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Tag: Government policy

  • How will the IRS spend $80 billion in new funding? The Treasury Department is dropping hints.

    How will the IRS spend $80 billion in new funding? The Treasury Department is dropping hints.

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    Details about the Internal Revenue Service’s spending plans for a major cash influx are about to come to light, Treasury Secretary Janet Yellen said Tuesday.

    More than half a year after Congress authorized $80 billion in new funding for the tax-collection agency over the next decade, Yellen said details are coming this week on how the IRS will put the money to use in improving customer service, upgrading internal technology and making sure the richest taxpayers are paying their fair share.

    The $80 billion infusion is part of the Inflation Reduction Act, which passed Congress last summer without Republican support and plenty of GOP skepticism that the additional funding would be used appropriately, depicting it instead as engendering a sort of tax-collection police state in which middle-income individuals could find themselves targeted by armed IRS agents.

    From the archives (August 2022): Fact check: No, the IRS is not hiring an 87,000-strong military force with funds from the Inflation Reduction Act

    Yellen spoke Tuesday at the swearing-in ceremony for Danny Werfel, the newly confirmed IRS commissioner. Werfel “will lead the IRS through an important transition” after a period during which the agency “suffered from chronic underinvestment,” Yellen said in prepared remarks.

    During Werfel’s confirmation hearing in February, senators from both parties pressed him about how he would oversee the new money’s use.

    The U. S. House of Representatives is under Republican control, and observers expect lawmakers to give hard looks at the funding of the IRS. The House, in fact, voted in January to repeal the $80 billion. The measure isn’t expected to go further, with Democrats retaining control in the Senate and President Joe Biden, a Democrat, in the White House.

    Some of the money will go toward modernizing the taxation experience. Within the first five years of the decade-long plan, taxpayers should be able to file all of their tax documents and respond to all IRS notices online, according to a Treasury official.

    There are a handful of IRS notices for which taxpayers currently have that capacity. By the end of fiscal 2024, another 72 notices, which include Spanish-language notices, will add online capacity, the official said.

    By the end of fiscal 2025, taxpayers, along with accountants and other professional tax preparers, should be able to peruse their accounts and view and download information, including payments and notices, the official said.

    The IRS has already been hiring more staff, including 5,000 customer-service representatives to improve phone service, which has fallen off during the pandemic.

    Tax Day is weeks away, on April 18. As of late March, income-tax refunds are 11% lower than they were last year. They are averaging $2,903 versus $3,263 at the same point last year. It’s an outcome many tax-code watchers predicted after pandemic-era boosts to certain tax credits went away.

    The same day Yellen spoke, a new watchdog report said the IRS still has plenty of work to do processing the backlog of tax returns that built up during the pandemic.

    During last year’s tax-filing season, the IRS hired 9,000 employees and shifted more than 2,400 workers from other areas to cut the backlog, according to Treasury’s inspector general for tax administration.

    By last July the IRS had transcribed all tax-year 2020 paper returns but still had 9.5 million unprocessed 2021 paper returns. “The inability to timely process tax returns and address tax account work continues to have a significant impact on the associated taxpayers,” the report said.

    At this point, the IRS says it has processed all paper and electronically filed returns that it received before this January. The agency said it still has 2.17 million unprocessed tax returns from the 2022 tax year and 2021 returns that needed fixes and corrections.

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  • Trump indictment: Full text of the much-anticipated document

    Trump indictment: Full text of the much-anticipated document

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    Trump pleads not guilty to 34 felony counts — read the indictment

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  • The surprise OPEC+ oil production cuts will increase gas prices — here’s how much

    The surprise OPEC+ oil production cuts will increase gas prices — here’s how much

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    Surprise crude oil production cuts from Saudi Arabia and other oil-rich countries shouldn’t produce worries of skyrocketing gas costs for U.S. drivers still smarting from last year’s pump price shocks, according to fuel industry experts.

    At a time when gas prices are already increasing because of rising seasonal demand, the slashed crude oil output that Saudi Arabia announced Sunday will translate into higher prices, they say. But compared to last year — when energy markets were absorbing the initial impact of Russia’s invasion of Ukraine — the altitude on those gas price increases may not feel so steep.

    On Monday, the national average for a gallon of gas was $3.50, according to AAA. That’s around 10 cents more than a month ago, but almost 70 cents less than the $4.19 average cost one year ago.

    The effects of decreased oil production could translate into initial price increases of up to 15 cents per gallon, according to two different energy sector watchers.

    There’s Patrick De Haan, head of petroleum analysis at GasBuddy.

    At OPIS, an outlet focused on energy sector news and analytics, Chief Oil Analyst Denton Cinquegrana said he was previously expecting summer gas prices to average around $3.60.

    “This move probably boosts that by about 10 – 15 cents to about $3.70-3.75/gal.” Cinquegrana told MarketWatch.

    OPIS is owned by Dow Jones, which also owns MarketWatch.

    It’s possible for gas price averages to hit around $3.60 in the next week or so, he said. The other 10 to 15 cents might filter into retail pump prices later this month or in early May, according to Cinquegrana.

    The surprise move came from Saudi Arabia and other members of OPEC+, the Organization of the Petroleum Exporting Countries and allies, including Russia. In Saudi Arabia, officials were reportedly “irritated” by recent remarks from U.S. Energy Secretary Jennifer Granholm.

    After the Biden administration tapped the country’s strategic petroleum reserve to combat last year’s high gas costs, Granholm said it will difficult to restock the reserve.

    By May, more than 1 million barrels of oil a day will be slashed from output in the global energy markets. That’s in addition to OPEC+ production cuts announced last fall.

    In cost breakdowns for a gallon of gas, the price of crude oil is responsible for more than half the price tag, according to the U.S. Energy Information Administration.

    In Monday morning trading, the price of West Texas Intermediate crude for May delivery jumped 6% to just over $80 on the New York Mercantile Exchange.

    For context, when gas prices were breaking records last year, the costs of West Texas Intermediate crude were in the triple digits. While retail prices surged in early March 2022, West Texas Intermediate crude briefly traded for more than $130 during the trading day on March 7, 2022.

    The national average for a gallon of gas hit a record $5.01 in mid-June, according to AAA. In the current context, Cinquegrana doesn’t see a return to $5 gas averages, he said. Gas prices vary across the nation. California drivers are paying $4.80 on average while Mississippi drivers are paying $3.02 per gallon. 

    Even if price increases are not as sharp as last year, hot inflation is retreating slowly. So any extra costs are unwelcome to millions of American drivers who are living their lives and more frequently commuting to the office.

    Like last year, oil prices are poised to increase, said AAA spokesman Devin Gladden.

    But the economy’s background noise right now could dampen the impact as downturn worries keep sticking around, he added. Furthermore, there can be discrepancies in the announced production reductions and the amounts that are actually reduced, Gladden said.

    “If recessionary concerns persist in the market, oil price increases may be limited due to the market believing lower oil demand will lead to lower prices this year,” he said.

    On Monday, energy sector stocks and related exchange traded funds were climbing after the production cut news. In early afternoon trading, the Dow Jones Industrial Average
    DJIA,
    +0.81%

    was up more than 200 points, or 0.7%, while the S&P 500
    SPX,
    -0.03%

    is little changed and the Nasdaq Composite
    COMP,
    -0.98%

    dropped 100 points, or 0.8%.

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  • Charles wins hearts in Germany as soft power pays off

    Charles wins hearts in Germany as soft power pays off

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    BERLIN — BERLIN (AP) — King Charles III won plenty of hearts during his three-day visit to Germany, his first foreign trip since ascending to the throne following the death of his mother, Elizabeth II, last year.

    Charles’ tour saw a number of firsts that show the importance both countries placed on it — at a time when London and Berlin are trying to rebuild relations frayed by Britain’s departure from the European Union.

    German President Frank-Walter Steinmeier took the unprecedented step of welcoming Charles and Camilla, the queen consort, at the Brandenburg Gate with military honors Wednesday. A day later, Charles became the first monarch to address the Bundestag, the German parliament, stressing the long-standing close ties between both countries and the importance of future cooperation.

    Observers in both Germany and the U.K. said the trip sent a strong signal about the enduring strength of British-German relations.

    Jens Zimmermann, a lawmaker from Germany’s center-left Social Democrats, said Charles sent a “clear message” by speaking to parliament partially in German.

    “The speech in the Bundestag was very well-received,” Zimmermann told The Associated Press. “It was much more political than you might have expected. It was very connecting — I think that was very good.”

    In the speech, Charles emphasized that London and Berlin have provided considerable aid to Ukraine in its efforts to fend off Russia’s invasion — praise that will have been gratifying to a German government more used to claims it’s not doing enough to help Kyiv. Zimmermann said Charles thanking Germans for taking in so many Ukrainians seeking shelter from the war might also be seen as a roundabout criticism of the British government’s recent anti-refugee policies.

    Although King Charles cannot pass legislation or directly impact British policy, the “soft power” of his visit should not be underestimated, Zimmermann said.

    Others said that after the pandemic’s long-distance diplomacy, in-person visits like Charles’ can help deepen and renew relationships between leaders.

    “I think as coronavirus has faded, we’ve been reminded of the value of face-to-face meetings,” said Bronwen Maddox, chief executive of the Chatham House think tank.

    “And it just does add something to relationships, particularly between heads of state, who are very insulated,” she said. “I think it has been received very well.”

    Charles originally planned to visit France first, but anti-government protests there led both governments to postpone that part of his trip. The new itinerary put the focus on Germany, where Charles has family roots and the royals have long been the subject of keen interest.

    That fascination was on display among the German public at Charles’ appearances. Despite the wet and cold spring weather, well-wishers waited patiently to greet Charles and Camilla at their stops in Berlin and Hamburg, a city that sees itself as having a particularly close connection to Britain due to its long seafaring and trading ties.

    Charles and Camilla also laid a wreath at the remains of St. Nikolai church to commemorate the more than 30,000 people, mostly German civilians, who were killed in Operation Gomorrah, the Allied bombing of Hamburg in July 1943. A boat trip and a farewell reception involving musical performances, including by a Beatles cover band and a sea shanty group, rounded off the king’s visit on Friday.

    Michael Kruse, a lawmaker with the pro-business Free Democrats who like Zimmermann is a member of the German-British parliamentary group, said the two countries continue to have many common economic interests despite Britain’s divorce from the EU.

    “The channel has widened due to Brexit,” he said. “That’s why the visit by Britain’s head of state was all the more important.”

    Kruse voiced a hope shared by many in Germany, that London will find its way back into the 27-nation bloc.

    “My hope is still that the British will someday recognize Brexit was a mistake and return to the EU,” he said. “The door should always be open for this. Until then, we say: see you again, King Charles III.”

    ___

    Danica Kirka in London contributed.

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  • Dominion Voting Systems’ defamation case against Fox News should continue to trial, says Delaware judge

    Dominion Voting Systems’ defamation case against Fox News should continue to trial, says Delaware judge

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    DOVER, Del. (AP) — A voting-machine company’s defamation case against Fox News over its airing of false allegations about the 2020 presidential election will go to trial after a Delaware judge on Friday ruled that a jury must decide whether the network aired the claims with actual malice, the standard for proving libel against public figures.

    Superior Court Judge Eric Davis ruled that neither Fox nor Dominion Voting Systems had presented a convincing argument to prevail on whether Fox acted with malice without the case going to trial. But he also ruled that the statements Dominion had challenged constitute defamation “per se” under New York law. That means Dominion did not have to prove damages to establish liability by Fox.

    ‘The evidence developed in this civil proceeding demonstrates that [it] is CRYSTAL clear that none of the statements relating to Dominion about the 2020 election are true.’


    — Superior Court Judge Eric Davis

    “The evidence developed in this civil proceeding demonstrates that [it] is CRYSTAL clear that none of the statements relating to Dominion about the 2020 election are true,” Davis wrote in his summary judgment ruling.

    The decision paves the way for a trial start in mid-April.

    Dominion is suing the network for $1.6 billion, claiming Fox defamed it by repeatedly airing false allegations by then-President Donald Trump and his allies in the weeks after the 2020 election claiming the company’s machines and its accompanying software had switched votes to Democrat Joe Biden. The network aired the claims even though internal communications show that many of its executives and hosts didn’t believe them.

    The company sued Fox News and its parent, Fox Corp.
    FOX,
    +1.36%

    FOXA,
    +1.13%
    ,
    which shares ownership with News Corp
    NWS,
    +1.99%

    NWSA,
    +1.77%
    ,
    parent company of MarketWatch publisher Dow Jones.

    Don’t miss: Top congressional Democrats Schumer and Jeffries seek on-air acknowledgements that Fox News personalities knew Trump lost and election wasn’t stolen

    See: 2020 election ‘was not stolen,’ Fox Chairman Rupert Murdoch said under oath, according to evidence in Dominion case

    Also: Pro-Trump on air, Tucker Carlson privately told his Fox News producer that he hates the former president with a passion

    Fox has said it was simply covering newsworthy allegations made by a sitting president claiming his re-election had been stolen from him. In his ruling, Davis said Fox could not escape potential liability by claiming privileges for neutral reporting or opinion.

    “FNN’s failure to reveal extensive contradicting evidence from the public sphere and Dominion itself indicates that its reporting was not disinterested.” the judge wrote.

    In a statement issued after the ruling, Dominion said it was gratified that the court had rejected Fox’s arguments and found “as a matter of law that their statements about Dominion are false. We look forward to going to trial.”

    Fox emphasized that the case is about the media’s First Amendment protections in covering the news. “Fox will continue to fiercely advocate for the rights of free speech and a free press as we move into the next phase of these proceedings,” the network said in a statement.

    See: ‘A complete nut’: Fox News hosts didn’t believe 2020 election fraud claims

    Also: Tucker Carlson, Sean Hannity among potential witnesses at Fox News trial

    The coverage fed an ecosystem of misinformation surrounding Trump’s loss in 2020 that has persisted ever since.

    MarketWatch contributed.

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  • Trump to surrender Tuesday morning before court appearance: report

    Trump to surrender Tuesday morning before court appearance: report

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    Former President Donald Trump plans to fly to New York’s LaGuardia Airport Monday night, then spend the night at Trump Tower and surrender Tuesday morning before a court appearance at 2:15 p.m. Eastern time, according to an NBC 4 NY report citing unnamed sources. Trump is expected to face an arraignment on Tuesday after a Manhattan grand jury voted Thursday to indict him.

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  • U.S. stocks end Friday higher, Nasdaq posts best quarter since 2020

    U.S. stocks end Friday higher, Nasdaq posts best quarter since 2020

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    U.S. stocks rallied on Friday to end a rocky month higher, while the Nasdaq Composite also posted its best quarterly gain since 2020. The Dow Jones Industrial Average
    DJIA,
    +1.26%

    jumped about 414 points, or 1.3%, ending near 33,273 on Friday and up 1.9% for the month, according to preliminary FactSet figures. The S&P 500 index
    SPX,
    +1.44%

    and Nasdaq Composite Index
    COMP,
    +1.74%

    posted higher daily gains of 1.4% and 1.7%, respectively, which elevated their monthly gains to 3.5% and 6.7%. Investors in stocks largely looked past turbulence earlier in March after the Federal Reserve acted to calm markets following the sudden collapse of Silicon Valley Bank and Signature Banks. The Fed opened a new facility for banks to tap for liquidity with the aim of preventing forced asset sales, if other banks experience sharp deposit outflows. Friday also marked the end of the quarter, with the Dow and S&P 500 both posting back-to-back quarterly gains. The Nasdaq booked a 16.8% quarterly gain, the best quarter since the 2020, according to Dow Jones Market Data.

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  • East Palestine derailment: Norfolk Southern sued by Justice Department and EPA

    East Palestine derailment: Norfolk Southern sued by Justice Department and EPA

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    The Justice Department and the Environmental Protection Agency have filed a complaint against Norfolk Southern Corp. for unlawful discharge of pollutants and hazardous substances in the Feb. 3 train derailment in East Palestine, Ohio.

    The complaint seeks penalties and injunctive relief for the unlawful discharge of pollutants, oil and hazardous substances under the Clean Water Act, according to statements released by the Justice Department and the EPA. The Justice Department and EPA are also seeking a declaratory judgment on liability for past and future costs under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).

    Norfolk Southern’s
    NSC,
    +1.51%

    stock has fallen 16.8% since the derailment near the Ohio-Pennsylvania border. The stock is up 0.3% Friday.

    Related: Norfolk Southern will do ‘everything it takes’ for East Palestine, CEO tells senators

    “When a Norfolk Southern train derailed last month in East Palestine, Ohio, it released toxins into the air, soil, and water, endangering the health and safety of people in surrounding communities,” Attorney General Merrick Garland said in a statement. “With this complaint, the Justice Department and the EPA are acting to pursue justice for the residents of East Palestine and ensure that Norfolk Southern carries the financial burden for the harm it has caused and continues to inflict on the community.” 

    In a separate statement, EPA Administrator Michael Regan said: “No community should have to go through what East Palestine residents have faced. With today’s action, we are once more delivering on our commitment to ensure Norfolk Southern cleans up the mess they made and pays for the damage they have inflicted as we work to ensure this community can feel safe at home again.”

    Norfolk Southern has created a website, nsmakingitright.com, to track its progress in cleaning up the site.

    “Our job right now is to make progress every day cleaning up the site, assisting residents whose lives were impacted by the derailment, and investing in the future of East Palestine and the surrounding areas,” a spokesperson for Norfolk Southern told MarketWatch. “We are working with urgency, at the direction of the U.S. EPA, and making daily progress. That remains our focus and we’ll keep working until we make it right.”

    Related: Norfolk Southern sued by Ohio over ‘entirely avoidable’ East Palestine derailment

    More than 9.4 million gallons of affected water have been recovered and transported off-site for final disposal, according to Norfolk Southern, along with 12,904 tons of waste soil that has been removed for proper disposal.

    The company has also flushed 5,200 feet of affected waterways and sampled more than 275 private drinking water wells, according to nsmakingitright.com.

    The suit from the Justice Department and the EPA comes just two weeks after Ohio Attorney General Dave Yost filed a 58-count civil lawsuit against Norfolk Southern over the derailment in East Palestine.

    Now read: Here are the chemicals spilled near Philly as U.S. drinking-water safety is top of mind

    No one was killed or injured in the Ohio derailment, but the incident has been described as a “PR nightmare” for Norfolk Southern and the rail industry. The derailed cars included 11 tank cars carrying hazardous materials that subsequently ignited, damaging an additional 12 railcars, according to the National Transportation Safety Board, and setting off concerns about the impact on air and water quality and dangers to health in the region.

    Earlier this month, Norfolk Southern CEO Alan Shaw was grilled by senators when he provided testimony on the disaster before the Senate Committee on Environment and Public Works.

    While safety was the primary focus of the hearing, Shaw was also pressed on Norfolk Southern’s stock buybacks and the company’s use of precision scheduled railroading, which focuses on the movement of individual train cars rather than whole trains.

    Related: Train derailment in Minnesota thrusts rail safety back into the spotlight

    In his testimony, Shaw vowed to do “everything it takes” for the community affected by the derailment.

    Rail safety was thrust into the spotlight again this week with the derailment of a BNSF train carrying ethanol and corn syrup in Minnesota early Thursday. 

    Everstream Analytics, a supply-chain analytics company, has been researching train derailments involving Class I rail carriers between 2018 and 2023. A Class I carrier is defined as any carrier earning annual revenue greater than $943.9 million, according to the U.S. government’s Surface Transportation Board. Data show that derailments across rail companies increased considerably in the U.S. between 2021 and 2022, according to Everstream Analytics.

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  • How Trump’s presidency became inextricably linked with catch-and-kill — setting the stage for his indictment

    How Trump’s presidency became inextricably linked with catch-and-kill — setting the stage for his indictment

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    There is perhaps no part of the sordid tale of Donald Trump, the National Enquirer and the hush-money payments to an adult-film actress and a Playboy bunny who claimed to have had sex with him, that has lodged itself more firmly in the public consciousness than the phrase catch-and-kill. 

    The term arguably first became part of the national lexicon on Friday, Nov. 4, 2016, when the Wall Street Journal broke news about the dubious journalistic practice involving the man who would be elected president just four days later.

    Fast forward 6½ years and that revelation has snowballed into the first-ever criminal indictment of a former president with a Manhattan grand jury voting to bring charges against Trump for his role in the payoffs.

    Breaking news: Trump to surrender Tuesday before New York court appearance: report

    Back in 2016, I was a media reporter at the Journal and on that late Friday afternoon found myself at the heart of what would become a major political scandal, when then-colleague Michael Rothfeld came up to me asking for some help.

    Mike, an investigative reporter, explained that he and legal-affairs reporter Joe Palazzolo had uncovered a wild story about how the National Enquirer paid a Playboy bunny $150,000 for her kiss-and-tell story of having an affair with Donald Trump in 2006. But, once she signed the contract and was given her check, the supermarket tabloid had never run the story.

    The deal had given exclusive rights to the story to the Enquirer, so the move to bury it effectively locked the story up for good.

    At the time, I focused primarily on newspaper and digital media companies. In a previous life, I had worked in tabloids, so I was familiar with that world.

    I made some calls and struck gold, discovering that this kind of payoff was a time-honored method by which supermarket tabloids like the Enquirer protected friends and made bad news about powerful people go away. Usually the favor was returned later — quid pro quo — as a juicier story down the road or via some other form of payback.

    It emerged that this kind of thing was called a catch-and-kill.

    It was an explosive phrase that ran in the third paragraph of that first Journal story and subsequently appeared prominently in stories written about the subject by many media organizations for years to come. 

    That first catch-and-kill story would lead to numerous other revelations by the Journal’s crack team led by Joe and Mike about additional payoffs, most importantly one to adult-film star Stormy Daniels.

    MarketWatch and the Wall Street Journal are both published by Dow Jones, which is owned by News Corp.

    The payment for her story had been made not by the Enquirer but directly, by Trump’s then–personal lawyer, Michael Cohen, who was later reimbursed by the Trump organization, purportedly booked by the Trump Organization as legal fees.

    That chain of payments resulted in Cohen’s pleading guilty to campaign-finance violations and going to prison, as well as, ultimately, to the charges brought by the Manhattan district attorney’s office on Thursday.

    In 2019, the Wall Street Journal was awarded the Pulitzer Prize for national reporting for its work uncovering the catch-and-kill payments. 

    Given the tawdriness of the tale — replete with an army of characters with names that sounded made up, like Trump friend and AMI chief executive David Pecker — the phrase catch-and-kill has taken on a larger-than-life dimension that has come to define the Trump era as much as “Make America Great Again.”

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  • Wall Street bonuses fall by the most since 2008 as policy makers mull economic impact

    Wall Street bonuses fall by the most since 2008 as policy makers mull economic impact

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    Wall Street bonuses fell 26% in 2022, the largest drop since the collapse of Lehman Brothers in 2008, as New York state and city officials dial back their expectations for the economic impact of the securities industry.

    While many people bemoan the salaries commanded by the Big Apple’s white-shoe bankers, the financial sector provides an economic boost to city and state budgets, helping to find public services that touch the lives of residents.

    Now, with the banking sector absorbing the impact of the collapse of Silicon Valley Bank and Signature Bank in recent weeks and of a lack of investment bank deal-making, 2023 isn’t looking particularly strong. The current malaise may signal what’s in store for bonuses and employment in the coming year.

    Rahul Jain, state deputy comptroller, said state and city official are baking in conservative projections for a decline in Wall Street profits and bonuses in 2023 partly because much remains unknown such as when the Fed will pause its interest rate hikes or possibly cut them.

    “What we can’t tell is what the Fed will do with interest rates,” Jain told MarketWatch. “It doesn’t seem like we’ll return to the levels of 2020 and 2021, but there’s hope that 2023 will level off near 2022.”

    While Wall Street and the banking sector is challenged, the overall economy remains relatively healthy, as other sectors such as travel make up for weakness in the securities industry in the New York area.

    “The broad economy still matters and it’s still resilient,” he said. “People still want to do things.”

    Like the FDIC and other regulators, the comptroller’s office is keeping an eye on the commercial real estate market, which will hinge on how much credit is available for loan refinancings.

    “Any kind of credit crunch would make the situation worse,” Jain said.

    The average Wall Street banker’s bonus dropped by $63,700 in 2022, to $176,700, the New York State Comptroller’s Office reported Thursday. That figure does not include regular salary.


    Terrence Horan/MarketWatch

    Even with the cut, the bonus alone eclipses average U.S. wages. Full-time employees in management, professional and related occupations have the highest median weekly earnings reported by the Bureau of Labor Statistics, and the median income for this group across the U.S. was $1,729 a week, or $89,908 a year, in the fourth quarter of 2022 for men, and $1,316 per week, or $68,432 per year, for women.

    Wall Street banker bonuses jumped by 28% in 2020 and grew by another 12% in 2021, only to fall 26% in 2022. That is the largest drop since the 43% fall in 2008, the year Lehman Brothers collapsed and triggered a global financial crisis.

    At the same time, employment in the securities industry climbed to 190,800 by the end of 2022, the highest level in at least 20 years and surpassing the previous 20-year high of 188,900 in 2007.

    Collectively, Wall Street firms generated $25.8 billion in profits in 2022, less than half the $58.4 billion produced in 2021 as the impact of inflation, the war in Ukraine and supply constraints bit into deal-making.

    The securities industry accounted for about $22.9 billion in state tax revenue, or 22% of the state’s tax collections in fiscal 2021-’22, and $5.4 billion in city tax revenue, or 8% of total tax collections over the same period.

    New York State Comptroller Thomas P. DiNapoli estimated a drop of $457 million in 2022 tax income for the state and of $208 million for New York City, when measured against the lucrative year of 2021.

    With recession in the headlines and markets selling off in 2022, however, policy makers have already adjusted their expectations for tax income.

    New York Gov. Kathy Hochul’s proposed budget assumes that bonuses in the broader finance and insurance sector will drop by 25.2% in 2022-’23, while the city’s 2023 financial plan assumes a decrease of 35.6% for the securities industry.

    “While lower bonuses affect income tax revenues for the state and city, our economic recovery does not depend solely on Wall Street,” DiNapoli said in a statement. “Employment in leisure and hospitality, retail, restaurants and construction must continue to improve for the city and state to fully recover.”

    The fate of Wall Street’s bonuses in 2023 remains tied up in what markets and interest rates do for the balance of the year. Based on the storm clouds over the banking sector now, it’s possible bonuses could fall again.

    In one positive sign, the equities market has managed to post gains so far in 2023 after bruising losses in 2022. At last check, the S&P 500
    SPX,
    +0.57%

    is up 5.6% in 2023, while the Nasdaq
    COMP,
    +0.73%

    has risen 14.9%. The Financial Select Sector SPDR exchange-traded fund
    XLF,
    -0.22%

    is down 6.6% so far in 2023.

    After Wall Street bonuses fell 43% in 2008, they rebounded by 39% in 2009. Such a rapid recovery may not be in the cards for the coming year, however.

    Member firms at the New York Stock Exchange generated profits of $13.5 billion in the first half of 2022, down by more than half from year-ago levels, according to an October report on the securities industry in New York by the comptroller’s office.

    Revenue on trading, underwriting and securities offerings dropped about 48% over the same time period, while global debt offerings dropped by 17%.

    At the same time, interest-rate expenses tripled as the U.S. Federal Reserve boosted interest rates.

    “Despite this uncertainty, the city’s latest forecast predicts annual profits to average $21 billion over the next five years, comparable to the 10-year pre-pandemic average of $20.3 billion,” the study said.

    The bonus pool of $33.7 billion in 2022 fell 21% from 2021’s record of $42.7 billion, the largest drop since the Great Recession.

    Also read: Jobs added at Morgan Stanley, Bank of America, Citi and JPMorgan but cut at Wells Fargo and Goldman

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  • Credit Suisse abetted possible criminal tax evasion, Senate committee alleges

    Credit Suisse abetted possible criminal tax evasion, Senate committee alleges

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    A new Senate Finance Committee report from the Democratic staff alleges that Credit Suisse CS violated key terms of a plea agreement with the Justice Department. The report alleges Credit Suisse transferred nearly $100 million of funds from a family of dual U.S.-Latin American citizens to other banks in Switzerland without notifying the DOJ, enabling what “appears to be potentially criminal tax evasion” for almost a decade, the report says. Several additional Swiss banks may be currently holding large secret offshore accounts for U.S. persons, the report says. Credit Suisse has agreed to be purchased by UBS UBS with the…

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  • China threatens retaliation if Tsai and McCarthy meet

    China threatens retaliation if Tsai and McCarthy meet

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    BEIJING — China has threatened “resolute countermeasures” over a planned meeting between Taiwanese President Tsai Ing-wen and Speaker of the United States House Speaker Kevin McCarthy during an upcoming visit in Los Angeles by the head of the self-governing island democracy.

    Diplomatic pressure against Taiwan has ramped up recently, with Beijing poaching Taipei’s dwindling number of diplomatic allies while also sending military fighter jets flying toward the island on a near daily basis. Earlier this month, Honduras established diplomatic relations with China, leaving Taiwan with only 13 countries that recognize it as a sovereign state.

    Tsai framed the trip as a chance to show Taiwan’s commitment to democratic values on the world stage, as she left Taiwan Wednesday afternoon to begin her 10-day tour of the Americas.

    “I want to tell the whole world democratic Taiwan will resolutely safeguard the values of freedom and democracy, and will continue to be a force for good in the world, continuing a cycle of goodness, strengthening the resilience of democracy in the world,” she told reporters before she boarded the plane. “External pressure will not obstruct our resolution to engage with the world.”

    Tsai is scheduled to transit through New York on March 30 before heading to Guatemala and Belize. On April 5, she’s expected to stop in Los Angeles on her way back to Taiwan, at which time the meeting with McCarthy is tentatively scheduled.

    The U.S. stops are the most closely watched of her trip.

    Spokesperson for the Cabinet’s Taiwan Affairs Office Zhu Fenglian at a news conference Wednesday denounced Tsai’s stopover on her way to diplomatic allies in Central America and demanded that no U.S. officials meet with her.

    “We firmly oppose this and will take resolute countermeasures,” Zhu said. The U.S. should “refrain from arranging Tsai Ing-wen’s transit visits and even contact with American officials, and take concrete actions to fulfill its solemn commitment not to support Taiwan independence,” she said.

    Transit visits through the United States during broader international travel by the Taiwanese president have been routine over the years, senior U.S. officials in Washington and Beijing have underscored to their Chinese counterparts.

    In such unofficial visits in recent years, Tsai has met with members of Congress and the Taiwanese diaspora and has been welcomed by the chairperson of the American Institute in Taiwan, the U.S. government-run nonprofit that carries out unofficial relations with Taiwan.

    Tsai transited through the United States six times between 2016 and 2019 before slowing international travel with the coronavirus pandemic. In reaction to those visits, China lashed out rhetorically against the U.S. and Taiwan.

    However, the planned meeting with McCarthy has triggered fears of a heavy-handed Chinese reaction amid heightened frictions between Beijing and Washington over U.S. support for Taiwan, trade and human rights issues.

    Following a visit by then-House Speaker Nancy Pelosi to Taiwan in 2022, Beijing launched missiles over the area, deployed warships across the median line of the Taiwan Strait and carried out military exercises in a simulated blockade of the island. Beijing also suspended climate talks with the U.S. and restricted military-to-military communication with the Pentagon.

    McCarthy, R-Calif., has said he would meet with Tsai when she is in the U.S. and has not ruled out the possibility of traveling to Taiwan in a show of support.

    Beijing sees official American contact with Taiwan as encouragement to make the island’s decades-old de facto independence permanent, a step U.S. leaders say they don’t support. Pelosi, D-Calif., was the highest-ranking elected American official to visit the island since then-Speaker Newt Gingrich in 1997. Under the “One China” policy, the U.S. acknowledges Beijing’s view that it has sovereignty over Taiwan, but considers Taiwan’s status as unsettled. Taipei is an important partner for Washington in the Indo-Pacific.

    U.S. officials are increasingly worried about China attempting to make good on its long-stated goal of bringing Taiwan under its control by force if necessary. The sides split amid civil war in 1949 and Beijing sees U.S. politicians conspiring with Tsai’s pro-independence Democratic Progressive Party to make the separation permanent and stymy China’s rise as a global power.

    The 1979 Taiwan Relations Act, which has governed U.S. relations with the island, does not require Washington to step in militarily if China invades but makes it American policy to ensure Taiwan has the resources to defend itself and to prevent any unilateral change of status by Beijing.

    Tensions spiked earlier this year when President Joe Biden ordered a Chinese spy balloon shot down after it traversed the continental United States. The Biden administration has also said U.S. intelligence findings show that China is weighing sending arms to Russia for its ongoing war in Ukraine, but has no evidence Beijing has done so yet.

    China, however, has provided Russia with an economic lifeline and political support, and President Vladimir Putin and Chinese leader Xi Jinping met in Moscow earlier this month. That was the first face-to-face meeting between the allies since before Russia launched its invasion of Ukraine more than a year ago.

    The Biden administration postponed a planned visit to Beijing by Secretary of State Antony Blinken following the balloon controversy but has signaled it would like to get such a visit back on track.

    ___

    AP reporter Huizhong Wu in Taipei, Taiwan, contributed to this report.

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  • Biden: GOP policies would surrender tech economy to China

    Biden: GOP policies would surrender tech economy to China

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    DURHAM, North Carolina — DURHAM, North Carolina (AP) — President Joe Biden said Tuesday that Republicans’ ideas for cutting the budget could undermine U.S. manufacturing and help China dominate the world economy.

    Speaking at a semiconductor maker in North Carolina to highlight his own policies, Biden is trying to shape public sentiment as he faces off with House Speaker Kevin McCarthy, R-Calif., about whether the federal government should raise its legal borrowing capacity.

    McCarthy sent a letter Tuesday saying that talks should start about possible spending cuts in return for the debt limit increase. Biden has said Republicans need to put forth their own budget plan before negotiations start. Without an agreement, the federal government could default on its financial obligations.

    The president tried to ratchet up pressure on Tuesday by saying that the GOP demands on the budget would only empower China, the country’s key geopolitical rival. Being tough on China has been a core part of the identity of former President Donald Trump, who is seeking to return to the White House in 2024, and his Make America Great Again movement. The Democratic president said their objections to his policies would instead strengthen China.

    “It would mean ceding the future of innovation and technology to China,” Biden told the crowd. “I’ve got news for you and for MAGA Republicans in Congress: not on my watch. We’re not going to let them undo all the progress we made.”

    Biden’s trip to Wolfspeed follows the Durham-based company announcing plans last September to build a $5 billion manufacturing facility in Chatham County that is expected to create 1,800 new jobs. Biden had won passage last July of a $280 billion legislative package known as the CHIPS Act, which was intended to boost the U.S. semiconductor industry and scientific research.

    It’s nothing new for the Biden administration to highlight the CHIPS Act, the $1.9 trillion COVID relief bill, the $1 trillion infrastructure legislation and a roughly $375 billion climate bill — major legislation that the Democratic administration steered into law before Democrats lost control of the House.

    But now, just weeks after Biden unveiled his own budget — it includes $2.6 trillion in new spending — his administration is looking for chances to lean into its battle with Republicans over spending priorities and who has better ideas to steward the U.S. economy in the years to come. Republicans have rejected Biden’s budget but have yet to unveil their own counteroffer to the Democrats’ blueprint, which is built around tax increases on the wealthy and a vision statement of sorts for Biden’s yet-to-be-declared campaign for reelection in 2024.

    His trip is part of a larger effort to draw attention to his policies, which have been overshadowed by high inflation.

    Besides Biden’s visit to Wolfspeed, Vice President Kamala Harris, first lady Jill Biden and other senior administration officials will fan out to 20 states over the next three weeks to highlight the impact of Biden’s economic agenda, according to the White House.

    Biden has said he intends to run for a second term but has yet to formally launch his reelection campaign.

    His effort to highlight legislative victories could also give him an opportunity to present voters with images of an administration focused on governing as Trump braces for a possible indictment.

    Trump is being investigated over payments during his 2016 campaign to two women who alleged affairs or sexual encounters with him. The ex-president denies being involved with either of the women — porn actor Stormy Daniels and model Karen McDougal.

    Trump narrowly won North Carolina in 2020. Among the other states that Biden and administration officials will be visiting in the weeks ahead are Georgia, Michigan, Pennsylvania, Nevada and Wisconsin — crucial battlegrounds that Biden won in 2020 and states expected to be competitive again in 2024.

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  • Alibaba’s Shakeup Is Unrivaled. What It Means for the Stock.

    Alibaba’s Shakeup Is Unrivaled. What It Means for the Stock.

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    Alibaba


    stock was on track for its best day in months after the Chinese technology giant announced that it would split itself into six units, opening the door for its subsidiary businesses to go public.

    Akin to Alibaba (ticker: BABA) shifting from conglomerate to holding company, the move is designed to unlock shareholder value and foster market competitiveness, said the group, which is one of China’s largest and most important companies. It’s a nod both to investors who have weathered years of losses for the stock—caused largely by regulatory pressures—as well as regulators who have hammered Alibaba and the rest of the Chinese tech sector over competition concerns since late 2020.

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  • California lawmakers OK potential fines for high gas prices

    California lawmakers OK potential fines for high gas prices

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    SACRAMENTO, Calif. — California lawmakers on Monday approved the nation’s first penalty for price gouging at the pump, voting to give regulators the power to punish oil companies for profiting from the type of gas price spikes that plagued the nation’s most populous state last summer.

    The Democrats in charge of the state Legislature worked quickly to pass the bill on Monday, just one week after it was introduced. It was an unusually fast process for a controversial issue, especially one opposed by the powerful oil industry that has spent millions of dollars to stop it.

    Democratic Gov. Gavin Newsom used his political muscle to pass the bill, which grew out of his call last October for a special legislative session to pass a new tax on oil company profits after the average price of gas in California hit a record high of $6.44 per gallon, according to AAA. Taking on the oil industry has been a major policy priority for Newsom, who is widely viewed as a future presidential candidate.

    “When you take on big oil, they usually roll you — that’s exactly what they’ve been doing to consumers for years and years and years,” Newsom told reporters after the vote. “The Legislature had the courage, conviction and the backbone to stand up to big oil.”

    He is expected to sign the bill into law Tuesday.

    Legislative leaders rejected his initial call for a new tax because they feared it could discourage supply and lead to higher prices.

    Instead, Newsom and lawmakers agreed to let the California Energy Commission decide whether to penalize oil companies for price gouging. But the crux of the bill isn’t a potential penalty. Instead, it’s the reams of new information oil companies would be required to disclose to state regulators about their pricing.

    The companies would report this information, most of it to be kept confidential, to a new state agency empowered to monitor and investigate the petroleum market and subpoena oil company executives. The commission will rely on the work of this agency, plus a panel of experts, to decide whether to impose a penalty on oil company profits and how much that penalty should be.

    “If we force folks to turn over this information, I actually don’t believe we’ll ever need a penalty because the fact that they have to tell us what’s going on will stop them from gouging our consumers,” said Assemblymember Rebecca Bauer-Kahan, a Democrat from Orinda.

    California’s gas prices are always higher than the rest of the country because of the state’s taxes and regulations. California has the second-highest gas tax in the country at 54 cents per gallon. And it requires a special blend of gasoline that is better for the environment but more expensive to produce.

    But state regulators say those taxes and fees aren’t enough to explain last summer, when the average cost of a gallon of gasoline in California was more than $2.60 higher than the national average.

    “There’s truly no other explanation for these historically high prices other than greed,” said Assemblymember Pilar Schiavo, a Democrat from Chatsworth. “The problem is we don’t have the information that we need to prove this, and we don’t have the ability to penalize the kind of historic price gouging we saw last year.”

    The oil industry recorded massive profits last year, following years of huge losses during the pandemic when more people stayed home and fewer people were on the road.

    Eloy Garcia, lobbyist for the Western States Petroleum Association, said California’s high gas prices are the result of decades of public policy decisions that have made the state an island in the global petroleum market and driven many oil refiners out of the state. He noted California does not have a pipeline to send oil into the state, meaning it has to ship what it can’t produce itself from the ocean, which takes longer and costs more.

    “We’re not like Texas. We’re not like Louisiana. We’re not like the Northeast,” Garcia said. “We do not have a fungible fuel supply. We have chosen to do that. We have set ourself up by 30 years of public policy.”

    Garcia said Monday’s vote “sends a clear signal not to invest in California.”

    Lauren Sanchez, senior climate advisor for Gov. Gavin Newsom, said the state has plenty of supply, noting California oil refineries exported 12% of their product to other states last year.

    “We’re also the third-largest gasoline market in the world for these companies,” she said.

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  • California lawmakers OK potential fines for high gas prices

    California lawmakers OK potential fines for high gas prices

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    SACRAMENTO, Calif. — California lawmakers on Monday approved the nation’s first penalty for price gouging at the pump, voting to give regulators the power to punish oil companies for profiting from the type of gas price spikes that plagued the nation’s most populous state last summer.

    The Democrats in charge of the state Legislature worked quickly to pass the bill on Monday, just one week after it was introduced. It was an unusually fast process for a controversial issue, especially one opposed by the powerful oil industry that has spent millions of dollars to stop it.

    Democratic Gov. Gavin Newsom used his political muscle to pass the bill, which grew out of his call last October for a special legislative session to pass a new tax on oil company profits after the average price of gas in California hit a record high of $6.44 per gallon, according to AAA. Taking on the oil industry has been a major policy priority for Newsom, who is widely viewed as a future presidential candidate.

    “When you take on big oil, they usually roll you — that’s exactly what they’ve been doing to consumers for years and years and years,” Newsom told reporters after the vote. “The Legislature had the courage, conviction and the backbone to stand up to big oil.”

    He is expected to sign the bill into law Tuesday.

    Legislative leaders rejected his initial call for a new tax because they feared it could discourage supply and lead to higher prices.

    Instead, Newsom and lawmakers agreed to let the California Energy Commission decide whether to penalize oil companies for price gouging. But the crux of the bill isn’t a potential penalty. Instead, it’s the reams of new information oil companies would be required to disclose to state regulators about their pricing.

    The companies would report this information, most of it to be kept confidential, to a new state agency empowered to monitor and investigate the petroleum market and subpoena oil company executives. The commission will rely on the work of this agency, plus a panel of experts, to decide whether to impose a penalty on oil company profits and how much that penalty should be.

    “If we force folks to turn over this information, I actually don’t believe we’ll ever need a penalty because the fact that they have to tell us what’s going on will stop them from gouging our consumers,” said Assemblymember Rebecca Bauer-Kahan, a Democrat from Orinda.

    California’s gas prices are always higher than the rest of the country because of the state’s taxes and regulations. California has the second-highest gas tax in the country at 54 cents per gallon. And it requires a special blend of gasoline that is better for the environment but more expensive to produce.

    But state regulators say those taxes and fees aren’t enough to explain last summer, when the average cost of a gallon of gasoline in California was more than $2.60 higher than the national average.

    “There’s truly no other explanation for these historically high prices other than greed,” said Assemblymember Pilar Schiavo, a Democrat from Chatsworth. “The problem is we don’t have the information that we need to prove this, and we don’t have the ability to penalize the kind of historic price gouging we saw last year.”

    The oil industry recorded massive profits last year, following years of huge losses during the pandemic when more people stayed home and fewer people were on the road.

    Eloy Garcia, lobbyist for the Western States Petroleum Association, said California’s high gas prices are the result of decades of public policy decisions that have made the state an island in the global petroleum market and driven many oil refiners out of the state. He noted California does not have a pipeline to send oil into the state, meaning it has to ship what it can’t produce itself from the ocean, which takes longer and costs more.

    “We’re not like Texas. We’re not like Louisiana. We’re not like the Northeast,” Garcia said. “We do not have a fungible fuel supply. We have chosen to do that. We have set ourself up by 30 years of public policy.”

    Garcia said Monday’s vote “sends a clear signal not to invest in California.”

    Lauren Sanchez, senior climate advisor for Gov. Gavin Newsom, said the state has plenty of supply, noting California oil refineries exported 12% of their product to other states last year.

    “We’re also the third-largest gasoline market in the world for these companies,” she said.

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  • Sen. Sherrod Brown: American consumers losing power over their savings and paychecks is an emergency, too.

    Sen. Sherrod Brown: American consumers losing power over their savings and paychecks is an emergency, too.

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    The collapse of Silicon Valley Bank sent shockwaves through the global economy and had the makings of another crisis. Depositors raced to withdraw money. Banks worried about the risk of contagion. I spent that weekend on the phone with small business owners in Ohio who didn’t know whether they’d be able to make payroll the next week. One woman was in tears, worried about whether she’d be able to pay her workers. 

    The Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve responded quickly, took control of the bank, and contained the fallout. Consumers’ and small businesses’ money was safe. That Ohio small business was able to get paychecks out.

    The regulators were able to protect Americans’ money from incompetent bank executives because when Congress created the Federal Reserve in 1913 and the FDIC in 1933, it ensured that their funding structures would remain independent from politicians in Congress and free from political whims. 

    But now, as the U.S. Supreme Court considers the case of Community Financial Services Association v. CFPB, these independent watchdogs’ ability to keep our financial system stable faces an existential threat.

    The Consumer Financial Protection Bureau is the only agency solely dedicated to protecting the paychecks and savings of ordinary Americans, not Wall Street executives or venture capitalists. Corporate interests have armies of lobbyists fighting for every tax break, every exemption, every opportunity to be let off the hook for scamming customers and preying on families.

    The CFPB’s funding structure is designed to be independent, just like the Fed and the FDIC.

    Ordinary Americans don’t have those lobbyists. They don’t have that kind of power. The CFPB is supposed to be their voice — to fight for them. The CFPB’s funding structure is designed to be independent, just like the Fed and the FDIC. Otherwise, its ability to do the job would be subject to political whims and special interests — interests that we know are far too often at odds with what’s best for consumers.

    Since its creation, the CFPB has returned $16 billion to more than 192 million consumers. It’s held Wall Street and big banks accountable for breaking the law and wronging their customers. It’s given working families more power to fight back when banks and shady lenders scam them out of their hard-earned money. 

    The CFPB can do this good work because it’s funded independently and protected from partisan attacks, just as the Fed and the FDIC are. So why, then, does Wall Street claim that only the CFPB’s funding structure is unconstitutional?

    Make no mistake — the only reason that Wall Street, its Republican allies in Congress, and overreaching courts have singled out the CFPB is because the agency doesn’t do their bidding. The CFPB doesn’t help Wall Street executives when they fail. It doesn’t extend them credit in favorable terms or offer them deposit insurance like the other regulators do. The CFPB’s funding structure isn’t unconstitutional — it just doesn’t work in Wall Street’s favor.

    If the Supreme Court rules against the CFPB, the $16 billion returned to consumers could be clawed back. What would happen then — will America’s banks really go back to the customers they’ve wronged with a collection tin?

    Invalidating the CFPB and its work would also put the U.S. economy — and especially the housing market — at risk.

    Invalidating the CFPB and its work would also put the U.S. economy — and especially the housing market — at risk. For more than a decade, the CFPB has set rules of the road for mortgages and credit cards and so much else, and given tools to help industry follow them. If these rules and the regulator that interprets them disappear, markets will come to a standstill. 

    By attacking the CFPB’s funding structure and putting consumers’ money at risk, Wall Street is putting the other financial regulators in danger, too. 

    The Fifth Circuit’s faulty ruling against the CFPB is astounding in its absurdity — the court ruled that the authorities that other financial agencies, like the Federal Reserve and the FDIC, have over the economy do not compare to the CFPB’s authorities. In other words, the court is claiming that the CFPB supposedly has more power in the economy than the Fed.

    That’s ridiculous. Look at the extraordinary steps taken to contain the failures of Silicon Valley Bank and Signature Bank — the idea that the CFPB could take action even close to as sweeping is laughable.

    But we know why the Fifth Circuit put that absurd assertion in there — they recognize the damage this case could do to these other vital agencies, and to our whole economy.

    Imagine what might happen if another series of banks failed and the FDIC did not have the funds to stop the crisis from spreading.

    The FDIC’s own Inspector General has stated that the Fifth Circuit ruling could be applied to their agency. If that happens, the FDIC and other regulators could be subject to congressional budget deliberations, which we all know are far too partisan and have resulted in shutdowns. Imagine what might happen if another series of banks failed and the FDIC did not have the funds to stop the crisis from spreading, or the Deposit Insurance Fund to protect depositors’ money. Imagine if politicians caused a shutdown, and we were without a Federal Reserve. 

    U.S. financial regulators are independently funded so that they can respond quickly when crises happen. It’s telling, though, that plenty of people in Washington don’t seem to consider the CFPB’s issues in the same category. Washington and Wall Street expect the government to spring into action when businesses’ money is put at risk. But when workers are scammed out of their paychecks, that’s not an emergency — it’s business as usual. 

    When Wall Street’s abusive practices put consumers in crisis, the CFPB must have the funding and strength it needs to carry out its mission — to protect consumers’ hard-earned money. 

    U.S. Sen. Sherrod Brown (D-OH) is chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs.

    More: Supreme Court to hear case that will decide the future of consumer financial protection

    Also read: Senate Banking Chair Sherrod Brown sees bipartisan support for changes to deposit insurance

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  • First Citizens enters agreement to buy Silicon Valley Bridge Bank, says FDIC

    First Citizens enters agreement to buy Silicon Valley Bridge Bank, says FDIC

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    First Citizens BancShares Inc. has entered a deal to assume all the deposits and loans of the failed Silicon Valley Bridge Bank from the Federal Deposit Insurance Corp., the regulator announced on Monday.

    As of Monday, the 17 former branches of Silicon Valley Bridge Bank, National Association, will open as First Citizens
    FCNCA,
    -1.11%
    ,
    FDIC said. The FDIC has been trying to auction off Silicon Valley Bank for about two weeks, since it became the largest U.S. bank to go bust since Washington Mutual in 2008.

    As of March 10, Silicon Valley Bridge Bank had approximately $167 billion in total assets and about $119 billion in total deposits, the FDIC said. The deal included the purchase of about $72 billion of Silicon Valley Bridge Bank’s assets at a discount of $16.5 billion.

    Roughly $90 billion in securities and other assets will remain in FDIC receivership for disposition, and the regulator has received equity appreciation rights in First Citizens common stock worth up to $500 million.

    The FDIC and the Raleigh, North Carolina-based bank entered into a loss–share transaction on the commercial loans it purchased of former Silicon Valley Bridge Bank.  The FDIC said it will share in the losses and potential recoveries on the loans covered by that agreement, which is “projected to maximize recoveries on the assets by keeping them in the private sector,” and minimize disruptions for loan customers.  First Citizens will also assume all loan–related qualified financial contracts.

    The FDIC estimates the cost of the failure of Silicon Valley Bank to its Deposit Insurance Fund at roughly $20 billion, the exact cost of which will be determined when receivership is terminated.

    The FDIC created Silicon Valley Bridge Bank, National Association, following the closure of Silicon Valley Bank by the California Department of Financial Protection and Innovation.

    Speculation that First Citizens, which has bought 20 failed banks since 2009, was pursuing an acquisition of Silicon Valley National Bank emerged last week. Bloomberg, which first reported First Citizens would enter a deal for the bank on Sunday, also reported that Valley National Bancorp
    VLY,
    +2.87%

     was trying to purchase the failed bank. It said First Citizens had previously made an offer for the bank immediately after it collapsed.

    First Citizens shares have sunk 23% year to date — mostly over the past month — and are down 15% over the past 12 months, compared to the S&P 500’s
    SPX,
    +0.56%

    3.4% gain in 2023 and 13% decline over the past year.

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  • Turkmenistan votes for new, opposition-free parliament

    Turkmenistan votes for new, opposition-free parliament

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    ASHGABAT, Turkmenistan — Voters in Turkmenistan cast ballots Sunday for a new parliament that is expected to have no members of opposition parties and be loyal to the government of the gas-rich Central Asian nation.

    The election for 125 members included 258 candidates, put forward by three political parties or running independently. All of them support President Serdar Berdymukhamedov.

    Berdymukhamedov, 41, was elected last March to succeed his father, Gurbanguly Berdymukhamedov, who had run the isolated ex-Soviet country for more than a decade.

    Gurbanguly Berdymukhamedov came to power after the death of the eccentric Saparmurat Niyazov in 2006 and established a pervasive personality cult similar to that of his predecessor. Under his rule, Turkmenistan has remained difficult for outsiders to enter. It has also struggled to diversify its economy, which is overwhelmingly dependent on its vast natural gas reserves.

    The elder Berdymukhamedov has cultivated an image of robust health with media stunts that included firing a pistol at a man-sized target while riding a bicycle and hoisting a gold weightlifting bar, to the applause of his Cabinet. He has the title “Arkadag,” or Protector, and last year stepped down, giving way for his son to assume office.

    Earlier this year, Serdar Berdymukhamedov appointed his father to be the chairman of Halk Maslahaty, or People’s Council, the country’s supreme representative body. The People’s Council has the power to change the country’s constitution and determine the main guidelines of domestic and foreign policies, giving Gurbanguly Berdymukhamedov powerful levers to shape the country’s course.

    Loud patriotic music played at polling stations in the capital and dance troupes performed. Although the central elections commission reported that 91% of the electorate turned out, there did not appear to to be long lines at the voting stations.

    Some who showed up were enthusiastic.

    “Election day is a holiday for us. I would like to see such classy holidays as often as possible,” said Arzygul Bekmuradova, a teacher.

    Others took a dim view.

    “Aside from the biographies of the candidates in the Turkmen language, I didn’t see any other information about their platforms. I don’t even know who I voted for,” said a voter who gave his name only as Begenc.

    Both Berdymukhamedovs voted at the same polling station. In remarks shown on state television, the elder one said most of the candidates were representatives of the youth.

    “The fact that the youth contingent prevails in the composition of the deputy corps allows us to work out the national legislative and legal framework in accordance with the existing realities and the identified prospects,” he said.

    The results were expected to be announced within several days.

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  • Lululemon, Intel, Carnival, Micron, Walgreens, and More Stocks to Watch This Week

    Lululemon, Intel, Carnival, Micron, Walgreens, and More Stocks to Watch This Week

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    Data on the U.S. consumer and housing market, plus several notable earnings reports, will be this week’s highlights. Barring any surprises, federal financial regulators’ Congressional testimony will be the main event on the banking front.

    On Wednesday, Fed Vice Chair for Supervision Michael Barr and Federal Deposit Insurance Corp. Chairman Martin Gruenberg are scheduled to testify before the House Financial Services Committee. They’ll discuss the collapses of Silicon Valley Bank and Signature Bank and efforts to maintain confidence in the U.S. banking system.

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