this year but making it potentially more lucrative for those who make it.

“Goldman’s new class of partners, to be promoted next month, is likely to be its smallest since the mid-1990s,” the Journal said. “And for those who make the cut, the Wall Street firm is dangling a new financial carrot: access to profits from its private investment funds. Partners will receive carried interest—a slice of future profits, taxed at low rates—in four of Goldman’s private investment funds starting this year. The firm will lend partners up to half a million dollars to increase their personal investment.”

“David Solomon, who became Goldman chief executive in October 2018, has long argued for the partnership to be more exclusive and aspirational,” the FT said. “Mr. Solomon had been pushing his executives to nominate fewer partners, resulting in a smaller shortlist for candidates.”

Wall Street Journal

Out of patience

Commercial-property foreclosures “are poised to rise as Covid-19 lingers and more lenders are going after malls, hotels and apartment buildings as forbearance periods expire.”

“Lenders, for the most part, were initially happy to grant debt forbearance and hope that the pandemic would end soon. But many now expect the pandemic and its aftereffects to linger for a long time. As forbearance periods expire, more lenders are going after properties or demanding additional capital in exchange for extending relief.”

The Fed's loan lady

Federal Reserve Gov. Lael Brainard, whom Fed Chairman Jerome Powell “turned to to manage lending programs designed to prevent frozen markets from making the downturn worse” in March, is “a likely candidate for a top economic policy job if Joe Biden were to win the White House in November.”

Financial Times

Cryptonite

The U.K.’s financial regulator, the Financial Conduct Authority, “has banned the sale of cryptocurrency-related derivatives to retail consumers, saying the underlying assets had ‘no reliable basis for valuation,’ ” and are “ill-suited for retail consumers due to the harm they pose.” Products to be banned include “contracts for difference and exchange traded notes linked to popular cryptocurrencies such as bitcoin.”

“As well as the valuation concerns, the watchdog cited ‘extreme volatility’ in the price of these assets and the prevalence of market abuse and financial crime such as cyber theft. It also said there was a lack of understanding of the products among consumers.” The ban goes into effect Jan. 6, 2021.

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