Who Got Rescued?

The lucky few

More than 5.2 million companies received loans from the Paycheck Protection Program, the $523 billion centerpiece of the government’s pandemic aid for businesses. But the first full accounting of the data from the Small Business Administration shows what most suspected: More than a quarter of the money went to just 1 percent of borrowers, The Times’s Stacy Cowley and Ella Koeze report.

A tiny fraction of high-value loans made up a substantial portion of total P.P.P. money handed out

Share of loans distributed, by amount

100% of loans

75

92% of loans were

$250,000 or smaller.

50

25

Only about 1% of

loans were over

$1.5 million.

0

Loan

amount:

$500

thousand

$1

million

$1.5

Share of money distributed, by loan amount

100% of money distributed

75

50

Loans over $1.5 million made up over 25% of the total amount given out.

25

0

Loan

amount:

$500

thousand

$1

million

$1.5

Share of loans distributed, by amount

Share of money distributed, by loan amount

100% of loans

100% of money distributed

75

92% of loans were

$250,000 or smaller.

50

Loans over $1.5 million made up over 25% of the total amount given out.

25

Only about 1% of

loans were over

$1.5 million.

0

Loan

amount:

$500

thousand

$1

million

$1.5

$0

$500

thousand

$1

million

$1.5

Note: The largest possible amount a business can be loaned via the Paycheck Protection Program is $10 million.

Source: Small Business Administration

Some of the most prominent recipients:

National restaurant chains: Ted’s Montana Grill, T.G.I. Friday’s and P.F. Chang’s were among those that each received the maximum of $10 million, after the industry successfully lobbied to make large chains eligible for aid aimed at small businesses.

Law firms: Boies Schiller Flexner and Kasowitz Benson Torres, which was founded by the Trump ally Marc Kasowitz, each collected $10 million.

Tenants of Trump properties: Nearly 100 businesses listing an address at 40 Wall Street, a building with ties to the Trump Organization, received a total of more than $34 million in loans.

The program’s effectiveness is in question. The payroll provider Gusto found that the chances that workers would lose their job at a company that took a P.P.P. loan — which was forgivable if companies kept employees on their books for a period of time — increased by 25 percent during the week that the loan’s restrictions ended.

Some 232,000 jobs may have been eliminated as the restrictions expired. “Companies really emerged in no better shape,” said Luke Pardue, a Gusto economist. “A lot of that is due to the fact that the economy is in no better shape.”

HERE’S WHAT’S HAPPENING

Top Democrats back a bipartisan stimulus plan. The House speaker, Nancy Pelosi, and the Senate minority leader, Chuck Schumer, have endorsed a $908 billion proposal as a starting point for new federal aid. But Senator Mitch McConnell, the majority leader, appears to be more focused on a “skinny” bill. The negotiating comes as the U.S. set a daily record for coronavirus deaths and hospitalizations.

Congress prepares to fight President Trump over a legal tech shield. Democratic and Republican lawmakers alike appear unwilling to attach the repeal of Section 230 of the Communications Decency Act, which protects online platforms from legal liability for user-generated content, to a $740 billion military spending bill. Mr. Trump has threatened to veto the bill, but Congress may have enough votes to override him.

Gary Cohn resists Goldman Sachs’s effort to claw back pay over the 1MDB scandal. Mr. Cohn, the firm’s former president, is reportedly unwilling to return $10 million that he has already received, according to Bloomberg. The bank has sought to recoup $174 million from past and present leaders after it admitted to a role in the Malaysian bribery case, a major test of the effectiveness of executive clawbacks.

UPS sets limits on e-commerce deliveries. The shipping giant told its drivers to restrict pickups from large retailers like the Gap, Macy’s and Nike, The Wall Street Journal reported. The rare move is meant to preserve shipping capacity amid a surge in online shopping.

Boies Schiller loses one of its leaders amid an exodus of lawyers. Nicholas Gravante Jr., who was named a managing partner last year to help overhaul the law firm after it faced blowback from work for Harvey Weinstein and Theranos, is defecting to a rival, Cadwalader Wickersham & Taft. His departure follows the exit of at least 59 partners over the past year.

How Nestlé will get to net zero

Last year, Nestlé pledged to reduce its net greenhouse gas emissions to zero by 2050. Today, it released a detailed 27-page plan on how it will get there. Nearly two-thirds of the Swiss food giant’s emissions come from agriculture, where reducing emissions requires working with some 500,000 farmers and 150,000 suppliers. That’s more complicated than simply switching to renewable electricity or offsetting business travel (which Nestlé is also doing).

Mark Schneider, the company’s C.E.O., spoke with DealBook about how he won support from more than 290,000 employees — and how he will sell investors on paying now to meet a goal 30 years in the future.

On the scope of the challenge

It will take Nestlé, which has a globe-spanning, resource-intensive supply chain, a lot longer to reach net zero emissions than it would for, say, a big tech company. For example, Nestlé was responsible for 92 million metric tons of greenhouse gas emissions in 2018, roughly double the amount emitted by all of Switzerland. “When we’re all living on this earth,” Mr. Schneider said, “we want to be sure that it becomes a place for future generations that’s inhabitable.”

On making a climate pledge “earnings neutral”

Long-term investors see the net-zero pledge as “future-proofing the company,” Mr. Schneider said, especially as environmental laws become stricter and consumers increasingly seek climate-friendly products. For investors with shorter horizons, the pledge is “earnings neutral,” he added: Despite costing around $3.6 billion over the next five years, these investments will be financed by operational efficiencies and will, eventually, enable the company to “charge a premium for better products.”

“There is also a revenue upside,” Mr. Schneider said. “The margin is not going backwards.”

On ensuring that future company leaders stick with it

After announcing the targets with “great fanfare,” it will become “a matter of honor” to meet them, Mr. Schneider said. Still, the executives making these commitments will probably have retired by 2050. To give the plan teeth, starting next year the company will tie part of its executive committee’s annual bonuses to quantifiable environmental factors. “We’re putting our money where our mouth is,” he said.

On how the pandemic changes everything

Nestlé made the net-zero commitment about six months before the pandemic, which has had two major effects on the pledge, Mr. Schneider said.

On the positive side, the urgency of addressing climate change has intensified. “People see what can happen if you wait too long, and that you better fight a problem early on and get a handle on it,” he said. And being confined at home has given people time “to think through what really matters,” he added.

On the negative side, the financial stimulus to rescue the global economy — which was necessary, Mr. Schneider emphasized — has left the world with huge, unexpected debts. That means less “leeway from the public point of view” to spend on measures like long-term greenhouse gas reductions.

“What’s that company? How do you spell it?”

— Marc Benioff, the Salesforce founder, on Microsoft, which he will compete with more directly after buying Slack. (They have a complicated history.)

Senator Perdue’s prolific stock trading

Senator David Perdue, Republican of Georgia, is the Senate’s most active trader, by far: His 2,596 trades account for nearly one third of all senators’ trades in the six years he’s held office, report The Times’s Stephanie Saul, Kate Kelly and Michael LaForgia. As he prepares for a runoff election next month, this activity is drawing increased scrutiny.

Some of his trades involved companies in industries he oversaw on Senate committees, which have access to information not available to the public. They include shares of the tech security company FireEye, which he bought and sold 61 times since 2016. Nearly half of those trades came while he sat on the cybersecurity subcommittee. He also bought shares of JPMorgan Chase, Bank of America and Regions Financial while a member of the Senate banking committee.

There is no law or regulation prohibiting such trading by legislators. Still, it raises questions about potential conflicts of interest and whether the 2012 STOCK Act, which prohibits members of Congress from trading on inside information, goes far enough. Mr. Perdue’s trades in the financial company Cardlytics, where he once served on the board, were the subject of a federal inquiry earlier this year, which closed without pursuing charges.

Mr. Perdue insists there isn’t a conflict. “Senator Perdue doesn’t handle the day-to-day decisions of his portfolio — all of his holdings are managed by outside financial advisers who make recommendations, set strategy, and manage trades and personal finances,” a spokesman for the senator’s re-election campaign told The Times.

Does the U.S. need a Science Readiness Reserve?

In times of crisis, like the pandemic, the public and private sectors often join to solve problems at “warp speed.” But these emergency efforts don’t necessarily prepare the country for the next disaster, so IBM is asking the incoming Biden administration and Congress to create a new public institution devoted to scientific preparedness. “This isn’t the last emergency,” Dario Gil, IBM’s research director, told DealBook.

“A national guard of scientific experts” is how IBM characterized its proposed Science Readiness Reserve in a letter to Congress. These scientists would be on duty “to deploy cutting-edge and emerging technologies” in partnership with government when crisis strikes.

There is a model. Dr. Gil points to a supercomputing consortium IBM started in March to match infrastructure providers with coronavirus researchers. This could be the template for “complementary” chapters in fields like artificial intelligence, genomics and biotechnology, he suggested. It’s time to think ahead about “the urgency of science for society,” Dr. Gil said.

But critics say public-private partnerships aren’t great for the public. In “The Perils of Partnership,” Jonathan Marks, the director of the bioethics program at Penn State University, argues that such unions create “webs of influence” that can undermine the integrity of government agencies, research and policy.

THE SPEED READ

Deals

Amazon is reportedly in talks to buy the podcast studio Wondery, as tech and media companies race to snap up audio companies. (WSJ)

Cerberus Capital Management, one of Deutsche Bank’s biggest investors, is said to have sought the removal of the German lender’s chairman, Paul Achleitner. (FT)

Two big asset management firms, Dyal Capital Partners and Owl Rock Capital Partners, are in talks to combine via a complicated deal involving a SPAC. (WSJ)

Politics and policy

Why President-elect Joe Biden has fewer tools to revive the economy than President Barack Obama had in his first term. (WSJ)

The former Citigroup executive Ray McGuire kicked off his campaign for New York City mayor with a social media ad featuring Spike Lee. (Bloomberg)

Tech

The next challenge in the Justice Department’s antitrust lawsuit against Google: Gaining access to confidential data given to the government by corporate rivals. (WSJ)

Parler, the social network favored by conservatives, has a pornography problem. (WaPo)

Best of the rest

How to hold a virtual office holiday party that’s not just another Zoom meeting. (Reset Work)

“This Japanese Shop Is 1,020 Years Old. It Knows a Bit About Surviving Crises.” (NYT)

Annotating the Salesforce-Slack acquisition announcement, with a heavy dose of sarcasm. (Paul Ford)

We’d like your feedback! Please email thoughts and suggestions to [email protected]

Source: Read Full Article