Goldman sets office return date; PPP runs out of money a month ahead of time

Receiving Wide Coverage ...

Let’s get together

Goldman Sachs “told its bankers in the U.S. and U.K. on Tuesday that they should be ready to return to the office next month, as the two countries loosen restrictions in response to falling Covid-19 cases,” the Financial Times reported. “U.S. staff were asked to be ready to report to the office by June 14, while U.K. employees will be called back one week later on June 21.”

“The mandate follows a similar one from JPMorgan Chase, in which it told its U.S. staff last week to be in position to be back in the office on a regular basis by early July as vaccine rollouts and lower infection rates have brought life in many U.S. cities closer to normal.”

“We are focused on progressing on our journey to gradually bring our people back together again, where it is safe to do so,” Goldman told its employees, according to The New York Times.

“Banks, which are among the largest employers in New York, have been eager to bring workers back into the office, concerned that an extended period of working from home would hurt the training, camaraderie and work culture that develop when people are together.”

“The bank’s memo does not stipulate a full-time return to the office, noting that teams and regions may have different expectations,” The Washington Post said. “But unlike a growing number of major employers, Goldman also isn’t telling workers that some kind of hybrid schedule will be its new routine. Nor is it defining the sort of three-days-in, two-days-remote setup many workplace experts predicted would become commonplace post-pandemic.”

Role reversal

Treasury Secretary Janet Yellen “said Tuesday that it is possible the Federal Reserve may have to raise interest rates to keep the economy from overheating if the Biden administration’s spending plans are enacted,” the Journal reported. “It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat, even though the additional spending is relatively small relative to the size of the economy,” she said.

“Ms. Yellen’s remarks were unusual because White House officials typically refrain from commenting on interest-rate policy. Fed Chairman Jerome Powell reiterated last week that the central bank isn’t worried about a persistent rise in inflation and that he expects that price increases over the coming months will be transitory.”

Her comments, which were “made in the context of the Biden administration’s plans for $4 trillion of infrastructure and welfare spending, on top of several rounds of economic stimulus because of the pandemic, exacerbated a sell-off in technology stocks,” the FT said.

“The Treasury secretary has no role in setting interest rate policies. That is the purview of the Federal Reserve, which is independent from the White House,” The New York Times noted. “But the words of Ms. Yellen, a former Fed chair, carry substantial weight, and her comments were seized on by investors and critics who said she was improperly exerting influence over her prior monetary policy portfolio.”

Later in the day, Yellen walked back her comments, telling the Journal that “she is neither predicting nor recommending that the Federal Reserve raise interest rates as a result of President Biden’s spending plans.”

“I don’t think there’s going to be an inflationary problem, but if there is, the Fed can be counted on to address it,” she said.

Wall Street Journal

Trouble ahead?

“Consumer lender stocks can still be good bets, but the easy money may already have been made,” the Journal says. “Early worries of credit woes stemming from the pandemic haven’t materialized. But investors also now have reason to be cautious on the longer-term outlook, as the current lending boom could create conditions for higher defaults eventually.”

“One risk is that consumers may appear more creditworthy only temporarily, boosted by stimulus, forbearance of other debts such as student loans or mortgage payments, and high collateral values for things like used vehicles. Auto lending seems like one potential area for excess. Inexpensive debt available in the capital markets both draws in more lenders and drives tighter pricing. This in turn makes subprime lending more attractive because there are fewer lenders in that space—but then it is even more incumbent on lenders not to misjudge borrowers’ financial health based on the availability of government stimulus.”

“After a year of pandemic-induced caution in consumer lending, bankers are starting to reacquaint themselves with risk,” American Banker reports.

New York Times

It's over

“Four weeks before its scheduled end, the Paycheck Protection Program ran out of funding on Tuesday afternoon and stopped accepting most new applications. Congress allocated $292 billion to fund the program’s most recent round of loans. Nearly all of that money has now been exhausted, the Small Business Administration, which runs the program, told lenders and their trade groups. While many had predicted that the program would run out of funds before its May 31 application deadline, the exact timing came as a surprise to many lenders.”

“Some money — around $8 billion — is still available through a set-aside for community financial institutions, which generally focus on lending to businesses run by women, minorities and other underserved communities. Those lenders will be allowed to process applications until that money runs out.”

Financial Times

Taking the lead

BNY Mellon is “the early winner in the cryptocurrency ETF service provider contest. The New York-based bank has secured administration and/or transfer agency contracts with three of the eight bitcoin ETFs that have filed registration paperwork with the Securities and Exchange Commission.”

Quotable

“We want people back at work and my view is sometime in September, October, it will look just like it did before. Yes, people don’t like commuting, but so what?” — JPMorgan Chase CEO Jamie Dimon, on the bank’s time frame for employees to return to the office.