Daily Business Briefing
June 23, 2021, 8:57 a.m. ET
June 23, 2021, 8:57 a.m. ET
breaking
Warren Buffett, the chairman and chief executive of Berkshire Hathaway, said on Wednesday that he has resigned as a trustee of the Bill and Melinda Gates Foundation, weeks after the couple announced their divorce.
Mr. Buffett, a longtime friend of Mr. Gates, had been a huge presence at the Gates Foundation: It is one of five nonprofit organizations to which he has pledged the majority of his fortune — estimated at $105.3 billion, according to Forbes — and the only one not run by a member of the Buffett family.
All told, Mr. Buffett, 90, has donated $41 billion worth of Berkshire stock to the five foundations. In Wednesday’s announcement, he said he has donated an additional $4.1 billion.
“For years I have been a trustee — an inactive trustee at that — of only one recipient of my funds, the Bill and Melinda Gates Foundation (BMG),” Mr. Buffett said in a statement. “I am now resigning from that post, just as I have done at all corporate boards other than Berkshire’s.”
Mr. Buffett did not give a reason for his action. The foundation’s reputation for global philanthropy has lately been overshadowed by reports of Mr. Gates’s questionable conduct in work-related settings. The New York Times has reported that on at least a few occasions, Mr. Gates pursued women who worked for him at Microsoft and at the foundation, according to people with direct knowledge of his overtures.
In 2019, Microsoft’s board, on which Mr. Gates sat, opened an inquiry into one of those cases after being notified that he had “sought to initiate an intimate relationship with a company employee in the year 2000,” a Microsoft spokesman said. The board hired a law firm to investigate. The following year, Mr. Gates stepped down from Microsoft’s board.
Also in Wednesday’s statement, Mr. Buffett acknowledged the recent debate over how little in income tax American billionaires — including himself — pay. Citing leaked Internal Revenue Service data, the news organization ProPublica reported that the Berkshire chief paid just $23.7 million in taxes from 2014 to 2018, a period when his wealth grew $24 billion.
Without referring to the ProPublica article specifically, Mr. Buffett acknowledged that he had “relatively little” income, with his wealth flowing largely from his Berkshire holdings. He also argued that his charitable donations led to only about 40 cents per $1,000 in donations.
A longtime advocate of tightening tax rules for the wealth, Mr. Buffett said Wednesday that although tax deductions were important to some wealthy donors, “it is fitting that Congress periodically revisits the tax policy for charitable contributions, particularly in respect to donors who get imaginative.”
This is breaking news. Check back for updates.
Five years ago, on June 23, 2016, Britain voted to leave the European Union. The separation has hardly been smooth, and in some ways the effects have yet to appear, the DealBook newsletter reports.
The referendum result upended Britain’s politics, divided its people and fundamentally altered its business environment.
Some of the fallout was immediate. The day after the referendum, the value of the British pound plunged the most in its history, setting off a period of rising inflation.
Other effects have emerged more slowly. In the past six months — after Britain formally left the bloc’s single market and customs union — the impact has been harder to discern through the turmoil of the pandemic.
After the vote, business investment stalled. Companies were too unsure about Britain’s major trading relationships to make big decisions. By the time there was any certainty, the coronavirus had hit British shores. Now, the government is planning a “super deduction” tax break to bolster investment. That could spur spending, but the underlying pace of growth is unlikely to return to its pre-referendum level.
Business investment in Britain
It’s too soon to determine the overall impact on trade, especially for more than 180,000 British businesses whose only experience of international trade was with the European Union. New customs checks, veterinary requirements and other regulations have already restricted the movement of goods, and new agreements with far-flung countries aren’t expected to replace the deal Britain had with its nearest neighbors as a member of the trade bloc. By the government’s own estimates, its new trade deal with Australia will increase G.D.P. by as much as 500 million pounds (about $700 million) over 15 years, or 0.02 percent of output.
The financial services industry, one of Britain’s most prosperous sectors, resigned itself early to diminished status in Europe. This year, European shares and derivatives trading has shifted out of London, and banks are still moving employees to other European capitals. In response, the British government is trying to revive London’s reputation as a finance hub by overhauling rules on listings — welcoming SPACs, among other things — and loosening regulations for start-ups.
For many, Brexit was never about the economy, it was about immigration. Industries that relied heavily on European workers warned from the start about a looming labor crisis as it became harder for E.U. citizens to move to Britain. As the country recovers from the pandemic, that crisis has arrived.
Restaurants and hotels have been thwarted by staff shortages. There are warnings that there aren’t enough food production workers or truck drivers. Pandemic restrictions were a factor in foreign workers leaving the country, and industry groups are lobbying the government for exceptions to visa rules so that more chefs, truck drivers and butchers can be hired from the European Union, as they don’t expect those workers to easily return (or enough locals to step into the roles).
Britain’s last year in the bloc coincided with its worst recession in three centuries because of the pandemic. Recovering from the crisis won’t be easy for any country, but businesses in Britain are also contending with the end of a four-decade economic union. It could be another five years, or more, before we know the true shape of Britain’s post-Brexit economy.
Morgan Stanley will require employees and visitors to be vaccinated against the coronavirus when they enter its New York offices next month.
Starting July 12, employees, contingent workers, clients and visitors at Morgan Stanley’s buildings in New York City and Westchester County must attest that they are fully vaccinated, a person familiar with the matter said, citing a memo from Mandell Crawley, the bank’s chief human resources officer. Staff members who don’t will be required to work remotely, added the person, who spoke on condition of anonymity to discuss personnel-related matters.
Although the requirement relies on an honor system for now rather than proof of vaccination, it will allow the bank to lift other pandemic protocols, such as face coverings and physical distancing. Some office spaces for Morgan Stanley’s institutional securities, investment and wealth management divisions already allow only those who have received their shots to work from their desks.
Companies across America are grappling with the question of whether to ask employees about their vaccination status, or to require those returning to offices to be vaccinated. The Equal Employment Opportunity Commission said last month that both actions were legal. Still, some senior executives have worried about pushback from employees.
This month, Goldman Sachs said its employees in the United States would have to report their vaccination status. Other big Wall Street banks, including JPMorgan Chase and Bank of America, are encouraging workers to disclose their vaccination status voluntarily. BlackRock, the asset manager, will allow only vaccinated staff to return to the office beginning next month, Bloomberg reported. Those firms, however, stopped short of also asking clients and visitors to attest to being vaccinated.
An umbrella organization for the world’s central banks urged its members on Wednesday to issue digital equivalents to cash that would offer some of the advantages of cryptocurrencies without the risks.
Central bank digital currencies “are an idea whose time has come,” Hyun Song Shin, the economic adviser and head of research at the Bank for International Settlements in Basel, Switzerland, said in a statement Wednesday.
The Bank for International Settlement’s 63 members include the Federal Reserve, the European Central Bank, the People’s Bank of China and almost all other major central banks, and serves as a forum for them to coordinate and exchange ideas. The organization’s endorsement of digital currencies adds momentum to efforts already underway at most central banks to answer the challenge posed by cryptocurrencies, which threaten to disrupt governments’ hold on monetary policy.
In an article published as part of its annual economic report, the organization was sharply critical of cryptocurrencies like Bitcoin. The bank described cryptocurrencies, which tend to suffer extreme fluctuations in value, as vehicles for speculation rather than a reliable means of payment.
Cryptocurrencies have become popular with organized crime because of their anonymity and independence from government control. Also, the computer power needed to create Bitcoins and maintain the cryptocurrency’s infrastructure uses enormous amounts of electricity, contributing to climate change.
“By now, it is clear that cryptocurrencies are speculative assets rather than money, and in many cases are used to facilitate money laundering, ransomware attacks and other financial crimes,” the Bank for International Settlements said. “Bitcoin in particular has few redeeming public interest attributes when also considering its wasteful energy footprint.”
The article also warned that tech companies could issue digital currencies that would acquire dominant market positions, siphoning off a percentage of transactions that would be out of proportion to the service they provide.
The Bank for International Settlements acknowledged, though, that digital currencies were unstoppable, and offered detailed advice to central banks on how they might design their own counterparts.
Crucially, the bank said that, in contrast to cryptocurrencies, transactions with an official digital currency should not be anonymous. That would remove one of the main lures of cryptocurrencies to their boosters.
“Effective identification is crucial to every payment system,” the bank argued. “It guarantees the system’s safety and integrity, by preventing fraud and bolstering efforts to counter money laundering and other illicit activities.”
Executives, lobbyists and more than a dozen think tanks and advocacy groups paid by tech companies have swarmed Capitol offices this month, arguing there will be dire consequences for the industry and the country if six antitrust bills become law.
The bills take aim at Amazon, Apple, Facebook and Google by trying to undo their dominance in online commerce, advertising, media and entertainment, Cecilia Kang, David McCabe and Kenneth P. Vogel report for The New York Times. They would empower regulators, make it harder for the tech giants to acquire start-ups and prevent the companies from using their strength in one area to form a grip in another.
Amazon’s top lobbyist, Brian Huseman, rarely speaks publicly about bills before there is a vote. But with the House Judiciary Committee expected to vote on the bills on Wednesday, he warned in a statement on Tuesday that the legislation “would have significant negative effects on the hundreds of thousands of American small- and medium-sized businesses that sell in our store and tens of millions of consumers who buy products from Amazon.”
Google’s senior vice president for global affairs, Kent Walker, has also made calls to lawmakers in recent days, and the company’s top lobbyist, Mark Isakowitz, said, “American consumers and small businesses would be shocked at how these bills would break many of their favorite services.” A spokesman for Facebook, Christopher Sgro, said that antitrust laws “should promote competition and protect consumers, not punish successful American companies.”
Thirteen nonprofit groups, most of which have received funding from the tech giants, wrote a letter to lawmakers decrying two of the bills. NetChoice, one of the groups, hosted a public panel on Tuesday featuring Senator Mike Lee, Republican of Utah and a leading member of the Senate antitrust subcommittee, to cast skepticism on the proposals. A prominent Republican lobbyist and fund-raiser, Jeff Miller, has been trying to stanch the support for the bills within his party, reaching out to members of Congress on behalf of his tech company clients.
“In a way I’ve never seen before, they are fighting tooth and nail,” said Gigi Sohn, a distinguished fellow at Georgetown University’s Institute for Technology Law and Policy. “They consider these bills existential for them because they get at their business models.”
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The International Brotherhood of Teamsters, which represents more than one million workers in North America in industries including parcel delivery and freight, will vote on whether to make it a priority to organize Amazon workers and help them win a union contract. “Amazon is changing the nature of work in our country and touches many core Teamster industries and employers,” states the resolution, which will be voted on at the Teamsters convention on Thursday. The company “presents an existential threat to the standards we have set in these industries,” it says.
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Sales of homes in the United States fell for the fourth consecutive month in May as a sharp rise in prices and a shortage of houses for sale led to a slowdown in the market. Existing home sales fell 0.9 percent in May from April, the National Association of Realtors said Tuesday, with the median sales price climbing nearly 24 percent from a year earlier to a record $350,300.
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