AT&T’s C.E.O. Regretted Paying Michael Cohen: DealBook Briefing

Yet it also said that its legislative affairs team would now report to the telecom’s general counsel, David McAtee. The team’s senior executive vice president, Bob Quinn, will be “retiring.”

Here’s the full text of the memo, which was obtained by DealBook:

Our company has been in the headlines for all the wrong reasons these last few days and our reputation has been damaged. There is no other way to say it – AT&T hiring Michael Cohen as a political consultant was a big mistake.

To be clear, everything we did was done according to the law and entirely legitimate. But the fact is, our past association with Cohen was a serious misjudgment. In this instance, our Washington D.C. team’s vetting process clearly failed, and I take responsibility for that. Here is more information on this issue, if you’re interested.

For the foreseeable future, the External & Legislative Affairs (E&LA) group will report to our General Counsel David McAtee. Bob Quinn, Senior Executive Vice President – E&LA, will be retiring.

David’s number one priority is to ensure every one of the individuals and firms we use in the political arena are people who share our high standards and who we would be proud to have associated with AT&T.

To all of you who work tirelessly every day to serve customers and represent the brand proudly, thank you. My personal commitment to you is – we will do better.


In a separate document, the company discussed several other points about the hiring of Essential Consultants— including the fact that Mr. Cohen approached AT&T:

Michael Cohen approached our External Affairs organization during the post-election transition period and said he was going to leave the Trump Organization and do consulting for a select few companies that wanted his opinion on the new President and his administration – the key players, their priorities, and how they think.

The company also noted that it had hired “political consultants” in the past, especially at the beginning of new administrations.

The AT&T memo comes after Novartis’s C.E.O. of three months, Vasant Narasimhan told his employees on Thursday that the revelations of the drug company’s $1.2 million contract with Mr. Cohen led to “not a good day for Novartis.” (The contract was signed under Mr. Narasimhan’s predecessor.)

The big issue: It’s not clear that Novartis, seeking counsel on issues like drug pricing, or AT&T, which wanted advice on its Time Warner deal and net neutrality, got much from Mr. Cohen in the end. (The Justice Department sued to block AT&T’s transaction, after all.)

In other Michael Cohen news: The Treasury Department has begun an inquiry into how Michael Avenatti, Stormy Daniels’s lawyer, obtained Mr. Cohen’s bank records.

— Michael de la Merced


Wu Xiaohui, former chairman of Anbang.

Thomas Peter/Reuters

Behind China’s debt crackdown

As Beijing metes out tough prison sentences — the former chairman of Anbang Insurance Group, once a highflier, just got 18 years — and lets shadow lenders wither, China is signaling that it is serious about its debt problem. (The total was 256 percent of G.D.P. as of last year.)

Debt appears to be one of the things that keep President Xi Jinping awake. From a 2016 speech highlighted by the NYT:

“Some financial risks are longstanding, lurking sources of infection that are concealed very deep but may erupt in a flash. The United States subprime crisis erupted in a night. If we’re going to have big trouble in the future, it could well be in this area, and this demands high vigilance.”

(Another of his worries: losing a tech race to the West.)

But reducing debt will be difficult, as Christopher Lee of S.&P. Global told the NYT: “Like any deleveraging campaign, it is not painless.”


Oil rig pumpjacks, which extract crude.

David Mcnew/Reuters

What’s on our economic radar

Oil: Bank of America Merrill Lynch analysts are talking about $100 a barrel next year. Military exchanges between Israel and Iran haven’t helped. (But the Blackstone Group appears ready to profit if prices rise.)

Lending: It has been a huge driver of economic growth, but has slowed in recent years, Peter Eavis writes. In March, bank loans to companies rose just 2.5 percent, compared with an average of 7 percent over the past three years; corporate bond issuance is down 14 percent from last year. The longer credit growth lags, the less likely a Trump boom becomes.

Trade: While Commerce Secretary Wilbur Ross said the U.S. had made progress in negotiations with China, there’s more to do. And if the White House wants a new Nafta deal passed this year, House Speaker Paul Ryan says the deadline for a final version is next Thursday.

Stocks: Third Point’s Dan Loeb thinks that investors are getting worried about companies’ trading multiples and is looking for signs of a looming recession.

The political flyaround

• Rudy Giuliani resigned from the law firm Greenberg Traurig, which then undercut his claims about payments to Stormy Daniels. (NYT)

• President Trump is expected to drop a campaign pledge to have Medicare negotiate lower drug prices. The F.D.A. acknowledged a shortage of EpiPens.

• What automakers are likely to raise with Mr. Trump at a C.E.O.s’ meeting today. (NYT)

• The White House’s choice for assistant Treasury secretary for international finance, Adam Lerrick, has withdrawn. (Politico)

• Scott Pruitt dined in Rome with a cardinal who has denounced action against climate change as “pagan emptiness” (and who faces sexual abuse charges). A White House spokesman said yesterday that allegations against the E.P.A. chief “have raised some concerns.”


Nicolas Asfouri/Agence France-Presse — Getty Images

What happens when Apple and Goldman Sachs team up?

They’re working on an Apple Pay-branded credit card. That would let Apple juice its services revenue as iPhone sales slow, and Goldman expand its consumer lending to make up for falling trading revenue. The loser: Barclays, whom Goldman would replace.

But they would face challenges. More from Tripp Mickle and Liz Hoffman of the WSJ:

The push into credit cards is fraught for Goldman, whose track record in consumer finance is scarcely two years old. Credit cards are a cutthroat business dominated by larger rivals like JPMorgan Chase and Citigroup. Yields are falling. And Goldman lacks much of the infrastructure to be able to issue credit cards and process payments to merchants.

Elsewhere in financial services: Morale at Deutsche Bank’s U.S. operations is dropping. Bank of America spoke of selling its piece of a loan to Remington Outdoor.


Andy Samberg, left, and Andre Braugher in Brooklyn Nine-Nine.

John P. Fleenor/Fox

The deals flyaround

• Media M.&A. moves have clouded the fate of television shows. (That said, R.I.P. “Brooklyn Nine-Nine.”) What Liberty Media’s Greg Maffei thinks of the deal making.

• Silver Lake agreed to buy ZPG, a British online real estate platform operator, for about $3 billion. (Bloomberg)

• We like the code names in Takeda Pharmaceutical’s deal for Shire: Takeda was “Yamazaki,” Shire “Hibiki.” (Bloomberg)

• Dan Loeb’s Third Point is reportedly in talks to set up a blank-check acquisition company. (Reuters)

• Why Alphabet might invest in Flipkart alongside Walmart. Robinhood, an online brokerage, has raised $363 million at a $5.6 billion valuation from the likes of DST Global. New Zealand’s sovereign wealth fund has invested $65 million in Rubicon Global, a trash-collecting start-up.

• Volvo’s parent company has reportedly hired Citigroup, Goldman Sachs and Morgan Stanley to run an I.P.O. The biggest I.P.O. of the year so far, AXA Equitable, fell in initial trading. Thoma Bravo is reportedly considering an I.P.O. or sale of Dynatrace, a business software maker.

• Saint-Gobain of France dropped its long-running takeover bid for a Swiss rival, Sika. (FT)


Eric Thayer for The New York Times

See thousands of the Russian ads that ran on Facebook

Democrats on the House Intelligence Committee published 3,519 ads bought by the Internet Research Agency, a Russian entity accused of interfering in the 2016 presidential election. Their target audiences include fans of Sean Hannity and supporters of Black Lives Matter. Facebook conceded that it was “too slow to spot this type of information operations interference,” but said it was working to prevent such abuse.

Elsewhere in Facebook: A Calstrs portfolio manager compared the company’s dual-class stock structure to a “dictatorship.” (Note: The New York Times Company also has dual-class stock.)

Cryptocurrency corner: Huawei is giving its users easier access to Bitcoin. Cryptocurrency-inspired art is now a thing, with a disintegrating portrait of Jamie Dimon fetching $33,000.

Elsewhere in tech: SoftBank’s Masa Son has changed tech investing, for good and bad. Amazon has reportedly stopped buying “Shopping” ads in Google results. Apple has scrapped plans for a $1 billion data center in Ireland. How Didi Chuxing teamed up with Uber’s biggest rival in Brazil, 99. Panasonic is reportedly hesitant to invest more in a battery partnership with Tesla.

Revolving door

• JPMorgan Chase named Chris Berthe as global head of cash equities execution, leading teams that electronically match stock buyers and sellers. (CNBC)

• Moelis & Company has hired Anuj Mathur as a managing director specializing in internet and digital media investment banking. (Moelis)

The speed read

• Spotify said it would stop promoting or recommending music by artists whose conduct or content it deemed offensive, including R. Kelly. (NYT)

• Elaine Wynn has emerged as a champion of shareholder rights and good corporate governance. (NYT)

• The novelist Junot Díaz, facing sexual misconduct allegations at M.I.T., is stepping down as chairman of the Pulitzer Prize board. (NYT)

• Marchesa, the brand codesigned by Harvey Weinstein’s estranged wife Georgina Chapman, is making a comeback with the support of Anna Wintour and Scarlett Johansson. (NYT)

• Bloomberg Philanthropies is investing $43 million in more than 20 small and midsize cultural organizations in seven cities. (NYT)

• MoviePass has competition. (Wired)

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Anbang Was Seized by China. Now, It Has a Deal for You.

The government “would think of solutions,” Ms. Cheng said. “Since they allowed this indulgence, they should be there to clean up the mess.”

China has a problem with debt. Shadowy, underground lenders have flooded the country with a staggering $15 trillion in credit, which threatens to hobble its economy.

Beijing now appears to be taking a harder stance with the companies in need of a bail out. On Wednesday, Chinese authorities accused a founder of Anbang, who was the deal maker who bought the Waldorf Astoria, of bilking investors of more than $10 billion. In a country where courts tend to convict, the accusations raised the likelihood that the executive, Wu Xiaohui, could face life in prison.

Officials have also spent the past two years trying to contain the risk. Earlier this month, the Chinese government said it would merge the country’s banking and insurance regulators in an effort to close regulatory loopholes.

Central to that effort is keeping a tighter rein on products like Anbang’s Abundant Stability No. 10. Many small investors believe that means the government backs them. Anbang also calls them “universal insurance products,” making them sound conservative.

The truth is more complicated.

Abundant Stability No. 10 is closer to what in China is called a wealth management product. Wealth management products on paper are not backed by the government, but state-run banks act as middlemen and sell them to small investors, giving many people the perception that they are. The salespeople often know little about what is backing them — or how the people ultimately behind them will pay the money back.

Abundant Stability No. 10, for example, requires only a $4,600 investment over three years. In return, investors are promised a payout that is triple what Chinese savers might get by parking their money in a savings account. On the phone, salespeople at one state-run Chinese bank, China Merchants, said the payout could be even higher, perhaps 10 times what a savings account pays out.

Shen Gang, an Anbang spokesman, said that banks were an important channel for the company’s insurance products and that the government takeover had not changed the operations of Anbang at all. “Anbang has always been very stable on the financial front,” he said. “As such, the selling of our products is a normal business activity.”

Li Yan, 48, a founder of a technology company, bought a universal insurance product from Taikang Insurance, an Anbang rival. She said she was a “teeny bit” concerned about the government takeover of Anbang but “didn’t think it’s a huge problem,” citing the two insurers’ political connections.

“Aren’t insurance companies not allowed to go bankrupt?” she said.

The Chinese authorities have pressured big issuers to slow down. In November, they proposed tightening disclosure rules and stopping firms from guaranteeing payments to investors, among other steps.


Anbang has used the money it raised from investment products to help pay for risky deals like the purchase of the Waldorf Astoria hotel in New York and other flashy properties around the world.

Karsten Moran for The New York Times

Data suggest China is making some headway. The total outstanding balance of wealth management products issued by Chinese banks was about $4.7 trillion in 2017, up just 1.7 percent from a year before, according to China Wealth, a state-backed company that tracks China’s wealth management products. Two years ago, sales were growing at roughly 50 percent.

“I would say that the risk of the debt crisis has come down because of what the government has done,” said Wang Tao, head of Asia economics for UBS Investment Bank. “The problem is not entirely resolved but it’s moving in the right direction.”

Still, the government has a lot of work to do before investors shake the notion that the government amounts to an eternal safety net.

In his last news conference as China’s central bank governor, Zhou Xiaochuan, long a proponent of Chinese financial overhauls, said on March 9 that the country had to strengthen investor education. He said investors had to “fully learn” about new financial products before they bought them.

“If you want to use them, you have to take your own risks and find out for yourselves,” he said. “You can’t leave it entirely to the regulators to manage them.”

Zhu Ning, a Tsinghua University economist, said the only way the government can prevent investors from taking on more risk that they can handle is to allow for “some real failures.”

China has been reluctant to allow for failures. Fearing mass unrest, the ruling Communist Party has repeatedly instructed Chinese banks and local officials to cave in to angry investors, who have protested outside government offices after losing their investments.

The real test, according to Mr. Zhu, could come later this year, when wealth management products issued years earlier have to be paid back.

“Nonperforming loans are going to be so severe that some of the weaker banks will be forced to face their Judgment Day — whether they are going to be bailed out or whether they are going to die,” he said.

In the last five years or so, retail investors have poured money into wealth management products that enabled China’s developers to circumvent laws to buy land, “zombie” state-owned enterprises facing overcapacity problems to borrow, and debt-laden local government financing vehicles to take on more leverage.

In the case of Anbang, it helped the company raise money for trophy acquisitions such as the Waldorf Astoria.

“They were just buying up assets, playing the markets and investing overseas, which, of course, isn’t really beneficial to China’s economy,” said Christopher Aston, an associate consultant in Shanghai at Control Risks, a global risk consultancy, who is writing a book on his experience in a Chinese shadow bank.

The market is still booming for Anbang. According to data from China’s insurance regulator, Anbang earned $9.2 billion in income derived mostly from universal life insurance products in January, compared with just $1.3 million a year before.

Very few investors in China tend to ask where the money is going. Part of the problem is that many people became cash-rich in a relatively short period of time without an industry of financial advisers that is common in the West.

“The investment mentality really has not evolved,” said Lester Ross, chair of the insurance forum of the American Chamber of Commerce in China. “It’s rather recent.”

Meng Hongxia, a hotel employee who says she earns $480 a month, was considering such a product while inside a branch of China Merchants. She said she was mulling putting her entire savings of nearly $8,000 in a wealth management product f because it promised a yield of more than 4 percent and guaranteed repayment.

“What do you think?” she said, when asked about the product. “Should I invest?”

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