Where Is All the Money for Main Street?

The heartbeat of America is in dire need of money.

Small businesses have accounted for more than two-thirds of the new job creation in the past 15 years. Now, more than one in three are saying they won’t survive three months without more aid, according to a survey by the non-profit Small Business Majority.

Both Donald Trump and Joe Biden reiterated in their Thursday debate that businesses need funds -- what was unclear is how much, in what form and how long the assistance would last.

Money managers from Blackstone to Apollo are telling us that economic damage from the pandemic could last into 2022. And regardless of aid, credit markets are poised to pull back more from the smallest firms, while the biggest have more free-flowing capital.

Tune into Bloomberg Television for our 30-minute, special report on the credit disconnect, tonight at 7:30 p.m. Special thanks to Sheila Bair, Guggenheim’s Scott Minerd, Blackstone’s Dwight Scott, Apollo’s Jim Zelter, Houlihan Lokey’s Irwin Gold and and Discover’s Roger Hochschild for explaining why capital isn’t flowing to the people who need it most.

And for more on America’s unequal recovery, read this story by Bloomberg’s Sally Bakewell and Davide Scigliuzzo, and hear for yourself from business owners who have struggled.

Apollo Woes

For many firms on Wall Street, there is no barometer of success more conspicuous than stock price. At Apollo Global Management, it’s down almost 15% this year.

Investor concerns about Leon Black’s relationship with convicted sex offender Jeffrey Epstein have been brewing ever since a New York Times report outlined that the Apollo CEO wired at least $50 million to entities affiliated with Epstein after a 2008 conviction. While saying that they take the issue seriously, Apollo’s investors have stuck by the firm since we began to outline those ties last year.

But now, the firm faces a client revolt. Cambridge Associates, an influential consultant, may stop recommending Apollo, Bloomberg’s Heather Perlberg and Sabrina Willmer reported. Meanwhile, a Pennsylvania pension fund has informed the behemoth money manager that it won’t consider additional investments for now.

Aksia, which advises on more than $160 billion of investor commitments, told clients to not give new money to Apollo, Bloomberg’s Gillian Tan broke. Connecticut Treasurer Shawn Wooden is also halting additional capital to the firm.

There’s been no allegation that Black’s dealings with Epstein broke the law. Apollo board members hired a law firm, at Black’s urging, to independently examine the CEO’s account of his ties to Epstein.

Goldman Pays Up

It’s been years of cleaning up the 1MDB scandal, and Goldman Sachs’s tab is now more than $5 billion of costs including fines to regulators around the world. Its Malaysian subsidiary pleaded guilty to a bribery case that crossed over many borders.

Goldman itself didn’t plead guilty, keeping its services available to many clients that would have had to disconnect from Goldman otherwise, Bloomberg’s Sridhar Natarajan reported.

The more-than $2 billion settlement with the U.S. Justice Department is the largest bribery penalty in the history of the Foreign Corrupt Practices Act since the rules were enacted in 1977. In fact, among the top five largest fine of this kind, Goldman is the only bank and the only U.S. firm on the list. (Airbus is the only other company to have settled a bribery case for more than $2 billion, followed by Brazilian energy company Petrobras.)

Goldman’s current and former executives face millions in pay being clawed back or withheld as a result of the scandal. For an explainer of the 1MDB case, click here.

This week was filled with some heavy news. I hope you have a great weekend ahead of you, one that’s restful so we can break down the U.S. election season for you just ahead. Tips and opinions always welcome at [email protected].