• In its latest World Economic Outlook report, the International Monetary Fund upgraded its forecast for the global economy in 2023 and 2024, projecting global output to slow to 2.9% in 2023 but bouncing back to 3.1% in 2023. The IMF expects inflation to decline to a rate of 6.6% in 2023 and to 4.3% in 2024, but Pierre-Olivier Gourinchas, the IMF’s chief economist, urged central banks to continue strategies to tamp down rising prices. (The New York Times)
• Alameda Research Ltd., the trading house run by former FTX CEO Sam Bankman-Fried, is trying to claw back $446 million in loans that it had repaid to crypto lender Voyager Digital Ltd. prior to the latter company filing for bankruptcy. Alameda’s attorneys wrote in court filings that the company may seek additional funds from Voyager. (Bloomberg)
• Commissioner Caroline Crenshaw of the Securities and Exchange Commission would like to see greater transparency for investors who buy company stock via private placements, warning in a speech of the “unintended and perverse consequence” of how some companies leverage less-stringent SEC disclosure rules that were meant for smaller businesses. Crenshaw noted that private companies now have access to large amounts of private capital, citing FTX and Theranos as examples of companies that utilized these disclosure exemptions, and recommended a two-tiered approach that would require increased disclosures for larger deals. (Financial Times)
• A group of 24 Senate Republicans, led by Sens. Mike Lee (Utah) and Ted Budd (N.C.), sent a letter to President Joe Biden stating they will not vote to pass any legislation to raise the federal debt ceiling unless it is accompanied by either cuts or meaningful structural reform in spending. The letter said that the Prevent Government Shutdowns Act and the Full Faith and Credit Act could be utilized to fund the government and prioritize federal debt payments if Congress fails to reach a consensus before the government hits the funding limit. (The Hill)

Even on $100,000-Plus, More Americans Are Living Paycheck to Paycheck

Bloomberg

$5.4 billion in covid aid may have gone to firms using suspect Social Security numbers

Tony Romm, The Washington Post

The findings from the nation’s top pandemic watchdog come as House Republicans plan to hold their first hearing this week on coronavirus-related fraud.

House passes bill to protect elderly, vulnerable Americans from financial exploitation

Eric Revell, Fox Business

The House on Monday passed a bipartisan bill that aims to prevent the financial exploitation of elderly and disabled Americans by scammers amid a surge in such crimes that have impacted one in five senior citizens.

Key Part of Biden’s Student Loan Plan Carries Hefty Price Tag

Mackenzie Hawkins, Bloomberg

A central piece of President Joe Biden’s student-debt reform package could cost as much as $361 billion over the next decade, according to a new estimate from the University of Pennsylvania’s Wharton School.

AIG fires interim chief financial officer

Stephen Foley, Financial Times

Insurer says Mark Lyons violated confidentiality rules.

Trump Used Records Requests to Hinder IRS Release of His Tax Returns

Jason Leopold and Laura Davison, Bloomberg

Donald Trump demanded reams of information from the Internal Revenue Service as it was preparing to turn over his personal tax returns to a congressional committee, papering the agency with a deluge of Freedom of Information Act requests in search of a behind-the scenes look at its deliberations, new documents show.

Can Joe Manchin Broker a Debt Deal as Republicans Try to Unseat Him?

Luke Broadwater, The New York Times

As Democrats unleashed relentless criticism against Speaker Kevin McCarthy last week, portraying him as a reckless politician willing to force the country into default and slash bedrock entitlement programs, one of their own spoke up in the top Republican’s defense: Senator Joe Manchin III of West Virginia.

W.H. will release budget in early March

Jake Sherman and John Bresnahan, Punchbowl News

The Biden administration plans to release the president’s budget March 9, according to multiple sources familiar with the plan.

No permanent successor in sight as Kansas City Fed president retires

Kyle Campbell, American Banker

Esther George, president of the Federal Reserve Bank of Kansas City, is poised to leave office this week without a permanent successor.

Yellen Sees Low Inflation as More Likely Long-Term Challenge

Christopher Condon, Bloomberg

US Treasury Secretary Janet Yellen said persistently weak inflation is likely to return as a long-term challenge for the economy and policymakers once pandemic-era distortions behind the recent surge subside and prices cool.

Ways and Means Chairman Plans Aggressive IRS Oversight, Implements Direct Online Committee Portal for Agency Whistleblowers

Jeff Carlson, Reuters

The House Ways and Means Committee has established an online form to assist IRS personnel who wish to submit information confidentially to the Committee regarding any inappropriate behavior or mishandling of taxpayer information at the agency.

Wall St. Is Counting on a Debt Limit Trick That Could Entail Trouble

Jeanna Smialek et al., The New York Times

If the debt limit is breached, investors expect Treasury to put bond payments first. It’d be politically and practically fraught.

‘Intellectually bankrupt’: Biden allies blast GOP debt-limit backup plan

Zachary Warmbrodt, Politico

Washington and Wall Street are ramping up discussions around contingency plans after the U.S. hit its legal borrowing limit on Jan. 19.

The U.S. Consumer Is Starting to Freak Out

Harriet Torry and Joe Pinsker, The Wall Street Journal

The flush savings accounts and cheap credit that helped keep Americans spending at high rates since 2020 are disappearing.

Fed’s Interest-Rate Strategy in 2023 Hinges on How Quickly Rate Increases Slow Economy

Nick Timiraos, The Wall Street Journal

Federal Reserve officials’ deliberations this week over how much more to raise interest rates will hinge on how much they expect the economy to slow this year.

The 2% target: Central banks’ inflation touchstone faces post-pandemic reckoning

Howard Schneider et al., Reuters

Top central bankers, who credit the use of a 2% inflation target with anchoring decades of stable prices, are facing the first full-on test of how well that approach to monetary policy works once prices have erupted, and how strictly they’ll enforce it if damage to their economies intensifies.

Smaller Rate Increase by Federal Reserve Is Likely as Inflation Cools

Jeanna Smialek, The New York Times

Federal Reserve officials are widely expected to raise interest rates by a quarter point at their meeting this week, further slowing what had been an aggressive pace of rate increases in 2022 as they wait to see how swiftly inflation will fade.

JPMorgan reviews oversight of traders amid boom in financial markets – sources

Stefania Spezzati, Reuters

JPMorgan Chase & Co. is working with KPMG to improve how the U.S. bank supervises its traders, sources with knowledge of the review told Reuters, as Wall Street wrestles with how to spot potential wrongdoing during a securities trading boom.

Goldman transferred privately held Russian assets to former employees

Joshua Franklin in New York and Max Seddon, Financial Times

Western banks are exiting the country following the invasion of Ukraine.

Banks say CFPB’s data access rule ratchets up liability risks

Kate Berry, American Banker

Banks and credit unions are raising concerns about data security risks and oversight of third-party partners as the Consumer Financial Protection Bureau crafts rules around how much control consumers have over their own financial data.

The Philadelphia Eagles Are Getting One of Goldman’s Top Traders

Sridhar Natarajan, Bloomberg

A Goldman Sachs trader is headed to the Philadelphia Eagles, though not in time for the Super Bowl. Adam Berry, head of US loan trading at the Wall Street firm, is leaving his post to take up an executive position with the Eagles, according to people with knowledge of the matter.

Long Covid has an ‘underappreciated’ role in labor shortage, study finds

Greg Iacurci, CNBC

Long Covid is keeping people out of work and may reduce on-the-job productivity for others, contributing to a labor shortage and weighing on the U.S. economy at large, according to a new study.

Politicians Want to Keep Money Out of E.S.G. Funds. Could It Backfire?

Ron Lieber, The New York Times

States are supposed to act in the best interests of citizens and retirees. Divesting from E.S.G. funds and companies like BlackRock that run them may create legal jeopardy.

Net-Zero Asset Owner Alliance increases scope, expectations for asset owners in 2023 and beyond

Hazel Bradford, Pensions & Investments

Members of the United Nations-convened Net-Zero Asset Owner Alliance are ramping up the scope and expectations for achieving net-zero targets, according to the latest edition of their target-setting protocol released Tuesday.

Consumer credit resilient even as debt, delinquencies rise

Bonnie Sinnock, National Mortgage News

Credit scores, particularly among borrowers in the mortgage market, have held up relatively well as inflation has risen, though some other indicators point to potential strain.

People who posted Sam Bankman-Fried’s bail should be named, U.S. judge rules

Jonathan Stempel, Reuters

A U.S. judge on Monday said the names of two people who helped guarantee bail for indicted FTX cryptocurrency exchange founder Sam Bankman-Fried should be made public, but put his ruling on hold pending an expected appeal.

Stripe in Talks to Raise Up to $3 Billion From Current Investors

Jessica E. Lessin et al., The Information

Less than a week after telling employees that it would evaluate a public offering over the next year, payments giant Stripe is moving quickly on a deal to raise as much as $3 billion from its existing investors.

Celsius Used New Customer Funds to Pay for Withdrawals: Independent Examiner

Jack Schickler, CoinDesk

Shoba Pillay was appointed by a New York bankruptcy court to look at whether the crypto lender operated as a Ponzi scheme.

Prosecutors say Sam Bankman-Fried tried to obscure his crimes with Robinhood’s stock

Kara Scannell, CNN

Federal prosecutors said FTX founder Sam Bankman-Fried’s efforts to control about $500 million worth of Robinhood shares last year indicates steps the former crypto entrepreneur has taken to “obscure” his alleged crimes.

U.S. says FTX founder Bankman-Fried needs limits on communications, asset access

Jonathan Stempel, Reuters

The U.S. government on Monday urged a judge to reject Sam Bankman-Fried’s claim it went too far by insisting that the indicted founder of the now-bankrupt FTX cryptocurrency exchange be banned from contacting his former colleagues.

Crypto collapse spurs calls for new rules to crack down on abuse

Sam Sutton, Politico

The epic implosion of digital exchange FTX is sparking a torrent of lawsuits and legal threats among crypto financiers scrambling to salvage what they can from the wreckage. Small investors stand little chance of being made whole.

Block.one’s revived $22 mln settlement could be template for crypto class actions

Alison Frankel, Reuters

After the rejection last summer of a proposed $27.5 million settlement of tokenholders’ class action securities fraud claims and an aborted takeover of the litigation by a different plaintiffs’ firm, blockchain company Block.one has reached a new $22 million deal with investors – and this one could turn out to provide a template for future crypto class action settlements.

Celebrities Who Endorsed Crypto, NFTs Land in Legal Crosshairs After Investor Losses

Corinne Ramey et al., The Wall Street Journal

Madonna sang the praises of nonfungible tokens, or NFTs, depicting cartoon portraits of bored apes. Tampa Bay Buccaneers quarterback Tom Brady appeared in commercials endorsing crypto exchange FTX, which collapsed suddenly in November. And Kim Kardashian gushed about EMAX tokens on Instagram.