• Federal Reserve officials said that recent banking sector turmoil could push the United States into a “mild” recession later this year, according to minutes from the Federal Open Market Committee’s March 21-22 meeting, during which officials also projected that the U.S. economy would keep growing and noted that it is too soon to tell how much banks will tighten lending. According to the latest data from the Bureau of Labor Statistics, inflation slowed last month, rising 5% for the year ending in March, down from a rate of 6% in the prior month and the smallest year-over-year increase since May 2021. (The Washington Post)
• National Economic Council Director Lael Brainard told attendees at an event in Washington D.C. that discussions about changes to Federal Deposit Insurance Corp. insurance caps are “on a slower track” and the Biden administration’s decision in March to insure all deposits at failed Silicon Valley Bank and Signature Bank were “very targeted” on specific risks. In response to questions about whether there would be more bank failures this year, Brainard said the U.S. banking system is “sound” and bank executives were responsive to recent stresses, but institutions that fail to manage risks may see pressure from their investors, though such pressure shouldn’t lead to bank runs. (Reuters)
• The White House is working to find support for nominees to the vacant position of vice chair of the Federal Reserve, according to people familiar with the matter, and while Northwestern University finance professor Janice Eberly is still seen as a leading candidate, Sen. Robert Menendez (D-N.J.), a senior member of the Senate Banking Committee, continues to push the Biden administration to nominate a Latino. Progressive lawmakers including Sen. Elizabeth Warren (D-Mass.) are also pushing for the White House to nominate a candidate who will work inside the Federal Reserve to support softer monetary policymaking. (The Wall Street Journal)
• FDIC Vice Chairman Travis Hill said his agency could have worked more quickly to find a buyer for Silicon Valley Bank and set up a data room for potential bidders, noting that the slowness may have worsened the crisis since opening the bank as a “bridge bank” while it was in receivership caused the value of its franchise to deteriorate rapidly. (The Wall Street Journal) Hill, a Republican, also said at the Bipartisan Policy Center event that he did not think deregulation of the banking system led to the collapse of SVB, but instead blamed the bank’s investments in long-dated fixed-rate securities and its flighty deposit base. (American Banker)
  

Worth watching:

• World Bank President David Malpass, Goldman Sachs Group Inc. CEO David Solomon and Melinda French Gates of the Gates Foundation will discuss gender inclusion and equality in a World Bank session on women entrepreneurs.
• Mastercard CEO Michael Miebach will speak at the 2023 Global Inclusive Growth Summit.

A California Law Limiting Gas Price Gouging Is Popular With Democrats and Republicans

Morning Consult

World Bank staff were told to give special treatment to son of Trump official

Kalyeena Makortoff, The Guardian

World Bank staff were apparently told to give preferential treatment to the son of a high-ranking Trump administration official after the US Treasury threw its support behind a $13bn (£10bn) funding increase for the organisation, a leaked recording suggests.

Yellen urges continued ‘significant, predictable and timely’ aid for Ukraine

Andrea Shalal, Reuters

U.S. Treasury Secretary Janet Yellen on Wednesday called for continued significant aid to Ukraine as it battles against Russia’s invasion, and lauded Ukrainian authorities for their focus on good governance and anti-corruption.

World Bank steering committee, Yellen urge more reforms at lender this year

Andrea Shalal, Reuters

The World Bank’s steering committee and U.S. Treasury Secretary Janet Yellen on Wednesday called for further reforms this year to expand the bank’s ability to respond to climate change, pandemics and other crises that are reversing development gains.

Julie Su’s nomination for Labor looking doubtful

Hans Nichols, Axios 

President Biden’s nomination of Julie Su as Labor secretary is in serious danger, as Sen. Joe Manchin (D-W.Va.) has told the Biden administration he has deep reservations about her, according to people familiar with the situation.

U.S., China to Lead Growth in Government Debts

Yuka Hayashi, The Wall Street Journal

The governments of major economies—particularly the U.S. and China—are projected to boost their borrowing in coming years as they spend more on aging populations and a shift to clean energy, the International Monetary Fund said.

More Junk-Rated Companies Are Facing Credit Downgrades and Defaults

Mark Maurer, The Wall Street Journal

U.S. businesses with lower credit ratings or significant leverage are increasingly struggling with steep increases to debt-servicing costs.

EY Breakup Plan Doomed by Miscalculations and Powerful Opponents

Jean Eaglesham et al., The Wall Street Journal

For months, Ernst & Young’s top leaders characterized their planned breakup of the firm as almost inevitable. All that was left were some adjustments around the edges and votes by partners in dozens of countries.

The House GOP debt limit proposal: Updates

Jake Sherman and John Bresnahan, Punchbowl News

House Republican leaders have begun informally putting together a debt-limit package they intend to socialize with their rank-and-file members when Congress returns to Washington next week.

Fed’s Barkin Says There’s More Work to Do to Rein in Inflation

Steve Matthews, Bloomberg

Federal Reserve Bank of Richmond President Thomas Barkin said policymakers still have more work to do to tame prices after fresh data Wednesday showed inflation remained well above the Fed’s 2% target.

Wage growth returns with cooling inflation

Hope King and Courtenay Brown, Axios

Workers are seeing real pay gains on a monthly basis as inflation cools, this morning’s consumer price index report shows.

US Credit and Debit Card Spending Slows to Weakest Pace in Two Years, BofA Says

Augusta Saraiva, Bloomberg

Spending on credit and debit cards rose at the smallest pace in more than two years, dragged down by slower wages, fewer tax refunds and the end of pandemic-era benefits, according to a report by Bank of America Institute.

US Budget Deficit Widens to $1.1 Trillion in Fiscal Half Year

Christopher Condon, Bloomberg

The US federal government’s budget deficit hit $1.1 trillion in the first half of the fiscal year, a 63% jump over a year ago, driven by higher outlays for education, health care benefits and debt interest payments.

What Happened When the IRS Got Audited

Ben Cohen, The Wall Street Journal

Obsolete software. Archaic code. Tech so old it makes the typical member of Congress look young. The IRS has an IT problem.

How the inflation report is playing with Biden, Powell and Jamie Dimon

Ben White, Politico

President Joe Biden isn’t used to a lot of good news on inflation, but he got some on Wednesday.

The cities with the highest — and lowest — unemployment levels

Alex Fitzpatrick, Axios

Las Vegas, Chicago, Los Angeles and Houston have the country’s highest unemployment rates among metro areas with more than 1 million workers, according to a new Axios analysis of the latest local-level Labor Department data.

What It Takes to Be Middle Class in America’s Largest Cities – 2023 Study

Patrick Villanova, SmartAsset

The middle class has long been considered the backbone of the American economy. But the American middle class is shrinking. The percentage of adults living in middle-income households in the United States fell by more than 10 percentage points over the last 50 years, indicating an ongoing shrinkage of the middle class.

JPMorgan Internally Flagged Epstein’s Large Withdrawals Years Before His 2008 Conviction, Lawsuit Alleges

Khadeeja Safdar and David Benoit, The Wall Street Journal

JPMorgan Chase & Co. employees internally flagged Jeffrey Epstein’s large cash withdrawals two years before he was convicted of soliciting a minor for prostitution, according to new court papers filed Wednesday.

JPMorgan Calls Managing Directors to Office Five Days a Week

Hannah Levitt and Daniel Taub, Bloomberg

JPMorgan Chase & Co. told its managing directors that they now must be in the office every weekday, ending a hybrid-work practice that arose during the pandemic.

Warren Buffett Says More Bank Failures Are Likely But Depositors Are Safe

Max Reyes, Bloomberg

Warren Buffett said more US banks are likely to fail, but depositors should be confident they won’t lose any of their funds.

Track How U.S. Banks Are Faring in First-Quarter Earnings

Telis Demos et al., The Wall Street Journal

In March, banks experienced one of their worst months this century. The collapse of Silicon Valley Bank and Signature Bank sparked widespread fears about potential deposit runs and declining values of bonds and loans. Now attention will turn to how the banks are doing and what comes next.

Top US Banks to Reveal $521 Billion Deposit Drop, Most in Decade

Katherine Doherty and Jennifer Surane, Bloomberg

The largest US banks are about to reveal how they fared as customer deposits came under siege in the first quarter. Deposits at JPMorgan Chase & Co., Wells Fargo & Co. and Bank of America Corp. are expected to have tumbled $521 billion from a year earlier, the biggest drop in a decade, according to analysts’ estimates.

Deposit Crisis Sets Up a Tough First Quarter for All But the Biggest Banks

Peter Rudegeair, The Wall Street Journal

Two regional lenders collapsed, and more than $300 billion in deposits left banks last month.

PPP fraud investigations heat up. Who will be hit next?

Jordan Stutts, American Banker

Two significant questions loom over the Paycheck Protection Program: How much of the program’s funds was lost to fraud? And are banks going to get into trouble for approving these bad loans?

U.S. Bancorp to Install New CFO in Leadership Shuffle

Dean Seal, The Wall Street Journal

John Stern, currently president of the company’s global corporate trust and custody business, set to take over as CFO in September.

Credit Suisse rescue package rejected by Swiss parliament

Noele Illien, Reuters

Switzerland’s parliament rejected on Wednesday the government’s 109 billion Swiss francs ($120.82 billion) aid for Credit Suisse’s merger with UBS, leaving the fallen bank’s hastily arranged rescue without a largely symbolic parliamentary blessing.

Investors shun riskier US corporate debt as recession fears loom

Harriet Clarfelt, Financial Times

Lowest-rated ‘junk’ bonds miss out on rebound from last month’s banking crisis.

Manhattan Rents Reach Record High With Busy Season Yet to Come

Jennifer Epstein, Bloomberg

Median on new leases rose to $4,175 in March, even as apartment hunters got more listings to choose from.

Millennials became homeowners later than their parents and grandparents. Here’s why.

Adam Barnes, The Hill

Millennials are now a homeowner-majority generation — a milestone achieved amid a global pandemic and an unsteady housing market.

Bankrupt crypto exchange FTX has recovered $7.3 billion in assets

Dietrich Knauth, Reuters

Bankrupt crypto exchange FTX has recovered over $7.3 billion in cash and liquid crypto assets, an increase of more than $800 million since January, the company’s attorney said on Wednesday at a U.S. bankruptcy court hearing in Delaware.

FTX’s Bankruptcy Lawyers: ‘The Dumpster Fire Is Out’

Cheyenne Ligon, CoinDesk

At a hearing on Wednesday, lawyers for the now-defunct exchange described it as a “digital Potemkin village” run by former CEO Sam Bankman-Fried.

The U.S. Cracked a $3.4 Billion Crypto Heist—and Bitcoin’s Anonymity

Robert McMillan, The Wall Street Journal

Federal authorities are making arrests and seizing funds with the help of new tools to identify criminals through cryptocurrency transactions

Crypto VC Funding Plunges by 80% in Dire Quarter for Startups

Hannah Miller, Bloomberg

Global venture funding for cryptocurrency-related companies has hit its lowest level in two years.