Biden Looks to Step Up Federal Disaster Aid for Texas

Plenty of companies are cutting costs to weather the pandemic recession. Few are trying to do so while also spending billions of dollars to satisfy their regulators. These are the tasks facing Wells Fargo WFC 5.17% & Co. Chief Executive Charles Scharf, who is attempting to slash at least $8 billion from the San Francisco bank’s annual budget. The bank’s expenses last year were $57.63 billion. Wells Fargo is simultaneously shelling out money to remake the vast risk-and-control systems that regulators have said were inadequate to catch the fake-account scandal that got it in hot water more than four years ago. Wells is still subject to 10 regulatory penalties known as consent orders. The harshest, from the Federal Reserve, has capped the bank’s growth for three years.

How to Slash Costs Without Angering Regulators

Severe weather conditions hitting much of the U.S. have caused some semiconductor companies to idle production capacity, threatening to exacerbate a chip shortage that has already prompted car makers to curtail output at some plants. South Korea’s Samsung Electronics Co. , one of the world’s biggest chip makers, operates two factories in Austin, Texas, and was asked by local authorities to shut those down on Tuesday, said a company spokeswoman. Samsung expects to resume production as soon as possible and, the spokeswoman said, was waiting for electricity provider Austin Energy to advise when the chip maker’s operations could start up again. Texas has suffered widespread power disruptions that began early Monday amid a severe winter storm. The outages have prompted local officials to ask companies to reduce operations to minimize demand on the region’s power grid. The Austin facilities represent about 28% of Samsung’s overall production capacity, according to Citi analysts. Austin is a manufacturing hub for Samsung, which is considering a $17 billion plan to expand its operations there or in other parts of the U.S.

So You’ve Bought a House in the ’Burbs. Here’s How to Make Good With Your Neighbors.

As more of you flee the cities for the suburbs, exurbs and not-at-all-urbs, here are some things your new neighbors would like you to know. When you marry someone, you marry their whole family. It is the same with buying a house. You buy the whole neighborhood. And the neighbors. Like in-laws, your new neighbors will be watching you. You screw up, they won’t forget. They will be talking about that time your garbage can fell over and dumped dirty diapers on the street until that diapered child is married. My neighbors are still giving me grief about the year we left our Christmas wreath up until March, a shame we wear like a brownish, crumbly Scarlet Letter “O.” The ways you can alienate your new community are endless. Making too much noise, owning aggressive pets, driving too fast down the street, cutting down trees that don’t belong to you, leaving major appliances in your front yard, acting like a total Karen, selling drugs out of your garage, burning crosses on your lawn—these obvious infractions will earn you neighborhood pariah status and, potentially, jail time. But even if you are not a jerk or a criminal, are thoughtful, kind and leave your major appliances in the house where they belong, here’s a secret: There is a whole list of neighborhood crimes you won’t even know you’re committing. Here are some: Gratuitous shoveling: Shovel your driveway, shovel the sidewalk on both sides of your driveway, shovel out the elderly person across the street. Don’t shovel the driveway of your able-bodied next door neighbor. That is virtue signaling and it will not be received well by the able-bodied owners, who have egos that you just bruised. The only time it is acceptable to shovel the driveway of the able-bodied is when they have a boat, pool and/or awesome outdoor entertainment area, in which case someone else probably beat you to it. Failure to wave: You’re walking down the street. Someone you don’t know waves from their porch as you pass. You don’t see it. Or maybe you do and you don’t wave back, or you wave back in an insufficiently enthusiastic way. The talk will have started before you even set foot back in your house. “He’s stuck up.” “Is that the new guy?” “Ya. He’s from New York, right?” “Yes. Of course.” “I knew it.” If a neighbor waves at you, wave back like they are a beloved relative risen from the dead.

Biden Looks to Step Up Federal Disaster Aid for Texas

The Texas Division of Emergency Management said it had transported 1.7 million bottles of water and assisted in delivering ready-to-eat meals. It said the Texas Military Department had deployed six units in North Texas earlier in the week to assist with rescuing stranded motorists and conducting welfare checks. The division said Friday it had requested water, meals, blankets and generators from FEMA, but didn’t provide details on when it had done so. Texas Gov. Greg Abbott’s office referred questions about the pace of the response to Emergency Management Chief W. Nim Kidd, who said icy roadways had made it impossible to move commodities such as water across the state. Mr. Kidd said ice had kept officials from accessing an emergency warehouse in Fort Worth until Thursday night. “We continue to make tremendous strides to overcome the challenges over the past week,” Mr. Abbott said Friday. “We’re working nonstop with local and federal partners. After a request from Mr. Abbott, Mr. Biden declared a state of emergency on Sunday night for all 254 counties in the state, allowing FEMA to make generators and fuel available to maintain critical infrastructure. The governor then asked the president on Thursday for major disaster assistance, which would allow local communities to seek federal help to pay for damage to infrastructure and state residents to recover payments for property damage. Local governments said they still haven’t received the aid they requested from the federal government via the state. Former Harris County Judge Ed Emmett, who was in office during Hurricane Harvey and numerous other natural disasters, said he hadn’t seen the same level of coordination that is routine for responding to hurricanes. “Nobody saw this coming—OK,” he said. “But once it occurred, why didn’t people start thinking about what’s really needed out there.” As of Friday afternoon, an estimated 14.6 million Texans were without safe drinking water, according to the Texas Commission on Environmental Quality. A winter storm had burst pipes across the state, leading to dry faucets and an order from city governments to boil any accessible tap water to make it safe to drink. The water crisis came after days of blackouts across the state in subfreezing temperatures.

Billionaire Developer Rick Caruso Lists Oceanfront Malibu Home for $40 Million

Records show Mr. Caruso, 62, purchased the property for $11.3 million in 2008. He remodeled it, taking it down to the studs, his spokeswoman said. The resulting five-bedroom looks like a whitewashed beach house and has a handset stone driveway, a formal dining room and a large living room with a painted brick fireplace. The black-and-white theme continues throughout the house: A black island is juxtaposed against bright white surrounding cabinetry in the kitchen, and retractable a black-and-white striped overhang shades the deck. The property also includes a theater with dual balconies opening up to a courtyard and the ocean as well as a pair of two-car garages. An antique limestone fountain in the entry courtyard was imported from France. Mr. Caruso’s spokeswoman said he is selling because his family has outgrown it and is expanding a home in nearby Orange County instead. Mr. Caruso’s company is perhaps best known as the owner of the Grove, the Los Angeles shopping center. The company also owns apartments, retail spaces and hotels across California. Forbes has pegged Mr. Caruso’s net worth at approximately $3.5 billion. Santiago Arana of The Agency has the listing. Write to Katherine Clarke at

Underfunded and Under Pressure, U.S. Pensions to Keep Investing in China

U.S. state pension funds that invested in Ant Group Co. were stung when the financial technology firm’s initial public offering was suddenly pulled on orders of China’s president. But few of these investors are swearing off Chinese private markets, where they still hope to reap big returns. Shock waves rippled through the investment world when China halted the initial public offering of Ant, which would have been the world’s biggest. The decision was made by President Xi Jinping after controlling shareholder Jack Ma infuriated government leaders by criticizing government financial regulation in an October speech, The Wall Street Journal reported. For the past several years, the retirement savings of America’s police, firefighters and teachers have increasingly found their way to private companies in China such as Ant. Anxious to meet ambitious return targets in a low-yield world, large North American pension funds have committed growing sums to both global private-equity managers active in China and managers local to China, according to pension officials and their advisers and investment reports.

Jeff Immelt on the Humbling of GE

 In the summer of 2001, weeks before Jeff Immelt became CEO of General Electric, he was playing golf with friends at a country club near Chicago when a club member asked him what he did. “I work for GE, ” Mr. Immelt replied, omitting his title. “Ah, GE! Jack Welch !” the man said. “I feel sorry for the poor son of a bitch who’s taking his place.”

The late Jack Welch was indeed a tough act to follow. The man dubbed the “manager of the century” by Fortune magazine quintupled the company’s revenues and increased shareholder returns 70-fold during his tenure from 1981 to 2001. At its 2000 peak, GE’s market capitalization soared to $600 billion.

Twenty years on, GE is a husk of its former self. The nearly 130-year-old conglomerate has shed some $500 billion in value and almost half its global workforce. Its profits have plunged, its stock has tumbled, and it recently paid $200 million to settle with the Securities and Exchange Commission over claims that it misled investors. GE has sold off many of its businesses, and it has cut its dividend to a token penny a share—a stunning fall for a one-time market leader in everything from lightbulbs to jet engines. Many point fingers at Mr. Immelt, 65, who led the company for 16 years until he was nudged out in 2017.

Mr. Immelt (right) and General Electric CEO Jack Welch (left) during a news conference in New York City, Nov. 27, 2000.

PHOTO: SHAWN BALDWIN/BLOOMBERG NEWS

“It became clear right away that my main role would be Person to Blame,” Mr. Immelt writes in his new book “Hot Seat: What I Learned Leading a Great American Company,” which will be published Feb. 23. While he admits he made mistakes, he says he felt moved to write about his years at GE’s helm to highlight the often-dire context of his decisions. “I dealt with bad news almost every day,” Mr. Immelt says over Zoom from his home on Kiawah Island, off the coast of South Carolina.

Despite Mr. Welch’s hallowed legacy, Mr. Immelt says that many of GE’s problems were inherited. “I’d become CEO of a company where perception didn’t equal reality,” he writes. GE’s shares were overvalued, high returns from its pension funds inflated earnings, and the company relied too heavily on its financial division, GE Capital, which contributed nearly half the firm’s earnings in 2001 by loading up on debt and becoming overleveraged in the insurance business.

Mr. Immelt says he knew GE Capital’s prominence was a problem, but it never seemed like the right time to curtail the company’s “only engine of growth.” By offering essentially all the services of a bank (consumer lending, auto loans, insurance, subprime mortgages), GE Capital grew almost twice as fast as the company as a whole. GE’s industrial business gave the company an AAA rating, which allowed GE Capital to borrow money cheaply and increased the margins of its financial investments.

Mr. Immelt argues that GE needed these funds to help support its industrial businesses, which he says had suffered from a lack of investment and innovation on Mr. Welch’s watch. But Mr. Immelt says that failing to wean the company off GE Capital’s cash early on was probably his biggest mistake. “We basically decided to try to grow them both simultaneously,” he says of the company’s financial and industrial businesses. “By the financial crisis, that didn’t look so smart.”

The 2008 crisis dealt an existential blow to GE, which had become the largest nonbank finance company in the world, with some $545 billion in debt. It took years and the backing of the Federal Reserve to stabilize the firm after its financial profits cratered. (A self-described stress-eater, Mr. Immelt “could squeeze into” only one of his suits at the time.) By the time Mr. Immelt finally sold off most of GE Capital in 2015, the damage was largely done.

‘I wish I had experienced more different things to be better prepared for the world I saw.’

Mr. Immelt’s first Monday in the top job was Sept. 10, 2001. Al Qaeda’s terrorist attacks the next day “marked the end of an era,” he says. Having joined GE in 1982, after studying math at Dartmouth and business at Harvard, Mr. Immelt rose through the ranks during a largely “tranquil” time when China was a sleeping giant and the U.S. economy expanded at a reliably impressive rate. The world he inherited as CEO, however, was “raucous, volatile and unpredictable,” full of bursting bubbles (dot-com, housing, power), disruptive rivals and increased scrutiny. “I wish I had experienced more different things to be better prepared for the world I saw,” he says.

Yet some of the problems that hobbled Mr. Immelt’s GE were self-inflicted. Critics say that he often bought businesses at too high a price and sold others at a loss. He could be extravagant, traveling overseas with a spare corporate jet, and he made some costly bets that never paid off, such as spending billions on a digital strategy in the industrial-services market that the company has largely dismantled. (Mr. Immelt points to “dozens of disrupters” that are now targeting this market as evidence of his prescience.) He also spent more than $24 billion in 2016 and 2017 buying back stock, only for the price to fall.

He has earned criticism for not getting GE completely out of the insurance business. Although the company seemed to shed its risky portfolio in the mid-2000s, in 2018 GE disclosed that it had just written off more than $6 billion for its long-term-care insurance and would need another $15 billion over seven years. Mr. Immelt says that he had to keep these holdings to sell off the others. He now sees that it would have been better to dump these remnants at any price.

Alstom CEO Patrick Kron (left) stands with Mr. Immelt (center) and Steve Bolze (right), chief executive officer of General Electric’s power and water unit, against the backdrop of a turbine unit inside the manufacturing facilities of an Alstom plant, Belfort, France, June 24, 2014.

PHOTO: SIMON DAWSON/BLOOMBERG NEWS

Mr. Immelt’s biggest deal has often been called his worst. GE spent more than $10 billion in 2015 to buy Alstom, a French company that makes trains, power turbines and generators, but the move proved costly and ill-timed. GE essentially invested in carbon-fueled energy equipment just as that market was cooling, and time-consuming regulations and concessions stripped the deal of much of its value. Mr. Immelt defends the strategy behind the deal and says that the board reviewed the acquisition at least 12 times. He places much of the blame on Steve Bolze, who ran GE Power before he left for Blackstone in 2017, for failing to capitalize on the acquisition. Leaving Mr. Bolze in his job at GE “is something I’ll always regret,” Mr. Immelt writes. Mr. Bolze says that Mr. Immelt’s “narrative simply doesn’t align with the facts…While no deal is ever perfect, I remain proud of the GE Power team and its record executing in a tough and ever-changing environment.”

MORE WEEKEND CONFIDENTIAL

• Fashion Legend Norma Kamali’s ‘Handbook on Aging With Power’ February 12, 2021
• Vaccine Expert Paul Offit Believes Science Will Win in the End February 5, 2021
• How David Duchovny Became an Accomplished Novelist January 29, 2021
• James Taylor Looks Back on His Early Years January 22, 2021

Mr. Immelt says that he relied on “GE’s system of internal checks and balances.” Some insiders have complained that Mr. Immelt prized optimism and suppressed dissent, preferring “success theater” to rigorous accountability. As both CEO and chairman, he also had some control over who sat on GE’s board. But Mr. Immelt says that he surrounded himself with people he trusted to be honest and regularly invited executives to his home to pick their brains. Looking back, he says that he wishes he had said “I don’t know” more often: “There’s a certain sense of vulnerability to saying I haven’t figured this out yet. But there are a few times when that would’ve served me better.”

Running a company is “a lonely job,” Mr. Immelt found. As a lecturer at Stanford’s business school and a partner at a Bay Area venture-capital firm, he now regularly warns young entrepreneurs that there is no playbook for success. But he feels a responsibility to impart what he sees as the core lessons from his time at GE: When you have a tailwind, don’t get arrogant; and when you have a headwind, don’t give up.

IBM Explores Sale of IBM Watson Health

Severe weather conditions hitting much of the U.S. have caused some semiconductor companies to idle production capacity, threatening to exacerbate a chip shortage that has already prompted car makers to curtail output at some plants. South Korea’s Samsung Electronics Co. , one of the world’s biggest chip makers, operates two factories in Austin, Texas, and was asked by local authorities to shut those down on Tuesday, said a company spokeswoman. Samsung expects to resume production as soon as possible and, the spokeswoman said, was waiting for electricity provider Austin Energy to advise when the chip maker’s operations could start up again. Texas has suffered widespread power disruptions that began early Monday amid a severe winter storm. The outages have prompted local officials to ask companies to reduce operations to minimize demand on the region’s power grid. The Austin facilities represent about 28% of Samsung’s overall production capacity, according to Citi analysts. Austin is a manufacturing hub for Samsung, which is considering a $17 billion plan to expand its operations there or in other parts of the U.S.

HSBC Doesn't Have to Give Documents to Huawei CFO, U.K. Judge Says

 

U.S. Justice Department has accused Meng Wanzhou of misleading the bank about Huawei’s ties to Iran

Meng Wanzhou, third from left, was arrested by Canadian police in 2018 on behalf of the U.S. Justice Department.

PHOTO: DARRYL DYCK/BLOOMBERG NEWS

By 

Updated Feb. 19, 2021 7:04 am ET

• SAVE
• PRINT
• TEXT

Listen to this article

5 minutes

00:00 / 04:59

1x

HSBC HSBC 0.54% Holdings PLC doesn’t need to hand over banking documents requested by Huawei Technologies Co. Chief Financial Officer Meng Wanzhou as part of her effort to resist a U.S. extradition order, a judge in London’s High Court said.

Ms. Meng, who filed a lawsuit at the U.K. court, was arrested by Canadian police in 2018 on behalf of the U.S. Department of Justice, which has accused her in a criminal case of misleading HSBC about Huawei’s business ties in Iran while the country was subject to U.S. sanctions.

Huawei is one of China’s top companies and a global leader in telecommunications equipment. Ms. Meng asked the court in London, where HSBC is based, to obtain documents that her lawyers said would prove she didn’t mislead the bank. She is currently living in Vancouver under bail terms requiring her to wear an ankle monitor and be supervised by court-appointed security.

“I have no jurisdiction to make the order sought,” Judge Michael Fordham said Friday.

---

NEWSLETTER SIGN-UP

Markets

A pre-markets primer packed with news, trends and ideas. Plus, up-to-the-minute market data.

SUBSCRIBED

---

An HSBC spokeswoman said the bank was pleased with the court’s ruling, saying the bank wasn’t party to the underlying U.S. case or the extradition request in Canada.

A Huawei spokesman said the company was disappointed by the ruling.

From the Archives

The Huawei Executive Facing Extradition: Three Things to Know

YOU MAY ALSO LIKE

UP NEXT

0:00 / 2:06

0:31

The Huawei Executive Facing Extradition: Three Things to Know

Huawei CFO Meng Wanzhou is set to face extradition hearings in Canada after the U.S. charged her with crimes related to violating sanctions against Iran. (Originally published March 5, 2019)

“The pursuit of justice benefits from access to relevant information and clarity of fact,” he said. “Huawei remains confident in Meng Wanzhou’s innocence and will continue to support her pursuit of justice and freedom.”

The U.S. case against Ms. Meng has further inflamed its relations with China and deepened HSBC’s entanglement in the geopolitical standoff. The bank, which competes with the likes of Citigroup Inc. and JPMorgan Chase & Co., services multinational companies, but makes most of its profit in Hong Kong and China.

Last year, HSBC supported Beijing’s imposition of a new security law in Hong Kong. The move angered U.S. and U.K. politicians who said it undermined an agreement to give the city a high degree of autonomy after the British handed it back to China in 1997.

As the controversy over the national security law peaked last summer, Chinese state media accused HSBC of setting Huawei up in Ms. Meng’s case. The reports forced HSBC to issue a statement saying it wasn’t involved in the U.S.’s decision to investigate Huawei or to arrest Ms. Meng, who is the daughter of Huawei’s founder, Ren Zhengfei.

Ms. Meng’s situation is seen by many in China as an attempt by Washington to slow the country’s global ascent. Her arrest also touched off a major diplomatic standoff with Canada, with two Canadians, including a diplomat on leave from his post, detained in China and charged with espionage. China has denied any direct links between the arrests and Ms. Meng’s case.

HSBC handed documents to the U.S. in the Huawei case in 2016. At the time, it was being monitored by the Justice Department as part of a 2012 settlement over sanctions breaches and money laundering. Huawei lawyers have alleged that the Justice Department’s grip on the bank gave HSBC a motive to present Huawei as the mastermind of its sanctions violations. HSBC has denied that.

The U.S. has accused Ms. Meng of misrepresenting the relationship between Huawei and a company called Skycom Tech Co., which did business in Iran, to HSBC, including in a PowerPoint presentation handed to an HSBC banker in a Hong Kong restaurant in August 2013. The U.S. has alleged that HSBC subsequently relied on the presentation to clear millions of dollars in transactions that potentially violated U.S. sanctions against Iran.

Ms. Meng’s lawyers told a Canadian court last year that the U.S. made “reckless misstatements” about her 2013 presentation, which they said identified Skycom as a partner that conducts business activities in Iran. Ms. Meng wanted HSBC to hand over documents which mention Huawei, Skycom or the PowerPoint presentation.

“Knowledge of the true relationship between Huawei and Skycom was in fact shared by HSBC’s senior executives,” Ms. Meng’s lawyers said in a filing to the London court.

HSBC opposed Ms. Meng’s request, arguing that the London High Court doesn’t have jurisdiction to make the order sought and the information she wanted may include documents held by HSBC units in different places around the world. A lawyer for the bank said at a court hearing last week that responding to the request could take “several months.”