• Amid the competing stresses of inflation and banking sector turmoil, all 11 Federal Open Market Committee members voted to raise the Fed’s benchmark interest rate by a quarter percentage point, bringing the federal funds rate to its highest level since 2007 at a range between 4.75% and 5%. Fed Chair Jerome Powell, who noted that officials had considered forgoing a rate hike this time around, said that the possibility of a contraction in credit markets putting a strain on economic activity is “potentially quite real” going forward. (The Wall Street Journal)
• Treasury Secretary Janet Yellen told a Senate Appropriations subcommittee that she has not discussed or considered providing “blanket” deposit insurance to all U.S. banks without approval from Congress, and while she said it would be “worthwhile” for lawmakers to consider changes to Federal Deposit Insurance Corp. coverage, she did not elaborate on exactly what those changes should be. Yellen’s comments come after urging by banking groups for the FDIC to temporarily guarantee all banking deposits to shore up confidence in the U.S. financial system. (Reuters)
• Coinbase Global Inc. has received a Wells notice from the Securities and Exchange Commission, signaling that the agency plans to sue on the grounds that the crypto exchange’s tokens and other products, including aspects of its staking service Coinbase Earn and Coinbase Wallet, are securities that should be registered. Coinbase Chief Legal Officer Paul Grewal said the exchange and its products will continue to operate as usual for the time being, and while the company is “confident in the legality” of its assets and services, a legal process that would provide clarity would be welcomed and “demonstrate that the SEC simply has not been fair or reasonable when it comes to its engagement on digital assets.” (Bloomberg)
• Sens. Rick Scott (R-Fla.) and Elizabeth Warren (D-Mass.) introduced legislation that would replace the Federal Reserve’s inspector general with one appointed by the president, overseeing both the Fed and the Consumer Financial Protection Bureau. Both senators have blamed the collapse of Silicon Valley Bank and Signature Bank on lax regulatory oversight, and Scott said in a joint statement with Warren that having a Senate-confirmed appointee “like every other major government agency” fixes the issue of the Fed’s current inspector general reporting to the Fed board. (Reuters)

Visualizing the Link Between Unemployment and Recessions

Visual Capitalist

Janet Yellen pushes for first steps in World Bank reform by April

Camilla Hodgson et al., Financial Times

US and German allies step up agenda for overhaul of lender.

Gen Z is chalking up credit card debt and falling behind on their payments faster than any other generation, new report says

Huileng Tan, Insider

Gen Z is growing up and entering the workforce in an era of high inflation — and it shows on their credit card bills. Those in Generation Z — born between 1997 and 2012 — are racking up credit card debt faster than any other generation, according to a March 16 report from Credit Karma, a California-based personal finance company.

Seven takeaways from a big day for the Fed.

Jeanna Smialek, The New York Times

By raising interest rates a quarter-point, the Federal Reserve signaled that it was continuing to fight inflation, but it was holding off an aggressive move that might spook investors.

OFR says central bank digital currency helps households, hurts banks

Ebrima Santos Sanneh, American Banker

A working paper published Wednesday by the Treasury Department’s Office of Financial Research highlighted the benefits of a central bank digital currency for consumers but noted that such an innovation would present “financial frictions” for the banking sector.

What Fed Rate Increases Mean for Mortgages, Credit Cards and More

Tara Siegel Bernard, The New York Times

Savers will benefit and borrowers can expect to pay more on credit cards, student loans and other forms of debt.

Double-Barreled Economic Threat Puts Congress on Edge

Carl Hulse, The New York Times

Republicans and Democrats disagree over how recent bank closures should impact the debt limit stalemate, and have taken divergent lessons from past economic crises.

Bank failures deepen debt ceiling stalemate on Capitol Hill as the clock ticks

Sahil Kapur et al., NBC News

Congress is making no progress on how to avert a debt ceiling crisis, and the recent collapses of some banks are deepening the stalemate. President Joe Biden and House Speaker Kevin McCarthy, R-Calif., met Feb. 1 to discuss the debt limit, but they haven’t met since then.

Conservative coalition takes aim at Biden’s IRS-run tax preparation service

Alexander Bolton, The Hill

A coalition of conservative groups led by Americans for Tax Reform are calling on lawmakers to block the creation of a government-run tax preparation service or a “direct file” tax return system, a largely overlooked reform included last year in President Biden’s landmark Inflation Reduction Act.

Where taxpayers need help

Accounting Today

If you want to know what’s bugging U.S. taxpayers about the tax system, check out the issues where they’re looking for help from the Taxpayer Advocate Service.

Filed an amended tax return with the IRS? You have a 20-week wait.

Michelle Singletary, The Washington Post

For the most part, this tax season has been short on drama. Even though returns received by the Internal Revenue Service are virtually identical to last year at this time — more than 63 million filed as of March 10 — the number of returns processed is up 2 percent, and refunds issued is up 8.5 percent, according to the IRS.

Swiss Central Bank Lifts Key Rate, Declares End to Bank Crisis

Paul Hannon, Bloomberg

Move follows decisions by the Fed and the ECB to press ahead with rate rises despite bank strains.

PacWest Says It Tapped Atlas Cash After 20% Deposit Outflows

Sridhar Natarajan and Max Reyes, Bloomberg

PacWest Bancorp is moving to shore up liquidity to protect itself after customers pulled 20% of their deposits since the start of the year. The regional bank, whose shares have tumbled 58% this month, obtained $1.4 billion from a financing facility from Apollo Global Management-owned investment firm Atlas SP Partners and abandoned a separate push to raise capital because of market volatility, it said in a statement Wednesday.

Citi CEO Fraser Warns Mobile Money is ‘Game Changer’ for Bank Runs
Jenny Surane, Bloomberg

Citigroup Inc. Chief Executive Officer Jane Fraser said mobile apps and consumers’ ability to move millions of dollars with a few clicks of a button mark a sea change for how bankers manage and regulators respond to the risk of bank runs.

JPMorgan Chase buys data platform for startups in push to serve venture capital investors

Hugh Son, CNBC

JPMorgan Chase is acquiring a data analytics provider for startup investors called Aumni, CNBC is first to report. The biggest U.S. bank by assets is buying the 5-year-old Utah-based company as part of a broader push to deepen relationships with venture capital investors and their companies, according to Michael Elanjian, who leads JPMorgan’s digital private markets efforts.

Sens. Booker, Warnock press big bank CEOs to pause overdraft fees after SVB failure

Chelsey Cox, CNBC

Sens. Cory Booker and Raphael Warnock have urged the CEOs of 10 major banks to waive overdraft and nonsufficient fund fees that could cost some Americans more than $100 a day in the wake of the failures of Silicon Valley Bank and Signature Bank.

House Financial Services Chair McHenry won’t take Fed’s word on SVB failure

Chris Matthews, MarketWatch

The head of the House Financial Services Committee said Wednesday that his panel “has a very important role to play” discovering what went wrong at Silicon Valley Bank and Signature Bank in the leadup to the failures of those institutions earlier this month.

JPMorgan CEO Dimon met White House’s Brainard during D.C. trip

Nandita Bose et al., Reuters

JPMorgan Chief Executive Jamie Dimon met Lael Brainard, the director of the White House National Economic Council on Wednesday, while in Washington this week, according to a person familiar with the situation.

First Republic Leaders Forgo Bonuses, Some Pay Amid Turmoil

Hannah Levitt, Bloomberg

First Republic Bank’s leaders agreed to forgo 2023 bonuses and some other pay as the company, which has lost more than 88% of its market value this year, grapples with a crisis in confidence in some regional banks.

Rescuing First Republic May Leave Bank Stockholders Stranded
Max Reyes, Bloomberg

Whatever plan emerges to preserve First Republic Bank might not leave much for shareholders of the troubled California lender.

Banks Are Risky. Silicon Valley Bank’s Risk Officer Was AWOL.

Ben Cohen, The Wall Street Journal

It might be the most thankless job in finance—and success means averting danger. Before SVB failed, the bank operated without a risk manager for eight months.

Swiss regulator defends $17bn wipeout of AT1 bonds in Credit Suisse deal

Sam Jones and Oliver Ralph, Financial Times

Writedown after takeover by UBS enraged holders of risky bonds.

US bondholders prepare to sue Swiss government over $17bn Credit Suisse wipeout

Stephen Morris et al., Financial Times

Distressed asset investor David Tepper says trust in European debt issuance at stake.

Americans less prepared for retirement amid financial uncertainty – Fidelity

Sergio Padilla, Pensions & Investments

Americans are less prepared for retirement than they were during the start of the COVID-19 pandemic, according to Fidelity Investment’s 2023 retirement saving assessment study.

Wall Street is thirsty for its next big investment opportunity: The West’s vanishing water

Lucy Kafanov, CNN

Critics accuse Greenstone – a subsidiary of the East Coast financial services conglomerate MassMutual – of trying to profit off Cibola’s most precious and limited resource: water.

Bank Turmoil Ramps Up Pressure for $900 Billion of Property Debt

John Gittelsohn, Bloomberg

Commercial-property owners face nearly $400 billion of debt maturing this year as regional bank failures threaten the industry’s biggest source of financing.

The typical down payment is 10% smaller than a year ago

Brooklee Han, Housing Wire

The typical homebuyer’s down payment was down 10% year over year in January 2023, according to a report released Wednesday by Redfin.

VA makes major change to America’s most underutilized mortgage program

Chris Clow, Housing Wire

The U.S. Department of Veterans Affairs (VA) announced on Wednesday that it will lower the VA Native American Direct Loan (NADL) program interest rate from 6% to 2.5% in an effort to make housing loans more affordable for Native American military veterans.

Celebrities Lindsay Lohan and Jake Paul Illegally Touted Crypto Assets, SEC Says

Dave Michaels, The Wall Street Journal

U.S. regulators clawed back money that actress Lindsay Lohan and boxer Jake Paul earned by promoting cryptocurrencies, continuing a campaign of making examples of celebrities who tout digital assets in violation of investor-protection laws.

FTX reaches deal to recover over $400 mln from hedge fund Modulo

Dietrich Knauth, Reuters

Bankrupt crypto exchange FTX has reached a deal to recover more than $400 million in cash from hedge fund Modulo Capital, pulling back 97% of the money that FTX companies sent to the hedge fund in 2022, according to court documents filed on Wednesday.

Ron DeSantis proposed a bill to ban CBDCs. A trade policy professor calls that ‘a little ludicrous’

Ben Weiss, Fortune

Florida Gov. Ron DeSantis on Monday announced legislation to ban the use of central bank digital currencies, or CBDCs, in his state. “The Biden administration’s efforts to inject a Centralized Bank Digital Currency is about surveillance and control,” he said in a statement, asserting that it “will stifle innovation and promote government-sanctioned surveillance.”

Stablecoin issuer Circle says exec’s Twitter giveaway offer was scam, account was hacked

Hannah Lang and Elizabeth Howcroft, Reuters

Stablecoin USDC’s issuer Circle said its chief strategy officer’s Twitter account was hacked on Wednesday, after the account posted a link appearing to offer holders of the stablecoin USDC a “one-time bonus” of free cryptocurrency.