The central bank place will more emphasis on developments that could upend its expectations and less on forecasts that convey too much certainty about the future.
Paul Hannon
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Tag: Financial services
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BOE to Embrace Uncertainty, and Bernanke’s Guidance, With Communications Revamp
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Federal Reserve cuts key rate yet Powell says future reductions are not locked in
WASHINGTON (AP) — The Federal Reserve cut its key interest rate Wednesday for a second time this year as it seeks to shore up economic growth and hiring, even as inflation stays elevated.
But Fed Chair Jerome Powell also cautioned that further rate cuts weren’t guaranteed, citing the government shutdown’s interruption of economic reports and sharp divisions among 19 Fed officials who participate in the central bank’s interest-rate deliberations.
Speaking to reporters after the Fed announced its rate decision, Powell said there were “strongly differing views about how to proceed in December” at its next meeting and a further reduction in the benchmark rate is not “a foregone conclusion — far from it.”
The rate cut — a quarter of a point — brings the Fed’s key rate down to about 3.9%, from about 4.1%. The central bank had cranked its rate to roughly 5.3% in 2023 and 2024 to combat the biggest inflation spike in four decades before implementing three cuts last year. Lower rates could, over time, reduce borrowing costs for mortgages, auto loans, and credit cards, as well as for business loans.
The move comes amid a fraught time for the central bank, with hiring sluggish and yet inflation stuck above the Fed’s 2% target. Compounding its challenges, the central bank is navigating without the economic signposts it typically relies on from the government, including monthly reports on jobs, inflation, and consumer spending, which have been suspended because of the government shutdown.
Financial markets largely expected another rate reduction in December, and stock prices dropped after Powell’s comments, with the S&P 500 nearly unchanged and the Dow Jones Industrial Average closing slightly lower.
“Powell poured cold water on the idea that the Fed was on autopilot for a December cut,” said Gennadiy Goldberg, head of U.S. rates strategy at TD Securities. “Instead, they’ll have to wait for economic data to confirm that a rate cut is actually needed.”
Powell was asked about the impact of the government shutdown, which began on Oct. 1 and has interrupted the distribution of economic data. Powell said the Fed does have access to some data that give it “a picture of what’s going on.” He added that, “If there were a significant or material change in the economy, one way or another, I think we’d pick that up through this.”
But the Fed chair did acknowledge that the limited data could cause officials to proceed more cautiously heading into its next meeting in mid-December.
“There’s a possibility that it would make sense to be more cautious about moving (on rates). I’m not committing to that, I’m just saying it’s certainly a possibility that you would say ‘we really can’t see, so let’s slow down.’”
The Fed typically raises its short term rate to combat inflation, while it cuts rates to encourage borrowing and spending and shore up hiring. Right now it sees risks of both slowing hiring and rising inflation, so it is reducing borrowing costs to support the job market, while still keeping rates high enough to avoid stimulating the economy so much that it worsens inflation.
Yet Powell suggested the Fed increasingly sees inflation as less of a threat. He noted that excluding the impact of President Donald Trump’s tariffs, inflation is “not so far from our 2% goal.” Inflation has slowed in apartment rents and for many services, such as car insurance. A report released last week showed that inflation remains elevated but isn’t accelerating.
The government recalled employees to produce the report, despite the shutdown, because it was used to calculate the cost of living adjustment for Social Security.
At the same time, the economy could be rebounding from a sluggish first half, which could improve job growth in the coming months, Powell said. That would make rate cuts less necessary.
“For some part of the committee, it’s time to maybe take a step back and see if whether there really are downside risks to the labor market,” Powell said. “Or see whether in fact that the stronger growth that we’re seeing is real.”
Two of the 12 officials who vote on the Fed’s rate decisions dissented Wednesday, but in different directions. Jeffrey Schmid, President of the Federal Reserve Bank of Kansas City, voted against the move because he preferred no change to the Fed’s rate. Schmid has previously expressed concern that inflation remains too high.
Fed governor Stephen Miran dissented for the second straight meeting in favor of a half-point cut. Miran was appointed by President Donald Trump just before the central bank’s last meeting in September.
Trump has repeatedly attacked Powell for not reducing borrowing costs more quickly. In South Korea early Wednesday he repeated his criticisms of the Fed chair.
“He’s out of there in another couple of months,” Trump said. Powell’s term ends in May. On Monday, Treasury Secretary Scott Bessent confirmed the administration is considering five people to replace Powell, and will decide by the end of this year.
The Fed also said Wednesday that it would stop reducing the size of its massive securities holdings, which it accumulated during the pandemic and after the 2008-2009 Great Recession. The change, to take effect Dec. 1, could over time slightly reduce longer-term interest rates on things like mortgages but won’t have much overall impact on consumer borrowing costs.
Without government data, the economy is harder to track, Powell said. September’s jobs report, scheduled to be released three weeks ago, is still postponed. This month’s hiring figures, to be released Nov. 7, will likely be delayed and may be less comprehensive when finally released. And the White House said last week that October’s inflation report may never be issued at all.
Before the government shutdown cut off the flow of data, monthly hiring gains had weakened to an average of just 29,000 a month for the previous three months, according to the Labor Department’s data. The unemployment rate ticked up to a still-low 4.3% in August from 4.2% in July.
More recently, several large corporations have announced sweeping layoffs, including UPS, Amazon, and Target, which threatens to boost the unemployment rate if it continues. Powell said the Fed is watching the layoff announcements “very carefully.”
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Associated Press Writer Alex Veiga in Los Angeles contributed to this report.
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The stock market is breaking records. Time for a gut check
NEW YORK (AP) — Almost everything in your 401(k) should be coming up a winner now. That makes it time for a gut check.
Not only is the U.S. stock market setting records, so are foreign stocks. Bond funds, which are supposed to be the boring and safe part of any portfolio, are also doing well this year, along with gold and cryptocurrencies.
But in the midst of all the fun, it can pay to remember how you felt during April. That’s when financial markets were tumbling because of worldwide tariffs that President Donald Trump announced on his “Liberation Day.”
Did all that fear push you to sell your stocks, lock in the losses and miss out on the stunning rebound that came afterward? Or did you hold tight, as many financial advisers suggested? Either way, it’s valuable information because another downturn could strike at any time.
To be sure, many professionals along Wall Street are forecasting that the U.S. stock market will keep rising. But the threat of a sharp drop remains, as it always does. That leaves investors with the luxury now, while prices are high, to reassess. Don’t get lulled into leaving your 401(k) on autopilot, unless you’re intentionally doing so, and make sure your portfolio isn’t stuffed with too much risk.
Here are some things to keep in mind:
The stock market is doing well?
It’s been another fabulous year for stocks. The S&P 500 has soared more than 35% from its low point in April, shortly after “Liberation Day.”
The market has had a few hiccups recently, as worries have popped up about everything from potentially bad loans at some banks to renewed talk about much higher tariffs on China. But stocks have come back from each stumble, only to push higher.
“The market continues to (hit) record highs on the back of strong earnings and easing U.S.–China trade tensions,” said Mark Hackett, chief market strategist at Nationwide, who calls the current state of “steady growth without irrational exuberance” a ”Goldilocks environment.”
If the market’s great, why should I worry?
You don’t need to worry at the moment, but remember that the stock market will fall eventually. It always does.
The S&P 500 index, which sits at the heart of many 401(k) accounts, has forced investors to swallow a 10% drop every couple of years or so, on average. That’s what Wall Street calls a “correction,” and professional investors see them as ways to clear out excessive optimism that may have built up and pushed prices too high. More serious drops of at least 20%, which Wall Street calls “bear markets,” are less common but can last for years.
Back in April, the S&P 500 index plunged nearly 20% from its record at the time. But the market came back, propelled by the big tech companies that have led the way the last few years.
“Fundamentally superior stocks recover quickly and bounce like fresh tennis balls, while fundamentally inferior stocks bounce like rocks.” said Louis Navellier, founder and chief investment officer of asset manager Navellier & Associates, who also brushed off worries that the stock market is in a bubble.
What could trip up the market?
The stock market has charged to records because investors are expecting several important things to happen. If any fail to pan out, it would undercut the market.
Chief among those expectations is that big U.S. companies will continue to deliver big growth in profits. That’s one of the few ways they can justify the jumps for their stock prices and quiet criticism that they’ve become too expensive.
Critics point in particular to the frenzy going on in artificial-intelligence technology. There, they hear echoes of the dot-com bonanza that ultimately imploded in 2000 and sent stocks on a yearslong descent. One popular measure of valuing stocks, which looks at corporate profits over the preceding 10 years, showed the S&P 500 recently was near its most expensive level since the 2000 dot-com bubble.
Consider Nvidia, the chip company that’s become the poster child of the AI trade. If it fails to meet analysts’ high expectations for growth, its stock will look more expensive than it already does. It’s trading at 54 times its earnings per share over the last 12 months, much higher than the overall S&P 500’s price-earnings ratio of nearly 30.
What’s the next event to be mindful of?
Wednesday’s meeting of the Federal Reserve could be a key moment for the market.
Besides companies delivering bigger profits or stock prices falling, another way for the stock market to look less expensive is if interest rates ease.
The widespread expectation is that the Fed will cut its main interest rate to support the slowing job market and deliver more reductions through next year. But the Fed has also warned it may hold off on cuts if inflation accelerates beyond its still-high level. That’s because lower interest rates can make inflation worse, and Wednesday’s focus will be on whether the Fed gives any hints about the likelihood of more cuts in coming months.
Several of Wall Street’s most influential stocks will also be reporting their latest earnings results this week, including Microsoft and Apple. And Trump will be meeting with China’s leader, Xi Jinping on Thursday. The market has already run up on hopes that the two will ease rising trade tensions at some point.
If there’s a bubble, I should sell everything, right?
A famous saying on Wall Street is that being too early is the same as being wrong.
Consider prescient investors who knew that stocks were too expensive when former Fed Chairman Alan Greenspan famously talked about the possibility of “irrational exuberance” in financial markets. That was in late 1996.
If they sold then, they would have missed out as the bubble inflated further and the S&P 500 more than doubled through late March 2000 before it popped.
Instead, the better way to think of it may be: Make sure your investments are set up the right way, so you can stomach the market whether it goes up or down.
How much of my 401(k) should be in stocks?
It depends on your age and how much risk you’re willing to take.
If you did sell stocks this past April, you may have had too much of your portfolio in stocks for your risk tolerance. Or you may need to steel yourself more during the next drop.
Remember that anyone decades away from retirement has the luxury of waiting out any drops in the market. Bear markets are actually great in that case, because they put stocks on sale for anyone continuing to make regular contributions to their 401(k) account.
Workers closer to retirement still need stocks, though in smaller proportions, because they have historically provided the highest returns over the long term, and a retirement can last decades.
“They aren’t the most sexy, but companies with dependable dividends are a good bet, as are simple index funds designed to track the S&P 500 or a subset aimed at value or growth,” said John Kiernan, managing editor of personal finance site WalletHub.
“Young people need to grow their money over time, and they will have decades to make up for any losses,” Kiernan said. “Older people need to protect the money they have now, which might mean favoring bonds and high-yield savings accounts over risky investments.”
It’s easy to see how much stock retirement savers are recommended to hold at various ages. Mutual-fund companies have target-date retirement funds, which are built as autopilot products that will automatically move investors from lots of stocks when they’re young to fewer stocks when they’re closer to retirement.
The average target-date fund for workers just starting their careers had 92% of its portfolio invested in stocks at the end of last year, according to Morningstar. Target-date funds designed for people entering retirement have a bit under 50% invested in stocks, meanwhile.
I hate all this uncertainty
Unfortunately, it’s the price you have to pay if you want the strong returns that the U.S. stock market has historically provided over the long term.
This is what the stock market does. It goes up and down, sometimes by shocking amounts, but it usually helps patient savers build their nest eggs over decades.
Ben Fulton, CEO of WEBs investments, recommends monitoring volatility by paying attention to the VIX, a volatility index, sometimes called the “fear index, which measures market expectations of future risk. The VIX is currently around 16, which Fulton said signals ”calm by historical standards.”
“When the VIX begins to hold consistently above 20, it often signals a time to gradually reduce market exposure,” he said. That happened during the tech bubble and more recently during the pandemic in 2020 and when inflation spiked in 2022.
“Until then, maintaining positions is critical, as markets that rise steadily can continue longer than logic might suggest, and stepping aside too early can mean missing valuable portfolio appreciation,” Fulton said.
“Markets rarely behave as we want, instead reflecting the collective sentiment of all investors.”
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Beyond Meat shares briefly sizzle on Walmart deal and meme stock interest
Beyond Meat’s shares briefly sizzled Wednesday before heading back down again.
The plant-based meat company’s shares more than doubled early Wednesday before closing at $3.58 per share, which was down 1%. Still, it was a surprising comeback for a stock that was trading at an all-time low of 50 cents per share late last week.
Investors cheered Beyond Meat’s announcement Tuesday that it’s increasing the availability of some of its products at U.S. Walmart stores. Beyond Meat said that its chicken pieces, Korean BBQ-style steak and burger six-packs will now be easier to find in more than 2,000 Walmart stores.
Beyond Meat also launched a direct-to-consumer website this week, which will try to build buzz by offering limited releases of new products.
But perhaps the biggest driver of interest in Beyond Meat is Roundhill Investments, which added Beyond Meat to its Meme Stock ETF, or exchange-traded fund, on Monday. The fund consists solely of meme stocks, which are stocks that gain popularity and trading volume based on social media hype rather than a company’s financial performance.
Investors have been sporadically turning to meme stocks throughout 2025 in an effort to find bargains amid a very pricey stock market. The stocks are often the target of “short sellers,” or investors betting against the stock.
Beyond Meat was the darling of the plant-based meat industry when it went public on the Nasdaq stock exchange in 2019.
But in recent years the El Segundo, California-based company has been struggling with weak demand for its burgers, sausages, tenders and other products. Beyond Meat’s net revenue was down 15% in the first six months of this year.
Beyond Meat’s stock price cratered last week after the company announced the expiration of lock-up restrictions on some of its 326 million shares of new stock as part of a plan to help it reduce its debt load and extend the time until its debt matures. The lock-up had prevented shareholders from selling the stock but now they were free to do so.
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Wells Fargo opens new branch in Lake Grove | Long Island Business News
Wells Fargo expands its Long Island presence with a new Lake Grove branch and donates $25K to support veterans through local nonprofit New Ground.
David Winzelberg
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Regional banks’ bad loans spark concerns on Wall Street
NEW YORK — NEW YORK (AP) —
Wall Street is concerned about the health of the nation’s regional banks, after a few of them wrote off bad loans to commercial customers in the last two weeks and caused investors to wonder if there might be more bad news to come.
Zions Bank, Western Alliance Bank and the investment bank Jefferies surprised investors by disclosing various bad investments on their books, sending their stocks falling sharply this week. JPMorgan Chase CEO Jamie Dimon added to the unease when he warned there might be more problems to come for banks with potentially bad loans.
“When you see one cockroach, there are probably more,” Dimon told investors and reporters on Tuesday, when JPMorgan reported its results.
The KBW Bank Index, a basket of banks tracked by investors, is down 7% this month.
There were other signs of distress. Data from the Federal Reserve shows that banks tapped the central bank’s overnight “repo” facilities for the second night in a row, an action banks have not needed to take since the Covid-19 pandemic. This facility allows banks to convert highly liquid securities like mortgage bonds and treasuries into cash to help fund their short-term cash shortfalls.
Zions Bancorp shares sank Thursday after the bank wrote off $50 million in commercial and industrial loans, while Western Alliance fell after the bank alleged it had been defrauded by an entity known as Cantor Group V LLC. This came on top of news from Jefferies, which told investors it was holding $5.9 billion in debt of bankrupt auto parts company First Brands. All three stocks recovered a bit by midday Friday.
Even larger banks were not immune. Several Wall Street banks disclosed losses in the bankruptcy of Tricolor, a subprime auto dealership company that collapsed last month. Fifth Third Bank, a larger regional bank, recorded a $178 million loss from Tricolor’s bankruptcy.
While the big Wall Street banks get most of the media and investor attention, regional banks are a major part of the economy, lending to small-to-medium sized businesses and acting as major lenders for commercial real estate developers. There are more than 120 banks with between $10 billion and $200 billion in assets, according to the FDIC.
While big, these banks can run into trouble because their businesses are not as diverse as the Wall Street money center banks. They’re often more exposed to real estate and industrial loans, and don’t have significant businesses in credit cards and payment processing that can be revenue generators when lending goes south.
The last banking flare up, in 2023, also involved mid-sized and regional banks that were overly exposed to low-interest loans and commercial real estate. The crisis caused Silicon Valley Bank to fail, followed by Signature Bank, and led to the eventual sale of First Republic Bank to JPMorgan Chase in a fire sale. Other banks like Zions and Western Alliance ended up seeing their stocks plummet during that time period.
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American businessman whose firm invested in European soccer clubs indicted for alleged $500M fraud
NEW YORK — NEW YORK (AP) — An American businessman whose firm invested in several European soccer clubs that struggled under its ownership has been indicted in New York on charges of financial wrongdoing in an alleged $500 million fraud scheme.
Josh Wander was a co-founder of Miami-based 777 Partners that owned stakes in an Australian airline plus soccer clubs Hertha Berlin in Germany, Genoa in Italy, Standard Liege in Belgium and Vasco da Gama in Brazil.
The 777 story became a cautionary tale in the global soccer trend of “multi-club ownership” — investors taking stakes in several clubs in different countries. European soccer body UEFA has identified the trend as a threat to the integrity of games and the player trading industry worth more than $10 billion each year.
“As alleged, Wander used his investment firm, 777 Partners, to cheat private lenders and investors out of hundreds of millions of dollars by pledging assets that his firm did not own, falsifying bank statements and making other material misrepresentations about 777’s financial condition,” Jay Clayton, United States Attorney for the Southern District of New York, said in an FBI statement Thursday.
The indictment charging Wander with wire fraud, securities fraud and conspiracy to commit those crimes was unsealed Thursday in federal court in Manhattan. Most of the charges carry a maximum prison term of 20 years.
Wander and 777 had failed last year in targeting their biggest capture in soccer, nine-time English champion Everton, amid increasing scrutiny of the business and a lawsuit in New York from a London-based investor.
Reporting about 777’s soccer interests, led by Norwegian soccer magazine Josimar, intensified even before Wander was elected to a board seat at the influential European Club Association, a network of hundreds of teams that shapes the Champions League and other competitions.
Wander’s firm had moved heavily into soccer in 2021, buying stakes in financially distressed clubs recovering from playing in empty stadiums during the COVID-19 pandemic.
The former chief financial officer at 777, Damien Alfalla, “is cooperating with the government,” the FBI said, and made a guilty plea this week.
“The women and men of the SDNY and our law enforcement partners will continue to work tirelessly to protect our investors and our markets,” Clayton said.
Another 777 executive, Steven Pasko, also is targeted in a civil law court filing Thursday by the Securities and Exchange Commission.
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AP soccer: https://apnews.com/hub/soccer
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World shares retreat after worries over bank lending pull Wall Street lower
MANILA, Philippines — MANILA, Philippines (AP) — World shares skidded Friday following a retreat on Wall Street driven by concerns over banks’ loan portfolios.
The future for S&P 500 fell 1.3% while that for the Dow Jones Industrial Average shed 1%. Oil prices were lower while the price of gold climbed to over $4,383 an ounce, and was last trading at $4,356.50 per ounce, as Washington and Beijing swapped harsh words over trade.
In early European trading, a sell-off of bank and financial shares weighed on regional indexes. Germany’s DAX slumped 2% to 23,783.64. Britain’s FTSE 100 fell 1.5% to 9,293.24 while in Paris, the CAC 40 shed nearly 0.8% to 8,126.52.
In Asia, Japan’s Nikkei 225 fell 1.4% to 47,582.15, tracking U.S. losses. Uncertainty over the choice of a new prime minister has also weighed on investor sentiment.
Conservative lawmaker Sanae Takaichi was elected to head the ruling Liberal Democratic Party but last week’s collapse of its coalition with the Buddhist-backed Komeito cast doubt over whether she would garner enough support in the lower house of parliament to prevail in a vote expected next week.
Takaichi has led efforts to form a new alliance with the Osaka-based Japan Innovation Party, which would improve her chances of becoming Japan’s first female prime minister.
In Chinese markets, shares fell as trade tensions with Washington intensified. Hong Kong’s Hang Seng index slumped 2.5% to 25,247.10, while the Shanghai Composite index slid nearly 2% to 3,839.76.
Traders also remained cautious ahead of Monday’s release of economic data and an important meeting of the ruling Communist Party leadership next week.
South Korea’s Kospi closed nearly flat at 3,748.89, erasing earlier gains amid optimism over progress in trade talks with the U.S.
Data released on Friday showed South Korea’s seasonally adjusted unemployment rate slid to 2.5% in September from 2.6% in August.
Australia’s S&P/ASX 200 lost 0.8% to 8,995.30, retreating from the previous day’s record high. Energy and tech stocks led the decline.
Taiwan’s Taiex dropped nearly 1.3% while in India, the Sensex rose 0.4%.
On Wall Street, stocks fell Thursday as worries flared over the financial health of midsized banks.
The S&P 500 slid 0.6% to 6,629.07, in its latest up-and-down day. The Dow Jones Industrial Average dropped 0.7% to 45,952.24, and the Nasdaq composite lost 0.5% to 22,562.54.
Salt Lake City-based Zions Bancorp. tumbled 13.1% after the bank said its profit for the third quarter will take a hit because of a $50 million charge-off related to loans made to a pair of borrowers. Zions said it found “apparent misrepresentations and contractual defaults” by the borrowers and several people who guaranteed the loans, along with other irregularities.
Another bank, Western Alliance Bancorp, dropped 10.8% after saying it has sued a borrower, alleging fraud. It also said it’s standing by its financial forecasts given for 2025.
Scrutiny is rising on the quality of loans that banks and other lenders have broadly made following last month’s Chapter 11 bankruptcy protection filing of First Brands Group, a supplier of aftermarket auto parts. The question is whether the hiccups are just a collection of one-offs or a signal of something larger threatening the industry.
“The Street’s been dining on rate cut and AI optimism for months, but this week the waiter brought something no one ordered: the return of the credit bogeyman,” Stephen Innes of SPI Asset Management said in a commentary.
“Regional banks have become the canaries in the credit coal mine, and their chirping sounds suspiciously weak,” he said.
U.S. companies broadly are under pressure to deliver stronger profits after the S&P 500 surged 35% from a low in April. To justify those gains, which critics say made their stock prices too expensive, companies will need to show they’re making much more in profit and will continue to do so.
In other dealings on Friday, benchmark crude oil lost 61 cents to $56.85 per barrel. Brent crude, the international standard, gave up 64 cents to $60.42 per barrel.
The U.S. dollar fell to 149.70 Japanese yen from 150.44 yen. The euro rose to $1.1703 from $1.1688.
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Interactive Brokers Logs Higher Profit, Revenue as Trading Volume Climbs
Interactive Brokers Group IBKR -1.79%decrease; red down pointing triangle
The online brokerage platform said Thursday that client trading volumes in stocks and options climbed 67% and 27%, respectively, in the quarter. Futures volume, meanwhile, decreased 7%. Customer accounts increased by 32% to 4.1 million, with customer equity up 40% to $757.5 billion.
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Canada’s Bank Supervisor to Propose Easing of Financial-Stability Rules
OTTAWA—Canada’s banking regulator said the watchdog would issue proposals in the coming months to ease capital-buffer requirements amid the abrupt change in the geopolitical dynamics fueled by President Trump’s tariff policy.
Peter Routledge, the head of the Office of the Superintendent of Financial Institutions, said domestic lenders “argue that the shift before us demands more intelligent risk-taking, risk-taking to help economies shift their economic model to the world emerging.”
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Paul Vieira
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New California law aims to stabilize insurance for people who can’t get private coverage
SACRAMENTO, Calif. — SACRAMENTO, Calif. (AP) — California Gov. Gavin Newsom signed a bipartisan bill Thursday that aims to prevent the state’s home insurer of last resort from running out of money following a natural disaster.
The FAIR Plan is an insurance pool that provides policies to people who can’t get private insurance because their properties are deemed too risky to insure. The number of homeowners forced onto the FAIR Plan has skyrocketed. With high premiums and basic coverage, the plan is designed as a temporary option until homeowners can find permanent coverage.
But more Californians are relying on it than ever as increasingly devastating and destructive fires spark across the state, including in densely populated areas. There were nearly 600,000 home policies on the FAIR Plan as of June. Leaders of the plan last year warned state lawmakers that it could go insolvent after a major wildfire or disaster.
That reality came true earlier this year after wildfires swept through Los Angeles and destroyed more than 17,000 structures. The plan faced a loss of roughly $4 billion and needed a $1 billion bailout from private insurers to pay out claims. Half of that cost is expected to be passed onto all policyholders.
The law Newsom signed allows the FAIR Plan to request state-backed loans and bonds and spread out claims payments over multiple years after a disaster. Insurance companies were previously required to pay the full bailout within 30 days. Supporters of the new law said it will prevent the need for future bailouts that raise rates for everyone.
“The kinds of climate-fueled firestorms like we saw in January will only continue to worsen over time. That’s why we’re taking action now to continue strengthening California’s insurance market to be more resilient in the face of the climate crisis,” Newsom said in a statement.
Republican state Sen. Marie Alvarado-Gil said the measure was a good step to help stabilize the FAIR Plan.
“This bill doesn’t solve everything. But it does help to ensure that the FAIR Plan customers can rely on coverage in their time of greatest need,” she said in September during a floor debate.
Newsom also signed another bill to expand the FAIR Plan board, which currently consists of nine voting insurers and four nonvoting members appointed by the governor. The new law adds two representatives from the Legislature to serve as non-voting members on the board.
Supporters, including the state’s top insurance regulator, said the law adds a new layer of oversight and transparency. Opponents said it wouldn’t make a difference because the new members don’t have any voting power.
California is undergoing a yearslong effort to stabilize its insurance market after several major insurance companies either paused or restricted new business in the state in 2023, which pushed hundreds of thousands of homeowners onto the FAIR Plan. Wildfires are becoming more common and destructive in California because of climate change, and insurers say that is making it difficult to truly price the risk on properties.
Of the top 20 most destructive wildfires in state history, 15 have occurred since 2015, according to the California Department of Forestry and Fire Protection.
The state now gives insurers more latitude to raise premiums in exchange for issuing more policies in high-risk areas. That includes regulations allowing insurers to consider climate change when setting their prices and allowing them pass on the costs of reinsurance to California consumers.
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US buys Argentine pesos, finalizes $20 billion currency swap
WASHINGTON — WASHINGTON (AP) — The U.S. directly purchased Argentine pesos on Thursday and finalized a $20 billion currency swap framework with Argentina’s central bank, Treasury Secretary Scott Bessent said in a social media post.
The intent is to provide assistance from the Latin American country’s economic turmoil.
“U.S. Treasury is prepared, immediately, to take whatever exceptional measures are warranted to provide stability to markets,” Bessent said, adding that the Treasury Department conducted four days of meetings with Argentinian Finance Minister Luis Caputo in Washington D.C. to come up with the deal.
Bessent has insisted that the Argentina credit swap is not a bailout. Last month, President Donald Trump stopped short of promising Argentina’s President Javier Milei a financial bailout from the Latin American country’s economic turmoil.
Still, U.S. farmers and Democratic lawmakers have criticized the deal as a bailout of a country that has benefited from sales of soybeans to China, to the detriment of U.S. farmers.
Argentina is one of the biggest Latin American economies and the biggest borrower from the International Monetary Fund — its total outstanding credit as of Aug. 31 is $41.8 billion.
The offer to financially help Argentina comes as Trump has frequently promoted his “America First” agenda. Critics contend that the planned intervention is a way to reward a personal friend of Trump’s who is facing a critical midterm election next month.
Milei celebrated Bessent’s announcement on social media, hailing his economy minister, Luis Caputo, as “far and away, the best Minister of Economy in all of Argentine history…!!!”
Caputo was in Washington last week for talks with Bessent about the swap line.
Argentina’s deregulation minister, Federico Sturzenegger, also congratulated Caputo and the rest of the economic team. “Let’s keep working so that our children want to stay and live in Argentina,” he wrote, adding a pitch to voters to support Milei in the crucial midterm elections later this month.
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Associated Press writer Isabel DeBre in Buenos Aires contributed reporting.
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Canada’s Banking Sector Needs Increased Competition, Bank of Canada Official Says
OTTAWA—The Bank of Canada’s No. 2 official endorsed a competition shakeup in the highly concentrated financial-services industry, saying the country’s banking sector is an oligopoly and changes could help lift Canada’s prolonged productivity slump.
Carolyn Rogers, the central bank’s senior deputy governor, on Thursday said Canadian authorities have done a stellar job in regulating banks by ensuring they have enough capital to survive shocks such as the 2008-09 financial crisis and the Covid-19 pandemic. “It would also be hard to argue, on any objective measure, that Canada’s banking system is anything other than an oligopoly,” Rogers told a blue-chip Toronto audience.
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Paul Vieira
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Fed minutes: Most officials supported further rate cuts as worries about jobs rose
WASHINGTON — WASHINGTON (AP) — Most members of the Federal Reserve’s interest-rate setting committee supported further reductions to its key interest rate this year, according to minutes from last month’s meeting released Wednesday.
A majority of Fed officials felt that the risk unemployment would rise had worsened since their previous meeting in July, while the risk of rising inflation “had either diminished or not increased,” the minutes said. As a result, the central bank decided at its Sept. 16-17 meeting to reduce its key rate by a quarter-point to about 4.1%, its first cut this year.
Rate cuts by the Fed can gradually lower borrowing costs for things like mortgages, auto loans, and business loans, encouraging more spending and hiring.
Still, the minutes underscored the deep division on the 19-person committee between those who feel that the Fed’s short-term rate is too high and weighing on the economy, and those who point to persistent inflation that remains above the central bank’s 2% target as evidence that the Fed needs to be cautious about reducing rates.
Only one official formally dissented from the quarter-point cut: Stephen Miran, who was appointed by President Donald Trump and was approved by the Senate just hours before the meeting began. He supported a larger, half-point cut instead.
But the minutes noted that “a few” policymakers said they could have supported keeping rates unchanged, or said that “there was merit” in such a step.
The differences help explain Chair Jerome Powell’s statements during the news conference that followed the meeting: “There are no risk-free paths now. It’s not incredibly obvious what to do.”
Miran said in remarks Tuesday that he thinks inflation will steadily decline back toward the Fed’s 2% target, despite Trump’s tariffs, and as a result he doesn’t think the Fed’s rate needs to be nearly as high as it is. Rental costs are steadily declining and will bring down inflation, he said, while tariff revenue will reduce the government’s budget deficit and reduce longer-term interest rates, which gives the Fed more room to cut.
Yet many other Fed officials remain concerned about stubbornly high inflation, the minutes showed. Jeffrey Schmid, president of the Federal Reserve’s Kansas City branch, said in a speech Monday that “inflation is too high” and argued that the Fed should keep rates high enough to cool demand and prevent inflation from worsening.
And Austan Goolsbee, president of the Fed’s Chicago branch, said in an interview Friday with The Associated Press that he supported a cautious approach toward more cuts, and wanted to see evidence that inflation would cool further.
“I am a little uneasy with front loading rate cuts, presuming that those upticks in inflation will just go away,” he said.
The minutes provide insight into how the Fed’s policymakers were thinking last month about inflation, interest rates, and hiring. Since then, however, the federal government shutdown has cut off the flow of economic data that the Fed relies on to inform its decisions. The September jobs report wasn’t issued as scheduled last Friday, and if the shutdown continues, it could also delay the release of the inflation report set for next Wednesday.
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Comerica Stock Soars. Fifth Third to Buy Peer for $10.9 Billion as Bank Mergers Heat Up.
Fifth Third Buys Comerica for $10.9B in Year’s Biggest Bank Deal. Which Firms Might Be Next.
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Fifth Third Bancorp to buy Comerica for $10.9 billion in tie-up of big regional banks
Fifth Third Bancorp is buying Comerica for $10.9 billion in an all-stock deal, tying up two big regional banks.
The buyout will create the 9th largest U.S. bank with approximately $288 billion in assets, the companies said Monday.
The combined company will have operations in the Southeast, Texas and California, and will greatly solidify Fifth Third’s position in the Midwest. It is anticipated that over half of Fifth Third’s branches will be located in the Southeast, Texas, Arizona and California by 2030.
“This combination marks a pivotal moment for Fifth Third as we accelerate our strategy to build density in high-growth markets and deepen our commercial capabilities,” Fifth Third Bank Chairman and CEO Tim Spence said in a statement. “Comerica’s strong middle market franchise and complementary footprint make this a natural fit.”
Comerica’s stockholders will receive 1.8663 Fifth Third shares for each share they own. This representing $82.88 per share as of Fifth Third’s closing stock price on Friday.
Fifth Third shareholders will own about 73% of the combined company, while Comerica shareholders will own approximately 27%.
Three members of Comerica’s board will join Fifth Third’s board once the deal is complete.
The deal is expected to close at the end of the first quarter of 2026. It still needs the approval of both companies’ shareholders.
Shares of Comerica rose 11% before the opening bell Monday, while shares of Fifth Third sank 2%.
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How Steve Schwarzman Landed in Hot Water With His British Neighbors
TANGLEY, England—Steve Schwarzman once said his business philosophy was to seek war. The Wall Street billionaire may have met his match in the chalk hills of southern England.
One morning in early September, refrigeration consultant Lawrence Leask woke before 3 a.m., got into his car in pajamas and slippers and waited. It wasn’t long before he spotted his quarry, a water tanker passing through this rural parish. Leask tailed it to the town of Andover to learn where it would eventually unload thousands of gallons of water.
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