• Goldman Sachs Group Inc. reported first-quarter profit of $3.09 billion, down from $3.83 billion a year earlier, with the bank’s quarterly revenues down 5% to $12.22 billion amid a decline in dealmaking and a loss of about $470 million related to the sale of some of its consumer banking unit’s loans. (Reuters) Bank of America Corp. posted first-quarter revenue of $26.39 billion, beating analyst expectations of $25.13 billion, thanks in part to a 25% year-over-year boost in net interest income, which totaled $14.4 billion in the quarter. (CNBC)
• House Speaker Kevin McCarthy (R-Calif.) said in the coming weeks that the chamber would vote to pass a bill that would raise the country’s debt limit through an unspecified date in 2024, lower federal spending to 2022 levels, hold spending growth to 1% over the next 10 years, claw back unused COVID-19 federal funding and increase work requirements for federal assistance programs. In a speech at the New York Stock Exchange, McCarthy called the White House’s refusal to negotiate over the debt ceiling “partisan political games” that threatened to provoke a crisis, while Democrats called the GOP spending cuts extreme and reiterated that cuts should not be tied to the debt ceiling. (NPR News)
• President Joe Biden will sign an executive order today that includes more than 50 directives for various cabinet-level agencies aimed at increasing the affordability of child care and improving access, federal coverage and transparency for home care services, including for veterans. White House officials told reporters that the executive order will lay out a clear set of policy priorities intended to improve existing practices, and Council of Economic Advisers member Heather Boushey noted that the rising cost of child and home care is preventing workforce participation by women. (NBC News)
• Charles Schwab Corp., State Street Corp. and M&T Bank Corp. saw a combined $60 billion in bank deposit outflows in the first quarter as banking customers continue to move money in search of higher returns. Traditional banks are facing a new threat to customer retention as Apple Inc., in partnership with Goldman Sachs, launched a new savings account for U.S. customers that will pay a market-leading interest rate of 4.15% per year, well above the average U.S. bank savings account rate of 0.37%. (Financial Times)

Worth watching:

• Securities and Exchange Commission Chair Gary Gensler will testify in an oversight hearing before the House Financial Services Committee.
• Housing and Urban Development Secretary Marcia Fudge, Education Secretary Miguel Cardona and Commerce Secretary Gina Raimondo testify in budget hearings before the House Appropriations Committee.
• The Senate Banking Committee will hold a hearing to consider the nominations of Jared Bernstein as chairman of the Council of Economic Advisers, Ron Borzekowski as director of financial research at the Treasury Department, and Solomon Jeffrey Greene and David Uejio as assistant secretaries at HUD.
• Fed Governor Michelle Bowman will speak at a Georgetown University event on central bank digital currencies.

Consumers Face Worsening Financial Well-Being Following a Year of Inflation, Nagging Debt

Morning Consult

Tedeschi tapped as CEA chief economist

Victoria Guida and Katy O’Donnell, Politico Pro

The White House has tapped Ernie Tedeschi to be chief economist at the Council of Economic Advisers, according to a Biden administration official.

SEC Chair Gensler to Defend Climate, Crypto Plans Before GOP-Led Panel

Paul Kiernan, The Wall Street Journal

Securities and Exchange Commission Chair Gary Gensler is set to defend his regulatory agenda Tuesday before a House panel that has grown hostile to his plans under Republican leadership of the committee.

EY to cut 3,000 jobs in US to eliminate ‘overcapacity’

Stephen Foley, Financial Times

Move by ‘Big Four’ accounting firm comes just days after collapse of plan to split group up.

Americans Using Buy Now, Pay Later for Groceries Risk ‘Cycle of Debt’

Augusta Saraiva and Paulina Cachero, Bloomberg Businessweek

With inflation squeezing budgets, more consumers are turning to instant credit apps to make ends meet.

These veterans’ student loans are gone, but so are their GI Bill benefits. How that could change

Arit John, Los Angeles Times

Legislation introduced last month would restore benefits to veterans who attended programs that qualified for borrower defense discharges or were found to have defrauded students by state or federal officials. The bill is up for a vote in the House Veterans’ Affairs panel’s Economic Opportunity subcommittee on Tuesday.

Tax Day Cash Will Indicate Just How Close US Is to Default

Alex Harris, Bloomberg

The question of when the US could default will come into sharp relief this week when the Treasury reveals how big its tax take is likely to be. With the political battle over the statutory debt ceiling set to amp up again, the Treasury’s tax receipts will give a clearer idea of how much cash it will have on hand as it approaches the limits imposed by the $31.4 trillion cap that will prevent it from borrowing.

McConnell returns to Senate, urges Biden to ‘stop wasting time’ on debt ceiling

John T. Bennett, Roll Call

Minority Leader Mitch McConnell returned to the Senate on Monday weeks after suffering a concussion and fractured rib in a fall, jumping back into the fray by accusing President Joe Biden of taking an “extreme position” over a coming debt ceiling deadline.

House GOP puts on united front as conflict brews behind the scenes

Marianna Sotomayor and Leigh Ann Caldwell, The Washington Post

After 100 days in control, House Republicans have not reached consensus on how they will handle a vote on raising the debt ceiling — a critical piece of legislation that, if not passed, has global economic implications.

Fed’s Barkin Wants More Evidence Inflation Is Easing to 2% Goal

Alister Bull, Bloomberg

Richmond Federal Reserve President Thomas Barkin said he wants to see more evidence that US inflation is easing back to the central bank’s goal of 2%.

White House economists: There isn’t a “missing worker” problem anymore

Neil Irwin, Axios

One of the most persistent economic narratives of 2021 and 2022 was that of missing workers. Many Americans seemed to have simply vanished from the labor force during the pandemic, leaving employers in a lurch. That’s no longer the case, White House economists argue in a new post presenting evidence that labor supply has returned to its pre-pandemic trend.

China to Be Top World Growth Source in Next Five Years, IMF Says

Alexandre Tanzi, Bloomberg

China will be the top contributor to global growth over the next five years, with its share set to be double that of the US, according to the International Monetary Fund.

Cleveland Fed report says near-term inflation expectations data now key

Michael S. Derby, Reuters

Contrary to how many Federal Reserve officials have tended to focus on longer-run inflation expectations data as a tool to divine real world price pressures, a Cleveland Fed report released on Monday said shorter-run expectations may be the more important factor to watch right now.

Calling the IRS? Hold times are way down this tax season

Fatima Hussein, The Associated Press

Taxpayers who called the IRS had an average wait time of four minutes this tax season compared to 27 minutes a year earlier, the agency said Monday.

Biden administration wants to more rigorously audit the 1% — but that will be a lot trickier than it sounds

Andrew Keshner, MarketWatch

The Internal Revenue Service has a plan for how it wants to use $80 billion to revamp the agency, and revive high-end audits. Wally Adeyemo, the deputy secretary at the Treasury Department, said Monday he knows the tough job that’s ahead.

Fewer electric vehicles qualify for federal tax credits under new rules

Jeanne Whalen, The Washington Post

American brands dominate a shorter list of electric vehicles that now qualify for consumer tax credits, after the Biden administration on Monday announced the models that meet tough new rules on where vehicle batteries must originate.

Wells Fargo Sells $3.8 Billion in First Post-SVB Big Bank Sale

Olivia Raimonde, Bloomberg

Wells Fargo & Co. tapped the high-grade corporate bond market Monday, the first large US lender to sell bonds since the collapse of Silicon Valley Bank.

Are Federal Home Loan Bank advances a sign of distress?

Kate Berry, American Banker

The Federal Home Loan Bank System has played an outsized role in shoring up the balance sheets of hundreds of banks this year, including banks that have failed and banks that are still under stress. Home Loan bank executives say the system is working precisely as Congress intended it to.

Bank Pullback Leaves Buyout Firms Starving for Bridge Loans

Chris Cumming, The Wall Street Journal

Reduced bank lending and higher interest rates are chipping away at a practice that investors have complained about for years: private-equity firms’ use of bridge loans to artificially enhance performance.

JPMorgan Seeks Identity of Epstein Victim in Deutsche Bank Suit

Ava Benny-Morrison, Bloomberg

JPMorgan Chase & Co., which is facing a lawsuit by a Jane Doe victim of Jeffrey Epstein, is trying to learn the identity of another Jane Doe making similar claims against Deutsche Bank AG.

Few Banks Are Hedging Interest-Rate Risk

Matt Grossman, The Wall Street Journal

Few U.S. banks protected themselves against rising interest rates during the Federal Reserve’s monetary-tightening campaign last year, according to a research paper that says unhedged securities holdings are more widespread than investors might realize.

First Republic Worked Hard to Woo Rich Clients. It Was the Bank’s Undoing

Noah Buhayar et al., Bloomberg

The bank attracted wealthy clients with loans that have become a costly hurdle to finding a rescuer.

More than a quarter of Americans have no money saved for retirement.

Paulina Cachero, Bloomberg

That’s according to a new survey from personal finance site Credit Karma, which found older respondents are even less prepared by some measures than their younger counterparts.

$1 million isn’t enough to retire on in comfort, many Americans say

Alicia Adamczyk, Fortune

As the cost of living in the U.S. creeps further and further upward, American workers are rethinking how much they’ll need to save for a comfortable retirement. And it’s a lot more than they think they’ll be able to put away.

BlackRock Sees Big Investors Boosting Private Equity, PE Stakes

Silla Brush, Bloomberg

BlackRock Inc. said it expects institutional investors to increase allocations to private equity and private credit funds this year even amid recession fears and rising interest rates. Investors including pension funds, family offices and insurers currently allocate 24% of their portfolios, on average, to private markets, according to a newly released BlackRock survey of senior executives and allocators at more than 200 firms managing a total of $15 trillion.

BlackRock Calls Time on 60/40 in New Regime of High Inflation

Richard Henderson, Bloomberg 

BlackRock Inc. strategists are ditching the 60/40 portfolio in favor of public and private investments as well as tactical holdings of bonds to navigate higher interest rates.

Landlords pumped billions into apartment buildings during the pandemic. That bet could now go horribly wrong.

Daniel Geiger, Insider

While offices have been going through a paradigmatic shift as more workers do their jobs remotely, apartment buildings have experienced robust demand from tenants.

Mortgage forbearance improves as pandemic emergency draws to a close

Connie Kim, HousingWire

MBA forecasts a recession in 2023, but credit quality is generally good, and borrowers can access enhanced loss mitigation options.

Rising Interest Rates Brought Down Reverse-Mortgage Lender

Akiko Matsuda, Wall Street Journal Pro

A government-backed reverse-mortgage program intended to help seniors tap their home equity ran into problems as interest rates rose, pushing one of the largest participating lenders into bankruptcy last fall, recent court documents show.

SEC Sues Bittrex Crypto Exchange and Former CEO

Dave Michaels, The Wall Street Journal

Securities regulators sued Bittrex, a crypto exchange that once ranked as the biggest U.S.-based platform for trading digital assets. The Securities and Exchange Commission’s lawsuit, filed in Seattle federal court, accuses Bittrex Inc. of operating an illegal securities exchange, broker-dealer and clearinghouse.

New York is making crypto compliance more expensive

John Adams, American Banker

New York has updated state digital currency regulations, requiring cryptocurrency firms to adhere to rules similar to more mature financial industries such as banking and insurance, a move that also comes with higher costs. Adrienne Harris, New York’s Superintendent of Financial Services, on Monday announced companies holding a NYDFS-issued BitLicense will be subject to rules modeled after banking supervision.

FTX celebrity promoters say crypto investors cannot sue over accounts

Jody Godoy, Reuters

Celebrities who promoted FTX, including NFL quarterback Tom Brady and comedian Larry David, said an investor lawsuit seeking damages in the wake of the cryptocurrency exchange’s collapse should be dismissed.

Coinbase Could Move Away From U.S. if No Regulatory Clarity: CEO Brian Armstrong

Jamie Crawley, CoinDesk

Armstrong said “anything is on the table” in terms of the crypto exchange’s plans should greater regulatory clarity not emerge in the U.S.

Gary Gensler’s new assault on DeFi puts him on a legal limb

Jeff John Roberts, Fortune

The world of decentralized finance gave a collective shudder this weekend upon learning the Securities and Exchange Commission wants to amend a regulation that defines exchanges. This is the third time the SEC has tweaked its proposed amendment, and the latest version is aimed directly at DeFi platforms.

Do Kwon Loses Bid to Block SEC From Seeking Singapore Records

Chris Dolmetsch, Bloomberg

The SEC can seek records from the Singapore Monetary Authority as part of the US regulator’s lawsuit against Terraform Labs and founder Do Kwon, a judge ruled.