This Week in ESG and Impact Investing

Wells Fargo will testify several times this month before the House Financial Services Committee, under the leadership of Rep. Maxine Waters, D-Calif. And Waters is no radical, despite what right-wing propagandists say . She is an experienced, capable legislator with a solid track record of protecting the public. Yet Waters is also not to be trifled with. Both the independent chairman and lead director at the board of Wells Fargo resigned Monday after Waters called for their resignation. Interestingly, those same two leaders are the only witnesses scheduled to testify at Wednesday’s hearing . (It’s long overdue that the entire board be replaced, as noted in 2018 .) In 2019, Wells Fargo reported net income of $19.5 billion . That was lower than the $22.4 billion the bank earned in 2018, as the cost of litigation started to impact profits. Wells recently agreed to pay regulators an additional $3 billion to cover fines for violating consumer protection laws. The bank has a long and sor...

  On June 15th, several American financial and political leaders convened in distinct discussions concerning the future of Minority Deposit Institutions (MDIs) and Community Development Financial Institutions (CDFIs). At a White House press conference, a Federal Deposit Insurance Corporation (FDIC) Board meeting and MDI policy statement release, in a House Financial Services Committee statement, and a Georgetown University forum with an all-star cast, minority lending was the conversation of the day. Utilizing the Mosaic Theory, Creative Investment Research contends that the convergence of these events may not be a coincidence, and may signal a significant policy change. We note that the MDI events of June 15th were preceded by a June 14th meeting of the California Public Employees’ Retirement System (CalPERS) Investment Committee. Of particular relevance was a progress report on the Fund’s Sustainable Investment 5 Year Strategy Plan. Fund management discussed diversity and inclusi...

The Federal Reserve Act (FRA) requires the Chairman of the Federal Reserve System  to testify before the House Financial Services Committee and the Senate Banking Committee twice a year, in February and July, on how the Board handles monetary policy and its observations on economic developments. In keeping with that requirement, the current Chairman of the Federal Reserve, Jerome Powell, testified before the House on July 10th. He indicated as follows: Economic activity increased at a solid pace in the first part of 2019. The labor market has continued to strengthen: unemployment fell from 3.9% (Dec) to 3.6% (May), wage gains remained moderate.  Inflation has been running below the Federal Open Market Committee’s ( FOMC ) longer- run objective of 2 percent.  In June, the FOMC judged that current and prospective economic conditions called for maintaining the target range for the federal funds rate at 2 1⁄4 to 2 1⁄2 percent.  Inflation: Consumer Price I...

On June 20 the House Financial Services Committee held a hearing on diversity in America’s boardrooms. The witness list consisted of Ms. Chelsa Gurkin, Acting Director of the Education, Workforce and Income Security team of the U.S. Government Accountability Office, Mr. Luke Visconti, Founder and Chairman of DiversityInc, Mr. Ron Lumbra, Managing Partner of Heidrick and Struggles, Ms. Linda Akutagawa, Chair of the Alliance for Board Diversity, the Former Ambassador to Argentina, Vilma Martinez, and Dr. Stephanie Creary, an Assistant Professor of Management at the Wharton School of Business of the University of Pennsylvania. The hearing examined options for diversifying the gender, racial and ethnic composition of corporate and federal boards. Each witness presented testimony on how to address the issue of diversity on corporate boards and identify the conditions that lead to meaningful diversity so that more companies can follow the lead of firms that have been successful. D...

With the seating of the 116th Congress, Rep. Maxine Waters (D-Calif.) has taken control of the House Financial Services Committee, the House committee tasked with supervision of the banking industry and the Federal Reserve Board. This is an enormously important role. As we surveyed tech- and financial services-related trade and business associations this week, one noted: “I can look into that policy inquiry for you. We are of course always looking to expand our relationships on Capitol Hill, and with the new majority in the House taking the reins, Rep. Waters will be very influential.” See:  https://morningconsult.com/opinions/maxine-waters-is-no-wild-eyed-radical/

Wall Street Journal, May 22, 2009. NEW YORK -- The financial turmoil that has weakened or destroyed some of Wall Street's most prominent companies is presenting an opportunity for some lesser-known firms, especially those owned by women and minorities. One company that is benefiting is Williams Capital Group LP, an African-American-owned broker-dealer and asset manager in New York. Earlier this week, Goldman Sachs Group Inc. said it will invest $1 billion in a money-market fund managed by Williams Capital, more than doubling the amount of funds the firm has under management and pushing it over a critical size threshold that could help it attract additional institutional investors. Last month, Williams Capital was named as part of a team assembled by Invesco Ltd. that applied to participate in the Treasury Department's Public-Private Investment Program, or PPIP, an effort to relieve banks of toxic assets. Invesco, and its affiliate WL Ross & Co., which is controlled by money...

According to the New York Times, "WASHINGTON — Top banking regulators were taken aback late last year when a California congresswoman helped set up a meeting in which the chief executive of a bank with financial ties to her family asked them for up to $50 million in special bailout funds, Treasury officials said. Representative Maxine Waters, Democrat of California, requested the September meeting on behalf of executives at OneUnited, one of the nation’s largest black-owned banks. Ms. Water’s husband, Sidney Williams, had served on the bank’s board of directors until early last year and has owned at least $250,000 in stock in the institution. Treasury officials said the session with nearly a dozen senior banking regulators had been intended to allow minority-owned banks and their trade association to discuss the losses they had incurred from the federal takeover of Fannie Mae and Freddie Mac. But Kevin Cohee, OneUnited’s chief executive, instead seized the opportunity to plead for...