The fallout from the Adams case
Over the past 48 hours, the biggest spectacle for New Yorkers hasn’t been the presidential race, but rather the criminal case against Mayor Eric Adams. He was indicted Thursday on five counts, including fraud, bribery and soliciting illegal campaign donations from abroad for years.
Adams pledged to stay in office and fight the charges. But many in the New York business community are waiting to see how the drama will play out — and weighing who might come next.
Prosecutors accused Adams of taking favors from Turkish individuals for years, starting when he was the Brooklyn borough president and continuing through to his term as mayor, in exchange for helping Turkish officials with issues they faced in the city.
Some of the details revealed in the indictment are straight out of a TV police procedural. Here’s one exchange, between Rana Abbasova, an Adams aide, and Cenk Ocal, a former manager of the Turkish Airlines office in New York, about a last-minute flight for Adams to Istanbul:
Ocal: “I am going to charge $50.”
Abbasova: “No.”
Ocal: “That would work, wouldn’t it?”
Abbasova: “No, dear. $50? What? Quote a proper price.”
Ocal: “How much should I charge? :)”
Abbasova: “His every step is being watched right now. $1,000 or so. Let it be somewhat real.”
Publicly, business leaders are mostly in a holding pattern. “We must allow the legal process to take its course, including a full assessment of a substantive response from the mayor to the charges against him,” Kathryn Wylde, the C.E.O. of the Partnership for New York City, an influential business trade group, said on Thursday.
One prominent figure who changed his tune on Adams was Bill Ackman, who on Wednesday questioned why the mayor was being prosecuted. After the indictment was unveiled, the billionaire financier posted on X, “Sadly for NYC and for the Mayor, the complaint against @ericadamsfornyc is devastating and credible.”
Privately, executives suggest that Adams could stay put for now. The local economy is holding up, despite ongoing concerns about homelessness, crime and other quality-of-life issues. Some suggested that so long as the state’s top Democratic leaders don’t pressure him to go, the mayor has time to fight.
That said, Gov. Kathy Hochul called Thursday’s news “the latest in a disturbing pattern of events” and said that Adams should “review the situation and find an appropriate path forward.”
Who would follow Adams? Among the publicly declared candidates for the 2025 Democratic mayoral primary are Brad Lander, the city’s comptroller, and Scott Stringer, Lander’s predecessor whose previous run was overshadowed by a sexual assault allegation that he has denied.
Both are seen as being to Adams’s left, though Lander has recently sought to play down perceptions that he’s too progressive. More-centrist potential challengers include Kathryn Garcia, who nearly beat Adams in 2021, and — perhaps the most hotly debated figure of all — former Gov. Andrew Cuomo.
Boldface name alert: Adams’s defense team includes Alex Spiro, the Quinn Emanuel Urquhart & Sullivan partner whose other clients include Elon Musk, and a team from WilmerHale led by Brendan McGuire and Boyd Johnson III. They’re all being paid in part by taxpayer dollars.
HERE’S WHAT’S HAPPENING
DirecTV is said to be near a deal to buy Dish, its longtime rival. Talks between the two, first reported by Bloomberg, could create a pay-TV giant with about 19 million subscribers. (DirecTV and Dish have weighed uniting several times in the past.) Combining the two TV providers could give them more leverage in negotiations with content providers such as Disney and compete against streaming giants like Netflix. The companies may be betting that the shifting TV landscape could diminish opposition from antitrust regulators to such a deal.
Tropical Storm Helene barrels toward Georgia. After pummeling Florida as a Category 4 hurricane, Helene moved northward as President Biden issued disaster declarations for the states in its path. The storm is one of the most powerful to hit Florida and comes as regions across the United States face rising costs from extreme weather events.
Investors await key inflation data that’s closely watched by the Fed. The Personal Consumption Expenditure Price Index is expected to show that inflation cooled further last month, a trend that could determine the central bank’s next move on interest rates. Elsewhere, Chinese stocks have just logged their best week since 2008 on the back of a Beijing stimulus package.
OpenAI reportedly sees its mega funding round closing next week. The artificial intelligence start-up sought to reassure investors after a string of high-level departures, including that of its chief technology officer, Mira Murati, that stunned many at the company this week. The fresh round of funding could give OpenAI a roughly $150 billion valuation and enable it to keep up with deeper-pocketed rivals like Google.
Europe is split over a potential bank deal
For the past two decades, European banks have lurched from crisis to crisis, leading to government bailouts and putting a lid on the sector’s growth.
But financial industry leaders have been abuzz about a daring move by UniCredit, the profitable Italian lender, that puts pressure on a beleaguered German rival, Commerzbank, about a union of some kind. The two are set to begin talks on Friday, but politics in Germany and Brussels are weighing on the prospects of any deal.
A recap: UniCredit stunned investors, and German government officials, this month after it began acquiring what’s now a 21 percent stake in Commerzbank as Berlin started selling its shares in the lender. (UniCredit is now a bigger shareholder than the German government.)
UniCredit has said it wants to amass even more, raising speculation that Europe may see its first significant cross-border deal since three banks carved up the troubled Dutch lender ABN Amro in 2007. (That deal was a disaster.)
Investors are cheering the prospect of a takeover. “In the long-run we believe a tie-up between the two is the most likely outcome,” Borja Ramirez Segura, an analyst at Citi, wrote to clients on Thursday. Commerzbank’s shares have surged nearly 30 percent over the past two weeks and are now trading at a 13-year-high.
Alexandra Annecke, a fund manager at Union Investment, which owns a 1.5 percent stake in Commerzbank, said that “cooperation with UniCredit — in whatever form — does not have to be to the detriment of Commerzbank.”
But German politicians and union bosses stand in the way. “Unfriendly attacks, hostile takeovers, are not a good thing for banks and that is why the German government has clearly positioned itself in this direction,” Olaf Scholz, the German chancellor, said in New York this week.
Andrea Orcel, the C.E.O. of UniCredit and a prominent financial deal maker, played down talk of pursuing a hostile bid, saying this week that his company was not seeking a board seat at Commerzbank.
A deal would test European Union tolerance for such cross-border deals. Orcel has said he sees international consolidation as the best way to build a European mega-bank that could better challenge the likes of JPMorgan Chase.
Enrico Letta, a former Italian prime minister who wrote a much-cited report on the future of the E.U.’s single market, said the market — not governments — should decide the fate of the banks’ talks.
Falling interest rates may drive more deals. The high rates of recent years padded UniCredit’s bottom line, giving Orcel financial ammunition for M.&A., Marco Troiano, the head of financial institutions at the credit ratings agency Scope Ratings, told DealBook.
With rates heading down, more banks could be motivated to explore takeovers, he added.
“I think individual creators or publishers tend to overestimate the value of their specific content in the grand scheme of this.”
— Mark Zuckerberg. The Meta C.E.O. said that content producers might not reap a bonanza from tech giants that might want to license their work to train their artificial intelligence models. (The New York Times has sued OpenAI and Microsoft for copyright infringement of news content related to A.I. systems.)
A truce in the battle over private credit
The hot topic on Wall Street on Thursday was Citigroup’s $25 billion deal to create a direct-lending program in collaboration with Apollo Global Management, the giant investment firm.
It marked perhaps the biggest sign yet that big banks, which have long derided the business of private credit (essentially, when nonbanks lend money to clients), are making their peace with an increasingly formidable foe.
How it will work: Citi will find opportunities to lend to borrowers with junk-level credit ratings, using its army of bankers. Apollo — along with its in-house insurance subsidiary, Athene, and the Abu Dhabi sovereign wealth fund Mubadala — will then stump up the cash.
If the arrangement is successful, Citi and Apollo have the option to expand the program.
(Of note: The deal was one of the first major initiatives by Vis Raghavan, Citi’s head of banking, who joined the firm last year from JPMorgan Chase.)
It’s the latest acknowledgment by banks of private credit’s potential. Leaders of major banks, including Jamie Dimon of JPMorgan Chase, have questioned whether the direct-lending business had grown too big too quickly. It now oversees more than $1.5 trillion, by at least one estimate, with Ares Management having raised a $34 billion fund this summer. But skeptics worry that more of its loans could go bad if the economy sours.
That said, more stringent bank rules (including higher capital requirements) have effectively barred traditional lenders from issuing many of the loans they used to make to midsize businesses and leveraged buyouts.
Effectively offloading the financial risk to private-credit specialists is one way around that. “We lose a number of transactions to private credit,” Richard Zogheb, Citi’s head of debt capital markets, told Bloomberg. “The great news for us now is that we can maintain incumbency and offer that solution.”
Expect banks to forge more ties with private credit. Last year, Wells Fargo set up a similar, though smaller, partnership with Centerbridge Partners. A number of major banks, including Goldman Sachs, have set up direct-lending funds within their asset management firms. And JPMorgan is already the biggest lender to private credit firms like Ares.
THE SPEED READ
Deals
-
Intel reportedly rejected an approach by the chip designer Arm about selling its core product division. (Bloomberg)
-
Chevron is said to have agreed not to give a board seat to John Hess, the C.E.O. of the oil producer Hess, to win the F.T.C.’s approval for its $53 billion takeover of the smaller rival. (FT)
Elections, politics and policy
-
Smartmatic settled a defamation lawsuit against Newsmax before a trial was set to begin; the election technology company is pursuing a similar case against Fox News. (NYT)
-
The Justice Department is reportedly investigating Super Micro Computer following a critical report by the activist short-seller Hindenburg Research. The server maker’s shares have boomed amid the A.I. stock rally. (WSJ)
Best of the rest
-
In media news: Hoda Kotb, the “Today” show host, plans to leave the job early next year, and CNN will introduce a paywall for its flagship website next month. (NYT)
-
Car thieves are far more likely to target gasoline-powered cars than electric vehicles, new crime data shows. (Axios)
We’d like your feedback! Please email thoughts and suggestions to [email protected].
The post The Big Apple Business View on Eric Adams appeared first on New York Times.
