• House Speaker Kevin McCarthy (R-Calif.) told CBS’s “Face the Nation” that he will meet with President Joe Biden on Wednesday, saying he believes he can find a “responsible” way to both raise the federal borrowing limit and cut spending, while reiterating that cuts to Social Security and Medicare are off the table, and noting that defense spending cuts haven’t been ruled out. (The Washington Post) Senate Majority Leader Chuck Schumer (D-N.Y.) said in an interview that he thinks Democrats will win when it comes to pushing the GOP to raise the debt ceiling without “hostage-taking” over spending cuts, describing Republican lawmakers’ strategy as “flirting with disaster.” (Politico)
• Treasury Secretary Janet Yellen said in an interview that she is nervous about the prospect of a U.S. default on its debt if Congress fails to raise the federal borrowing limit by summer, saying that such an event would cause a financial crisis and a recession. Yellen described the situation as a “catastrophe” and noted that if the United States was unable to issue new debt, “spending would have to decline to match the tax revenues” and consumers could be gripped by fear and severely curtail spending. (Axios)
• Citigroup Inc. Chief Executive Jane Fraser will meet with Mexican President Andres Manuel Lopez Obrador as the bank tries to finalize the sale of Banamex, its business unit in that country. The meeting date has not been finalized, but a source familiar with the matter said Fraser will be in Mexico the first week of February. (Reuters)
• The Federal Reserve rejected an application from crypto bank Custodia Bank to be supervised by the Fed and join its payments system, on the grounds that the application from the bank formerly known as Avanti presented significant safety and soundness risks. In a statement, Custodia, which is not insured by the Federal Deposit Insurance Corp. and which describes itself as a “special purpose depository institution,” said it has concerns about the Fed’s “handling of its applications” and it will continue to litigate over the matter. (MarketWatch)

Our Big Mac index shows how burger prices are changing

The Economist

Q&A: Rep. Bill Huizenga, incoming Financial Services oversight chair

Zachary Warmbrodt, Politico Pro

He’s already signaling that he intends to dig into the SEC, cryptocurrency and investing practices driven by environmental, social and governance goals.

What happens if the Supreme Court strikes down student loan forgiveness? Here are 3 predictions

Annie Nova, CNBC

It’s possible that the U.S. Supreme Court will strike down the Biden administration’s student loan forgiveness plan, leading to a reversal for the millions of Americans who had been expecting the debt cancellation.

Lawmakers make another run at banning their colleagues from trading stocks

Ben Werschkul, Yahoo Finance

After an anticlimactic end to the issue in 2022, Congress is again setting up another debate over policing stock trading among lawmakers.

Consumer Financial Protection Bureau requests public input in consumer credit card market review

Financial Regulation News

For a biennial review of the consumer credit card industry, the Consumer Financial Protection Bureau (CFPB) this week requested information from the public on various aspects of its experience with credit cards, be they consumers, industry, or advocates.

CFPB lawsuit seen as warning shot to subprime auto lenders

Polo Rocha, American Banker

A federal lawsuit against the subprime auto lender Credit Acceptance Corp. is making waves, posing existential questions for the company and potentially upending some corners of the auto finance industry.

Americans Fall Behind on Car Payments at Higher Rate Than in 2009

Claire Ballentine, Bloomberg

Losing his car was just the beginning. When 21-year-old Kobe Hatch walked outside his Chicago home in December and couldn’t find his 2013 Dodge Journey, he knew it had been repossessed. He’d been falling behind on payments for months.

House GOP votes to rein in Biden’s power over the Strategic Petroleum Reserve

Ben Werschkul, Yahoo Finance

After two days of floor action and consideration of over 100 amendments, the House of Representatives passed a bill Friday to limit the Biden administration’s powers when it comes to the nation’s Strategic Petroleum Reserve (SPR).

U.S. to launch talks on partnership with 11 Western Hemisphere nations

David J. Lynch and  Karen DeYoung, The Washington Post

The Biden administration said Friday that it would begin negotiations with 11 mostly Latin American nations on an agreement designed to promote regional economic cooperation without offering greater access to the U.S. market for their goods.

Fed Debates Whether Wages or Low Unemployment Will Drive Inflation

Nick Timiraos, The Wall Street Journal

Easing price, wage data are at odds with concerns that the job market is too tight and the economy is operating above capacity.

Federal Reserve set to signal plans to keep raising rates even as inflation eases

Colby Smith, Financial Times

US central bank officials expected to shift down to quarter-point rise at first gathering of the year.

GOP national sales tax talk backfires, as Dems see political gold

Benjamin Guggenheim, Politico

House Speaker Kevin McCarthy has backed his fellow Republicans into a corner with one of the promises he made to his far-right flank to land his job: opening the door to considering fringe legislation that would replace the income tax with a federal sales tax and abolish the IRS.

Mint the coin? Buy back bonds? 7 ‘gimmicks’ for dodging the debt limit.

Jeff Stein, The Washington Post

Experts say the White House has unilateral ways to end the stalemate without Congress — but even proponents call them ‘silly.’

Biden’s new debt ceiling problem: Wall Street’s not freaking out

Zachary Warmbrodt, Politico Pro

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

Jobs report to give further clues about where economy is headed

Paul R. La Monica, CNN

The Federal Reserve is going to raise interest rates again on Wednesday. But will it be another half-point hike or just a quarter-point increase? And what about the rest of the year?

Biden gets set to lean into economy in 2024

Amie Parnes and Sylvan Lane, The Hill

President Biden is expected to lean into an economic message as he and his campaign team conduct a soft launch of his reelection campaign in the coming weeks, sources familiar with his plans say.

Banks Brace for More Consumers to Fall Behind on Their Loans

Gina Heeb, The Wall Street Journal

Delinquencies are rising, prompting lenders to add to rainy-day funds.

Goldman Sachs CEO touts bank performance as some investors balk

Lananh Nguyen and Saeed Azhar, Reuters

To listen to Goldman Sachs Group Inc Chief Executive David Solomon, the bank is doing “great,” while skeptical investors wonder what comes next.

BlackRock steps up spending on US lobbying in face of anti-ESG attacks

Brooke Masters, Financial Times

Republican politicians have sought to punish asset manager they accuse of being hostile to fossil fuel.

Adani’s market loss swells to $70 billion as its fight with short-seller escalates

Chris Thomas and Aditya Kalra, Reuters

Adani group shares extended their sharp falls on Monday as the Indian conglomerate’s rebuttal of a U.S. short-seller’s criticism failed to pacify investors, driving stock market losses for the companies to almost $70 billion over three days.

Blackstone Is Coming Up Short in Its Push for a Record $30 Billion Buyout Fund

Dawn Lim, Bloomberg

Blackstone Inc.’s ambitions to raise as much as $30 billion for a record-breaking buyout fund have crashed headlong into a new reality.

Pension Funds in Historic Surplus Eye $1 Trillion of Bond-Buying

Denitsa Tsekova and Vildana Hajric, Bloomberg

For some of America’s biggest bond buyers, the soft-versus-hard-landing debate on Wall Street might be a sideshow. They’re getting ready to swoop in with as much as $1 trillion, no matter what happens.

Blackstone steps up tenant evictions in US with eye on boosting returns

Mark Vandevelde, Financial Times

Hundreds affected as one of biggest US landlords calls time on long period of pandemic forbearance.

Pending home sales show gains for first time in seven months

Jared Gans, The Hill

The number of pending home sales increased in December for the first time in seven months, a result of falling mortgage rates as inflation continues to subside.

Wall Street Is Losing Out to Amateur Buyers in the Housing Slump

Prashant Gopal and Patrick Clark, Bloomberg

Big money spent a fortune snapping up homes. Now, regular folk are outsmarting the pros.

Prosecutors ask court to ban Sam Bankman-Fried from contacting FTX colleagues

Joe Miller and Joshua Oliver, Financial Times

US government alleges crypto founder communicated with potential witnesses in his criminal trial

Investors Who Bet on Bitcoin Fund in Retirement Accounts Pay the Price

Vicky Ge Huang, The Wall Street Journal

The $14.6 billion Grayscale Bitcoin Trust is selling at a 42% discount to its underlying assets

Senators call on PCAOB to toughen crypto audits

Michael Cohn, Accounting Today

Sen. Elizabeth Warren, D-Massachusetts, and Senate Finance Committee chairman Ron Wyden, D-Oregon, are asking the Public Company Accounting Oversight Board to do more to regulate the audits of cryptocurrency companies in the wake of recent high-profile bankruptcies of companies like FTX.

Regulator Says FTX’s LedgerX Auction Shows Need for More CFTC Clout on Acquisitions

Lydia Beyoud, Bloomberg

A senior Commodity Futures Trading Commission official says the agency needs the power to approve or reject an unregulated company’s acquisition of a derivatives exchange.

Winklevoss Twins’ Gemini Gets New Head of Finance as Crypto Exchange Faces Turmoil

Olga Kharif and Vildana Hajric, Bloomberg

Gemini Trust, the crypto exchange run by the Winklevoss brothers, hired a fintech veteran as new head of finance even as it undergoes another round of layoffs and deals with uncertainty over whether users of its Earn program will get their money back.