• The Consumer Financial Protection Bureau is proposing a new rule that would cap late or missed payment fees for credit cards at $8, down from as much as $41, and if adopted, the rule could go into effect in 2024. President Joe Biden is expected to make the announcement today as he meets with cabinet and administration members of the Competition Council. (The Wall Street Journal)
• A U.S. bankruptcy court-appointed examiner found that crypto lender Celsius Network LLC misused customer funds for years, including boosting the value of its own coin, CEL, in a scheme that an employee described as “Ponzi like.” The examiners also said that Celsius founder Alex Mashinsky personally profited by selling more than $68 million in CEL coins, while publicly saying he was not selling. (Financial Times)
• PayPal Holdings Inc. said it would lay off 2,000 employees, approximately 7% of its workforce, amid what Chief Executive Dan Schulman described as a “challenging macroeconomic environment.” Schulman said that while PayPal has made progress on controlling costs, the company has more work to do, and in an earnings call, acting CFO Gabrielle Rabinovich had indicated that the company expected inflationary pressures to curtail discretionary spending. (CNBC)
• A study by a group of economists from Stanford University, the University of Michigan, the University of Chicago and the Treasury Department found that Black taxpayers are at least three times more likely to be audited by the Internal Revenue Service than other taxpayers, though there is no evidence to suggest that Black Americans evade tax payment more than other groups. The findings do not point to racial bias from individual IRS auditors, who do not know the race of filers, but to discrimination embedded in the computer algorithms used to select returns for audit. (The New York Times)

Worth watching:

• President Joe Biden and House Speaker Kevin McCarthy (R-Calif.) are set to discuss the federal debt ceiling in a closed-door meeting at the White House.
• Federal Reserve Chair Jerome Powell will hold a press conference following the Federal Open Market Committee meeting that began yesterday. It is expected that he will announce a 25-basis-point increase in the Fed’s benchmark interest rate.
  

New compensation data shows inflation pressure fading

Axios

Dems press GOP on whether anti-socialist bill could hit Medicare, Social Security

Grace Yarrow, The Hill

House Democrats pushed Republicans to clarify the implications of a new bill that would denounce the “horrors of socialism” and socialist policies, expressing concern that it may include Medicare and Social Security benefits.

Biden to remake economic team with Brainard, Bernstein poised for top roles

Ben White, Politico Pro

The shakeup would give the president three well-known players from across the Obama-Biden presidential years at a key moment for the economy.

‘Colossal’ central bank buying drives gold demand to decade high

Harry Dempsey, Financial Times

Fallout from US sanctions on Russia helped fuel 18 per cent leap in purchases last year.

Some borrowers may qualify for a student loan interest deduction, despite payment pause

Annie Nova, CNBC

Fewer borrowers will be able to claim the student loan interest deduction for 2022, with federal loan payments on hold for the duration of the year. But some people may still qualify.

Americans Are Leaving High-Tax New York and Moving to Florida

Paulina Cachero, Bloomberg

New Jersey, California and Illinois are also among the places losing residents as lower costs draw people to the Sun Belt.

Cooler Pay Gains Add to Debate on When Fed Might Pause Rate Hikes

Gabriel T. Rubin and Nick Timiraos, The Wall Street Journal

Data leaves central bank on track to slow interest-rate increases again this week.

Moderate House Democrats offer help to McCarthy, Biden on debt limit

Aris Folley, The Hill

A coalition of moderate House Democrats is offering a helping hand to Speaker Kevin McCarthy (R-Calif.) and President Biden in debt limit talks while urging them to work toward “good faith negotiations” as both leaders prepare to meet on Wednesday.

In Debt Limit Fight, Republicans Won’t Say What Spending Cuts They Want

Alan Rappeport, The New York Times

A renewed focus on fiscal restraint in the standoff with Democrats poses its own political risks.

Wall Street’s Newfound Optimism Faces a Test as the Fed Meets

Joe Rennison, The New York Times

Recent stock gains have been driven by hope that a rate-raising cycle is close to ending. If investors decide they were wrong about this, a drop could follow.

Federal watchdogs ask Congress for long-delayed help to fight covid fraud

Tony Romm, The Washington Post

Top federal watchdogs are set to warn Congress on Wednesday about the vast array of criminal activity targeting the U.S. government’s roughly $5 trillion in coronavirus aid, as they plead for new laws and money to help combat an emerging torrent of waste, fraud and abuse.

Biden-McCarthy debt ceiling talks to set tone for divided Washington rule

Trevor Hunnicutt, Reuters

President Joe Biden and Republican House Speaker Kevin McCarthy are set to discuss the nation’s $31.4 trillion debt ceiling on Wednesday, a meeting that will give a first sign of how the two will work together, or fail to, in a divided Washington.

Wall Street bets Powell will flinch on rate hikes once job market sours

Victoria Guida, Politico

Federal Reserve Chair Jerome Powell is vowing to keep up the fight against inflation no matter how much pain it causes the economy. Wall Street is betting that he blinks.

Inflation Outpaces Wages in Most US Cities, But LA Bucks Trend

Alexandre Tanzi, Bloomberg

Wage growth was easing in most US cities by the end of last year and remained below the inflation rate in almost all of them, according to the latest regional pay data from the Bureau of Labor Statistics.

Obsessive recession watch gives way to strong corporate earnings

Nathan Bomey, Axios

The maybe-things-won’t-be-so-bad-after-all narrative is playing out in earnings season, with a slew of major American companies remaining resilient despite fears of a downturn.

Banks battle to shed unsold buyout loans – sources

Chiara Elisei et al., Reuters

Banks are whittling down a pile of unsold loans that backed private equity buyouts in the cheap-money era and trying to avoid heavy hits by refinancing the debt or selling chunks in secondary markets, bankers and investors said.

The Money Move That Has People Ditching Their Bank Accounts

Imani Moise, The Wall Street Journal

More people are banking with companies that hold their 401(k)s.

Senators press Silvergate on FHLB loan in the wake of FTX collapse

Claire Williams, American Banker

A bipartisan group of senators asked Silvergate, the bank connected to the failed crypto exchange FTX, if the bank knew about the exchange’s alleged misuse of customer funds, and how it plans to use the $4.3 billion it received from the Federal Home Loan Bank of San Francisco late last year.

How a Tiny Bank in a Washington Farming Town Got Tangled Up With FTX

Peter Rudegeair, The Wall Street Journal

When Jean Chalopin applied to buy a tiny bank in Washington state nearly three years ago, he made modest promises to bring not-so-new innovations such as ATM cards to a place with few local banking options.

Nebraska banks seek changes to anti-ESG bill tied to public deposits

Jordan Stutts, American Banker

The Nebraska Bankers Association is raising concerns about legislation that would bar state treasurers from depositing public funds in financial institutions that could use the money to promote social or political objectives.

California bills call for CalPERS, CalSTRS to divest fossil fuels, company climate disclosure

Courtney Degen, Pensions & Investments

California lawmakers introduced a package of bills in the state Senate that would require the state’s public pension funds to divest from fossil fuels and force large companies operating in California to disclose more climate-related information.

Disney, Salesforce and Others Draw Activist ‘Swarm’ After Shares Decline

Lauren Thomas, The Wall Street Journal

Shareholder activists, newly emboldened by beaten-down share prices, are increasingly crowding into the same big names.

BlackRock pushes to attract more retail investors to ETFs

Chris Flood, Financial Times

World’s largest asset manager offers new ETFs savings plans with neobroker Bux.

Morningstar, Plan Administrators launch PEP loaded with ESG funds

Margarida Correia, Pensions & Investments

Morningstar Investment Management and Plan Administrators Inc., a retirement plan administrator and record keeper, on Tuesday launched a pooled employer plan featuring an investment menu made up almost exclusively of ESG funds.

Home builders are expecting a little more pain before business improves.

Aarthi Swaminathan, MarketWatch

While realtors believe that the housing market is on the mend, home builders are still cautious, with low demand and rising construction costs. Home builders are one of the key contributors to the housing supply.

Trio of Indiana Cities Tops WSJ/Realtor.com Housing Index

Nicole Friedman, The Wall Street Journal

Three Indiana cities led the Wall Street Journal/Realtor.com Emerging Housing Market Index in the fourth quarter, when affordable markets continued to dominate the rankings.

Home Prices Fell in November for Fifth Straight Month

Nicole Friedman, The Wall Street Journal

Case-Shiller price index drops 0.6% as higher mortgage rates make home purchases less affordable for home buyers

Home price slowdown hasn’t improved affordability outlook

Spencer Lee, National Mortgage News

While the surge in home prices has slowed substantially from the heights of last year, home buyers’ affordability concerns are not abating. Single-family home values increased 8.2% on an annual basis in November, according to the latest price index from the Federal Housing Finance Agency.

Binance offshore exchange tapped same Washington lobbyists as US affiliate

Scott Chipolina, Financial Times

Disclosures point to linkages between two entities that say they are operationally independent.

Bankrupt Lending Platform Celsius Names Users Eligible to Withdraw Assets

Sandali Handagama, CoinDesk

Users named on the list can withdraw 94% of their assets if they can cover the withdrawal fees.

Britain sets out plans to regulate crypto industry in wake of FTX collapse

Ryan Browne, CNBC

The U.K. formally laid out plans to regulate the cryptocurrency industry, with the government looking to rein in some of the reckless business practices that emerged over the past year and contributed to the demise of FTX.