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House to Vote on Debt Ceiling Bill After It Narrowly Passes Rules Committee

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May 31, 2023 | May 31, 2023 | FINANCE By Amanda Jacobson Snyder | Twitter  Email   Top Stories Feelings of Job Insecurity Rise While feelings of job insecurity have risen in the near term, U.S. workers are concerned about job losses over the longer term, with the impact of AI on jobs coming into focus. According to Morning Consult data, 65% of U.S. adults are “very” or “somewhat” concerned about job losses due to AI. Read more: American Workers Brace for a Recession in the Near Term and the Impact of AI in the Long Term And now for today's top news: After successfully passing the House Rules Committee in a 7-6 vote, legislation to raise the debt ceiling is expected to pass in the full House today. The Congressional Budget Office said the bill would reduce spending from current projections by $1.5 trillion over a decade beginning next year, and it would also cut interest on the public debt by $188 billion. (Reuters) The Securities and Exchange Commission’s examinations unit is looking into how some investment firms moved deposits — including client funds — out of Silicon Valley Bank before its collapse, according to people familiar with the matter. The SEC has requested records of money transfers and investor communications from the first three weeks of March, and the agency is probing where deposits were moved and whether executives with personal accounts at SVB cashed out before clients. (Bloomberg) The Federal Housing Administration is expected to propose new rules to help mortgage borrowers who have fallen behind on payments to get back on course by reducing their monthly payments for a period of time. Under the plan, the FHA would cover part of the monthly mortgage payment using its insurance fund, creating a second loan due after the first part is paid off, and amid rising mortgage rates, the plan would allow borrowers to keep their current low rates. (The Wall Street Journal) The SEC settled with a former Coinbase product manager and his brother over charges that the two engaged in an insider trading scheme, where Ishan Wahi provided tips to Nikhil Wahi and an associate, Sameer Ramani, about what tokens would be listed on the exchange. A Coinbase spokesperson said the company was disappointed that the “settlement involves no statement or admission that the crypto assets at issue are securities,” while SEC enforcement director Gurbir Grewal noted in a statement that federal securities laws “do not exempt crypto asset securities from the prohibition against insider trading.” (Axios) WORTH WATCHING: Treasury Department assistant secretaries Elizabeth Rosenberg and Paul Rosen and Commerce Department assistant secretaries Thea Rozman Kendler and Matthew Axelrod will testify in a Senate Banking Committee hearing titled, “Countering China: Advancing U.S. National Security, Economic Security, and Foreign Policy.” Philadelphia Fed President Patrick Harker will speak at the Official Monetary and Financial Institutions Forum. Boston Fed President Susan Collins and Fed Governor Michelle Bowman will give remarks at the Boston Fed’s event, “FedListens 2023: Transitioning to the Post-Pandemic Economy.”   Chart Review American Workers Brace for a Recession in the Near Term and the Impact of AI in the Long Term  Morning Consult Insurance and Tech Workers Most Likely to Be Worried About Impact of Al on Their Industry Shares of employed U.S. adults in each industry who said they are concerned that Al will result in job loss for their industry: m Very concerned Somewhat concerned Don't knowNo opinion Not too concerned m Not concerned at all Financial services - e 2 o e Transportation Manufacturing Retail Food beverage Construction Primarysecondary education Professional and business services R Health care 28 V. MORNING CONSULT Surveys conducted Feb. 17-May 6, 2023, among 141-636 U.S. adults employed in each industry, with an unweighted margin of error of up to -8 percentage points. Figures may not add up to 100% due to rounding. A MESSAGE FROM MORNING CONSULT SPECIAL REPORT MOST TRUSTED BRANDS plopic DOWNLOAD Most Trusted Brands 2023 15 brand rankings. 24 case studies. 57 pages of insights. Morning Consult’s fourth annual Most Trusted Brands report highlights the brands that have secured top spots in consumer trust around the world, within the United States and among their respective industries. Download now.   What Else You Need To Know GENERAL Companies Push Prices Higher, Protecting Profits but Adding to Inflation Talmon Joseph Smith and Joe Rennison, The New York Times Corporate profits have been bolstered by higher prices even as some of the costs of doing business have fallen in recent months. Americans owe $1 trillion in credit card debt Daniel de Visé, The Hill America’s credit card balance has passed $1 trillion, or it’s about to, depending on whom you ask. Earnings Adjustments Topped an Average of $1 Billion for Big Companies Last Year Mark Maurer, The Wall Street Journal Adjusted net income was higher than its GAAP counterpart by the highest sum in years. CEOs got smaller raises. It would still take a typical worker two lifetimes to make their annual pay Alexandra Olson, The Associated Press After ballooning for years, CEO pay growth is finally slowing. The typical compensation package for chief executives who run S&P 500 companies rose just 0.9% last year, to a median of $14.8 million, according to data analyzed for The Associated Press by Equilar. ECONOMY AND FISCAL POLICY Debt-Limit Deal Will Pass House Wednesday, Jeffries Says Billy House, Bloomberg Democrats will deliver at least enough votes in combination with Republicans to guarantee House passage Wednesday night of the debt-limit deal between President Joe Biden and Speaker Kevin McCarthy, the party’s leader in the House said Tuesday. Debt-Ceiling Deal Raises Age of Americans Who Must Work for Food Aid Kristina Peterson, The Wall Street Journal Bill would make it easier for veterans, the homeless and youths leaving foster care to get the assistance. Debt-Ceiling Deal Will Cost the IRS Up to $21.4 Billion Richard Rubin, The Wall Street Journal Bipartisan agreement rescinds some of the money the tax agency is using for enforcement and technology. Restart of Student Loan Payments Included in Debt-Ceiling Deal Claire Ballentine, Bloomberg An agreement forged by President Joe Biden and House Speaker Kevin McCarthy would end the moratorium on monthly bills. 14th Amendment Questions Linger Despite Debt Limit Deal Alan Rappeport, The New York Times The agreement President Biden struck with House Republicans to raise the debt limit aims to avert a catastrophic default on the nation’s debt. But the brinkmanship that brought the United States within days of being unable to pay its bills has renewed calls for the Biden administration to stop the debt ceiling from continuing to be a political tool. Shalanda Young emerges as quietly essential figure in the debt deal  Tyler Pager, The Washington Post  The intensive negotiations thrust Young, 45, into the center of a fight with sweeping economic and political ramifications. To many participants she seemed to become an indispensable figure, a rare individual who was known and trusted by members of both parties and could serve as a conduit at a moment when partisan recriminations have reached a fever pitch. US Treasury Seeks China Engagement Even as It Sharpens Its Economic Tools Daniel Flatley and Christopher Condon, Bloomberg The US Treasury Department is seeking engagement with China while also sharpening the economic tools needed to counter what it sees as national security challenges, according to two officials, highlighting Washington’s dual message on its top competitor. Why Yellen Doesn’t Lose Sleep Over US Borrowing That Alarms Most Americans Christopher Condon, Bloomberg Whether they favor debt-limit brinkmanship or not, most Americans are alarmed by the level of US government borrowing. Treasury Secretary Janet Yellen isn’t one of them. Top Fed official sees no ‘compelling’ reason to wait for fresh rate rise Colby Smith, Financial Times Debt-ceiling deal removes ‘big piece of uncertainty’ over US economy, says Loretta Mester. New paper predicts rising wages will keep inflation high Emily Peck, Axios Wages will likely play a bigger role in the fight against inflation going forward. According to a widely discussed new paper from powerhouse economics duo former Fed chair Ben Bernanke and former IMF chief economist Olivier Blanchard, the Fed might need to do more to cool down the labor market before prices are under control. Explaining America with Mark Zandi, Chief Economist, Moody’s Analytics Washington Post Live Mark Zandi, chief economist at Moody’s Analytics, joins The Post’s Frances Stead Sellers to discuss the ongoing standoff in Washington over the debt ceiling and the consequences for the global economy if America defaults. Pay growth slowed at small businesses in May Michael Cohn, Accounting Today Hourly earnings growth for U.S. workers decelerated to 4.33% in May, while small-business job growth declined slightly by 0.04% from April, payroll provider Paychex reported Tuesday. BANKING Jamie Dimon warns ‘uncertainty’ caused by Beijing could hit investor confidence Thomas Hale et al., Financial Times JPMorgan chair in Shanghai at conference attended by several US executives. 4Q overdraft revenue fell 50% in three years, CFPB says Kate Berry, American Banker Bank overdraft revenue fell nearly 50% in the fourth quarter compared with three years earlier, according to new Consumer Financial Protection Bureau data. Why the nation’s banks will lose even if Biden avoids default Victoria Guida, Politico The threat of more banking turmoil heightens the chances that the economy could slip into a recession heading into the presidential election year. Goldman Sachs is cutting jobs again amid Wall Street deals slump Hugh Son, CNBC Goldman Sachs is preparing for its third round of layoffs since September as Wall Street firms adjust to a slump in deals activity. The company is expected to trim fewer than 250 jobs in the coming weeks, according to a person with knowledge of the bank’s plans. Former Wells Fargo exec settles SEC fraud charges, to pay $3 million Kanishka Singh, Reuters The former head of Wells Fargo & Co's retail bank agreed to pay a $3 million penalty to settle U.S. Securities and Exchange Commission fraud charges for misleading investors about sales practices used to inflate a performance metric, the SEC said on Tuesday. JPMorgan Builds Unit for World’s Richest Families in Wealth Bet Benjamin Stupples, Bloomberg JPMorgan Chase & Co. has quietly built a global unit focused on catering to the ultra-wealthy and their investment firms as it looks to expand services to the world’s super-rich. Exclusive: Credit Suisse axes China bank plan to avoid regulatory conflict under UBS Engen Tham et al. Reuters Credit Suisse has scrapped plans to set up a locally incorporated bank in China to sidestep a potential regulatory conflict arising from its merger with UBS, said two sources with direct knowledge of the matter. Goldman Sachs Executive Dina Powell McCormick to Depart for Merchant Bank Miriam Gottfried and AnnaMaria Andriotis, The Wall Street Journal Dina Powell McCormick, one of the most senior women on Wall Street and a former U.S. government official, is leaving Goldman Sachs GS -0.36%decrease; red down pointing triangle Group to join an investment and advisory firm run by former partners at the Wall Street giant. FINANCIAL PRODUCTS AND INVESTMENTS It’s ‘More Expensive to Live,’ and Workers Are Tapping 401(k)s for Help Martha C. White, The New York Times More Americans are raiding their retirement accounts as the cost of living climbs, and experts predict that the number of workers drawing on their 401(k)s to pay for financial emergencies may increase due to a confluence of factors, like new provisions that make withdrawals easier and high inflation that is straining household budgets. There Were Runs on Banks, Not on Insurers. Here’s Why. Jean Eaglesham, The Wall Street Journal Investors who stashed billions of dollars in low-yielding annuities did a surprising thing last year: nothing. As interest rates shot up from near-zero, dramatically improving the returns on new annuities, investors mostly stayed in their existing policies, new data show. HOUSING AND GSES FHFA House Price Index hits an all-time high Logan Mohtashami, Housing Wire On Tuesday the FHFA House Price Index hit an all-time high. In this article I’ll explain why this is happening and why we still have a savagely unhealthy housing market. The quick takeaway here is that total active listings in the U.S. are still near all-time lows and the demand has stabilized. Home Prices Rose in March for Second Straight Month Nicole Friedman, The Wall Street Journal Case-Shiller index climbs 0.4% as shortage of homes for sale spurs competition among home buyers. CRYPTO AND FINANCIAL TECHNOLOGY Binance Explores Letting Some Traders Keep Collateral at a Bank Justina Lee and Anna Irrera, Bloomberg Binance is discussing a proposal to let some of its institutional clients keep their trading collateral at a bank instead of with the crypto platform, a step that could help reduce counterparty risk. U.S. CFTC Warns About Clearing Derivatives Tied to Digital Assets Jesse Hamilton, CoinDesk The derivatives agency said that clearing organizations need to address risks as they move into the crypto space, and Commissioner Johnson suggests it's time for agency rules on this point. Wall Street prepares to take on established crypto companies Nikou Asgari, Financial Times Traditional finance groups create digital asset infrastructure untainted by year of crypto scandals. PayPal continues to eye stablecoin space Crystal Kim, Axios Venmo-ing crypto is already here — the latest development in PayPal's nearly one-year-old service enabling on-chain transfers. It's an incremental advance in the payment giant's vision of a more cashless future, one that includes solving what it sees as some of the roadblocks keeping crypto from playing a more significant role in payments. FTX Examiner Appointment Referred to Court of Appeals by District Judge Jack Schickler, CoinDesk The U.S. government is pushing to have an independent inquiry into the crypto exchange despite concerns over cost. Genesis, Gemini says SEC ask is at expense of Earn customers Crystal Kim, Axios A pair of crypto firms are looking to dismiss a lawsuit brought by a top U.S. financial regulator. Digital Currency Group unit Genesis Global Capital, along with crypto exchange Gemini, filed a motion Friday asking the court to dismiss the SEC's complaint against them related to Gemini’s Earn program, court documents show. OPINIONS, EDITORIALS AND PERSPECTIVES  Why the Fed Is Hard to Predict Mohamed A. El-Erian, Project Syndicate The US Federal Reserve is adrift, and it has only itself to blame. Regardless of whether its policy-setting committee announces another interest-rate hike in June, its top priority now should be to address the structural weaknesses that led it astray in the first place. NING C NG CONSIL This email was sent to: [email protected] by: Morning Consult 1025 F Street NW, Suite 800, Washington, DC 20004
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