Morning Consult Finance will be off for the rest of the week for the Thanksgiving holiday. The newsletter will resume on Monday.
Today’s Top News
The Department of Labor issued final regulations that allow company retirement plan fiduciaries to offer retirement savings plans based on environmental, social and governance investment principles, reversing a 2020 move by the Trump administration that effectively prevented ESG investing by workplace 401(k) plans. Lisa Gomez, assistant secretary for the Labor Department’s Employee Benefits Security Administration, said the new rule allows employers to consider ESG when making investments and exercising shareholder rights, though fiduciaries must put financial returns ahead of ESG-related goals. (The Wall Street Journal)
The Education Department said it will extend the pause on payments and accumulation of interest on federal student loans, which had been scheduled to end Jan. 1, as the administration’s forgiveness program remains stalled in the federal courts. The payment pause will end 60 days after the debt forgiveness plan is allowed to be implemented, giving the Supreme Court time to hear the case as requested by the Biden administration, but if litigation is not resolved by June 30, 2023, payments will resume 60 days later. (CNBC)
In FTX’s first bankruptcy hearing, restructuring attorney James Bromley said a “substantial amount” of assets have been stolen or are missing, noting that the company had been hit with several cyberattacks since it commenced the bankruptcy process on Nov. 11. (CNN) In a letter apologizing to FTX staff, which was obtained by Bloomberg, former CEO Sam Bankman-Fried blamed a “run on the bank” and sharp falls in the cryptocurrency markets, among other factors, that led to a $51 billion crash in collateral, though he did not give details on the exact makeup of the collateral. (Bloomberg)
The Securities and Exchange Commission has fined Goldman Sachs Asset Management $4 million on grounds that it failed to follow the agency’s rules with regard to ESG-marketed funds. The SEC said between April 2017 and February 2020, the firm failed to have any written policies and procedures regarding the ESG research used by its investment teams to select and monitor securities, and when procedures were put into place, they were not followed consistently. (Reuters)
Laurence Norman and Andrew Duehren, The Wall Street Journal
The U.S. and its allies are seeking to agree on a level for a price cap on Russian oil as soon as Wednesday, with officials discussing setting it at around $60 a barrel as the group rushes to put the plan into place before Dec. 5, according to people familiar with the talks.
Major tax filing services such as H&R Block, TaxAct, and TaxSlayer have been quietly transmitting sensitive financial information to Facebook when Americans file their taxes online, The Markup has learned.
Some of the nation’s wealthiest people were among the tens of millions of Americans who received unemployment checks in the wake of the coronavirus outbreak. More than 19,000 people who made at least $1 million in 2020 also collected jobless assistance that year, new IRS data show.
Inflation may be slowing across a wide front as demand declines, supply chain disruptions fade and money supply growth tapers off, Fannie Mae said in a report. The unexpectedly low 7.7% year-over-year increase last month in the Consumer Price Index (CPI) indicated that “inflationary pressures may be easing broadly,” Fannie Mae said, noting lower health care costs and a 2.4% decline in used auto prices. “Both of these trends are likely to continue,” Fannie Mae said, adding “inflation may have peaked.”
Credit Suisse has laid off about one-third of its China-based investment banking team and nearly half of its research department, sources with knowledge of the matter told Reuters, as part of a global restructuring and as its China business slows.
US banks are making progress on closing the gender gap in the financial industry, but there’s still work to be done, especially at the leadership level. This is according to a recent study by DBRS Morningstar, which looked at women in leadership roles at 28 banks in the US.
Three Democratic senators urged Fidelity Investments to reconsider its decision allowing 401(k) plan sponsors to offer participants bitcoin exposure, citing the collapse of FTX as proof that the digital asset industry “has only grown more volatile, tumultuous, and chaotic.”
More Americans are tapping their 401(k)s for financial emergencies, with the percentage of retirement savers pulling money for hardships spiking 24% in the 12 months through Sept. 30, according to new data.
The collapse of FTX has placed Sequoia Capital in an unfamiliar position: damage control mode. The early backer of Apple Inc., Alphabet Inc.’s Google, and Airbnb Inc.—and one of Silicon Valley’s most successful venture-capital firms—apologized to its fund investors in a conference call Tuesday for its $150 million loss on the crypto exchange FTX and vowed to improve its due diligence process for future investments, said people familiar with the matter.
When a buttoned-up Fed economist says the U.S. housing market has entered into a “difficult [housing correction”], it’d be wise to believe them. When it comes from the lips of Fed Chair Jerome Powell, it’s more of a warning.
Fidelity National Information Services Inc. plans to dismiss thousands of workers as part of incoming Chief Executive Officer Stephanie Ferris’s strategy to win back investor confidence after the fintech giant slumped 44% this year.
In the first day of the bankruptcy hearing for collapsed crypto exchange FTX, lawyers for the company were able to get the proceedings moved to Delaware. Lawyers are trying to clean up the mess left behind by FTX founder Sam Bankman-Fried, who resigned on Nov. 11 as the company entered bankruptcy.
The dramatic collapse of Sam Bankman-Fried’s crypto exchange, FTX, may have come as a shock to the Miami Heat, Tom Brady, Twitter bots and financial-news talking heads. But crypto is following a well-worn path of financial innovations, such as subprime mortgages and credit-default swaps, that began with dazzling rewards and ended with crippling losses.
Recent weeks have witnessed another disaster for the cryptocurrency industry. FTX, one of the largest crypto exchanges, failed. The price of bitcoin, the largest cryptocurrency, fell by more than 20 percent. Industry-wide exposure to FTX is still unknown, with the solvency of several companies still in question.
The collapse of FTX, the world’s second largest crypto-exchange, raises major questions about the viability of cryptocurrency and the state of America’s financial regulatory system. While the debate on whether FTX’s collapse means crypto should be more regulated or kept further out of the regulatory safety net rages, we must ensure that those who might have broken the law at FTX be aggressively prosecuted.
Alena Kang-Landsberg and Matthew Plosser, The Federal Reserve Bank of New York
Understanding how deposit terms adapt to changes in policy rates is important to understanding the impact of monetary policy more broadly. In this post, we evaluate the pass through of the fed funds rate to deposit rates (that is, deposit betas) over the past several interest rate cycles and discuss factors that affect deposit rates.