Los Angeles Times - 29.08.2019

LATIMES.COM/BUSINESS THURSDAY, AUGUST 29, 2019C3

Citigroup Inc. quietly
boosted its minimum wage
to $15 an hour, joining com-
petitors in awarding raises
to rank-and-file staff, after
House Financial Services
Committee Chairwoman
Maxine Waters prodded the
firm.
Unlike other major banks
that announced similar
moves in news releases, Citi-
group disclosed its decision
directly to Waters after she
asked Chief Executive
Michael Corbat whether he
would consider raising the
minimum to $20. The move
to $15 took effect June 1, the
bank told her in a statement,
according to a copy of the ex-
change released by the Los
Angeles Democrat’s office
Tuesday.

A spokesman for the New

York company declined to

elaborate on how much the

move might boost employ-

ees’ pay and offered no addi-

tional comment. Median pay

at Citigroup rose 3% to

$49,766 in 2018, bank data

cited by Waters’ office show.

Corbat stood in a lineup

of seven leaders of major

U.S. banks at an April hear-

ing, where lawmakers took

turns chiding them over a

wide range of issues. At one

point, representatives noted

that Citigroup pays its CEO

about 486 times more than

the median for employees.

Waters posed her question

to Corbat as a follow-up to

that session. And since that

appearance, Corbat has said

the nation’s widening in-

come gap ranks high on the

list of things that keep him

up at night.

Waters has used such

events to wrest incremental

changes from banks. Ahead

of that hearing, JPMorgan

Chase & Co. said it would

stop financing private pris-

ons. Goldman Sachs Group

Inc. set more aggressive

targets for improving diver-

sity.

Last year, JPMorgan in-

creased its minimum wage

to a range of $15 to $18, a

move that has primarily af-

fected 22,000 of its full- and

part-time workers in

branches and call centers

across the country. Bank of

America Corp. has said it

plans to raise its minimum

wage to $20 over the next two

years. Wells Fargo & Co., the

fourth-largest U.S. bank, be-

hind Citigroup, announced

in late 2017 that it was boost-

ing its minimum wage to $15.

Banks typically pay

branch staff far less than

people in their securities

businesses or operations

serving corporations and

the wealthy. And in contrast

to other large U.S. banks,

Citigroup has a smaller

branch footprint in its home

country. Instead, it operates

an unusually large con-

sumer division internation-

ally.

CITIGROUPdisclosed its $15 minimum wage directly to Rep. Maxine Waters
(D-Los Angeles) after she asked the bank’s CEO if he’d consider raising it to $20.

Mark LennihanAssociated Press

Citigroup ups wage floor to $15

The bank boosted its

minimum pay June 1

without any fanfare.

bloomberg

Stocks overcame an early

stumble and closed broadly

higher Wednesday as the

market more than made up

its losses from a day earlier.

Retailers, healthcare and

industrial companies notch-

ed solid gains.

Financial and energy

stocks also helped power the

rally. The two sectors have

taken the heaviest losses

this month as fear that the

U.S. trade war with China is

hampering global economic

growth roiled markets.

Evidence of investor anx-

iety could still be found in

the bond market, as traders

seeking safety snapped up

U.S. government bonds. The

trend continued to drive

long-term bond yields fur-

ther below short-term ones.

The yield in the 10-year

Treasury fell below that of

the two-year Treasury on

Tuesday and remained

lower Wednesday. The 10-

year yield slid to 1.47%, down

from 1.49% late Tuesday. The

two-year dropped to 1.50%

from 1.52%.

“You’re seeing investors

hedge their bets, but also

take advantage of the pock-

ets of opportunity in sectors

that have been hurt by the

10-year yield coming down,”

said Quincy Krosby, chief

market strategist at Pru-

dential Financial.

The Standard & Poor’s

500 index rose 18.78 points, or

0.7%, to 2,887.94. The Dow

Jones industrial average

climbed 258.20 points, or 1%,

to 26,036.10. The Nasdaq re-

covered from an early slide,

gaining 29.94 points, or 0.4%,

to 7,856.88.

Investors favored smaller

company stocks a day after

they fell sharply. The Russell

2000 index rebounded 16.67

points, or 1.1%, to 1,472.71.

The market is on track to

end the week with a gain af-

ter having declined four

weeks in a row.

Still, with two trading

days left in August, the ma-

jor indexes are down more

than 3%. If those losses hold,

August would be the second

monthly drop for the market

this year after May.

Recent economic reports

have been mixed. The over-

all economy, as measured by

gross domestic product,

slowed to an annual growth

rate of 2.1% in the April-to-

June quarter from 3.1% in the

first quarter. An updated

snapshot is due out Friday.

The biggest source of un-

certainty for the market and

economy is the trade show-

down between Washington

and Beijing. U.S. and Chi-

nese trade negotiators are

due to meet next month in

Washington, but neither

side has given any indication

of offering concessions to

break a deadlock. A round of

talks last month in Shanghai

ended with no sign of prog-

ress.

Investors also pored over

a mixed batch of corporate

earnings reports and out-

looks Wednesday.

Tiffany & Co. gained 3%

after the luxury jeweler’s

second-quarter results beat

analysts’ projections and

the company reaffirmed its

full-year forecast.

Hewlett Packard Enter-

prise climbed 3.4% after the

information technology

products and services pro-

vider reported earnings that

easily beat analysts’ fore-

casts.

Autodesk slid 6.7% after

the software company

slashed its full-year fore-

casts, while Movado Group

sank 15% after the watch-

maker’s earnings and reve-

nue fell short of Wall Street’s

expectations.

Benchmark crude oil

rose 85 cents to $55.78 a bar-

rel after the government re-

ported a higher-than-ex-

pected drawdown in crude

inventories. Brent crude oil,

the international standard,

rose 98 cents to $60.49 a bar-

rel.

Gold slipped $3.20 to

$1,537.80 an ounce.

The dollar rose to 106.03

Japanese yen from 105.78 yen

Tuesday. The euro weak-

ened to $1.1079 from $1.1093.

Index

Dow industrials

S&P 500

Nasdaq composite

S&P 400

Russell 2000

EuroStoxx 50

Nikkei(Japan)

Hang Seng(Hong Kong)

Close

Daily

change

Daily % YTD %

26,036.10 +258.20 +1.00 +11.61

2,887.94 +18.78 +0.65 +15.20

7,856.88 +29.94 +0.38 +18.41

1,849.95 +17.32 +0.95 +11.24

1,472.71 +16.67 +1.15 +9.21

3,086.50 +0.16 +0.01 +11.83

20,479.42 +23.34 +0.11 +2.32

25,615.48 -48.59 -0.19 -0.79

Major stock indexes

change change

Source: AP

MARKET ROUNDUP

Banks, retailers lead stocks

higher after early wobble

associated press

Facebook Inc.’s Libra is
already in the firing line of
regulators and lawmakers.
Backers of other cryptocur-
rencies are now fighting to
ensure the fusillade doesn’t
take them down, too.
Crypto lobbyists are try-
ing to convince lawmakers
that efforts to slow or stop
Facebook’s virtual coin
shouldn’t apply to bitcoin
and other older digital cur-
rencies. The lobbying is ex-
pected to take on new ur-
gency during the coming
weeks as lawmakers return
from recess and renew ef-
forts to define and rein in Li-
bra.
“What we don’t want to
happen is members of Con-
gress for the first time come
in and author legislation
that aims to go after Face-
book and inadvertently
takes out the other part of
the industry,” said Kristin
Smith, director of the
Blockchain Assn., a trade
group that represents sev-
eral large cryptocurrency
companies, including some
also involved in Libra.
Facebook’s June an-
nouncement that it’s trying
to create a new cryptocur-
rency to make online pay-
ments cheaper and easier
met with swift pushback in
Washington. Though the
project is a joint effort with
Visa Inc., PayPal Holdings
Inc. and 25 other partners —
and Facebook emphasized it
had no more power over the
project than the others — its
prominent role drew criti-
cism from policymakers who
were already concerned
about the social network’s
issues with privacy and mar-
ket power.
President Trump, Treas-
ury Secretary Steven
Mnuchin and Federal Re-
serve Chairman Jerome
Powell have all questioned
Libra. Trump said in a series
of posts on Twitter in July
that Libra “will have little
standing or dependability”
and that he is “not a fan” of
bitcoin and other cryptocur-
rencies.
Regulators such as the
Securities and Exchange
Commission are also paying
close attention to Libra and
could choose to define it as a
security — a potential death

knell for the project. Defend-

ers of other cryptocurren-

cies want to avoid a similar

fate.

Some critics of Libra

have said its planned struc-

ture as a coin backed by mul-

tiple currencies and short-

term government debt looks

similar to that of exchange-

traded funds, which typi-

cally receive SEC oversight.

Although not commenting

on Libra directly, SEC

Chairman Jay Clayton said

that if something looks and

operates like an exchange-

traded fund, it should be

regulated like an exchange-

traded fund. That could po-

tentially cripple Libra as a

digital currency by creating

onerous reporting rules and

requirements for protecting

investors.

In the last two months, at

least four new firms have

registered to lobby for Face-

book on cryptocurrencies

and related issues. The lat-

est registrant was John

Collins of FS Vector, a lobby-

ing and regulatory compli-

ance firm in Washington.

He’s a former executive with

the cryptocurrency ex-

change Coinbase Inc.

U.S. lawmakers are plan-

ning legislation that would

make it difficult, if not im-

possible, for Libra to launch.

Intentionally or not, that

could affect other cryptocur-

rency projects.

The outcome could be

critical for bitcoin, ether and

scores of other cryptocur-

rencies that the market val-

ues in the hundreds of bil-

lions of dollars. Some bitcoin

advocates believe Libra

could make Facebook’s

more than 2 billion users

more comfortable with dig-

ital currencies overall. But

Facebook’s privacy and data

breaches are also drawing

unwelcome links.

At House and Senate

committee hearings in July,

lawmakers blasted Face-

book executive and Libra co-

creator David Marcus, criti-

cizing the project’s initial

white paper for being light

on details. The lawmakers

also linked Libra to other

Facebook missteps from the

past several years.

To distance bitcoin from

Libra, the Blockchain

Assn.’s Smith said the trade

group met with the offices of

60 lawmakers during the two

weeks before the hearings.

The meetings included the

staffs of most of the Senate

Banking and House Finan-

cial Services committee

members.

The Libra Assn., a Ge-

neva, Switzerland-based

nonprofit that is to govern

the proposed cryptocur-

rency, has plowed ahead

since the hearings even

though the blowback rattled

some participants, people

close to the project said.

Members have formed work-

ing groups to address vari-

ous aspects of the project,

such as privacy and govern-

ance, the people said. And

engineers have submitted

and reviewed more than 400

revisions to Libra’s open-

source code since the week

of July 14, when Marcus testi-

fied at the hearings.

Dante Disparte, the Li-

bra Assn.’s head of policy

and communications, said

in a statement that the

group believes “financial in-

clusion, regulatory compli-

ance, and consumer protec-

tion are not competing ob-

jectives, but rather work in

lockstep” with the goal of of-

fering a simpler global cur-

rency to billions of people.

Lawmakers are plotting a

response. Sen. Brian Schatz

(D-Hawaii) may offer legis-

lation that would have the

effect of making currencies

such as Libra illegal, accord-

ing to a draft of the bill re-

viewed by Bloomberg. The

legislation would amend a

U.S. statute originally

meant to prevent Americans

from minting their own

physical currencies. The

amendment would also

make it illegal for someone

to create a digital currency,

intended to be used as mon-

ey, whose value is based on

assets held in reserve.

House Financial Services

Committee Chairwoman

Maxine Waters (D-Los An-

geles) has circulated pro-

posed legislation that would

forbid large technology plat-

forms such as Facebook

from launching cryptocur-

rencies. Waters said Friday

that one of her committee’s

priorities in the coming

months will be “conducting

an ongoing review” of Libra.

Sen. Mike Crapo (R-

Idaho), the head of the Sen-

ate Banking Committee, has

also expressed interest in

more comprehensive legis-

lation. Few policy analysts,

however, expect Congress to

pass major legislation be-

fore the 2020 U.S. elections.

Supporters of digital cur-

rency worry that some of the

proposed legislative mea-

sures would quash more dig-

ital currencies than just Li-

bra. Bitcoin, its backers ar-

gue, is less a currency than a

store of value because its

price can move up or down.

But so-called stable coins,

such as USD coin and tether,

have a fixed price and could

be hit by legislation such as

Schatz’s proposal. Libra is

similar to stable coins but

would be backed by several

different currencies and

debt instruments rather

than by only the U.S. dollar.

The crux of the crypto

lobby’s pitch is that the bit-

coin network is decentral-

ized and open to anyone to

join. Because no single en-

tity controls bitcoin, regula-

tors can’t turn to any firm or

individual to enforce poten-

tial rule violations, said

Jerry Brito, who runs Coin

Center Inc., a nonprofit that

promotes cryptocurrencies.

The Libra Assn., on the

other hand, decides which

organizations are allowed to

manage transactions on its

network. And while the Li-

bra Assn. could make the

disclosures required by se-

curities laws, bitcoin doesn’t

have a corporate parent.

“If bitcoin were classified

as a security, who would

make the disclosure? It’s un-

workable,” Brito said. “We

have to educate people on

that.”

Some lawmakers have

long viewed that lack of cen-

tral control as a problem

rather than a feature. Rep.

Brad Sherman (D-

Northridge) told Bloomberg

TV after the Libra hearings

in July that he “absolutely”

believes all cryptocurrencies

should be illegal. Cryptocur-

rency “serves no function

unless somebody is engaged

in nefarious transactions,”

Sherman said.

Brito said his goal is to

stop lawmakers from con-

flating bitcoin and Libra. He

said his organization has al-

ready seen draft legislation

from lawmakers who want to

contain Libra and tried to

guide them to ensure they

also don’t stomp on bitcoin.

Bitcoin and Libra “aren’t

rivals. They’re completely

different things,” Brito said.

Light writes for Bloomberg.

Crypto rivals seek distance from Libra

With Facebook’s

proposed currency

under attack, the

industry tries to stay

out of the line of fire.

By Joe Light

FACEBOOK’SDavid Marcus appears at a July hearing where U.S. lawmakers grilled him about Libra.

Alex WongGetty Images