- PoliticsThe Daily Beast
Now that Bernie Sanders has dropped out of the 2020 presidential race, the heat is on Joe Biden to select his running mate soon, so that he can generate some much needed media attention and fundraising in the middle of this global pandemic. In my opinion, as a black woman, Biden’s choice, without question, should be a black woman. Here is why: When Barack Obama secured the nomination for president of the United States of America in 2008, he chose the older, wiser, gray-haired, white male senior senator from Delaware, Joe Biden. Although Biden was not the exciting choice, he was the right choice for the young, black nominee. Obama was going to be the nation’s first black executive. He needed to reassure those nervous about history’s choice, that he would have someone “safe” and known to the public by his side. Now, Biden needs to send the opposite signal: that it is time for America to trust a woman who represents the backbone of the Democratic Party with the vice presidency, one who is ready on day one, if need be, to serve as president.What Obama Saw in BidenThe entire history of America starts with white men of power owning everything, including slaves, running the government, owning the wealth, and calling all the shots.Then once that power was finally shared in the late 1860s after slavery, it was shared first with black men. Followed by white women, then finally, black women and women of color. It started with the 15th Amendment, approved by Congress on Feb. 26, 1869, and ratified Feb. 3, 1870, granting black men the right to vote. Not black women. And not white women. The first blacks elected to Congress, during Reconstruction, were all men, of course. It was not until 1920 that white women got the right to vote, with the first white woman elected to the House of Representatives in 1916 and to the U.S. Senate in 1922. It was not until Shirley Chisholm’s election to the House in 1968 that a black woman served in Congress.Chisholm’s historic win came one year after the first non-white Supreme Court justice, Thurgood Marshall, joined the highest court in 1967. It wasn't until Sandra Day O’Connor reached the Supreme Court in 1981 that a woman served on the world’s most elite bench. Sonia Sotomayor became the first Latina justice in 2009. It is 2020 and no black woman has been nominated to the high court. It was Bill Clinton who appointed the first women to serve as secretary of state and attorney general. It took George W. Bush, a Republican, to appoint the first black secretary of state, Colin Powell, followed by Condoleezza Rice, a black woman. Biden Commits to Selecting Female VPJoe Biden now has a chance to buck history’s tide. Two white women have been nominated for vice president, Geraldine Ferraro in 1984 and Sarah Palin in 2008. If I were advising Biden strictly along electoral guidelines, I would tell him the governor of Michigan, Gretchen Whitmer, or Sen. Tammy Baldwin of Wisconsin would make great choices. They both would likely bring key electoral states that Trump carried in 2016 into his column on Election Day.But Sen. Kamala Harris, who wouldn’t get him anything electorally, would deliver something Biden must have in 2020: the intense and energized black vote that eluded Hillary Clinton in 2016. She is a member of Alpha Kappa Alpha Sorority Inc. (which is also my sorority and we have a powerful army of more than 300,000 members worldwide to help her raise money and be foot soldiers on the ground). Another strong choice electorally and along color lines is Florida Rep. Val Demings, who served as a House impeachment manager during the Trump impeachment. She too could produce that excitement, and help Biden compete for Florida, a state that Trump can’t afford to lose. Some may ask why I don’t include Stacey Abrams here. One big reason: She has not been vetted nationally by a nosy, aggressive and often rough national press corps. Harris, Demings, and other possible candidates mentioned are federal office holders. They have been vetted. Biden has made clear he wants no hiccups or surprises. And a 43-year-old woman of color, who currently holds no public office and lost her only statewide race, would be a big leap for the country to accept as someone ready for the presidency on day one. In 2016, Hillary Clinton was ahead in the national polls, and yet she did not turn out the Obama coalition in sufficient numbers in part because black turnout in key states like Michigan and Pennsylvania wasn’t strong enough. Biden, who has pledged to nominate a woman as his running mate and a black woman as a justice, knows there is no path to the White House for a Democrat without strong black turnout. He needs a black woman as his running mate. Why? Because black women are the core of the Democratic base, the party’s most loyal voters. And as Harris made clear in her final debate performance this year, the Democratic Party must stop taking black women voters for granted. Whether it’s Harris or Demings, Biden needs a smart, strong, loyal, and tough sister by his side. It is the Obama 2008 ticket in reverse. Only this time Biden will be at the top, and he has a chance to change history’s trajectory by putting a tested and trusted black woman in his No. 2 slot—thus setting her up for the best shot a woman has ever had of becoming president in either 2024 if Biden does not run again or in 2028 after two terms. Read more at The Daily Beast.Get our top stories in your inbox every day. 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(Bloomberg) -- A popular investment among Asia’s wealthy in the years of rock-bottom interest rates has been upended in the recent market rout, leaving investors facing losses estimated to be in the billions of dollars.Structured products called fixed coupon notes attracted scores of private banking clients in Hong Kong and Singapore in recent years, according to half a dozen bankers and advisers Bloomberg spoke with. Promised regular coupons even in turbulent times, some put 20% or more of their portfolios into the instruments, they said. One catch: the principal was tied to swings in assets like stocks, and losses could mount quickly during deep market declines.About 5%, or more than $80 billion, of Asian private banking assets outside mainland China is probably tied to such notes, estimates University of Hong Kong Professor Dragon Tang. They worked smoothly until Covid-19 struck. The promised payouts have since been dwarfed by capital losses as stocks slid and some leveraged holders were forced out of the illiquid notes. Others are hanging on, hoping a turn in sentiment restores their value.“In a bull market, investors keep collecting coupons on these notes and they feel it’s a great investment,” said Rahul Banerjee, an ex-Standard Chartered banker and founder of BondEvalue, a fintech that offers bond pricing services to investors. “When the market turns, they get stuck with unimaginable losses,” he said, estimating wealthy Asian investors are seeing losses in the billions of U.S. dollars.The products work well in a rising market or one moving sideways, where investors recover the initial investment and the coupon owed, which could be as high as 12% per annum. But the interest-bearing notes, linked to the performance of underlying assets, open holders to the risk of steep losses if those assets fall below a preset level.Margin CallsSome leveraged investors have been forced into selling early at steep discounts, according to investors who asked not to be identified speaking on private matters. The loan-to-value offered for structured products including fixed coupon notes was over 50% on average, the people familiar said, though lending terms are being tightened given recent margin calls.Those that continue to hold the notes may see their investments recoup losses in a market rebound. After sinking 21% in the first quarter, the MSCI World Index has risen about 3% in April.“Investors of structured notes are essentially writing put options,” said Mary Leung, head of advocacy for Asia Pacific, CFA Institute, referring to derivative contracts where the seller agrees to buy an asset at a specified strike price. In Asia, higher retail participation in markets, the difficulty of accessing bonds and the hunt for yield drive the popularity of such products, she said.One Singapore-based financial services professional, who asked to remain anonymous, lost between 30% to 40% of the $400,000 he invested in fixed coupon notes tied to shares including Microsoft Corp., Broadcom Inc. and India’s ICICI Bank Ltd. The notes offered a coupon of about 10%, paid quarterly with a one-year maturity.He sold the investment, which was leveraged up about 60%, prior to maturity after receiving margin calls and deciding he didn’t want the stress of monitoring daily prices and worrying about fresh calls from his bankers.A second investor, who heads a family office in Singapore, said about 10% of his financial holdings were in notes offering yields of between 6% to 12%. Those tied to energy and the automotive sector were in the red at the end of March, he said, though he remained invested in hopes of a recovery over the next few months.Improved DisclosureSuch products don’t offer good risk-adjusted returns, said Professor Tang, who has researched the 2008 implosion of structured notes called Lehman minibonds, which led thousands of Hong Kong investors to protest outside bank branches. Disclosure rules have tightened since then and investors are now better-informed, he said, though there could still be some mis-selling.New rules following the collapse of Lehman Brothers Holdings Inc. included narrowing the scope of qualified investors -- who must have about $1 million to invest in Hong Kong and $1.4 million in Singapore -- and categorizing clients into different risk tolerance buckets.“Given the greater risk exposure of fixed coupon notes, we have de-emphasized the product in recent years,” DBS Group Holdings Ltd. said in an emailed response to questions. For clients keen on the product, DBS’s bankers recommend structures which include their high-conviction stock picks or incorporate features that “act as safeguards against outsize losses,” it said.Yield HuntThe attractions of high-yield offerings have been hard to resist. A 2019 report by Asian Private Banker and Julius Baer Group Ltd. showed structured products made up 11% of client portfolios for independent asset managers in 2018, up from 4% the previous year. Some 42% of non-exchange-traded investment transactions were in such products, according to a 2018 survey by Hong Kong’s Securities and Futures Commission.The hunger for yield will persist as an impending global recession prompts a fresh wave of monetary stimulus and companies slash dividends to preserve capital. “We are seeing a mix of fear of missing out and fear itself -- the allure of an annualized yield of 8% to 10% versus increasing risk aversion,” said CFA Institute’s Leung.About $15 billion to $20 billion of new fixed coupon notes have been issued by private banks in Asia this year, a person with knowledge of the market estimated.In South Korea, complex structured products have gained traction among both the well-heeled and retail investors, driving the total outstanding to 106 trillion won ($87 billion) as of April 1.For banks, it’s a lucrative business. Investment banks make money from structuring the notes and try to manage their exposure by passing the risk on to other parties. The product is then sold by private bankers at the likes of UBS Group AG, Credit Suisse Group AG, Morgan Stanley, Standard Chartered Plc and DBS. Commissions come from sales to investors and banks can also pitch for additional fees by offering leverage. UBS, Credit Suisse, Morgan Stanley and Standard Chartered declined to comment.Such products have “proliferated” in recent years with banks making a strong push as they delivered good revenues, according to Nick Xiao, Hong Kong-based CEO of wealth manager Hywin International. Investors liked the tailored features, he said, adding that as long as the risks are clear there shouldn’t be complaints. “You cry foul when you bought an umbrella but found out it was a walking stick.”Kerry Goh, CEO of multi-family office Kamet Capital Partners, is one investor who’s heeded the risks and stayed away. He says he prefers to put the more than $1 billion his firm manages into investments with more transparent pricing and ease of exit.“While most pitches from our bankers are professional in laying out the returns and risks, we are aware of potential mis-selling, disguising these products as yield-enhancement products.”(Adds chart to the story)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.