Fiserve's Bisignano takes on new mess: Social Security

Frank Bisignano, the chief executive officer of financial-technology company Fiserv Inc., has long had the reputation as a fixer on Wall Street. Now, he’s being tasked with fixing one of the biggest issues the U.S. faces: Social Security.

President-elect Donald Trump nominated Bisignano to lead the Social Security Administration, an almost 60,000-person government agency that provides benefits to roughly 71.6 million Americans. For years, management of the program has been a political football and subject of hot debate due to its cloudy future. Estimates have emerged that benefit cuts will be necessary as early as 2033, the result of a projected shortfall between the taxes that fund the program and the amount needed to pay full benefits.

“I have no objective to cut the benefit of any American, I’m going to fix it by doing other things,” Bisignano said on a call with Wall Street analysts following Trump’s nomination, without giving details on his plans. “I hope you guys root for me to do that in the way that I did other turnarounds.”

While he’s spent a long career in finance, Bisignano has some government in his background. His father worked for 45 years for the U.S. Treasury Department, and Bisignano recalled growing up in a patriotic household, informed by his grandfather’s immigration to the U.S. from Italy.

Bisignano learned the ropes of navigating complex businesses over decades in banking. He began his career at First Fidelity Bank, where he oversaw the merger and integration of multiple banks. Later at Citigroup Inc., he overhauled the transaction-services division, before joining JPMorgan Chase & Co., where among other duties he worked on the integration of Bear Stearns following the firm’s emergency acquisition during the financial crisis of 2008. He performed well enough that at one point there was talk that he might be among candidates to succeed Jamie Dimon as CEO.

He faced a tall 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 saddling the company following a leveraged buyout by KKR & Co. In 2019, he oversaw First Data’s acquisition by Fiserv. A year after the merger, Bisignano was named CEO of the combined firm.

The same year as the Fiserv and First Data deal, competitors Fidelity National Information Services Inc. and Global Payments Inc. made similar acquisitions with middling success. FIS acquired WorldPay Inc. for $35 billion, only to sell a majority stake in the business five years later to private equity firm GTCR at an $18.5 billion valuation.

“If you ask most investors, they would tell you that by far the most successful — and some would say the only success story — of the three big deals was this one,” said Wolfe Research analyst Darrin Peller, referring to the Fiserv-First Data tieup. “That’s the biggest thing: He’s proven his ability to operate and efficiently integrate assets.”

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 until he is confirmed by the Senate. He did not rule out the possibility of an external hire to fill his role. Holders of the company’s shares did not seem happy to hear he was leaving: The stock slid almost 6% on Thursday following Trump’s announcement the previous evening, though they recovered some on Friday. The stock is up 56% year to date, twice the gain of the S&P 500.

Bisignano pointed to a bright side for investors when it comes to his potential departure: “In the real world, if this all happens, Fiserv would have a pretty good friend to help them, you know what I mean?” he said on the call. “All the right way. But you know the government is a tricky place and you have a lot of hurdles. It’s net positive.”

As for the roughly $630 million in Fiserv shares that Bisignano owns himself, which he would be eligible to sell without paying capital-gains tax should he get confirmed, he said is not currently thinking of divesting.

Fiserv’s growth has largely been fueled by Clover, its point-of-sale payments system sold mainly to small-to-medium sized businesses across the U.S. through its network of bank clients. If the company continues executing on that strategy, Bisignano’s exit won’t be a major headwind, Morningstar analyst Brett Horn said.

“We want to continue to see solid volume growth and then that should lead to good revenue and margin expansion every time,” Horn said. “He leaves them in a spot where they’re in a strong competitive position.”

Should Bisignano get confirmed and make the leap from Fiserv headquarters Brookfield, Wisconsin, to Washington, he will have his work cut out for him. And his new boss’s own policies could make a tough problem even harder to fix.

Trump’s agenda for a second term risks accelerating the insolvency of Social Security and could result in steeper benefit cuts, the Committee for a Responsible Federal Budget estimated earlier this year. His plans for mass deportations, tariffs and tax cuts would empty the trust fund by 2031, two years ahead of current projections, unless Congress acts to bolster the program, the watchdog group said. Despite his planned initiatives likelihood to strain the program, Trump has said he will not cut benefits. When the watchdog’s report was released in October, a spokesperson for Trump’s campaign said his policies “will quickly rebuild the greatest economy in history and put Social Security on a stronger footing for generations to come.”

Still, from Wall Street to K Street, politicians, analysts and pundits will have a lot of questions about how exactly Wall Street’s fixer plans to get the job done.

“I hope the new administrator recognizes the impending 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’s got to get himself in front of Congress.”