• Barclays PLC said Britain’s Financial Conduct Authority and the Bank of England’s Prudential Regulation Authority are investigating its chief executive’s links to financier Jeffrey Epstein, who died last year while he faced charges of sex trafficking underage girls. During an earnings call with reporters, Jes Staley said that he didn’t know Epstein well, although he thought he did, and that he deeply regrets any relationship he had with Epstein. (Financial Times) 

• The federal budget deficit increased 25 percent in the first four months of the fiscal year to $389 billion as a quirk in the fiscal calendar moved forward the payment of federal benefits. Otherwise, the deficit would have been 6 percent larger with receipts and outlays each rising 7 percent. (The Wall Street Journal) 

• Independent advisers connected with Sen. Bernie Sanders’ (I-Vt.) campaign are beginning to think about who could lead key agencies such as the Treasury Department if Sanders wins the presidency, although more than a dozen internal and external advisers caution that this speculation is preliminary and many decisions have not been made. People who work with the campaign speculate that economists who have worked with Sanders on his campaigns could be tapped for key roles, including Jeffrey Sachs of Columbia University, Stephanie Kelton of Stony Brook University, former Clinton administration Labor Secretary Robert Reich and Nobel laureate Joseph Stiglitz. (The Washington Post) 

Correction: Due to an editing error, Wednesday’s newsletter misstated the number of prosecutors who resigned in Roger Stone’s case. Four withdrew from the case, and one of those prosecutors resigned. 

The Biggest Fan of Trump’s Steel Tariffs is Suing Over Them
Bryan Gruley and Joe Deaux, Bloomberg Businessweek

John Hritz, president and chief executive officer of JSW Steel USA Inc., put on a big smile and a Texas flag pin for his television spot on Fox Business in March 2018. “It’s a special day,” he told his host, then told her again: “It’s a special day.”

‘Trump can absolutely kill him’: Wall Street shrugs off Sanders
Ben White, Politico 

An avowed democratic socialist narrowly won the New Hampshire primary, propelled by promises to jack up taxes on the rich, nationalize health care and take a sledgehammer to the nation’s banking behemoths. Wall Street has so far reacted to the rise of Sen. Bernie Sanders with a massive yawn — because few in the industry think the Vermont senator has a real shot at becoming president.

As Congress Prepares to Vet Judy Shelton, Worries About the Fed’s Future Mount
Jeanna Smialek, The New York Times

Senators will vet Judy Shelton, a prominent Federal Reserve critic, for one of the central bank’s top jobs on Thursday, a moment that many economists will be watching closely because they see her as a potential threat to the Fed’s prized independence. Ms. Shelton has rhetorically questioned whether America even needs the Fed.

Trump’s Fed Nominees to Face Questions from Senators
Nick Timiraos, The Wall Street Journal

Judy Shelton and Christopher Waller, President Trump’s latest nominees to the Federal Reserve Board, head to Capitol Hill on Thursday for their confirmation hearing at the Senate Banking Committee. Ms. Shelton was an informal adviser to Mr. Trump’s 2016 campaign and served for less than two years as the U.S. envoy to the European Bank for Reconstruction and Development. 

Fed’s Daly says US job market still has room to run
Laura Noonan and Brendan Greeley, Financial Times

Long-term unemployment rate may be as low as 3.5%, San Francisco Fed president says.

Fed Picks Shelton, Waller: Two Mavericks with Little in Common
Craig Torres and Christopher Condon, Bloomberg

One is a credentialed insider who’s spent years at the Federal Reserve. The other is an idiosyncratic outsider who’s questioned why the Fed even exists.

U.S. Weighs Higher Tariff Ceilings in Bid for More Sway Over WTO
Bryce Baschuk and Jenny Leonard, Bloomberg

The U.S. is weighing a plan to increase its long-standing ceiling on tariffs in a move meant to trigger a renegotiation of relationships with fellow World Trade Organization members and step up its assault on the global trading system. President Donald Trump and senior aides have long complained about the fact that other countries can charge higher tariffs on certain products than the U.S. does. 

China Navigates the Latest Threat to Its Debt-Fueled Boom
Bloomberg Businessweek

For a decade, hedge fund managers and short sellers have unfurled dire and bold warnings about potentially catastrophic losses in China’s financial system. Jim Chanos, famous for predicting the 2001 collapse of Enron Corp., memorably said in 2010 that China’s reliance on real estate for growth was a “treadmill to hell.”

Central Banks Adopt Cautious Outlook on Coronavirus
Nick Timiraos, The Wall Street Journal

Central bankers are adopting a cautious stance as they consider how the coronavirus outbreak in China could ripple through the global economy in the coming months. Over two days of hearings on Capitol Hill, Federal Reserve Chairman Jerome Powell offered an upbeat assessment of the U.S. economy while warning of risks to global supply chains from production shutdowns in China.

Stocks Slide as Virus Cases Jump; Bonds Advance: Markets Wrap
Yakob Peterseil, Bloomberg

U.S. equity futures slumped alongside European stocks on Thursday as officials in China deployed a revised methodology to diagnose the coronavirus, sending the number of confirmed cases soaring. Treasuries, gold and the yen all advanced.

JPMorgan Accused of Bias Against Black Personal Bankers
Patrick Dorrian, Bloomberg Law

JPMorgan Chase Bank NA discriminates against its black personal bankers by systematically assigning them to lower-income branches where they’re exposed to greater risks of physical harm, a new class lawsuit filed in federal court in New Orleans charges. Angela Dunn filed the suit on behalf of herself and all other black personal bankers nationwide who were subjected to the bank’s racially discriminatory policies and practices at any time in the past four years.

Munger Says Wells Fargo CEO Ought to Be in San Francisco
Katherine Chiglinsky, Bloomberg

Charles Munger, whose Berkshire Hathaway Inc. and Daily Journal Corp. are shareholders in Wells Fargo & Co., isn’t a fan of the work arrangement set up by the bank’s new chief executive officer. “That’s outrageous,” Munger, 96, said Wednesday in an interview when asked about Charlie Scharf’s choice to live in New York while running the San Francisco-based lender. 

Credit Suisse Posts Strong Profit on Gains in Wealth Management Business
Margot Patrick and Pietro Lombardi, The Wall Street Journal

Credit Suisse Group AG CS 1.41% reported its highest annual profit in nine years as it seeks to move on from a spying scandal that led to the resignation of its chief executive last week, with gains in its wealth management and markets businesses offsetting a decline in corporate advisory revenue. The bank said net profit more than doubled in the fourth quarter to 852 million Swiss francs ($872.6 million) compared with 259 million francs a year earlier, helping to boost full-year net profit to 3.4 billion francs.

Student Debt Forgiveness in U.S. to Total $207 Billion in Next Decade, CBO Says
Josh Mitchell, The Wall Street Journal

The U.S. government will forgive $207.4 billion in student debt for Americans who take out loans over the next decade, the Congressional Budget Office said Wednesday. The biggest benefits will go to borrowers who attend graduate or professional school.

Retirement Millionaire Crowd Swells to Record in Roaring Market
Michael McDonald, Bloomberg

The bull market is minting plenty of millionaires — at least when it comes to retirement accounts. The number of people with $1 million or more in their 401(k) or individual retirement account on the Fidelity Investments platform reached record levels last quarter, fueled by higher savings rates along with market appreciation, the fund company said in a report Thursday.

Former HUD secretary criticizes Bloomberg on housing policy
J. Edward Moreno, The Hill

Former Housing and Urban Development (HUD) Secretary Julian Castro (D) criticized presidential hopeful Michael Bloomberg for statements he made while he was mayor of New York City in 2008, at the height of the financial crisis. Bloomberg, a multi-billionaire running a self-funded presidential campaign, blamed the recession on the overturn of “redlining,” a discriminatory housing policy that made it difficult for people of color to qualify for mortgages.

In California: The state’s housing crunch is literally making people sick
Gabrielle Canon, USA Today

A room infested with mice, rats and cockroaches. Showers under a cold drip of water amid moldy walls impenetrable by bleach. Fierce asthma attacks, induced by rodent feces.

Mnuchin defends Treasury regulations on GOP tax law
Naomi Jagoda, The Hill

Treasury Secretary Steven Mnuchin on Wednesday defended his department’s regulations implementing provisions of President Trump’s tax cut law, which Democrats argue have been overly beneficial for corporations. “Our job is to implement the legislation, not to make the legislation,” Mnuchin said at a Senate Finance Committee hearing.

Goldman is going head-to-head with Silicon Valley giants for tech talent, says exec
Ari Levy, CNBC

Wall Street giant Goldman Sachs is increasingly going head-to-head with the biggest tech companies for talent as it rapidly boosts its engineering talent, said George Lee, the bank’s co-Chief Investment Officer. Speaking onstage at Goldman’s Technology and Internet Conference in San Francisco on Wednesday, Lee said that the investment bank now has 10,000 developers, making up about one-quarter of its total workforce.

Consumer Protections and the Digital Evolution in Banking
Heather Hogsett, Morning Consult

The business of banking is increasingly the business of technology. Technological innovation has given consumers ready and easy access via their mobile devices to a full range of banking products and services like traditional bill pay, the convenience of making real-time payments, instant credit, deposit and savings tools, and investment advice at reduced cost and on-demand.

The War on Judy Shelton
The Editorial Board, The Wall Street Journal

Judy Shelton finally gets her day in the Senate on Thursday, and if anyone has a coherent argument for denying her confirmation to a seat on the Federal Reserve Board of Governors we haven’t heard it. The caterwauling over her nomination confirms why her intellectual diversity is needed at the Fed.

Bernie Sanders Could Be the Stock Market’s Best Friend
Nir Kaissar, Bloomberg

Of all the candidates in the 2020 presidential field, including Donald Trump, the U.S. stock market’s biggest booster might just be Bernie Sanders. With Sanders’s victory in the New Hampshire Democratic primary on Tuesday, questions about how the market would fare if the Vermont senator were elected president will intensify.

Trump and His Budget Aren’t on the Same Page
Greg Ip, The Wall Street Journal

The budget that President Trump released this week is a model of mainstream Republican orthodoxy. It asks for more defense money to fend off “rival nation-states” like China and Russia and support allies while decrying “a bloated federal government with duplicative programs and wasteful spending.”

Diversity and Inclusion: Holding America’s Large Banks Accountable
Majority Staff of the House Financial Services Committee

Banks and other financial services firms claim to agree with the underlying premise that diverse, inclusive organizations can be more profitable and productive. But despite the known benefits, the financial services industry, including our nation’s banks, remains mostly white and male.