• FTX is sending confidential letters to the recipients of political donations from Sam Bankman-Fried, his deputies and his companies as the bankrupt crypto exchange’s debtors seek to claw back about $93 million in contributions, plus interest, from politicians and other beneficiaries. FTX is asking for payments by the end of the month, and said it reserves the right to force repayment through court action if necessary. (CoinDesk)
• Bankman-Fried’s Emergent Fidelity Technologies Ltd., which owns an approximately $590 million stake in Robinhood Markets Inc., filed for bankruptcy, with one liquidator stating in a court filing that a Chapter 11 filing was “the only practical way” for the company to defend itself from the multitudes of parties making claim to the Robinhood stake. The Robinhood shares have been seized by the federal government, and Emergent Fidelity’s only remaining assets are $20.7 million of cash. (Bloomberg)
• A U.S. appeals court rejected an argument by PayPal Inc. that the Consumer Financial Protection Bureau overstepped its authority when it created mandatory rules that governed how providers of digital wallets must disclose commonly used fees, such as ATM and balance inquiry fees. The decision reversed a December 2020 ruling that had found the CFPB did not have such authority under federal law. (Reuters)
  
• Federal-funds markets have seen a surge of demand from banks as deposits continue to decline and customers move money to Treasurys and money-market funds. Federal-funds borrowing activity hit a new record of $120 billion on Jan. 27, the highest one-day total since 2016. (The Wall Street Journal)

After a Turbulent Economic Year, Most Adults Who Have Financial Goals Feel Good About 2023

Morning Consult

IMF Head Warns American Consumers Would Suffer If US Defaulted

Tony Czuczka, Bloomberg

A US debt default would cause a spike in borrowing costs that squeezes American consumers as well as significant harm to the world economy, International Monetary Fund Managing Director Kristalina Georgieva said.

Adani crisis sparks protests and arrests in India as sell-off losses top $110 billion

Adnan Abidi et al., Reuters

The crisis engulfing the Adani group intensified on Monday as dozens of members India’s main opposition party were detained by police during protests, and parliament was suspended again due to disruptions over the saga.

The Debt Ceiling Is All the Rage in Democrats’ Fundraising Emails

Bill Allison and Laura Davison, Bloomberg

Democrats have warned in speeches from the US Capitol and appearances on cable-news shows that the standoff over the debt ceiling threatens to rattle financial markets and wreck the economy.

Biden’s student loan forgiveness plan heads to the Supreme Court. How that affects the payment pause

Annie Nova, CNBC

The Supreme Court is set to hear arguments over President Joe Biden’s student loan forgiveness plan in late February. Federal student loan payments won’t resume until the end of August, unless the litigation over the Biden administration’s student loan forgiveness plan is resolved sooner.

Pence calls for Social Security reform, private savings accounts

Tom LoBianco, Yahoo News

Former Vice President Mike Pence, a possible contender for the Republican presidential nomination in 2024, said Thursday that he wants to “reform” Social Security and institute private savings accounts for recipients.

Biden Aide Says Negotiation on Debt Ceiling Is ‘Nonstarter’

Tony Czuczka, Bloomberg

A White House economic adviser said negotiations over raising the US debt ceiling are an “absolute nonstarter” for President Joe Biden, though he’s ready to discuss spending with congressional Republicans. “There is a separate set of discussions and negotiations over fiscal policy,” Jared Bernstein, a member of Biden’s Council of Economic Advisers, said on “Fox News Sunday.”

Larry Summers: More likely the Fed can pull off a soft landing, but don’t get hopes up

Ramishah Maruf, CNN

After a shocking jobs report, Larry Summers, treasury secretary under Bill Clinton, said he is more encouraged the Fed can pull off a soft landing, but cautioned it is a “big mistake” to think the economy is “out of the woods” on Fareed Zakaria GPS Sunday.

Tight Labor Market Eased Pandemic Job-Loss Pain, Fed Study Says

Jonnelle Marte, Bloomberg

The US labor market’s sharp recovery after the Covid-19 pandemic made it easier for workers who lost jobs to find new work and recoup lost pay, according to new research from the Federal Reserve Bank of Cleveland.

Gut spending? Slash the IRS budget? 7 GOP ideas for debt limit talks.

Jeff Stein, The Washington Post

House Republicans are demanding that President Biden agree to policy concessions in exchange for their support in raising the nation’s $31.4 trillion borrowing limit. But it is not clear — even to leading GOP officials — what they’re asking Biden to do.

States Are Flush With Cash, Which Could Soften a Possible Recession

David Harrison, The Wall Street Journal
State governments are entering 2023 with record-high reserves, which could help the overall economy weather a recession this year.

Corporate America is divided on odds of US recession

Andrew Edgecliffe-Johnson, Financial Times

Mixed signals on interest rates, jobs and consumer spending cloud the business outlook

OECD releases guidance on global minimum tax

Michael Cohn, Accounting Today

The Organization for Economic Cooperation and Development unveiled technical guidance for its far-reaching reform of the global tax system in which multinational companies would be subject to a minimum tax of 15% on their profits.

Bank of America CEO Moynihan Pay Fell to $30 Million for 2022

Katherine Doherty, Bloomberg

Bank of America Corp. Chief Executive Officer Brian Moynihan’s total compensation declined 6.3% to $30 million for his work in 2022, a year in which profit tumbled and the shares sank.

The Blurred Lines Between Goldman C.E.O.’s Day Job and His D.J. Gig

Emily Flitter and Katherine Rosman, The New York Times

David Solomon brushes off D.J.ing as a minor hobby that has little to do with his work at the bank, but his activities may pose potential conflicts of interest.

Culture war priorities stoke Republican hostility towards banks

Ebrima Santos Sanneh, American Banker

Cratered support among the Republican base, new priorities in the banking industry and simple pragmatism have significantly weakened the relationship between banks and the GOP, and opened up room for modest but increasing partnerships with congressional Democrats, in a role reversal that would have been unthinkable just a decade ago.

Republicans launch group to combat ‘threat’ posed by ESG investing

Rachel Frazin, The Hill

House Republicans are creating a new working group to further their pushback against environmental, social and governance investing, known as ESG.

Two Wall Street Powerhouses Hit by the Fall of Billionaire Adani’s Empire

Luc Olinga, The Street 

The Vanguard Group and BlackRock have exposure to the Adani Group conglomerate.

Carlyle to Name Banking Veteran Harvey Schwartz as CEO

Miriam Gottfried, The Wall Street Journal

Carlyle Group Inc. plans to name investment-banking veteran Harvey Schwartz its new chief executive, according to people familiar with the matter, as the private-equity firm’s founders seek a fresh start after a botched succession plan.

Why It’s So Hard to Be an ESG Investor

Michael A. Pollock, The Wall Street Journal

Supporting societal change through investing is one of the most popular themes in the financial world these days. But it is more challenging than many might realize.

Rep. Barr to reintroduce a CRA measure nullifying DOL pension plan guidance

Douglas Clark, Financial Regulation News

U.S. Rep. Andy Barr (R-KY) said the reintroduction of a Congressional Review Act (CRA) measure seeks to nullify the Department of Labor’s (DOL) recent rule regarding environmental, social, governance (ESG) pension plan investing.

ChatGPT Will Replace Some Jobs, But Traders Say Not Theirs

Nate Lanxon, Bloomberg

Advanced artificial intelligence systems stand to threaten jobs primarily in the financial, legal and technology sectors, according to the latest MLIV Pulse survey.

Delaware ruling may create SPAC havoc

Kia Kokalitcheva, Axios

A Dec. 27 opinion by a Delaware Chancery Court judge may cause trouble for some companies that went public by merging a special purpose acquisition company (SPAC) with a dual-class share structure. Over the last couple of weeks, a number of such companies filed requests in court, essentially asking for a defect in their corporate structure to be blessed so that it doesn’t cause further issues.

PennyMac profits in tough market, but by less than in recent quarters

Bonnie Sinnock, National Mortgage News

PennyMac Financial reported a profit for the fourth quarter due to strong servicing results but its net income was weaker than in comparable fiscal periods. The company earned $38 million in the fourth quarter of 2022. That compared to $135.1 million the previous quarter. A year earlier, PennyMac Financial earned $173.1 million during the fourth quarter.

Housing Market Shows Signs of Thawing

Ben Eisen, The Wall Street Journal

Falling mortgage rates are beginning to stir demand in the housing market. The average 30-year home loan rate has come down by just about a full percentage point from a 20-year high above 7% in November, largely in response to signs that the Federal Reserve is nearly finished lifting rates.

How Sam Bankman-Fried’s Psychiatrist Became a Key Player at Crypto Exchange FTX

Alexander Osipovich et al., The Wall Street Journal

Early last year, Sam Bankman-Fried told an FTX all-hands meeting about an addition to the company’s staff. It wasn’t a head of accounting. It wasn’t a risk manager. Instead, it was a psychiatrist.

Washington turns hostile on crypto

Brady Dale, Axios

A year ago, crypto successfully scraped and scrapped to get a foot in the door in Washington. But in the wake of crypto’s winter, and FTX’s spectacular collapse, that door has now slammed shut.