fortune--2020-06-04--How HSBC got stuck between Beijing’s new Hong Kong law and a hard place

HSBC, a London-based bank with deep roots in Hong Kong, has long been a conduit between China and the West. Today, that position may be as precarious as ever.
On Wednesday, HSBC’s Asia-Pacific chief executive Peter Wong signed a petition in support of Beijing’s new national security law on the Chinese messaging platform WeChat, and the bank later issued a statement supporting the measure that’s aimed at Hong Kong. The move follows public pressure from Hong Kong’s former chief executive Leung Chun-ying for HSBC to support the law and aligns the bank with a growing chorus of executives from Hong Kong business institutions supporting the bill. In recent days, London–based Standard Chartered bank and the city’s traditional trading houses Swire Pacific and Jardine Matheson have also pledged support for Beijing’s controversial policy.
Beijing’s new national security law was ratified last week by China’s National People’s Congress and aims to shore up China’s national security by preventing and punishing acts of secession, terrorism, and foreign interference in Hong Kong. Critics view the law as subverting the “one country, two systems” agreement that has provided the city with relative independence and autonomy from mainland China since it was handed over from the U.K. in 1997.
“HSBC reiterates that under the ‘one country, two systems’ principle, it respects and supports all laws that stabilize Hong Kong’s social order and boost the economy to develop prosperously,” the bank’s statement said.
When asked to elaborate on the bank’s stance, a spokesperson for HSBC on Thursday said it doesn’t “have any further comments” at this time.
Joshua Wong, a top pro-democracy activist in Hong Kong, denounced HSBC’s decision Wednesday night in a statement on Twitter. HSBC demonstrates “how China will use the national security law as new leverage for more political influence over foreign business community in this global city,” he wrote.
Even before HSBC’s statement Wednesday, Hong Kong’s pro-democracy camp speculated that HSBC is swayed by Beijing’s interests, an accusation the bank denies. But HSBC’s most recent move could ensnare it even further in the Hong Kong–Beijing feud that’s extended to the U.K. and the U.S., where the bank operates and where governments oppose the national security law. At the same time, the bank has become increasingly reliant on China and Asia more broadly in recent years, meaning political missteps in the region carry enormous risk.
“[Leung’s] recent call for HSBC to support China’s new national security law really had an intended audience of only one person, and [Peter Wong] quickly signaled his support,” said Brock Silvers, chief investment officer at Adamas Asset Management in Hong Kong. “Wong may have protected HSBC’s crucial Asia growth by trading Hong Kong for China, [but] the company has now taken sides in a hotly contested Hong Kong debate, the results of which remain unsettled for now.”
Caught in the crossfire
HSBC first became embroiled in Hong Kong’s pro-democracy movement last year, joining a list of companies with operations in Hong Kong, such as Starbucks and Chinese state–owned banks, that were targeted by protesters for their perceived ties to Beijing.
An HSBC lion statue is set on fire by a protester outside the bank’s offices, following a pro-democracy march in Hong Kong on Jan. 1, 2020. PHILIP FONG—AFP/Getty Images
HSBC’s difficulties began in November 2019, when it suspended a corporate bank account for a client called Spark Alliance HK, an advocacy organization in Hong Kong that raises money for pro-democracy causes like paying bail for jailed protesters.
HSBC later said it suspended the account because it “was not being used for its stated purpose.” A month later, Hong Kong police froze $10 million in the Spark account and arrested four people affiliated with the organization for money laundering. The police accused Spark of using the funds for personal gain, paying protesters, and “other illegal activities.”
Spark denounced the accusations as a smear campaign orchestrated by Beijing. In response, HSBC said its initial decision to suspend the account “was completely unrelated to the Hong Kong Police’s arrest of the four individuals.”
Protesters were unconvinced, and vandalized multiple retail outlets and ATM machines across the city during marches in late December and early January. The bank’s iconic lion sculptures, which have sat outside HSBC’s Asia headquarters in downtown Hong Kong since it moved to the building in 1935, were spray-painted and set on fire. In response, HSBC moved the lions off the street for only the third time in its history—the first was during World War II, and the second was during a construction project in the 1980s.
The pandemic’s social-distancing measures that quelled protests in early 2020 provided a temporary reprieve for HSBC’s Hong Kong locations, but the demonstrations have resurged in the wake of Beijing’s national security law.
Hit from all sides
Despite the recent turmoil, HSBC has long been embedded in the fabric of Hong Kong, to the point that it remains one of three banks that prints Hong Kong’s currency.
Formerly known as the Hong Kong and Shanghai Banking Corporation, HSBC was founded in 1865 in Hong Kong, just decades after China was forced to cede Hong Kong to the U.K. after the first Opium War. The bank was headquartered in Hong Kong for over a century, but moved its base operations to London in 1993 amid a push to expand outside Asia.
In the past decade, the firm has firmly shifted focus back to Asia again.
In June 2015, then–HSBC chief executive Stuart Gulliver unveiled a 150-page Asia pivot strategy document to move operations away from Europe and into growing Asian economies. “Asia [is] expected to show high growth and become the center of global trade over the next decade,” Gulliver said at the time.
The announcement sparked years of speculation—and even the company’s own threats—that HSBC would move its headquarters from London back to Hong Kong, but the firm remains based in the British capital.
However, HSBC’s Asia pivot has shown up clearly in its earnings. In 2014, 37% of HSBC’s revenue and 70% of its profit came from Asia. In 2019, those figures had grown to 49% and 90%, respectively.
The shift has accelerated under HSBC’s new chief executive, Noel Quinn, who assumed an interim role in August and got the permanent position in March. In February, the bank announced a restructuring plan to cut roughly 35,000 jobs. HSBC did not announce where the cuts would come from, but Quinn said resources would be redistributed from underperforming areas to faster-growing markets like Asia and the Middle East. Last year, Quinn had called the bank’s performance in the U.S. and Europe “unacceptable.”
That plan was temporarily put on hold in March, as the company delayed laying off thousands of workers amid the pandemic and global economic depression. Yet in the wake of HSBC’s bleak earnings report for the first quarter of 2020—pretax profit fell nearly 50% compared with the same period last year—some analysts predict that the bank’s turn toward Asia could become even more dramatic.
In fact, there’s early evidence that it’s already taking place.
On May 4, HSBC announced that it had bought out National Trust, its partner in a life insurance joint venture in China, as a means to “accelerate growth” in Asia, as Quinn put it. On May 26, the Financial Times reported that HSBC board members were urging the company to make a tighter turn to Asian markets, which may include deeper cuts to the bank’s operations in the U.S. and Europe.
Even as Asia increasingly bolsters the company’s bottom line, the bank’s future still relies a great deal on pacifying authorities in the U.S., who have threatened sanctions against entities seen as “involved in eroding Hong Kong’s autonomy.”
Supporting Beijing’s national security law may give the bank “greater profit potential in China in the medium to longer term,” said Jeffrey Halley, senior market analyst for Asia Pacific OANDA. “But that will mean nothing if they are shut out of the U.S. financial system.” As an international bank, HSBC depends on trading in U.S. dollars, the global reserve currency, and any threat to HSBC’s ability to use U.S. currency would be disastrous for the bank, he said.
In his Facebook post from last Saturday, Leung said HSBC should consider “which side of the bread is buttered” as he advised the bank to support the national security law.
In Hong Kong, at least, it seems it’s Beijing-side up.


fortune--2020-06-04--PPP forgiveness: Lenders push for loans under $150,000 to be turned to grants

Providing bereavement leave is one way companies can support black employees right now

Congress may have just passed new legislation altering rules to make the Paycheck Protection Program loans more flexible, but banks and lenders are asking policymakers to forgive smaller loans altogether.
In a letter sent to members of Congress (including Sen. Marco Rubio, chairman of the Senate Committee on Small Business & Entrepreneurship) on Tuesday, the Consumer Bankers Association and the Bank Policy Institute asked for loans under $150,000 to be automatically forgiven, citing that “considerable gaps in policy, particularly regarding the forgiveness aspect of PPP, … has proven to be unnecessarily burdensome for many of the businesses it sought to help.”
The lobbying groups, whose members include big banks like JPMorgan Chase, Bank of America, and Citibank, argue that by passing legislation to forgive PPP loans under $150,000, it’d help 85% of total recipients, but only account for less than 26% of PPP loan dollars. Although Congress passed a bill to amend some rules for the loans on Wednesday (which included requiring businesses to spend 60%, down from 75%, on payroll costs over a now-extended 24-week period), the forgiveness process as-is looks complicated, lenders say.
Small businesses’ “time and resources would be better focused on getting the economy safely back up and running, not processing burdensome paperwork,” the banking groups wrote.
An onerous burden
But it’s not just the big banks that are seeing smaller borrowers struggle and support forgiving their loans. Regional banks like Sunrise Banks, based in Minnesota, are servicing some of the smallest businesses (a large portion of their PPP loan recipients are sole proprietors and 1099 workers, CEO David Reiling tells Fortune), and point out that the process is challenging for businesses without the luxury of an accountant or attorney.
The “biggest issue” small businesses have voiced is working through the calculations, he says. “They just don’t have any counsel on that. It’s kind of like … the first time you ever tried to do your own tax return. You’re trying to read through all this jargon and language you don’t understand and do the best you can, and it’s nerve wracking,” Reiling says.
And with the intense civil unrest he’s been seeing in his city, and how it’s impacted the communities, time is of the essence for these small businesses—”They need every ounce of energy and dollars they can to get back up and running and to hire people,” he says.
Some fintech lenders are also adding their voices in support of the proposal. U.K.-based fintech Funding Circle favors the proposal to automatically forgive all loans under $150,000—which it says would account for most of its loans. Having loans forgiven without going through the onerous process of getting documents together and worry about forgiveness would be “awesome” for the fintech’s small clients, says Libby Morris, head of U.S. operations at Funding Circle, as it would allow businesses to focus their time and money on reopening.
“If you think about the smallest of small businesses who already have been kicked when they’re down with the situation that’s happening in the country right now and with the reopening, … Having them spend hours trying to come up with all this documentation is certainly one more thing that I imagine a small business would be happy to not have to do,” Funding Circle’s head of U.S. regulatory affairs Ryan Metcalf tells Fortune.
Mega fintech and fellow PPP lender Square is also in favor of the proposal, as head of Square Capital Jackie Reses wrote on Twitter Tuesday that they “absolutely agree” with the proposal, stating that “forgiveness as written is a challenge.”
Forgiveness is ‘simply too complicated’
From the start, problems have plagued the SBA and Treasury’s guidelines and regulations for the program. And the latest pieces of guidance about forgiveness of the loans are no exception.
Some attorneys and accountants have wrestled with the calculations and rules in the guidance. It’s enough to have those like Sunrise Banks’ Reiling declare: “It’s simply too complicated.”
Reiling’s bank works with a lot of the smallest businesses. In fact, he says that of the roughly 1,800 loans Sunrise Banks has serviced, about 92% of them were for under $350,000, with over half worth only $25,000. For businesses like that, Reiling argues, “There’s no time nor money in some cases to try to figure this paperwork and complexity out.”
Funding Circle is of the same mind, as Morris describes the forgiveness application as “pretty complicated.” Their average loan size has been around $60,000, and the majority of businesses they’ve funded have 10 employees or less.
And for lenders, new rules from the SBA and Treasury suggest the banks might have these loans on their balance sheets for years, with only a 1% interest rate (“that’s a 1% return, that’s not great at all,” Reiling says), with the cost of still having to service them if the borrowers didn’t get full forgiveness.
Funding Circle’s Morris also points out that for lenders who participated, doing forgiveness as-is means they won’t be able to get back to regular lending as quickly. Having legislation passed that would automatically forgive loans under $150,000 (reserving the right, of course, for the SBA to ask for additional information from any individual loan if they need) would let them get back to what they “really want to do, which is traditional lending,” Morris suggests.
Slowed demand in Round 2
Coming off of the flurry of activity in the first round of the PPP, which ran out in under 14 days, Round 2 has had less demand, some lenders say.
For one, Sunrise Banks’ Reiling says some borrowers have been wary to apply for loans amid all the controversy of companies returning loans or being threatened with audits to see if they were eligible, and others are simply “not confident” about forgiveness. “It’s not clear and it’s complicated, they don’t know if they can hire people back, so they’re not willing to take that risk of debt not knowing and having that certainty of what that forgiveness looks like,” he says. However, the new bill passed by Congress might help quell some of these worries by providing a longer runway for businesses to use funds.
Based on the latest numbers on May 30 from the Small Business Administration, there is still $120 billion that hasn’t been allocated to borrowers.
Now, the Hill has passed new legislation that amends loan rules just as the first businesses were reaching the end of their previous eight-week period. A bill proposed and passed by the House last week passed the Senate late Wednesday that extends loans to 24 weeks and reduces the cap businesses must spend on payroll (versus on things like utilities) from 75% to 60%.
With more time to use the funds and figure out forgiveness, Sunrise Banks’ Reiling, for one, thinks that slumping demand might pick back up. “Maybe [people can] get their arms around it a little bit more,” he adds.


fortune--2020-06-04--What does Hong Kong’s security law mean for global businesses?

The year in leadership : Everything to know about the most recent crop of leaders to score top CEO jobs

This is the web version of Eastworld, Fortune’s newsletter focused on business and technology in Asia. Subscribe here to get future editions in your inbox.
A new security law for Hong Kong, approved by China’s parliament last Thursday, “will only punish a small minority” of criminals and poses no threat to foreign businesses or Hong Kong’s stature as a global financial hub.
That was the message from Hong Kong chief executive Carrie Lam following her whirlwind trip to Beijing on Wednesday to meet with Chinese vice premier Han Zheng and other senior Chinese officials with oversight responsibility for Hong Kong.
The claim that the security law will have no impact on commerce in the territory has been repeated this past week in China’s state-controlled media, and by a chorus of Chinese diplomats, mainland legal scholars, and global companies with business operations in China.
“We reiterate that we respect and support laws and regulations that will enable Hong Kong to recover and rebuild the economy and, at the same time, maintain the principle of ‘one country two systems,'” British banking giant HSBC affirmed in a carefully-worded post on a Chinese social media platform Wednesday. London-based Standard Chartered, as well as British colonial-era trading houses Swire and Jardine Matheson, have offered similar public assurances.
And yet, the new law has sent a chill through Hong Kong’s foreign business community. In private, many expatriate bankers, investors, and business executives in the city profess deep misgivings about the vagueness of the legislation, and how it will be interpreted and enforced.
Of 180 U.S. companies surveyed recently by the American Chamber of Commerce in Hong Kong, more than 80% said they are concerned about China’s plan to foist new security measures upon Hong Kong. Fifty-three percent said they were “very concerned,” while 30% said they were “moderately concerned.” About 60% predicted the new law would harm their business.
Notably, though, 71% said that, for now, their companies have no plans to move capital, assets, or business operations out of Hong Kong.
Details of the new law remain unclear because the precise language of the bill is still being drafted in Beijing by members of a small committee of senior leaders from China’s ruling Communist Party. It was previously expected that work on the measure wouldn’t be complete until August. Hong Kong representatives to China’s National People’s Congress said Wednesday that fellow delegates are pushing for the new law to take effect before July 1, which marks the 23rd anniversary of Hong Kong’s return to Chinese sovereignty.
Proponents of the measure say it only targets perpetrators of four categories of crime: secession, subversion, terrorist activities and foreign intervention. They insist that law-abiding merchants, whether foreign or Chinese, have nothing to fear.
In an interview with Eastworld, Cora Chan, an expert on constitutional law at Hong Kong University, highlighted multiple ambiguities in the security law as it has been described so far by mainland authorities: How much power will the law grant to mainland security agents operating in Hong Kong? Will it criminalize speech as well as actions? Will final adjudication of the law fall to Hong Kong courts or some other authority?
Chan argues those ambiguities create long-run risks for foreign companies operating in Hong Kong at a time of escalating tensions over trade and national security.
U.S. President Donald Trump’s vow to punish Beijing by stripping Hong Kong of its special trade status with the United States only raises the stakes—and is certain to inflict far more pain on Hong Kong residents than leaders in the mainland.
More Eastworld news below!
Clay Chandler
clay.chandler@fortune.com
This edition of Eastworld was curated and produced by Grady McGregor. Reach him at grady.mcgregor@fortune.com.
Eastworld news
Started from the bottom
While relations between China and Australia may be unravelling amid trade tensions and the COVID-19 pandemic, China is hoping that its friendliness with local-level Australian authorities can counteract the national government’s relative hostility. Victoria, one of Australia’s largest states, recently announced that it is pushing ahead with a commitment to China’s Belt and Road Initiative that saw China pledge investments and cooperation for infrastructure projects and advanced industries in the Australian state. The initiative has driven a wedge between state and national authorities, and Australian Prime Minister Scott Morrison has publicly come out against Victoria’s deal with China. He said, “[It is] usual practice for states to respect and recognize the role of the federal government in setting foreign policy.” Wall Street Journal
The company of no brotherly love
When Dhirubhai Ambani, the head of India’s largest company Jio Platforms, suddenly passed away in 2002, he left a massive empire to be split between his two sons, Anil and Mukesh. Dhirubhani didn’t leave a plan for succession and the brothers quickly feuded and split up the conglomerate. Since then, Mukesh has become one of the richest men in the world with a net worth of $53 billion, while his brother Anil has teetered on the edge of bankruptcy. This Bloomberg profile of their relationship dives into how Mukesh won the ‘world’s most expensive sibling rivalry.’ Bloomberg
No sense in decoupling
There might not be a Chinese company trusted less in the U.S. than SenseTime, a facial recognition and artificial intelligence Chinese unicorn valued at over $7 billion. Yet even as the company is blacklisted in the U.S. for its alleged role (which it denies) in suppressing and surveilling the Uyghur ethnic minority in the western Chinese province of Xinjiang, the company has maintained partnerships with American institutions like the Massachusetts Institute of Technology as well as financial backing from U.S. companies like Qualcomm. The Wire China shows this week that given the close personal and financial ties between people in China and the U.S., the U.S.'s potential decoupling from China may be more complicated than it appears. The Wire China
Feeling the pressure
In the wake of HSBC and Standard Chartered declaring support for Beijing's new Hong Kong law, there are early indications that the banks who side with Beijing may draw the wrath of U.S. authorities. A group of U.S. senators on Thursday proposed 'unprecedented' sanctions that would target “the banks that choose to finance the erosion of Hong Kong’s autonomy and put marginal profits ahead of basic human rights,” said Pennsylvania Senator Pat Toomey. Other U.S. senators criticized the bill, saying that targeting global banks may harm U.S. strategic interests and would be ineffective without multilateral support. The bill was proposed as thousands of Hong Kong citizens defied a police ban to commemorate the 31st anniversary of the Tiananmen Square Massacre on Thursday night. Bloomberg
Coronavirus by country
Cambodia is a hidden success story of the pandemic. As of this week, the country has reported only 125 total COVID-19 infections and zero deaths, which is quite a remarkable feat considering the country’s early response to the pandemic. In early February, as cases were just starting to rise in China, Cambodian prime minister made a state visit to Beijing, slammed reporters for wearing face masks, and refused to shut down flights to the country from China. As more cases began emerge later in February and March, however, Cambodia closed its borders to most foreigners, placed heavy restrictions on the movement of its citizens, and shuttered schools across the country. Observers also attribute Cambodia’s success to a combination of having a largely spread out and rural population, support from the WHO, and downright luck. However, Cambodia’s economy has been slower to open than neighbors like Vietnam, and the country may be on the edge of economic disaster since the pandemic has derailed apparel exports, tourism, and construction, the country’s three largest industries. Nikkei Asian Review
Markets and movers
Softbank – The Japanese tech conglomerate announced on Thursday that it will open a $100 million fund to support American “companies led by founders and entrepreneurs of color” in response to ongoing anti-racism protests in the U.S. The company says it will be the largest fund “providing capital to Black Americans and people of color” in the U.S. Axios
Gojek – On Wednesday, Facebook and Paypal announced investments in Gojek, Indonesia’s rising ride-hailing app turned super app that provide over 20 services such as digital payments. The exact value of the deal has not been disclosed, but the Financial Times reports Facebook likely invested a few hundred million dollars. Financial Times
Netease – The Chinese Internet and gaming giant is planning to raise close to $3 billion in a secondary listing on the Hong Kong stock exchange. The company is already listed on Nasdaq and its secondary listing in Hong Kong is seen as a defensive measure amid heightened scrutiny of Chinese companies on U.S. exchanges. Variety
Final figure
50.7
China’s factories are bouncing back, but the rest of Asia is still slow to revive its manufacturing to pre-pandemic levels. Several manufacturing surveys were published this week, measuring the Purchasing Managers Index (PMI), a number that reflects manufacturing activity compared to the previous month. A number above 50 marks growth, while below 50 means contraction. China reached 50.7, according to Caixin, marking the country’s first growth on the index since the pandemic hit. In May, countries like Vietnam, Malaysia, and the Philippines all reported higher manufacturing levels but all registered below 50 on the PMI scale, marking further contraction. Countries like South Korea and Japan saw their PMI’s decrease in May compared to April. Al Jazeera


fortune--2020-06-04--After the tragedy of George Floyd’s death, where do A.I. and policing go from here?

The use of artificial intelligence by law enforcement was already fiercely debated because of fears that the technology could exacerbate existing prejudices or biases against nonwhite communities. But the death of Minneapolis resident George Floyd and the ensuing nationwide protests will likely make the topic even more controversial.
Law enforcement’s use of A.I. is still fairly new, with some police departments using tools like automatic license plate readers and facial recognition software. Future A.I. tools could include more capable drones that can analyze people’s faces from the sky or powerful data analytics services that predict crime in certain areas.
Many civil rights groups worry that police departments, some of which have a history of racial discrimination, will use these technologies to unfairly target communities of color. As Michael McAfee, CEO of advocacy group PolicyLink, says, the effects of over-policing can have a huge impact, including leaving people with criminal records that limit their employment opportunities.
“We are blessed to live in a nation that is so innovating and creates solutions that can change the quality of our life—no critique there,” McAfee says. “The critique is the lack of consciousness of the other.”
Jeff Kunins, the chief product officer and executive vice president of software for Axon, best known for making police Tasers and body cameras, says he’s both “incredibly proud and incredibly sad” about the use of his company’s products by police during the current protests. Axon’s shares have soared 21% over the past few days because investors are betting that the business will end up selling more to law enforcement. The use of certain products like live-streaming from body cameras for command staff to watch events as they unfold is already increasing, Kunins says.
Increasingly, Axon is adding A.I. tools to its product line. That includes technology that automatically blurs people’s faces in video, which comes in handy when releasing clips that feature minors in response to public records requests.
Kunins acknowledges that the use of A.I. by law enforcement is a hot-button topic, citing the well-known adage from the Spider-Man comic book that “with great power comes great responsibility.” Axon, for its part, created an ethics board made up of people from outside the company, and said last summer that it would not sell facial-recognition technology, because the software does a poor job of identifying people of color, among other problems.
McAfee says he’s less worried about companies selling A.I. technology and body cameras; his concern is more about the institutions that buy the products. Ultimately, law enforcement agencies will be the ones using the tools.
But that doesn’t mean that vendors are absolved from any responsibility. McAfee believes manufacturers should ask themselves: “Why are my cameras not stopping this kind of abuse when they’re on?”
Kunins argues that body cameras can provide a level of accountability for police by recording potential abuses. But he also concedes that the recent protests underscore that “we have more work to do.”
“We take as an article of faith that the technology, when used right, is part of the solution—that’s proven—and we are here to continue to make that true,” Kunins says.
Activist groups are concerned, however, that it’s ultimately up to police departments to audit themselves and release videos of possible abuses to the public. But Kunins says the mere fact that the data exists, that police departments routinely release the videos, and that they can be accessed via public records requests is better than nothing.
For Neema Singh Guliani, a senior legislative counsel for the American Civil Liberties Union, the use of A.I. and related surveillance technologies have the potential to “supercharge police abuses and racial inequalities.” She wants local communities to have more say about the kinds of technologies that law enforcement uses, which, she says, are “often deployed in secret.
“We’ve been stuck in this place now where, with some technologies, it’s just, ‘Let’s get it out into the streets, and we’ll just worry about it later,’” Guliani says.
Kunins says that Axon is considering ways for communities to be more involved in how the company’s products are used or developed, but no final decisions about that have been made.
Other companies that activists have called out for selling A.I. tools to the police include Amazon and Clearview AI. Fortune contacted those companies and will update this story if they respond.
Alice Xiang, the head of fairness, transparency, and accountability research at the tech consortium Partnership on AI, says that supporters of using A.I. in the criminal justice system often say that the technology could “reduce bias of human actors.” At the same time, however, the current protests underscore that there’s “increasing distrust in some of the institutions, of using A.I. tools in the future.”
It’s unclear if the protests will lead local governments to reevaluate the use of A.I. by law enforcement or whether events will accelerate its use.
As McAfee says, U.S. history has these “moments of conflict, and then everything reverts back.”
“It’s the routinized ceremony of black death,” he says.
But he has noticed that some in the tech industry are increasingly sounding alarms over software that can be used to discriminate against communities of color. “In the tech world, there’s an army of folks who care,” McAfee says. “You can see their voices standing up and pushing back at their organizations in ways they never have, and those folks are white.”


fortune--2020-06-04--How we can set up America’s insurance system for a future pandemic

We’re living through the unprecedented arrival of two black swans resulting from COVID-19: a double wallop of human suffering and a global lockdown. Businesses are experiencing losses that outpace any government support they may receive, and there is considerable debate over the role that insurance should play in covering this economic damage.
Insurers will certainly pay billions of dollars in coronavirus-related losses across a wide number of policies. However, not every policy will apply, and some policyholders will be disappointed. The insurance sector’s response should not end there. Instead we should collectively push to create solutions that enhance resilience. The scale of this challenge requires an approach that incorporates the efforts of insurers, government, and policyholders to develop the right playbook for any future pandemic.
Marsh, our insurance brokerage unit, helps companies find appropriate policies. As such, we could benefit financially from the advice offered here.
Insurance gives businesses the needed confidence to open their doors and take entrepreneurial risks. In the case of pandemics, insurance can help reduce widespread risk and build resilience to prevent future economic devastation on the scale we’ve seen recently.
The reality is that pandemic coverage has existed for a long time, but it has always been expensive and relatively rare; it’s often explicitly excluded from various insurance policies. The reason is grounded in both math and psychology: The payouts, while sporadic, can be so enormous they dramatically exceed insurers’ capacity to bear them. While most insurance policies cover events that may impact a single company (such as a fire) or region (like a hurricane), pandemics can impact the whole world. On the psychology side, it’s always harder to convince a company to buy insurance that protects against something that hasn’t happened in a hundred years and seems theoretical. Pandemic insurance has suffered from both supply and demand limitations.
While we can’t rewrite history, we can work together to underwrite a better future—and we should start immediately. Recent research from the World Economic Forum (in partnership with Marsh & McLennan and Zurich Insurance Group) found, “Pandemics have traditionally suffered from a panic-neglect cycle. Quiet periods see no action, early warnings of an outbreak tend to be overlooked, significant response and funding are late and uncoordinated, and valuable lessons from the crisis are not institutionalized.” In fighting COVID-19, we are rapidly developing both drug therapies and vaccines; let’s think about pandemic insurance the same way.
One institutionalized lesson to learn right now is that we can boost our economic resilience by forging a meaningful pandemic insurance system. Doing so will require shared action from the insurance sector, the federal government, and policyholders.
Robust national pandemic management needs insurers, backed by the federal government, to write pandemic insurance policies and brokers to contribute their risk knowledge and infrastructure. Widespread pandemic coverage would make the insurance sector the first line of economic response in future outbreaks.
Relying on existing insurance processes to pay losses would improve on the operational scramble we’ve seen plague efforts like the Paycheck Protection Program. Increased insurance coverage will also help banks and other capital providers better understand and price risk and more confidently inject equity in vulnerable sectors.
The U.S. government is the only entity with the financial resources to help close the pandemic coverage gap. The government already plays a role insuring against certain widespread risks that impact our national well-being. It’s clear that pandemics should be among those risks, and there’s a debate underway over which model would work best.
Some in the insurance industry favor modeling a pandemic risk insurance program after the National Flood Insurance Program, under which the government assumes sole risk for flooding damages in certain communities. This is a potential solution, but having the government be the only provider of pandemic insurance may not result in sufficient societal and economic resilience. We need the market dynamics of the private insurance sector to help promote risk mitigation strategies and actively engage policyholders through education and incentives to lower their risks.
Behavioral economics and recent history indicate that some private capital should still be on the line. After the 9/11 attacks, Congress passed the Terrorism Risk Insurance Act, which created a federal backstop for insurance claims arising from terrorist attacks. But the government did not assume all responsibility on its own. As a result, insurance companies wrote terrorism policies, businesses improved their security practices, and the country is more resilient to the threat.
Fortunately, the hesitance among some insurers to deploy capital is far from universal: There are a number of carriers that are willing to put private capital at risk so long as there is a strong government backstop. We work with many of them to help our clients manage risk.
With the right public-private solution, policyholders will take significant steps to bend the risk curve in collaboration with carriers, brokers, and risk advisers. While the world waits for a COVID-19 vaccine, all stakeholders must be part of ensuring that once this pandemic is eradicated, we remain vigilant against future outbreaks.
The new normal in manufacturing will likely include more geographically diversified supply chains. Stores and restaurants will shift to contactless payment. Businesses of all kinds will have infrastructure to support remote work or social distancing, new standards for cleaning facilities, and plans to be able to diagnose their employees daily. These steps will reduce the cost of future pandemic insurance and help prevent future outbreaks from reaching the scale of COVID-19.
One lesson of the coronavirus is that we all underestimated our susceptibility to a pandemic and the domino effect it would have on our global economy. Certain risks—like terrorism, massive cyberattacks, and pandemics—are too big for government or the private sector to manage alone and too important to ignore.
A strong pandemic insurance system can make us more resilient to risk and avoid the panic-neglect cycle—and inspire more economic confidence into the future.
Daniel S. Glaser is CEO of Marsh & McLennan.


fortune--2020-06-04--The health care system is stacked against black lives

Readers—I’m not sure how to put this delicately or politely. There’s no way to put what’s happened in the past few weeks in delicate or polite terms. We know that racism exists in America. CEOs and entrepreneurs from multiple sectors have admitted and condemned that reality in recent weeks in the wake of protests calling out police brutality.
But the inequality we’ve seen manifest itself during these times is nothing new, especially when it comes to healthcare. The fact of the matter is that black and brown Americans have consistently, through no fault of their own, been sicker, had less access to health care, and died younger than their fellow white peers. Coronavirus has only underscored those realities.
Nationally, black Americans account for about 13% of the U.S. population but 24% of the coronavirus deaths for which racial or ethnic information was available as of June 2, according to The COVID Tracking Project.
That may help explain why, per the Pew Research Center, people of color are less willing to trust the medical community at large—it’s possible they just don’t think the healthcare industry has their back.
It’s an even broader issue, though. Bernard Tyson, the late CEO of Kaiser Permanente, was an evangelist of the concept that societal inequality has led to different health outcomes for communities of color—the social determinants of health.
Living in an environment where the air you breathe is poisoned or where poverty restricts your access to healthy food or where it takes hours to get to a hospital can cut years off of your life, according to this theory. It’s a complicated science but one worth considering in this moment.
On a different but related note—our annual Brainstorm Health conference is going digital this year on July 7 and 8. We’ve gathered a group that includes the CEOs of Johnson & Johnson, Amgen, Bristol-Myers Squibb, Baxter, Centene, and others. Check it all out here.
And on another relevant note: Many companies are speaking out against racial injustices right now. But how do they fare in their own workplaces? Black employees in the corporate world, we want to hear from you: Please submit your anonymous thoughts and anecdotes here.
Read on for the day’s news. And see you next week.
Sy Mukherjee
sayak.mukherjee@fortune.com
@the_sy_guy
DIGITAL HEALTH
Evidation Health tapped for AI-fueled COVID predictive algorithm. The U.S. government (specifically BARDA) is partnering with Evidation Health to create software that can, theoretically, help sniff out COVID-19 symptoms so that first responders can assess dicey situations that may make them susceptible to infection. This kind of data collection is complicated. Much of it is self-collected data that's transmitted via a wearable device and which relies on user input (and trust that such information remain de-identified). Here's what the acting director of BARDA, Gary Disbrow, had to say: "The ability to self-monitor and be informed of health status will empower Americans in their decisions to help slow the spread of this pandemic and improve health outcomes for people with COVID-19." (HIT Consultant)
INDICATIONS
The cancer drugs (and companies) to keep an eye on. The world's largest cancer conference went digital this year for obvious reasons. But the fight against one of the biggest killers of Americans doesn't stop even in the midst of a pandemic. Companies ranging from biopharma giants like Johnson & Johnson, Merck, and AstraZeneca to startups such as Allogene presented impressive (if early) data for cancer drugs—and some pretty cool science, to boot. See my roundup here. (Fortune)
Allergan renews efforts to track down harmed women following Fortune investigation. Following an investigation by my colleague Maria Aspan, the drug giant Allergan, maker of Botox (and now owned by AbbVie, which manufactures the best-selling drug in the world) is now launching a renewed campaign to alert patients to a recall of breast implant products linked to a form of cancer. As Maria explains, this is part of a larger problem when it comes to tracking issues with medical devices—especially with companies' own failures in tracking defective products and those affected by it. (Fortune)
THE BIG PICTURE
Protests raise new concerns for a second wave. Getting people to socially distance and wear masks was always going to be complicated in the midst of gradual reopening for society. With widespread protests against police brutality and racial injustice, things have gotten even more complicated. Mayors and governors across the country are urging that those who participate in these demonstrations—especially if they're not wearing masks and socially distancing—should consider getting tested for COVID-19. Of course, as we've said multiple times, that can be easier said than done. (Reuters)
REQUIRED READING
Everything to know about rubber bullets and their risks, by David Z Morris
How to reopen businesses so it's safe for both employees and customers, by Rachel King
AstraZeneca agrees to provide 1.3 billion doses of its coronavirus vaccine to developing nations at cost, by Jeremy Kahn
Sign up for other Fortune newsletters.


fortune--2020-06-04--The year in leadership: Everything to know about the most recent crop of leaders to score top CEO jo

The year in leadership: Everything to know about the most recent crop of leaders to score top CEO jobs

After the tragedy of George Floyd ’ s death , where do A.I .
and policing go from here ?

In June of 2019, I wrote a story titled “More People Named Jeffrey Got Top CEO Jobs Than Women Last Year.” The piece lamented that of the 23 new leaders that America’s 250 largest companies chose last year, just one––Michelle Gass of Kohl’s––was a woman, so the lone female was outnumbered not just by two gents named Jeffrey but another two named Michael. In 2019, that dismal picture brightened a bit, launching what finally looks like a durable shift to promoting the best talent, regardless of gender. The S&P 250 placed four women in the top job, and while that number may sound low, it’s almost half as many as reached the pinnacle over the previous five years.
That trend is highlighted in The New CEO Report, a yearly study that examines the backgrounds of the leaders who ascended during the prior year to lead S&P 250 companies and pinpoints qualities that corporate boards prize most. It’s compiled by Feigen Advisors, the firm headed by America’s leading coach for CEOs, Marc Feigen. In previous stories, I’ve nicknamed Feigen “the CEO Whisperer.” Over the years, he’s guided 30 CEOs of leading global companies, either as heirs apparent or after they’ve taken charge, including Bob Iger of Disney and Mark Fields of Ford, and today advises the heads of a dozen members of the Fortune 500.
The 2019 study shows that corporate boards are following well-worn practices, while at the same quickening their push in new directions, notably in promoting women, putting global experience near the top of their checklists, and choosing deep technical knowledge over charisma. Here’s a review of the findings, along with running commentary from Feigen, whose many hours in the boardroom provide insights into the traditional—and new—ways that directors think about succession.
Boards favor insiders, and that’s a good thing
Feigen Advisors has been producing the report since 2014, and over those six years, many of the metrics remain remarkably unchanged. In 2019, the average age of the new CEOs was 54, the same as over the previous half-decade, and their predecessors served long terms, averaging 8.4 years, and retired at 60, also extremely close to the benchmarks from 2014 to 2018.
Another feature that remains constant is the preference for insiders. Of the 30 new CEOs, 26 were promoted from within, but the group divides into two categories. The larger group of 19 are long-time veterans averaging two decades of service. Five had been at the company over 30 years, among them Noel Wallace of Colgate-Palmolive and Enrique Lores of HP. But trajectory for the other seven underlines a shift that has accelerated in recent years, hiring potential superstars from the outside five or six years before the boss is scheduled to retire, then “fast-tracking” the candidates through a series of key positions to gauge their strength as leaders. The roster of fast-trackers include Ron O’Hanley of State Street, who joined from Fidelity in 2015, and Christopher Kempczinski of McDonald’s, who came from Kraft Foods in 2015.
Companies should promote from inside, says Feigen. “That almost 90% of the new CEOs were internal candidates shows that succession planning is working, and boards are developing the next generation of talent to run their companies,” he tells Fortune. He cautions that companies that don’t stick to an “inside favored” stance are sending a dangerous message. “A board that looks outside is telling its management team that not one of you is good enough to run this company,” he says.
Companies go outside mostly for turnarounds
This year’s list includes two changes made by troubled companies sorely in need of rescue. Charles Scharf, a longtime protégé of Jamie Dimon and highly successful leader at Visa, joined Wells Fargo from BNY Mellon. He takes charge of a formerly great name tarnished by scandal and suffering from a crisis of leadership that saw two CEOs depart in three years. Miguel Patricio left a top position at Anheuser-Busch InBev to take the reins from Bernardo Hees at Kraft Heinz after the food giant’s $10.2 billion loss in 2018.
“A turnaround is better led from without, so the best solution is to go outside,” says Feigen. “Just look at Scharf’s track as a two-time CEO. You can’t find that kind of experience in the management ranks.” Still, Feigen cautions that if a company needs what he calls “a transformation,” it’s far better to choose a star from the inside. “A company seeking a transformation is different from one that needs to go outside to save itself,” he says. Transformation is embraced by good performers that need to move into digital technology, launch exciting new products, and attract and retain the workforce of the future.
He cites two masters of transformation who reached the CEO suite this year, Michel Khalaf of MetLife and Jim Collins of Corteva. “At MetLife, Steven Kandarian stabilized the company following the financial crisis. Michel can build on that success and transform the business. He even moved from splendid offices in the MetLife tower to a lower floor just to work more closely with his people.” Corteva is the spinoff of DowDuPont’s agricultural business. Collins trained for the job by leading the integration of Dow and DuPont’s ag franchises that formed Corteva. “Jim can create a new kind of agriculture company that increases transparency so that customers better understand the workings of the food chain between farmers and consumers. Under Jim’s guidance, Corteva announced 14 sustainability goals to provide healthy food and support a healthy planet.”
The big rise in female CEOs is a sign of the times
The four women who took charge last year are Julie Sweet of Accenture, Kathy Warden of Northrop Grumman, Corie Barry of Best Buy, and Christine Leahy of CDW, the maker of printers, scanners, and digital products. Remarkably, Accenture and Northrop rank among the top 10 largest companies that named new CEOs. Here’s a stat for the ages: All four of the women replaced a male CEO.
The four come from a wide diversity of backgrounds. Sweet and Leahy joined as lawyers, a frequent entry point for women. They both rose to major positions overseeing M&A and corporate strategy, and Leahy headed the operations of a key international IT business she helped acquire. Barry is a former auditor who rose to CFO and also oversaw strategy, while Warden, a GE veteran, led mission systems at Northrop and served as president and COO before taking the top job.
Clearly, women CEOs are still far too rare. But the trend is positive. Consider that only nine women won the prize from 2014 to 2018. “Boards have gotten the message that they need to do a much better job on ethnic and gender diversity,” says Feigen. Succession planning, he notes, means reaching far down into the organization to identify the next generation of leaders, and then nurturing their progress for the next decade or more until a seasoned superstar is ready to take charge. “Companies realize that they need to have a rich and diverse pool of candidates to choose from,” he adds. “It’s only by planning ahead that you ensure getting the best possible leaders.”
Feigen points out that the lack of a single African-American CEO last year means America’s boards have a lot more work to do. In fact, over the previous five years, the S&P 250 named just two black CEOs.
Global experience is more and more prized
This writer was amazed that eight of the 30 new CEOs received their undergraduate education outside the U.S. These include Alphabet’s Sundar Pichai (India), Pfizer’s Albert Bourla (Greece), Schlumberger’s Olivier Le Peuch (France), Kraft Heinz’s Patricio (Brazil), and Molson Coors’s Gavin Hattersley (South Africa). Many others spent long portions of their careers managing global and national franchises. Adam Schechter of LabCorp, headed Merck’s global pharma and vaccine business from 2010 to 2018, and Brian Tyler of McKesson led its $28 billion European operations just prior to being named CEO.
“Global companies need globalists running them,” says Feigen. “Boards are looking for leaders who have spent a lot of their careers abroad, speak foreign languages, and lead where the growth is coming from––and that’s mainly from overseas.”
Deep technical knowledge is trumping personal magnetism
Just look at the educational credentials for the new 30, and you’ll find another interesting pattern. A large number hold technical degrees and relatively have few diplomas in the likes of marketing. Nine of the freshly minted CEOs received either undergraduate or graduate degrees in engineering or biotech, a group that encompasses Gerardo Norcia of DTE (chemical engineering), Preston Feight of Paccar (mechanical engineering), Lores of HP (electrical engineering), Daniel O’Day of Gilead (biology), and Bourla of Pfizer (Ph.D. in biotechnology).
Feigen views those tech-heavy résumés as symbolizing a shift in the personal qualities, and mastery of knowledge, that boards are increasingly seeking. “We’re seeing a shift away from charisma and boardroom savoir faire,” he says. “Boards are seeking leaders who are more comfortable around innovators and understand the basic science. It’s no longer all about the big man on campus, it’s about the person who spent a lot more time in the lab or the field, who may not be as extroverted, but knows the next breakthrough when he or she sees it.” It’s great sign if indeed America’s boards are choosing knowledge and competence over charm and political acumen. The proof of that progress will be quickening the march toward diversity.


fortune--2020-06-04--14 state and local bills currently being considered that address police reform and systemic racism

As nationwide protests sparked by the killing of George Floyd by a Minneapolis police officer over a suspected counterfeit $20 bill enter their 10th night, calls to institute real political change are spreading.
Immediate action in Congress, however, is incredibly unlikely.
The House remains out of session until the end of June, and any police reform plans will likely be blocked by a Republican-controlled Senate. On a local level, calls to defund police departments are also becoming common, and proposals are being drafted, but budget fights are complicated and lengthy.
There are, however, already a number of bills targeted at systemic racism and police reform in local legislatures that could theoretically be passed immediately.
New York State: The Safer NY Act
The Safer NY Act is a package of five bills already in the New York state legislature which aim to increase accountability and transparency in policing. Each part of the bill has the ability to pass separately, and some have passed through the New York State Assembly four years in a row before being blocked by the state senate. The package of acts have been endorsed by New York’s NAACP chapter and the New York Civil Liberties Union.
The series of bills include:
The Police STAT (Statistics and Transparency) Act: This policy was proposed after unrest in Ferguson, Mo., in 2014 and was based on the recommendations of President Barack Obama’s 21st Century Policing task force. It would require police departments around the state to record and report geographic and demographic data for people apprehended for low-level offenses as well as for anyone who dies in police custody. The data would lead to a better understanding of racial disparities when policing.
Repeal of Section 50-a: 50-a exempts police officers, firefighters, and correction officers in New York state from the release of “personnel records used to evaluate performance toward continued employment or promotion.”
That means that first responders’ records are “confidential and not subject to inspection or review” unless mandated by court order.
The law dates back to the 1970s and essentially prevents defendants and people suing the police from obtaining information about the history of a police officer.
New York Gov. Andrew Cuomo has voiced his support for the repeal and said he would sign any legislation that comes to his desk.
Codifying Executive Order 147: Executive order 147 gives the New York state attorney general jurisdiction as special prosecutor in matters relating to the deaths of unarmed civilians caused by law enforcement officers and would allow the special prosecutor to review cases where “the civilian was armed and dangerous at the time of his or her death.”
This would turn the executive order into state law.
The Marijuana Taxation and Regulation Act: This would legalize marijuana in New York state. Regulation around the prohibition of marijuana has disproportionately impacted communities of color in the state.
A study by the New York Times found that black people in New York City were arrested for low-level marijuana charges at eight times the rate of white, non-Hispanic people. In Manhattan, black people were arrested at 15 times the rate of white people.
Reduce unnecessary arrests for noncriminal offenses: This legislation would help prevent arrests for violations which are categorized as minor, noncriminal, and ticketable offenses. These types of arrests also disproportionately impact communities of color.
Louisville: Breonna’s Law
On Wednesday, the Louisville Metro Council’s Public Safety Committee voted to pass a law that would require all police officers to wear body cameras while executing no-knock warrants. The vote will now go to the full council. If approved, no-knock warrants would also be issued only for investigations involving murder, hostage taking, kidnapping, terrorism, and human trafficking.
The bill is named after Breonna Taylor, a 26-year-old black EMT who was killed by police during a no-knock raid on her apartment as part of a drug investigation. Police were investigating two people accused of selling drugs, neither of whom were her. They entered her home in March while she slept. Her boyfriend, Kenneth Walker, said he thought he was being robbed and fired a gunshot, which hit a police officer in the leg. Police then shot Taylor at least eight times.
The police say they knocked on the door and announced themselves, but neighbors say they did neither. They were not wearing body cameras.
Colorado: Senate Bill 217 (The Police Integrity Transparency and Accountability Act)
On Wednesday, Democratic state lawmakers in Colorado introduced legislation that would collect demographic and racial profiling data, make it easier for people to file lawsuits against the police, require police to wear body cameras and release footage, prevent the transfer of problematic police officers to different departments, and would require officers to intervene if they see one of their coworkers using “unreasonable force” against a member of the public. If officers do not intervene they face criminal prosecution.
The bill has been endorsed by the ACLU.
Massachusetts: Commission on Structural Racism
Massachusetts House Rep. Russell Holmes has penned three bills to address issues of systematic injustice and racism in the police force, all of which were endorsed by the Massachusetts Black and Latino Legislative Caucus this week.
The first would allow for the decertification of police officers who are found guilty of misconduct and abuse; the second would create diversity guidelines across all state agencies; and the third would create an independent commission to investigate institutional racism in the Massachusetts criminal justice system.
During the Hyde Park Kenwood Community Conference’s emergency forum this week, three Illinois state legislators, Reps. Curtis Tarver II (D-25th) and Kam Buckner (D-26th), and state Sen. Robert Peters (D-13th), highlighted legislation already in play in Illinois that would increase police accountability. They asked House speaker Mike Madigan and senate president Don Harmon to open an emergency legislative session to pass them.
HB 4999: Sitting in the House Personnel and Pensions Committee, this bill would make police officers convicted of a felony ineligible for their pensions.
HB 3926: Currently sitting in the Illinois House Judiciary-Criminal Committee, this act would require a special prosecutor for any law-enforcement related death in the state.
SB 3449: This would create the Community Emergency Services and Support Act to ensure that those who call 911 in mental distress would be connected with professionals who are trained in crisis control and deescalation. Peters said the bill was created in response to the shooting of University of Chicago student Charles Thomas while he was in the midst of a mental health crisis.
Vermont: Use of force legislation
H.808 would change the legal standard for deadly use of force by a police officer. Modeled off of legislation that passed in California last year, it would allow officers to use deadly force only when “necessary” or when no other options exist. It would also establish a statewide standard as opposed to case law, which is what is currently used. The current Vermont standard relies on what a “reasonable person” would do in a situation.
“In determining whether deadly force is necessary,” the legislation says, “officers shall evaluate each situation in light of the particular circumstances of each case and shall use other available resources and techniques if reasonably safe and feasible to an objectively reasonable officer.” The bill is currently stalled in the Vermont House Government Operations Committee. When asked if he would support the bill this week, Republican Gov. Phil Scott said that he did not know much about it.


fortune--2020-06-04--Will the protests be super-spreader events for the coronavirus? Experts say it’s too soon to tell

Public-health officials have been intently focused on how to re-open the U.S. economy after months-long lockdowns put in place to contain the coronavirus.
But none of them banked on having to contend with widespread social upheaval caused by the death of George Floyd, which has brought tens of thousands of people into the streets and into close contact in cities across the country to protest police violence.
The demonstrations are a new challenge to health officials’ still-early efforts to test and trace new infections, a key step to swatting down new clusters of cases. And scientists aren’t of one mind on the question of how well the virus could spread in protests, which are taking place in open air, with many—but not all—participants wearing masks.
The demonstrations are also happening as restrictions lift around the country and people tire of preventive measures, which will make it harder to unpack whether new cases are caused by the demonstrations, or by behavior that would have occurred in the course of a calmer reopening.
“Protests and large gatherings make it difficult to maintain our recommended social-distancing guidelines and may put others at risk,’’ said Kristen Nordlund, a spokeswoman for the U.S. Centers for Disease Control and Prevention. “It’s too early to know what, if any, effect these events will have on the federal COVID-19 response.”
Though it may take weeks for new cases to begin to show up in the data, and while a definitive answer on transmissions will be difficult to establish, top officials leading the U.S. response to the pandemic have expressed concern about the situation. Many of the protesters are black and other people of color, groups that have been harder-hit by the virus than white populations.
“I do worry,” said Deborah Birx, a medical officer on the White House Coronavirus Task Force. “I worry terribly about the peaceful protests,” she said this week. “We are really trying to work with each of the mayors to expand testing availability over the next week or two so that the individuals who are involved in the peaceful protests can get tested and really know their status before they unknowingly spread it to the elderly.”
Crowded conditions, chanting and shouting, and prolonged exposure to others create an environment where coronavirus could more easily spread, said William Schaffner, an infectious disease professor at Vanderbilt University in Nashville, Tennessee. The demonstrations may be an accelerant, he said.
“This is complicated because the whole country is opening up,” Schaffner said. “Whether we can sort out increases due to these demonstrations from the general increase which we are already experiencing in many parts of the country, I’m not sure.”
‘Wait and see’
The topic is fraught, with some officials struggling to address the health risks without dismissing the protests. The CDC declined to have an official discuss it, as did the Mayo Clinic, one of the premier U.S. academic medical institutions. Anthony Fauci, the head of the U.S. National Institute of Allergy and Infectious Diseases and one of the leaders of the U.S.’s response, side-stepped the subject during an online interview this week when he was asked about the protests and efforts to re-open states.
“We’ve seen pictures and photos and TV clips of people very much congregated, no masks, together on a boardwalk, on a beach, in a pool,” Fauci said during the interview with Howard Bauchner, editor-in-chief of the Journal of the American Medical Association. “That has been and continues to be a concern to me. We’re not going to know what the effect of that is for at least a couple more weeks. It likely is three weeks or more. We need to wait and see.”
Before the protests, most so-called super-spreading events that have been tied to major outbreaks in the U.S. occurred among relatively small groups of people interacting inside.
A single infected person who attended choir practice on March 10 in Mount Vernon, Washington, just north of the location of the first cases in the U.S., infected 52 of the 61 people present. An employee at Biogen Inc. infected dozens of people while attending a company meeting in Boston in February, with those who picked up the pathogen spreading it to more than half a dozen other states.
How the virus spreads among people outdoors, however, is much less well understood. There was a super-spreader event at an Italian soccer match earlier this year. But elsewhere, large gatherings that have stirred fears of wider outbreaks haven’t produced them. Protests in the U.S. at many statehouses against the lockdowns haven’t—so far—produced large jumps in infection rates.
For now, many officials are trying first to halt the violence in the streets. While officials in place like Chicago and Minnesota have encouraged protesters to observe social distancing and even quarantine, most municipalities aren’t visibly trying to trace contacts, push people to physically separate, or institute any other additional public-health surveillance.
Masks and testing
One thing infectious disease doctors are sure of is that protesters should keep wearing masks.
“I would advise to anyone who is going to these demonstrations, and people really have it in their hearts to participate, then wear a mask by all means, try to keep yourself as separate as possible from others and rather than yelling and chanting, how about holding up a sign?,” said Schaffner.
In Minnesota, public-health officials are advising protesters to get tested for the virus a week or two after the demonstrations, even if they aren’t showing any symptoms.
“There are going to be individuals who are unwitting, potentially exposing others,” said Kris Ehresmann, director of infectious disease for the Minnesota Department of Health. “We know that Covid has an asymptomatic period where people are still infectious, so we are making that assumption that yes, there is likely to be some opportunity for spread.”


fortune--2020-06-04--Gabrielle Union files complaint against NBC and producers of ‘America’s Got Talent’

Gabrielle Union filed a complaint Thursday with the state of California against NBC and the producers of “America’s Got Talent,” the latest move in a fight over her allegations that she was fired for objecting to an on-set environment that tolerated racism.
The complaint filed with the Department of Fair Employment and Housing says Union was harassed and discriminated against because of her race, and experienced retaliation for reporting these problems.
The document enumerates previously reported issues that Union, who is black, had with the show’s acceptance of racist jokes and remarks from judges, and cites criticism she received about her hair during tapings.
“Union, a black woman, was singled out due to her physical appearance and discriminated against by NBC due to the fact that her hair did not fit within the white image that NBC apparently sought to convey to the audience of AGT,” the complaint states, adding that a network executive and a show producer “informed Union’s manager that her hair was ‘too wild’ and that it needed to be ‘toned down.’”
The complaint also contains new allegations that NBC Entertainment Chairman Paul Telegdy called Union’s agents to issue unspecified threats, shared confidential information on the controversy with celebrities that the show was looking to hire and sought to undermine an investigation of Union’s issues.
That outside investigation commissioned by the network and producers, whose results were announced last week, found Union’s allegations were unfounded, and had no bearing on the decision to drop her as a judge. The review acknowledged unspecified “areas in which reporting processes could be improved.”
A request for comment from the network on the state complaint was not immediately answered.
Union’s attorney Bryan Freedman says the “racial bullying” Union received stands in contrast to the network’s recent statements about being outraged by racism and standing with Black Lives Matter.
“When Gabrielle Union informed NBC of racially offensive conduct during the taping of America’s Got Talent, NBC did not ‘stand’ with her in ‘outrage at acts of racism,’” Freedman said in a statement. “Instead, NBC did not care enough to either promptly investigate Ms. Union’s complaints or even ask HR to get involved. Rather, NBC stood against her and directed its “outrage” at Ms. Union for whistleblowing about the racially offensive conduct she experienced.”
Union, known for her roles in the films “Bring It On” and “Bad Boys II,” appeared on the talent showcase for a season, until she and fellow freshman judge Julianne Hough weren’t asked to return.


fortune--2020-06-04--Nasdaq 100 briefly hits record high as stocks close down slightly

What crash?
The Nasdaq 100 briefly erased all of its coronavirus losses Thursday, hitting a new intra-day high of 9,741.97 at 9:57 a.m. on Thursday. That marked a 39.3% rise since hitting bottom on March 23. Meanwhile the S&P 500 is in the midst of its best 50-day stretch in history. By the close, all three major indices had retreated slightly, with the Dow Jones Industrial Average up 0.04% to 26,281.82, the S&P 500 down 0.5% to 3,106.76, and the Nasdaq Composite down 0.7% to 9,615.81. The Nasdaq 100, which tracks 100 of the biggest names, closed just off its highs, down 0.8% to 9,629.66).
Though news headlines have been dominated by widespread protests across the U.S. following the death of George Floyd while in police custody, as well as fears of a ‘second wave’ of COVID-19 infections, the stock market has been seemingly immune to any hint of unrest.
That’s in part because Wall Street has moved on from looking at 2020 earning, and is instead focused on 2021 and beyond. As one analyst told Fortune, “investors are basically saying, ‘When it comes to earnings, tell me something I don’t know. I already know that 2020 is going to be horrible,’” said CFRA’s chief investment strategist Sam Stovall.
Even Thursday morning’s release of new unemployment data, which was worse than economists expected with 1.9 new claims filed, could not dampen the generally optimistic mood that has taken over Wall Street in recent weeks. That’s despite the fact that, as Fortune reported, this marks 11 straight week of unemployment claims above 1 million, a period of job-destruction without precedent in modern American economic history.
The Nasdaq in particular has soared on the strength of a few big names that have thrived during widespread stay-at-home orders: Amazon, Alphabet, Microsoft, Apple, and Facebook make up roughly 20% of the Nasdaq 100. As Fortune has reported, the dichotomy between “winners” and “losers” has become even more apparent, analysts say, because, “in a market where there’s quite a bit of uncertainty, investors almost always…are on the hunt for growth and certainty—that’s the magic combination,” Wells Fargo Investment Institute’s senior global market strategist Sameer Samana recently told Fortune.
Nasdaq 100 stocks that have outperformed since their March lows include Tesla (up 99%), Lululemon (up 84%) and PayPal (up 81%).
“There are no rollercoasters that can replicate what stocks have done so far in 2020,” wrote LPL Financial Senior Market Strategist Ryan Detrick in a note on Thursday. “Here’s the catch though: Big 50-day rallies in the past have taken place near the start of new bull markets, and the returns going out a year were quite bullish.”
Derrick continued, “Although we have near-term worries given this historic run, as some sentiment indicators such as put/call ratios are showing some froth, from a bigger picture perspective, this strong 50-day rally offers a reason to think stock prices may be even higher this time next year.”


fortune--2020-06-04--New Yorkers may be able to dine outside at restaurants in July

New York Mayor Bill de Blasio is targeting a July relaunch of outdoor dining.
More than 10 weeks after the city went on lockdown, the mayor is preparing for the June 8 start of phase one of reopening and said he anticipates reaching the second phase in July. Restaurants are a key part of New York City’s economy, de Blasio said Thursday at a press briefing.
The city’s Transportation and Planning Departments will help create curbside restaurants to allow eateries for the first time to convert adjacent parking spots into more seating. No permits will be needed to certify the street-side restaurants, de Blasio said.
“We will provide a massive expansion of curbside seating and an expansion of open streets,” de Blasio said. “We’ll do what it takes to help this key part of New York City, its economy, the wellspring of the livelihood of hundreds of thousands of New Yorkers, to come back strong.”
The mayor spoke as restaurant owners testified at a City Council hearing on how city streets could be turned into dining corridors. Some council members have cited Stone Street in lower Manhattan, a closed street with outdoor dining not far from the New York Stock Exchange, as a model. Owners of establishments have pushed for such arrangements on West 46th Street in the theater district, long known as restaurant row.
Dining Outside
More then 184,000 of the city’s 274,000 food and beverage industry workers have lost their jobs due to the forced shutdown of the city economy brought by the Covid-19 pandemic, according to city Comptroller Scott Stringer.
Seven other New York regions have reached the second phase of reopening and can have outdoor dining beginning today. That permission applies to the Capital Region, Central New York, the Finger Lakes, the Mohawk Valley, the North Country, the Southern Tier and Western New York.
Outdoor tables must be spaced six feet apart, all staff must wear face coverings and customers must also wear face coverings when not seated, according to a statement from Governor Andrew Cuomo’s office.
During the City Council hearing, Transportation Commissioner Polly Trottenberg criticized the New York City Council bill, saying it imposed a time-consuming and costly burden on the city to find appropriate sites over about 740 miles of commercial streets. A more streamlined process, she said, would be for restaurant owners to simply set up operations while observing city-established rules on where to set up tables and how far apart they should be spaced.
Trottenberg said Tampa has opened eight streets for outdoor dining and built platforms for curbside-lane dining. Other cities such as San Francisco and Boston are mostly providing the space and permitting, but little new infrastructure. In Washington D.C., restaurants can apply to use expanded sidewalk space, alleys, parking lanes, and travel lanes for seating, Trottenberg said.
Hoboken, a New Jersey town across the Hudson River that’s popular with millennials, adopted a plan this week to allow businesses to use more outdoor space when the state begins allowing such activity on June 15.
In 2018, there were more than 50,000 restaurants statewide in New York, with $51.5 billion of sales, according to the state Restaurant Association. The industry represents about 9% of employment in the state, and a much higher percentage in the city.
In New York City alone, there are about 19,400 full- and partial-service restaurants, cafes and food trucks, supporting more than 141,000 jobs, $4.2 billion in wages, and $12 billion in direct economic output, according to a 2018 city report on nightlife industries. The city is home to 72 Michelin-starred restaurants, more than any other U.S. city.


fortune--2020-06-04--People are getting fired over racist, violent, and insensitive social media posts

A writer from a Law & Order spin-off and the play-by-play broadcaster for the NBA’s Sacramento Kings found themselves out of jobs after making social media posts this week that their bosses found too incendiary or insensitive, highlighting an apparent surge in such firings across many lines of work.
Lost jobs over social media statements that seemed like a good idea at the time have become a common occurrence, but the tense environment of nationwide protests against racism and police brutality with the backdrop of the coronavirus pandemic have inspired harmful comments on Twitter, Instagram, and Facebook that have cost those behind them their jobs.
With the death of George Floyd in Minneapolis, who died after a police officer pinned his knee into his neck, even when he had become unresponsive, and the coronavirus that has killed over 100,000 and left others unemployed and many socially distant, feelings and emotions are strong. It can be difficult to resist the urge to post or tweet, even for people such as police officers, local officials, or teachers who are bound to draw scrutiny.
“People when they see a breaking news story they get that rush of wanting to be a part of something,” said Danny Deraney, a publicist who often works in crisis management. “There’s an adrenaline. They feel like they’re saying something so profound. But they need to think before they tweet.”
Craig Gore, who has worked on the shows S.W.A.T. and Chicago P.D., was fired Tuesday from the forthcoming Law & Order: Organized Crime spin-off because of Facebook posts. One was captioned “Curfew…” in which he’s shown holding a rifle on his front porch, and in another full of expletives, he threatens to shoot looters who come near his home.
Given the gravity of the moment, Gore’s boss, Law & Order franchise creator Dick Wolf, did not warn or suspend him but went straight to firing, saying in a statement, “I will not tolerate this conduct, especially during our hour of national grief.”
A lawyer for Gore did not respond to a request for comment.
Grant Napear, longtime TV announcer for the NBA’s Sacramento Kings was fired from his talk radio job and subsequently resigned Tuesday from the team’s broadcast crew after he tweeted “ALL LIVES MATTER” and more to former Kings player DeMarcus Cousins when asked his opinion on the Black Lives Matter movement.
Bonneville International, owner of the radio station that fired Napear, said in a statement, “The timing of Grant’s tweet was particularly insensitive.”
Napear later tweeted, “I’ve been doing more listening than talking the past few days,” and “I believe the past few days will change this country for the better!”
And social media-based firings are not just for the prominent.
Many others from public-facing institutions and businesses have been sanctioned, demoted, suspended, or fired for impolitic statements online in recent days.
The principal trombonist from the Austin Symphony Orchestra was let go after a string of Facebook comments, including one in which she said black protesters “deserve what they get.”
The personal accounts of police are under especially tight scrutiny.
A Denver officer was fired Tuesday for writing “Let’s start a riot” as the caption to an Instagram picture of himself and two fellow officers smiling in riot gear. An officer in Fulton, N.Y., posted an Instagram image that read, “Black lives only matter to black people unless they are killed by a white person” and found himself out of a job.
The poor timing cited by the former bosses Gore and Napear can make posts that might otherwise pass unnoticed have major consequences, especially in a moment marked by a volatile combination of politics and race.
“If you’re in a situation like this, you’ve got to read the room,” Deraney said. You’ve got to get a sense of what’s going on. You don’t need to always say something. These people who are getting fired or resigning, they’re not realizing this.”


fortune--2020-06-04--Key changes in just-passed PPP loan bill give small businesses 24 weeks to use funds

Small businesses will likely now have more flexibility to use Paycheck Protection Program loans after the Senate unanimously approved a House bill to amend rules of the program late Wednesday. The bill now goes to President Trump to be signed into law.
The bipartisan bill, entitled the Paycheck Protection Program Flexibility Act and spearheaded by Democratic Rep. Dean Phillips and Republican Rep. Chip Roy, makes several changes to the program. Those include: extending the timeframe to use funds from eight weeks to 24 weeks, and requiring businesses to use 60% of the funds on payroll (before, it was 75%, which some small businesses said was a struggle as employees are unable to return to work amid shutdowns). Additionally, the bill now gives small business owners until December 31 to rehire employees to qualify for full forgiveness. Small businesses will also now have five years to repay loans instead of two, and the bill allows businesses to defer payroll taxes. The 1% interest rate on the loans remains the same.
However, members of Congress made one clarification in a letter that the extension of the covered period until December 31 is only for businesses who already have loans—the SBA may not issue any new loans after June 30.
A ‘major inflection point’
Some CPAs like William McDevitt, based in the New York area, see the bill’s passage as a “major inflection point” for his clients.
Many of McDevitt’s clients are in the medical practice, and have been mostly closed except for emergency procedures. Now, he says they’re “thrilled” at the extended 24-week timeframe, which should give them more flexibility to rehire employees once they slowly start to reopen more.
Indeed, the bill’s passage is seen by many as a big win for small businesses. Small businesses have voiced concerns about both the timeframe to rehire employees and the amount they have to spend on payroll, as many of them, including restaurants and bars, are only just beginning to reopen in certain areas of the country.
“Since keeping workers on payroll obviously requires small businesses to stay afloat in the first place, we’re expanding firms’ ability to use these funds to meet obligations like their rent, their mortgage or their utility bills,” Senate Majority Leader Mitch McConnell said on the Senate floor on Wednesday.
Other groups have praised the passage of the bill, including the U.S. Chamber of Commerce, which also urged the SBA and Treasury in a statement to “immediately provide guidance to small businesses on how they qualify for loan forgiveness under the new law.” The National Federation of Independent Businesses also said in a statement that “We are pleased the Senate approved this important bill for small businesses and we look forward to continuing to work with members in the chamber,” further asking the president to “sign the bill into law swiftly and deliver this much-needed flexibility for small business owners.”
Practically, the new bill would make full forgiveness for small businesses entirely within reach. “Assuming [your business is] functioning, it’s almost a foregone conclusion that you’ll have enough payroll to absorb the whole loan, and it basically should make the administration of processing loan forgiveness that much easier,” McDevitt tells Fortune.
And those like Glen Birnbaum, a CPA based in Illinois, said the bill’s passage was just in time for some of his clients. Thursday “was the 56th day for one client of ours who got the loan pretty early,” he told Fortune in a note.
Lingering concerns
However, there has been some debate over how the Small Business Administration and the Treasury will interpret the new 60% rule—and whether forgiveness will be all-or-nothing if the borrower doesn’t hit the 60% mark for payroll. Senators Marco Rubio and Susan Collins have both voiced concerns about how the legislation will be interpreted, and further legislative fixes may be on the table. The SBA did not immediately respond to Fortune‘s request for comment.
Still, some CPAs like Birnbaum aren’t very concerned about the 60% cutoff for payroll, as he explains that with the new 24-week timeframe, it would only be a “20% cliff for each eight weeks.” And McDevitt thinks that practically, “The math just works in your favor” with the 60% spread out over 24 weeks. While CPAs and attorneys alike have noted that the forgiveness application and guidance issued by the SBA and Treasury in recent weeks has been complicated, McDevitt believes that the new bill “doesn’t necessarily remove those questions, but it kind of neuters those questions.”
While funds in the first round of the program ran out in only 14 days, Round 2 has seen somewhat slowed demand. Currently, there is over $120 billion of the $660 billion program still to be allocated to borrowers. With the passage of the bill, some lenders expect there could be an increased demand for the program.
If the bill is signed into law by the president, the SBA will likely issue new guidance about forgiveness, although McDevitt thinks it might be in the next week or two.


fortune--2020-06-04--Facebook to label state-owned media outlets’ posts, pages, and ads

Facebook is rolling out new labels that identify all posts, pages, and ads published by media outlets that are partially or wholly controlled by their governments.
The label will initially appear on Facebook’s ad library pages, on media outlets’ individual pages, and in the page transparency section of the site. Facebook plans to start applying the labels to posts on its News Feed over the next week and to ads later this summer.
“We’re providing greater transparency into these publishers because they combine the influence of a media organization with the strategic backing of a state,” Nathan Gleicher, head of cybersecurity policy at Facebook, wrote in blog post on Thursday. “We believe people should know if the news they read is coming from a publication that may be under the influence of a government.”
The news comes as Facebook tries to crack down on misinformation, better police coordinated efforts to spread disinformation, and provide more transparency about who’s posting and buying ads on its service. Facebook has grappled with how to handle international state actor and media groups, especially when they call for violence.
And that struggle has now extended to the U.S. and fueled a heated battle between President Donald Trump, who recently signed an executive order aimed at removing legal protection for social media companies, and social media companies, some of which have been flagging or halting the promotion of his posts. Facebook CEO Mark Zuckerberg’s recent decision to leave up inflammatory comments from Trump caused widespread criticism and angered the company’s employees.
Before applying its new state-owned media label, Facebook said it will evaluate outlets based on several factors including its ownership structure, sources of funding and revenue, and transparency around sources of content and independence. Facebook said that publishers aiming to prove their independence must be able to show that a statute in their country protects their editorial independence, that they have procedures and protections at the company to ensure independence, and that they have been assessed by a credible third-party organization.
Companies labeled as state-owned media can also file an appeal if they disagree with the decision. In their appeal, they will be allowed to provide additional documentation and will be reevaluated.
Zuckerberg recently said that Facebook is constantly working to develop its policies to better manage situations in the U.S. and beyond, according to an audio transcript of a recent all-hands meeting obtained by Vox. At the meeting, Zuckerberg spent much of his time explaining his decision to leave up recent comments Trump had posted, one of which said, “when the looting starts, the shooting starts.” Ultimately Zuckerberg chose to do nothing, saying that the company only removes posts that incite violence.
But at the meeting, Zuckerberg acknowledged the controversy around that decision and said it might be time to revisit some policies given the current unrest in the U.S. regarding racial injustice. “The excessive use of police force is unfortunately not a new reality,” he said, according to the transcript. “And something that our policies should probably—is something that I want to make sure we have another think on.”


fortune--2020-06-04--AstraZeneca agrees to provide 1.3 billion doses of its coronavirus vaccine to developing nations at

AstraZeneca agrees to provide 1.3 billion doses of its coronavirus vaccine to developing nations at cost

AstraZeneca has struck two deals to provide 1.3 billion doses of its coronavirus vaccine to low- and middle-income countries. The company says it has agreed to provide these doses at cost and will make no profit from the arrangement.
The vaccine, which it is developing alongside researchers from Oxford University, is among the most promising of dozens of possible candidates being developed around the world. It is currently in advanced human clinical trials.
The new agreements follow on earlier deals AstraZeneca struck with the U.S. government to supply 300 million doses of the vaccine and with the U.K. government to provide it with 100 million doses. Shipment is expected to start in September or October.
Those deals raised concerns that wealthy nations might try to monopolize supplies of vital COVID-19 vaccines and treatments for their own populations, leaving little for the developing nations where a large percentage of the world’s population lives.
Poorer nations also can’t afford to pay for expensive vaccines and treatments, so AstraZeneca says it has agreed to provide the doses at cost.
“Our goal is not to leave anyone behind, and we will keep working very hard to make sure this vaccine is rapidly and widely available to everyone around the world,” said AstraZeneca CEO Pascal Soriot during a press conference Thursday.
The new deals include an agreement with two global vaccine organizations, which will see them spending $750 million to enable 300 million doses of the vaccine to be produced and distributed to places with the most need, starting by the end of the year.
Richard Hatchett, the chief executive officer of the Coalition for Epidemic Preparedness Innovations (CEPI), one of the two vaccine organizations, called the deal with AstraZeneca “groundbreaking.”
He said that CEPI was taking an unprecedented risk paying for a manufacturing program while a vaccine was still undergoing clinical trials. The idea is to have doses of the vaccine already in production when the clinical trial results are announced, so that if the trial is successful—and if global regulators grant emergency approval—the vaccine can begin shipping immediately.
CEPI is a foundation funded by both governments and global charities that finances vaccines against emerging infectious diseases. It is leading the effort on vaccine development and manufacturing. The other organization involved in the deal is Gavi, another public-private alliance dedicated to vaccine development, which will be responsible for setting up a distribution process for the vaccine.
The money for the deal is being provided by a fund set up by the Bill & Melinda Gates Foundation and the World Health Organization that is designed to ensure low- and middle-income countries have fair access to COVID-19 drugs.
Separately, the Serum Institute of India, a private company in India that makes vaccines, has agreed to a licensing arrangement with AstraZeneca to produce 1 billion doses for India and other low-income countries, with 400 million doses to be delivered by year-end. No dollar figure was given for the value of that deal.
Soriot said AstraZeneca had secured manufacturing capacity for an additional 300 million doses and was involved in ongoing discussions with global health bodies about how those would be distributed. This bring the company’s total COVID-19 vaccine manufacturing capability to 2 billion doses, he said.
The drug company CEO declined to say how optimistic he was that the vaccine’s clinical trials would succeed.
“With this sort of pandemic and the tremendous impact it has on people, the economy, etc., you can’t second-guess what is going to happen,” he said. “You just have to commit—that is what you have to do in our industry. You make a bet on something and commit. That is what we are doing.”
The AstraZeneca/Oxford University vaccine is considered to be one of the most promising in the world—and is at the most advanced stage of clinical trials—because it is based on a similar vaccine that Oxford researchers developed to treat another coronavirus, the one that causes Middle Eastern respiratory syndrome (MERS).
He said that one problem AstraZeneca and the Oxford University researchers were having is that infection rates have fallen so quickly in countries were the pandemic first struck, that it has been difficult to find enough people to enroll in the vaccine trials in areas where infection rates remain high enough that the scientists can tell if the vaccine will actually prevent people from becoming infected.
“We are chasing the disease in many parts of the world,” Soriot said. He said that this might delay how quickly the company can get a valid clinical trial result and, if it is successful, how fast a vaccine can be distributed. But he said the clinical trial still seemed to be on track to be able to announce a result in August.