• The Federal Open Market Committee voted unanimously to approve the Fed’s 10th consecutive rate increase, bringing the benchmark federal-funds rate to between 5% and 5.25%, a 16-year high. The central bank signaled it may pause interest rate hikes going forward, with Fed Chair Jerome Powell saying “we feel like we’re getting closer or maybe even there.” (The Wall Street Journal)
• PacWest Bancorp confirmed that it is in talks with investors to explore options, including a sale, after the stock fell as much as 60% amid lingering concerns about the stability of regional banks. PacWest said in a statement that it had not experienced “out-of-the-ordinary deposit outflows” and its cash and available liquidity “remains solid and exceeded our uninsured deposits.” (Bloomberg)
• The Securities and Exchange Commission voted 3-2 along party lines to approve a rule that would require hedge funds and private-equity groups to disclose more information about events that signal stress or systemic risk as the rapidly growing industry becomes, as Chair Gary Gensler said, “ever more interconnected with our broader capital markets.” (Financial Times) The SEC also voted 3-2 along party lines to approve a rule that will require companies to provide increased disclosures, including daily tallies, about their stock buybacks, though the rule — which will take effect in the fourth quarter of this year — has drawn industry opposition and the U.S. Chamber of Commerce has said it is considering legal action to block the new rule. (The Wall Street Journal)
• FTX Group is seeking to use bankruptcy rules designed to ensure creditors are treated equally to claw back nearly $3.9 billion of cash and crypto from bankrupt Genesis Global Capital LLC and a non-bankrupt affiliate, GGC International Ltd. The funds are related to loans and collateral that Alameda Research — the trading house of FTX founder Sam Bankman-Fried — made to Genesis, as well as billions in assets that Genesis withdrew from FTX before its own bankruptcy. (Bloomberg)

US Homeowners Hold Near-Record Equity Even After Price Declines

Bloomberg

U.S. Businessman Ajay Banga Approved to Lead World Bank

Yuka Hayashim, The Wall Street Journal

Former Mastercard CEO, who grew up in India, takes over the bank at a moment of transformation.

Federal Agency Suspends Inspector General After Oversight Body Alleged ‘Substantial Misconduct’

Alexander Osipovich and Paul Kiernan, The Wall Street Journal

CFTC voted to place A. Roy Lavik on ‘non-duty status’ after watchdog said he disclosed whistleblowers’ identities, wasted government funds

Corporate Profit Margins Are Finally Stabilizing, Creating New Tailwind for Stocks

Vicky Ge Huang, The Wall Street Journal

A larger share of revenue at big U.S. companies is beginning to reach the bottom line, a potentially encouraging sign for a stock market that has been stuck in neutral in recent weeks.

Biden administration warns consumers to avoid medical credit cards

Noam Levey, NPR News

The Biden administration on Thursday cautioned Americans about the growing risks of medical credit cards and other loans for medical bills, warning in a new report that high interest rates can deepen patients’ debts and threaten their financial security.

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.

Ex-Fed Presidents Getting Worried About US Regional Bank Turmoil

Abhishek Vishnoi, Bloomberg

Former Federal Reserve regional presidents Robert Kaplan and Dennis Lockhart are becoming concerned over the recent US regional banking turmoil which has started engulfing one lender after the other this year.

Debt ceiling breach could wipe out 8 million jobs, White House warns

Jeff Stein, The Washington Post

White House economists said in a new analysis released Wednesday that an extended breach of the nation’s borrowing limit could wipe out more than 8 million jobs and cause “severe” economic damage, as lawmakers run out of time to resolve the fiscal impasse.

Lawmakers dismiss possibility of debt limit off-ramp

Caitlin Emma, Politico

Republicans argue the president should have come to the table sooner. Democrats say it’s a clean debt limit hike or bust. Both sides say they won’t approve a temporary hike.

What would a debt ceiling failure mean for Americans?

Aris Folley, The Hill

Lawmakers are bracing for what could shape up to be a dramatic few weeks for both parties, as they brace for a high-stakes battle over the nation’s borrowing limit.

Private employers add 296K jobs, well above expectations

Stephen Neukam, The Hill

Hiring by private companies in the U.S. heated up in April, beating projections as federal officials attempt to use interest rates to cool down the economy and fight inflation. Private payrolls increased by 296,000 in April, according to the latest report by ADP, beating Dow Jones projections by more than 100,000 jobs and marking a rapid heating up from the 142,000 added in March.

Biden wants McConnell at the debt ceiling table, despite (or because of) their history

Jennifer Haberkorn, Politico

The minority leader has so far distanced himself from next week’s negotiations, insisting any deal would have to come between the president and the House speaker.

America faces a debt nightmare

The Economist

On a wall in Manhattan, not far from Times Square, America’s debt clock ticks higher, from $3trn when it was inaugurated in 1989 to more than $31trn today. After climbing for so many years with no obvious economic fallout, it is easy to ignore, not least because it was moved from its location on a busy street corner to a quiet passageway.

Crypto traders avoiding billions in tax by ‘loss harvesting’

Philip Aldrick, Accounting Today

Crypto traders are avoiding billions of dollars in tax by taking advantage of wild price swings to “harvest” losses so they can be offset against other profits, according to a paper published by the National Bureau of Economic Research.

Senators want IRS to stop AI-generated tax scams

Michael Cohn, Accounting Today

A group of senators on both sides of the aisle is asking the Internal Revenue Service’s new commissioner, Daniel Werfel, to warn taxpayers and tax professionals about the emerging threat of tax scams produced by artificial intelligence programs and chatbots like ChatGPT.

Companies Flock to Biden’s Climate Tax Breaks, Driving Up Cost

Jim Tankersley and Brad Plumer, The New York Times

A law to boost clean energy appears to be more potent than predicted, with big implications for both budget talks and efforts to fight climate change.

The Debt Limit Standoff is a New Economic Headwind for the Fed

Alan Rappeport, The New York Times

The Federal Reserve’s decision about whether to continue raising interest rates comes at a fraught economic moment for the United States, with President Biden and Republicans in Congress locked in a standoff over how to raise the nation’s debt limit.

Toronto-Dominion Bank, First Horizon Terminate Merger Agreement

Adriano Marchese, The Wall Street Journal

Toronto-Dominion Bank and Tennessee-based First Horizon have decided to end their $13.4 billion merger agreement. In a joint statement Thursday, the companies said the decision was made after TD Bank considered that obtaining the regulatory prerequisites to push the merger through wasn’t certain.

Western Alliance says no unusual deposit outflows after First Republic sale

Reuters

Western Alliance Bancorp said on Wednesday it had not experienced unusual deposit outflows following the sale of collapsed lender First Republic Bank to JPMorgan Chase & Co, as the U.S. regional bank sought to reassure investors.

Goldman Moves to Settle Gender-Pay Lawsuit for About $200 Million

Sridhar Natarajan and Max Abelson, Bloomberg

Goldman Sachs Group Inc. is racing to settle one of Wall Street’s biggest gender-discrimination cases, a move that could help avoid the spotlight and embarrassment of a class-action trial that’s weeks away.

FDIC’s McKernan Says Failed-Bank Auctions Aren’t Competitive

Gillian Tan, Bloomberg

The Federal Deposit Insurance Corp. failed to create a level playing field for nonbank bidders pursuing First Republic Bank, according to FDIC board member Jonathan McKernan.

Morgan Stanley Is Sued by Outside Recruiter Alleging Race Bias

Greg Farrell, Bloomberg

Morgan Stanley was sued by an external recruiter who claims it discriminated against him because he is Black, short-changing him on commissions he earned in placing diverse candidates at the bank — even as it treated them with racial bias as well.

Too Big to Fail, But Not Too Big to Bail Out Other Banks

Max Abelson and Hannah Levitt, Bloomberg Businessweek

JPMorgan has dominated the financial world since, well, J.P. Morgan.

Inside Wells Fargo’s ‘chaotic’ journey to transform its services for the ultrarich

Hayley Cuccinello and Reed Alexander, Insider Premium

Advisors have left in droves amid complaints of flip-flopping by Wells Fargo’s leaders and a gutting of services. Some clients have taken notice.

SEC’s Gensler Blasts Hedge Fund Fees as Agency Readies Rules

Austin Weinstein, Bloomberg

Gary Gensler is again blasting hedge funds and private equity firms for the fees they charge investors, as the Securities and Exchange Commission plows ahead with plans to boost oversight of the private fund industry. “Today, private fund advisers receive multiple levels and types of fees—from management to performance to portfolio company fees.,” the SEC chief said in remarks prepared for a Managed Funds Association trade group conference.

Robinhood, securities regulators face off over Massachusetts fiduciary rule

Chris Prentice, Reuters

Massachusetts’ highest court on Wednesday heard arguments on whether to revive a state fiduciary duty rule that was central to an enforcement action securities regulators filed against the online brokerage Robinhood.

Swiss Hit With 120 Lawsuits Over Credit Suisse AT1 Bond Wipeout

Hugo Miller, Bloomberg

Six weeks since the deal to rescue Credit Suisse Group AG was rushed through, at least 120 claims have been filed against the Swiss banking watchdog’s decision to wipe out about $18 billion worth of its high-risk bonds as part of the deal.

How the Fed’s rate hikes helped drive up mortgage payments

Katy O’Donnell, Politico

The Federal Reserve’s decision Wednesday to raise its key interest rate to the highest level in 17 years could drive mortgage rates, currently at 6.4 percent for a 30-year fixed mortgage, still higher.

Rural housing crunch ‘ripe and ready’ for legislative fix, lawmakers say 

Grace Yarrow, The Hill

Senators expressed bipartisan optimism Tuesday about moving ahead with legislation aimed at relieving the affordable housing crunch in rural communities. A bill introduced this week by Sen. Tina Smith (D-Minn.) and Sen. Mike Rounds (R-S.D.) could expand availability of affordable housing by updating programs under the U.S. Department of Agriculture’s (USDA) Rural Housing Service.

Freddie Mac’s earnings bear up amid banking crisis

Bonnie Sinnock, National Mortgage News

Freddie Mac was largely insulated from any major issues associated with the banking crisis in the first quarter but warned there could be more lending contraction in the future.

U.S. SEC Changes Its Mind on Officially Labeling Digital Assets

Jesse Hamilton, CoinDesk

The Securities and Exchange Commission was about to define “digital asset” but deleted it in the final version of a rule, reversing a move that might have started formalizing crypto’s role.

Supposed AI-Based Crypto Token Using Musk’s Image Targeted by Texas Securities Board

Jack Schickler, CoinDesk

Five U.S. states are ordering TruthGPT Coin promoters to cease and desist using images of Elon Musk, CZ and Vitalik Buterin to promote what they describe as an investment scam.

Ex-OpenSea manager convicted in NFT insider trading case

Luc Cohen, CoinDesk

A former product manager at non-fungible token (NFT) marketplace OpenSea was convicted on Wednesday of fraud and money laundering for using inside knowledge of which assets would be featured on its home page to trade NFTs.

Bitcoin transactions are soaring, but it’s not what you think

Bradley Dale, Axios

Bitcoin’s confirmed transactions are exploding, but it’s not because people are buying cappuccinos in Dubai with satoshis. New experiments are running on the world’s oldest blockchain.