• Vice President Kamala Harris announced that the Treasury Department’s Community Development Financial Institutions Fund will provide $1.7 billion in grants for more than 600 community lenders to support communities rebounding from the COVID-19 pandemic. Harris said the funds — which are not loans and do not need to be paid back — will be directed to institutions that primarily serve minority communities. (The Hill)
• The Commodity Futures Trading Commission said Goldman Sachs Group Inc. will pay $15 million to settle claims that it failed to inform clients in 2015 and 2016 that it had priced overseas derivatives in a way that put the clients at a disadvantage. The CFTC said in the settlement order with a unit of Goldman that the pricing of the swaps put clients “underwater” at the beginning of the trade, and by settling, Goldman admitted that it failed to disclose important pricing details. (The Wall Street Journal)
• In a press conference today during the World Bank and International Monetary Fund meetings, Treasury Secretary Janet Yellen plans to push for the confirmation of Ajay Banga as president of the World Bank and reiterate her belief in the strength of the U.S. banking system, a senior Treasury official said. The official said there would be no big announcements on the topic of bank stability during the week. (Politico)
• New York Fed President John Williams said he isn’t too worried that investors in interest-rate futures are betting on a sharp cut in the Fed’s benchmark interest rate, saying that investors may be anticipating a more severe economic slowdown than Fed officials are, or investors may be more optimistic about how fast inflation can reach the Fed’s 2% target rate. Investors in interest-rate futures markets have bet that the Fed will cut interest rates beginning in September, while Fed officials have said they plan to hold rates steady after raising them to just above 5%. (The Wall Street Journal)

Worth watching:

• Chicago Fed President Austan Goolsbee speaks at the Economic Club of Chicago.
• Minneapolis Fed President Neel Kashkari will participate in a town hall at Montana State University.
• Philadelphia Fed President Patrick Harker speaks at a Wharton Initiative on Financial Policy and Regulation event.
• Consumer Financial Protection Bureau Director Rohit Chopra joins Washington Post Live to discuss recent banking failures.
• CFTC Chairman Rostin Behnam will give a keynote address at the National Credit Union Administration’s Capital Markets Symposium.
• Social Security Administration acting Commissioner Kilolo Kijakazi joins the Urban Institute for a virtual event.

Ranked: The U.S. Banks With the Most Uninsured Deposits

Visual Capitalist

Lawmakers Trade Bank Stocks While Working on U.S. Bank-Failure Fallout

Rebecca Ballhaus, The Wall Street Journal

Two lawmakers reported trades in bank stocks last month as they worked on government efforts to address fallout from two of the largest bank failures in American history.

A group of Democrats wants to make sure the Federal Student Aid office gets the funding it needs next year.

Ayelet Sheffey, Insider

Millions of student-loan borrowers will face ‘catastrophic consequences’ like delays in debt relief if Congress doesn’t give Biden’s Education Department more money, 17 Democratic lawmakers say.

​​Climate Change and Poverty Pose Challenge to World Bank

Yuka Hayashi and Andrew Duehren, The Wall Street Journal

As organization overhauls lending, a question of how to divvy up limited resources.

Biden’s student loan forgiveness plan may cause a drop in credit scores for some borrowers

Annie Nova, CNBC

The Biden administration’s sweeping plan to cancel up to $20,000 in student debt for tens of millions of Americans may have an unintended, though hopefully temporary, consequence for some people, experts say.

Small business owners feel the credit crunch

Mae Anderson and Anne D’Innocenzio, The Associated Press

When Nat West, owner of cider-making company Reverend Nat’s Hard Cider, decided to supplement his wholesale business by opening a taproom in a bustling neighborhood in Portland, Oregon, he thought getting financing would be a breeze.

Federal budget deficit hits $1.1 trillion over six months: CBO estimates

Aris Folley, The Hill

The federal budget deficit reached $1.1 trillion in the first six months of fiscal 2023, the Congressional Budget Office (CBO) estimated in a report released Monday.

US Treasury sees continued global growth despite strains in banking sector

Andrea Shalal, Reuters

The U.S. banking system remains strong and resilient, but American officials will continue working with foreign counterparts to bolster financial resilience after recent bank failures, U.S. Treasury Undersecretary Jay Shambaugh said on Monday.

Top Treasury Official Says US Not Seeking China Decoupling

Viktoria Dendrinou and Christopher Condon, Bloomberg

The US is not seeking to decouple its economy from China or limit the country’s growth, the Treasury’s top international official said on Monday.

NY Fed survey finds Americans more downbeat on credit access

Michael S. Derby, Reuters

Americans said last month that access to credit was at its toughest level in nearly a decade, as they also braced for higher levels of inflation over the next few years, a report from the New York Fed said Monday.

Bank Turmoil Squeezes Borrowers, Raising Fears of a Slowdown

Jeanna Smialek, The New York Times

Economists are watching for the aftereffects of recent bank collapses across many industries. How bad could it get?

US Online Prices Decline for a Seventh Month on Annual Basis

Alexandre Tanzi, Bloomberg

Online prices in the US dropped 1.7% in March from a year earlier, the seventh-straight decline and the sharpest retreat in four months.

No escape from the zero lower bound for top central banks, IMF says

Howard Schneider, Reuters

Interest rates eventually should fall back to levels seen before the outbreak of COVID-19, with advanced economies again within sight of the “zero lower bound” and developing countries seeing rates in steady decline, the International Monetary Fund said in a new analysis of whether the “natural” rate of interest was changed by the pandemic.

Tumbling Money Supply Alarms Economists Who Foresaw Inflation

Philip Aldrick, Bloomberg

Money supply growth is collapsing in the UK, eurozone and US, and they read that as a warning of recession and deflation. Central bankers have raised interest rates too far and, if the so-called monetarists are proved right again, they say there should be a “clear out” of officials.

The ‘rift is there’: China vs. the world on global debt

Adam Behsudi, Politico

As more countries start to default on their debt, China is refusing to forgive its loans — creating new tension with the U.S. and its allies.

IRS proposes new regs to crack down on micro-captives

Michael Cohn, Accounting Today

The Internal Revenue Service and the Treasury Department proposed regulations to identify micro-captive transactions as abusive tax transactions after the Supreme Court ruled against the IRS in a case two years ago involving the transactions.

Government Posing Greater Risk to Corporate Profits, Chamber Study Finds

Brody Mullin, The Wall Street Journal

Review of annual reports shows more references to policy shifts that could dent bottom lines.

Elizabeth Warren, AOC Ask SVB Depositors to Detail Ties to Bank

Hannah Miller, Bloomberg

Senator Elizabeth Warren of Massachusetts and Representative Alexandria Ocasio-Cortez of New York sent letters Sunday to 14 of the largest depositors with Silicon Valley Bank that raised concerns over the failed bank’s relationship with some of the venture capitalists and tech founders who made up much of its customer base.

Big US banks expected to report deposit flight in upcoming earnings

Joshua Franklin, Financial Times

Customers pulled almost $100bn from ‘Big Four’ retail lenders in first quarter, according to analysts’ forecasts.

Collapse of SVB, Signature Bank Tests the FDIC’s Executive Reserve Corps

Candice Choi and Ben Eisen, The Wall Street Journal

Tim Mayopoulos was squashed into a middle seat in coach on his flight to San Francisco, the only one available when he booked that afternoon. The Wi-Fi wasn’t working, so he pulled out a notepad to jot down what he would say to employees when he started his new job as chief executive of the failed Silicon Valley Bank the next morning.

Swiss parliament holds emergency session on Credit Suisse rescue

Noele Illien and John Revill, Reuters

Since Switzerland’s authorities last month pulled out all the stops to rush through a rescue of Credit Suisse, a storm has been brewing in the normally tranquil country. The unusual event – the third such session in over twenty years – provides parliament with a chance to reject the massive loans given as part of the rescue package.

Bank crisis shows signs of easing as FHLB debt issuance shrinks in late March

Austin Weinstein, National Mortgage News

The Federal Home Loan Bank system issued $37 billion in debt in the last week of March, a sharp drop-off from the $304 billion two weeks earlier, according to a person familiar with the matter. That plunge from an all-time peak earlier in the month is an early sign that the banking crisis has started to subside.

Regional Bank Pullback Exposes Widest Spreads In Years on Commercial Mortgage Bonds

Scott Carpenter, Bloomberg

Bonds tied to commercial mortgages are getting punished as money managers fret that US regional bank blowups will cut the availability of credit, but investors including GMO say there are good bargains available to those willing to carefully vet the securities.

Freddie Mac investors’ class certification ‘ploy’ shot down by appeals court

Alison Frankel, Reuters

You have to give points for creativity to an Ohio pension fund that lost big when Freddie Mac’s share price nosedived at the beginning of the subprime mortgage crisis in 2007.

Advocates eye farm bill to avert drop in affordable rural housing

Caitlin Reilly, The Hill

Housing advocates are turning to this year’s farm bill in an effort to steer rural communities away from an affordable housing cliff ahead.

Falling mortgage rates offer little relief for home buyers

Adam Barnes, The Hill

Mortgage rates are falling steadily after months of varied increases and short reprieves.

Winklevoss Twins Lend $100 Million to Their Gemini Crypto Platform

Hannah Miller et al., Bloomberg

Billionaires Tyler and Cameron Winklevoss dipped into their own pockets to support their crypto exchange Gemini Trust Co., which has faced numerous setbacks during the yearlong market downturn for digital assets.

The Real-World Costs of the Digital Race for Bitcoin

Gabriel J.X. Dance, The New York Times

Bitcoin mines cash in on electricity — by devouring it, selling it, even turning it off — and they cause immense pollution. In many cases, the public pays a price.

Cryptoverse: Ethereum upgrade to unlock $33 billion

Medha Singh and Lisa Pauline Mattackal, Reuters

Investors are finally set to gain access to more than $33 billion of ether this week under a planned revamp of the blockchain.

Montenegro’s Central Bank to Develop CBDC Pilot With Ripple

Jamie Crawley, CoinDesk

The pilot will see the central bank identify the practical application of a national stablecoin and come up with a design to simulate its circulation.

Inca Digital awarded DARPA contract to map crypto contagion risk

Crystal Kim, Axios

There are many theories out there that say crypto could ruin everything — and now the U.S. has given one firm the nod to study how.

The making of Binance’s CZ: An exclusive look at the forces that shaped crypto’s most powerful founder

Jeff John Roberts and Yvonne Lau, Fortune

Changpeng Zhao is perched in front of a bookshelf at his apartment in Dubai, a place that—along with Paris—he currently calls home. Speaking over video, he is affable and mild-mannered, even self-deprecating. It’s a persona that clashes with the Zhao that his rivals know best: a sharp-elbowed executive who built Binance into the biggest and most influential cryptocurrency exchange in the world.