(Bloomberg) — Frank Bisignano, the CEO of financial technology company Fiserv Inc., has long had a reputation as a fixer on Wall Street. Now he is charged with solving one of the biggest problems facing the US: Social Security.
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President-elect Donald Trump has nominated Bisignano to lead the Social Security Administration, a government agency with nearly 60,000 employees that provides benefits to about 71.6 million Americans. For years, management of the program has been a political football and the subject of heated debate due to its bleak future. Estimates have emerged that benefit cuts will be needed as early as 2033, due to a projected shortfall between the taxes that fund the program and the amount needed to pay full benefits.
“I have no goal of limiting the benefits of any American, I’m going to solve this by doing other things,” Bisignano said on a call with Wall Street analysts after Trump’s nomination, without giving details of his plans . “I hope you will support me in doing that the way I did other turnarounds.”
Although he has spent a long career in finance, Bisignano has some government in his background. His father worked in government work in Brooklyn, New York, and Bisignano recalled growing up in a patriotic household, informed by his grandfather’s immigration from Italy to the US.
Bisignano spent decades learning the ropes of navigating complex businesses in banking. At Citigroup Inc. he overhauled the transaction services division. That turnaround caught the attention of Jamie Dimon, CEO of JPMorgan Chase & Co., who recruited Bisignano to his bank, where he worked on the integration of Bear Stearns after the company’s emergency takeover during the 2008 financial crisis. He performed so well that at one point there was talk that he might be one of the candidates to succeed Jamie Dimon as CEO.
He faced a tough task when he was named CEO of First Data Corp., a New York-based payments company, where he was charged with unwinding $22 billion in debt that saddled the company after a leveraged takeover by KKR & Co. In 2019, he oversaw Fiserv’s Acquisition of First Data. A year after the merger, Bisignano was named CEO of the combined company.
The same year as the Fiserv-First Data deal, competitors Fidelity National Information Services Inc. and Global Payments Inc. similar acquisitions with mediocre success. FIS took over WorldPay Inc. for $35 billion, but five years later sold a majority stake in the company to private equity firm GTCR at a valuation of $18.5 billion.
“If you ask most investors, they would tell you that by far the most successful — and some say the only success story — of the big three deals was this one,” said Wolfe Research analyst Darrin Peller, referring to the Fiserv-First Data Link . “That’s the most important thing: he has proven his ability to manage assets and integrate them efficiently.”
While he awaits a confirmation hearing, Bisignano plans to continue running Fiserv. He told analysts not to expect a succession plan to be announced publicly before he was confirmed by the Senate. He did not rule out the possibility of an external hire to fill his role. Holders of the company’s stock didn’t seem happy to hear he was leaving: Shares fell nearly 6% on Thursday after Trump’s announcement the night before, though they recovered somewhat on Friday. The stock is up 56% year to date, twice the S&P 500’s gain.
Bisignano pointed to an upside for investors when it comes to his possible departure: “If all this happens, Fiserv would have a pretty good friend in the real world to help them out, you know what I mean?” he said during the conversation. ‘Everything in the right way. But you know that government is a tough place and there are a lot of hurdles. It is a net positive.”
As for the roughly $630 million in Fiserv stock that Bisignano himself owns and which he could sell without paying capital gains taxes if confirmed, he says he’s not thinking about divesting at the moment.
Fiserv’s growth is largely due to Clover, the point-of-sale payment system sold primarily to small to mid-sized businesses in the US through its network of banking customers. If the company continues to execute on this strategy, Bisignano’s departure won’t pose a major headwind, Morningstar analyst Brett Horn said.
“We want to continue to see solid volume growth and that should lead to good revenue and margin expansion each time,” Horn said. “He leaves them in a place where they have a strong competitive position.”
Should Bisignano be confirmed and make the jump from Fiserv headquarters in Brookfield, Wisconsin, to Washington, he will have his work cut out for him. And his new boss’s own policies could make a difficult problem even harder to solve.
Trump’s agenda for a second term threatens to accelerate Social Security insolvency and could result in sharper benefit cuts, the Committee for a Responsible Federal Budget estimated earlier this year. His plans for mass deportations, tariffs and tax cuts would drain the trust fund by 2031, two years earlier than current projections, unless Congress takes action to strengthen the program, the watchdog group said. Although his planned initiatives are likely to strain the program, Trump has said he will not cut benefits. When the watchdog’s report was released in October, a spokesman for Trump’s campaign said his policies “will quickly rebuild the greatest economy in history and put Social Security on a stronger foundation for generations to come.”
Still, politicians, analysts and pundits from Wall Street to K Street will have many questions about how exactly Wall Street’s fixer plans to get the job done.
“I hope the new administrator recognizes the looming bankruptcy of the Social Security program and advocates for reforms such as cutting benefits for wealthy people,” said Chris Edwards, a tax expert at the Cato Institute, a public policy research organization. “Congress would ultimately have to change the benefit structure, so he needs to appear before Congress.”
