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No ‘absolute immunity’ for Trump
The U.S. Supreme Court saved the most politically explosive cases of its current term for last. Yesterday, the court ruled on requests for access to President Trump’s financial records. The president had claimed that he could block the subpoenas on the grounds that he is immune from criminal proceedings while in office.
It was a split decision: New York won, Congress lost (for now). Both elements of the matter were decided by 7-to-2 majorities:
• Mr. Trump cannot block a subpoena from the Manhattan district attorney, served to his accounting firm, Mazars USA. New York prosecutors are seeking Mr. Trump’s business and personal tax records in an investigation into hush-money payments made during his election campaign.
• Congressional committees cannot access similar records from Capital One, Deutsche Bank and Mazars USA as part of investigations into the hush-money payments and possible conflicts of interest. They must narrow the parameters of their requests, the justices ruled, and heed the competing needs of government branches.
The fights will continue in lower courts. Mr. Trump will have to devise a new argument to keep his records secret in the New York case, while Congress will need to do the same in its case. The companies served with subpoenas say they will comply with whatever the courts decide.
• Neither case is likely to be resolved before November’s presidential election, according to Martin Lederman, a professor at Georgetown University’s law school. And because the New York case is part of a grand jury investigation, even if the records were released they would be shielded from public view.
“The justices are certainly not ignorant of practical outcomes,” Professor Lederman said. The court seemed more concerned with constitutional matters “than whether decisions help or hurt Donald Trump in November.”
• The justices appointed by Mr. Trump — Neil Gorsuch and Brett Kavanaugh — ruled against him in the New York case, joining the four left-leaning justices and Chief Justice John Roberts in rejecting his claim of “absolute immunity.” As The Times’s Peter Baker put it:
The forceful decisions represented a declaration of independence not only by Mr. Trump’s own justices but by the Supreme Court as an institution, asserting itself as an equal branch of government in the Trump era.
An intriguing question: If Mr. Trump loses the election, will Congress continue to pursue its investigations into his finances? If not, and the New York grand jury evidence stays sealed, the contents of those long-sought-after tax returns may remain a mystery — forever.
🎧 For more on the backstory to these cases, and what the decisions mean for the future, listen to today’s edition of The Daily podcast.
Today’s DealBook Briefing was written by Andrew Ross Sorkin in Connecticut and Michael J. de la Merced and Jason Karaian in London.
Here’s what is happening
The former top federal prosecutor in Manhattan testified about his firing. Geoffrey Berman, whom President Trump dismissed last month, told House investigators about efforts by Attorney General Bill Barr to pressure him into resigning, which he resisted.
Starbucks will require masks in its U.S. stores. Customers at the coffee giant’s 9,000 American locations will have to abide by the rule starting July 15. In locations where local rules don’t require mask-wearing, customers without face coverings can use drive-throughs or curbside pickup.
Ford’s C.E.O. rebuffed employee calls to stop making police vehicles. Jim Hackett, the automaker’s chief, wrote in a letter to senior executives that while he supports the Black Lives Matter movement, first responders “play an extraordinarily important role in the vitality and safety of our society.”
First-round offers for the New York Mets are in. Bidders for New York’s second-best Major League Baseball franchise reportedly include the hedge fund mogul Steve Cohen; a group backed by Jennifer Lopez and Alex Rodriguez; and the Wall Street executives David Blitzer and Josh Harris, who own the N.B.A.’s Philadelphia 76ers and N.H.L.’s New Jersey Devils.
Chelsea Clinton reportedly may start a venture capital firm. The former first daughter and hedge fund executive is said to be considering a company called Metrodora Partners, which would focus on health and learning start-ups, according to Axios.
Biden’s moderate twist on economic populism
Joe Biden is leading President Trump in polls on virtually every issue except the economy. Yesterday, the presumptive Democratic presidential nominee unveiled an economic platform wrapped up in populism, in an effort to close that gap.
“Build Back Better” is Mr. Biden’s slogan, with an emphasis on shoring up American manufacturing via huge investments in areas like 5G wireless technology and electric vehicles. He said it would be a level of spending “not seen since the Great Depression and World War II.”
He attacked Wall Street and big companies, saying that it was “way past time to put an end to shareholder capitalism” and criticizing Mr. Trump for focusing on the stock market as a barometer of America’s economic health. “The days of Amazon paying nothing in federal income tax will be over,” Mr. Biden added.
How would he pay for all this? Mr. Biden is proposing nearly $4 trillion in tax increases — largely by reversing Trump tax cuts for the wealthy and for companies — and deficit spending that builds on the $3 trillion in borrowing that Washington has approved in coronavirus economic aid.
Is Mr. Biden really shifting significantly to the left? Some thoughts:
• Attacking “shareholder capitalism” isn’t particularly radical. Since last year, the Business Roundtable, the trade group for blue-chip corporate America, has called for companies to focus on more than just their shareholders.
• The financial advisory firm Signum told clients yesterday that Mr. Biden’s platform excludes the most progressive ideas touted by Democrats, including “Medicare for all” and the Green New Deal. By Signum’s reckoning, Mr. Biden’s announcement makes “just enough concessions to the progressive wing to avoid an open rift in the party.”
• What’s more, many on Wall Street say they’ll put up with higher taxes if it means a change of administration. “The majority of people I talk to on Wall Street think it’s worth taking the hit to get Trump out of office,” an unnamed senior banker told Vanity Fair’s Bill Cohan.
An ugly quarter awaits U.S. banks
The biggest American banks will report their second-quarter earnings next week, and it could be rough.
Loss provisions will rise, but so will fees. Lenders were quick to add billions to their loan-loss provisions at the end of the first quarter, and analysts expect at least as much to be added in the latest quarter, too. For the full year, S&P expects that credit losses will account for around three-quarters of the world’s largest banks’ pre-provision earnings, more than double the share last year.
• The good news is that companies have taken on cheap debt and eagerly issued new shares into climbing stock markets, increasing banks’ fee income. That means that despite the drain on earnings from fresh provisions, banks with strong underwriting businesses, like Goldman Sachs, JPMorgan Chase and Morgan Stanley, could see a quarter-on-quarter rise in profit. All banks, however, are expected to announce huge drops in earnings versus the same quarter last year.
Global banks face $1.3 trillion — with a “T” — in credit losses this year. That’s more than double last year’s $600 billion, according to S&P. Losses will remain high next year, when the strength of banks’ provisions will be tested by a surge in charge-offs as payment holidays and government support measures expire. “From a bank credit risk perspective, perhaps the greater danger at this time is the reduction of such support too early, resulting in a longer and deeper economic contraction, further impairing banks’ asset quality and increasing credit losses,” according to S&P’s analysts.
TikTok weighs steps for survival
The social network’s Chinese owner, ByteDance, is under pressure to devise ways to shield the service from potentially damaging actions by governments uneasy with the company’s perceived ties with Beijing.
The White House may ban TikTok and other Chinese social media apps, Secretary of State Mike Pompeo said earlier this week. The Verge’s Adi Robertson runs through how that might work: One option is for the Committee on Foreign Investment in the U.S., the regulatory panel focused on national security, to force ByteDance to divest U.S.-based assets.
• India recently banned TikTok and other Chinese-owned apps like WeChat, saying they pose a “threat to sovereignty and integrity.”
ByteDance is reportedly considering a new headquarters for TikTok outside China and a new management board, according to The Wall Street Journal. And it has pulled TikTok out of Hong Kong, following a new security law that binds the territory closer to China.
• In May, TikTok hired a well-known Disney executive, Kevin Mayer, as C.E.O., in part to help the social network navigate Washington. And it has long stressed that it doesn’t share user data with Beijing, and argues it wouldn’t do so if asked.
Users are scared anyway. High-profile users like Casey Neistat warned their followers about the possibility of a TikTok shutdown, while the widely followed gamer Ninja said he had deleted his account because of concerns over the app’s perceived connections to Beijing.
The speed read
• Sony agreed to invest $250 million in Epic, the gamemaker behind “Fortnite.” (Business Insider)
• Coinbase, the big cryptocurrency exchange, is reportedly considering going public this year through a direct listing of its shares. (Reuters)
Politics and policy
• Treasury Secretary Steven Mnuchin said that the White House was working with the Senate on another round of pandemic aid, which is likely to be smaller than what House Democrats want. (WSJ)
• Google could reportedly avoid an E.U. antitrust inquiry into its takeover of Fitbit if it pledges to forgo using the fitness device’s data for ad-targeting purposes. (Reuters)
• SoFi, the online lender, has applied again for a national banking charter. (Axios)
• “Why Is a Tech Executive Installing Security Cameras Around San Francisco?” (NYT)
Best of the rest
• Twitter’s Jack Dorsey plans to fund a test of universal basic income in 14 cities. (Business Insider)
• The upside-down markets, as explained by Alice in Wonderland. (Reuters Breakingviews)
• “How the Mafia infiltrated Italy’s hospitals and laundered the profits globally” (FT)
Thanks for reading! We’ll see you next week.
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