• Key lawmakers and aides on both sides of the aisle said Facebook Inc. has not met with them, and the tech giant has been providing incomplete and sometimes contradictory information ahead of the back-to-back hearings in the Senate and House kicking off today. David Marcus, the Facebook executive expected to testify before Congress, said Facebook “could have done more” with lawmakers in the United States and around the world. (Politico)  

• Tomas Philipson, a health economist, has been named acting chairman of the White House Council of Economic Advisers, replacing Kevin Hassett, who resigned in late June. Philipson, who has served on the council since August 2017, could be nominated for the post by President Donald Trump permanently, which would need to be approved by the Senate, although the White House hasn’t announced an intention to make any nomination. (The Wall Street Journal) 

• JPMorgan Chase & Co. posted $9.65 billion in second-quarter profit, a 16 percent boost from a year earlier, and a 4 percent bump in revenue. JPMorgan said a one-time income tax benefit helped boost profit by $768 million. (CNBC) 

Obama officials say Trump administration hasn’t delayed new $20 bill, despite Harriet Tubman firestorm
Jeff Stein, The Washington Post

Congressional Democrats have been hammering the Trump administration for delaying the introduction of 19th-century abolitionist Harriet Tubman on the $20 bill. House Speaker Nancy Pelosi (D-Calif.) called it an “insult to the hopes of millions,” while Sen. Jeanne Shaheen (D-N.H.) said the delay sends an “unmistakable message to women and girls, and communities of color.” The Treasury Department’s inspector general, under pressure from Democratic lawmakers, recently said it will investigate the timing of the new currency.

Trump Fed Pick Missed Almost Half of Bank Board Meetings
Paul Kiernan, The Wall Street Journal

One of President Trump’s latest picks for the Federal Reserve, economic commentator Judy Shelton, has amassed a spotty attendance record on the board of the European development bank where she serves as U.S. envoy. Ms. Shelton missed 11 of 26 board meetings, or 42%, of the European Bank for Reconstruction and Development, or EBRD, in her first year as the U.S. representative, according to minutes of the meetings.

Fed’s Williams Calls for More Urgency in Replacing Libor
Michael S. Derby, The Wall Street Journal

Federal Reserve Bank of New York President John Williams said Monday financial firms need to stop dragging their collective feet and transition to a new reference interest-rate system to replace the scandal-plagued London interbank offered rate regime. “I don’t always sense urgency among market participants on this issue” of replacing what’s called Libor, Mr. Williams said a speech delivered at a conference held by the Securities Industry and Financial Markets Association.

Pelosi rejects short-term debt ceiling hike as budget talks extend
Caitlin Emma, Politico 

House Speaker Nancy Pelosi Monday night turned aside the notion of a short-term debt ceiling hike as she continues negotiating on a broader budget deal with Treasury Secretary Steven Mnuchin. After days of hashing out their positions over the phone, Pelosi (D-Calif.) and Mnuchin spoke again Monday night, with plans to talk on Tuesday, according to a Pelosi aide.

Christine Lagarde Faces a New Challenge in Europe
Jack Ewing and Amie Tsang, The New York Times

She doesn’t have the typical résumé — no doctorate in economics, no post as a central banker — for running the body that sets monetary policy for one-fifth of the global economy. But investors are betting that Christine Lagarde, the surprise nominee to be the next president of the European Central Bank, will act in much the same way as the bank’s last leader.

Tariffs on China Don’t Cover the Costs of Trump’s Trade War
Ana Swanson and Jim Tankersley, The New York Times

President Trump on Monday portrayed America as being on the winning end of his trade war, saying tariffs are punishing China’s economy while generating billions of dollars for the United States, an economic victory that will allow him to continue his fight without domestic harm. “We’ve taken in tens of billions of dollars in tariffs from China,” Mr. Trump told reporters during a “Made in America” product event at the White House.

Powell Concession on Too-Tight Fed Underlines Shift Toward Cuts
Craig Torres, Bloomberg

The biggest news from Jerome Powell’s congressional testimony last week may not have been the one that moved markets and grabbed the headlines. While Powell’s comments on Capitol Hill about the current outlook cemented expectations for an interest-rate cut this month, he also acknowledged for the first time publicly that officials have potentially tightened monetary policy too much because they underestimated shifts in the U.S. economy.

White House projects $1 trillion deficit for 2019
Rebecca Falconer, Axios

The White House Office of Management and Budget (OMB) projected in its midyear review Monday that the federal deficit would surpass $1 trillion this year.

Regulators need more tools to keep system safe: Boston Fed chief
John Heltman, American Banker

Eric Rosengren, who heads the Federal Reserve Bank of Boston, has gone on record as praising the advantages of central banks having a clear view inside financial services firms. “That can only occur when you actually have supervisors from the central bank that are actively engaged in the largest banks, which is the case in the United States,” Rosengren said in a recent interview on the sidelines of a stress test conference hosted by the Boston Fed.

Stocks Fluctuate as Big Banks Report; Dollar Gains: Markets Wrap
Yakob Peterseil, Bloomberg

U.S. futures drifted with European stocks following a mixed session in Asia as investors looked to earnings and policy makers for the rally’s next catalyst. Treasuries edged lower and the dollar strengthened.

Goldman Sachs earnings blow past Wall Street on strong investing banking, trading results
Kate Rooney, CNBC

Goldman Sachs reported second-quarter results that beat analysts’ expectations Tuesday. The investment bank also notched better-than-expected equities revenue of $2.01 billion vs. $1.80 billion forecast by analysts.

Citigroup cuts costs as lending margins squeezed
Robert Armstrong, Financial Times

Citigroup‘s lending margins came under pressure in the second quarter of the year, suggesting pain ahead for other large US banks. The lender, the first to report as quarterly earnings season got under way on Monday, delivered solid profit growth and a rebound in its struggling consumer operations, but trading revenues were weak and the bank reported tighter net interest margins.

Banks lure customers with air miles and perks
David Crow and Robert Armstrong, Financial Times

In ancient Babylon, banks began paying interest on deposits. Two thousand years later, Standard Chartered has come up with an alternative.

Citi’s Fed contingency plan
Andy Peters, American Banker

Revenue growth exceeded expectations at Citigroup, with a hat tip to credit cards. Now the question becomes whether the Federal Reserve’s anticipated rate cut throws a wrench into things.

Charles Schwab in Talks to Buy USAA Wealth-Management, Brokerage Units
Dana Cimilluca and Telis Demos, The Wall Street Journal

Charles Schwab Corp. SCHW +0.77% is in talks to buy brokerage and wealth-management operations from USAA for roughly $2 billion, a move that would push the discount-brokerage pioneer further into financial advice. The deal, which could bring Schwab roughly $100 billion of assets from closely held USAA, may be reached this month, people familiar with the matter said.

Wall Street’s Answer to Risks in Loan Market: Bundle Lower-Rated Loans
Sam Goldfarb, The Wall Street Journal

A growing number of money managers are embracing a new strategy designed to benefit from volatility in junk-rated corporate loans, a sign of building worries about riskier borrowers and the market that supports them. Since November of last year, three different money managers have issued $1.6 billion of so-called enhanced collateralized loan obligations that are set up to hold a much larger amount of loans with extremely low credit ratings than typical CLOs. 

Black Homeownership Drops to All-Time Low
Laura Kusisto, The Wall Street Journal

While Hispanic homeownership rate is on the rise, the black homeownership rate has fallen 8.6 percentage points since its peak in 2004, hitting its lowest level on record in the first quarter of this year, according to census data. This divergence marks the first time in more than two decades that Hispanics and blacks, the two largest racial or ethnic minorities in the U.S., are no longer following the same path when it comes to owning homes.

Biden proposes tax increases for wealthy as part of health care plan
Naomi Jagoda, The Hill

Former Vice President Joe Biden on Monday released a health care plan that his presidential campaign says would be paid for by raising taxes on the wealthy. “The Biden Plan will make health care a right by getting rid of capital gains tax loopholes for the super wealthy,” the former vice president’s 2020 campaign said in an outline of the plan.

Parenting can be a full-time job. Activists want the tax code to treat it that way.
Dylan Matthews, Vox

About 11 million parents in the US don’t work for a wage. Most of those are stay-at-home moms primarily at home for caregiving reasons, but it’s a group that also includes ill or disabled parents, parents who are retired, and parents still in school.

Facebook’s Big Libra Launch ‘Only Fanned the Flames’ for Critics
Felice Maranz, Bloomberg

Congress holding hearings on Facebook Inc.’s plan for a possible digital coin suggests that the high-profile debut for Libra was likely a public relations effort gone bad. That’s according to MoffettNathanson analyst Lisa Ellis, who said in an email that the “fact that these hearings are even happening is a good indication that the splashy/hyped Libra announcement last month was likely poor PR strategy on Facebook’s part.”

States, eyeing money in abandoned bitcoin, rewrite laws
Steven Harras, Roll Call

Cryptocurrency is bumping up against centuries-old legal doctrines on abandoned property, presenting new concerns about who actually holds these digital assets and how states are able to claim them. States are seeking to apply escheatment laws — which date back to feudal England — to present-day cryptocurrencies such as bitcoin, ethereum, bitFlyer and zcash. 

FCA head warns Libor may fail regulatory test after 2021
Phillip Stafford, Financial Times

The head of the UK markets regulator has warned that it may be forced into a sudden discontinuation of Libor for new business if the banks that make daily submissions to the lending rate begin leaving rapidly after 2021. Andrew Bailey, chief executive of the Financial Conduct Authority, told a US audience on Monday that he expected some banks to stop submitting data after 2021, when they will no longer be compelled to do so.

Goldman Sachs invests $28M in German fintech set for U.S. debut
Will Hernandez, American Banker

Raisin, an online marketplace that aggregates high-yield savings accounts and CDs in Europe, announced a $28 million investment from Goldman Sachs as the fintech prepares for a U.S. launch in the next year. Michael Stephan, the German company’s chief operating officer, said in an interview ahead of the official announcement Tuesday that Goldman’s endorsement gives the fintech more credibility as it seeks bank partners in the U.S.

Proxy Firms’ Independence Is Undermined by Their Own Shadow Reports
Tim Doyle, Morning Consult

Proxy advisory firms have come under increasing scrutiny in recent months for the disproportionate influence they have over shareholder votes at America’s public companies. A November 2018 roundtable at the Securities and Exchange Commission underlined the need for greater transparency and oversight, and in May the agency officially added the issue of proxy advisory firms to its regulatory agenda – a good indication that the Commission intends to act.

A New Tactic in Trump’s War on the Fed
Alan S. Blinder, The Wall Street Journal

You might have noticed that President Trump is waging war on the Federal Reserve. That in itself is nothing new.

Bank Regulators Set to Make Big Decisions About Small Loans
Alex Horowitz, Pew Charitable Trusts

The nation’s three federal bank regulators—the Federal Deposit Insurance Corp. (FDIC), Federal Reserve Board, and Office of the Comptroller of the Currency (OCC)—have agreed to pursue joint action on small-dollar lending, according to FDIC Chairman Jelena McWilliams. To date, most banks have not offered small installment loans because of regulatory uncertainty, but an announcement from these agencies clarifying their expectations could substantially boost the market for alternatives to payday and similar high-cost loans.