Rich Economies Set to Recover More Quickly From Covid-19 Contractions
Paul Hannon, The Wall Street Journal
China and other rich countries will suffer less economic damage from the coronavirus pandemic than previously feared, according to the Organization for Economic Cooperation and Development, but the global public health emergency will exact a higher toll on the economies of poor countries. The Paris-based research body Wednesday said the global economy will contract less sharply this year than it thought likely in June, but warned that the recovery is set to slow from this month and remain vulnerable to fresh outbreaks.
WTO Finds Some U.S. Tariffs on China Violate Trade Rules
Josh Zumbrun, The Wall Street Journal
The World Trade Organization ruled Tuesday that some U.S. tariffs against China broke international trading rules, a conclusion that exacerbates U.S.-WTO tensions but likely will have no consequence for American tariff policy because the organization’s appellate system currently doesn’t function. The WTO sided with a complaint filed by China in 2018, which said the Trump administration broke WTO rules because of the way it singled out China for separate tariffs than other countries.
House Committee subpoenas labor board over conflict of interest questions
Eli Rosenberg, The Washington Post
The House Committee on Education and Labor is expected to subpoena the National Labor Relations Board on Tuesday for records about potential conflicts of interest among board members, which the committee has been seeking. The legal request comes after more than a year of attempts by the committee to acquire ethics related documentation from the NLRB — the federal body charged with upholding workers’ rights to organize and raise safety concerns — on issues that involve an NLRB board member’s former law firm.
Futures, Stocks Rise Ahead of Fed; Dollar Slips: Markets Wrap
Constantine Courcoulas, Bloomberg
U.S futures advanced with European stocks as investors waited for the outcome of the Federal Reserve’s policy meeting later Wednesday. Treasuries were steady and the dollar slipped.
California’s Bank of Hope Was a Symbol of Success. Now It Faces a Covid-19 Reckoning.
Konrad Putzier, The Wall Street Journal
Bank of Hope has been an American success story. The Los Angeles-based firm created a niche by lending to Korean Americans and other businesses run by recent immigrants.
JPMorgan, BofA Cut Interest-Income Outlook Amid Jump in Trading
Michelle F Davis and Lananh Nguyen, Bloomberg
The two biggest U.S. banks trimmed expectations for net interest income as low rates and tepid loan growth weigh on revenue. JPMorgan Chase & Co.’s NII for 2020 will probably be $55 billion, down from a previous forecast of $56 billion, Chief Financial Officer Jennifer Piepszak said at a virtual investor conference Tuesday.
JPMorgan Adds Rohrbaugh, Duckett to Top Leadership Team
Michelle F Davis, Bloomberg
JPMorgan Chase & Co. added a half-dozen executives to the firm’s operating committee in the biggest expansion of its top leadership group in years. Trading head Troy Rohrbaugh and consumer banking Chief Executive Officer Thasunda Brown Duckett were among the executives promoted to the operating committee, JPMorgan CEO Jamie Dimon said in a memo Tuesday.
Financial Products and Investments
Asset managers overhaul money market funds after March rout
Joe Rennison and Colby Smith, Financial Times
Shake-up is focused on ‘prime’ funds that buy short-term corporate debt.
Housing and GSEs
Mortgage Securities Are Flooding the Market. Thank the Fed.
Orla McCaffrey, The Wall Street Journal
People are taking out lots of mortgages. The Fed is gobbling them up.
Lower-Credit Homeowners Weigh Heavily on U.S. Mortgage Market
Christopher Maloney, Bloomberg
Almost twice the percentage of Ginnie Mae borrowers have demanded forbearance compared to conventional ones, according to a Mortgage Bankers Association report on Monday. Mortgages in forbearance have dropped to just over 7% of the overall universe, the lowest since April.
Mortgage lending volume in 2020 likely to break records
Kathleen Howley, HousingWire
Fannie Mae, the world’s largest mortgage financier, said mortgage lending this year probably will reach an all-time high of $3.9 trillion. The dollar-volume record will be boosted by $2.4 trillion in refinancings, the highest level since 2003 and more than double the level seen in 2019, the mortgage giant said in a forecast on Tuesday.
GAO clears way for Democrats to try to overturn Trump’s payroll tax deferral
Naomi Jagoda, The Hill
The Government Accountability Office (GAO) on Tuesday cleared the way for Democrats to try to overturn IRS guidance implementing President Trump’s payroll tax deferral order. In a letter Tuesday to Senate Minority Leader Charles Schumer (D-N.Y.) and Senate Finance Committee ranking member Ron Wyden (D-Ore.), GAO General Counsel Thomas Armstrong said the office considers the IRS guidance to be a rule for purposes of the Congressional Review Act (CRA).
Senate Opting Out of Trump Payroll Tax Deferral for Employees
Laura Davison and Laura Litvan, Bloomberg
The U.S. Senate is joining the House in not implementing President Donald Trump’s order allowing employers to defer payroll taxes owed by workers, Missouri Senator Roy Blunt said Tuesday. “My belief is we are not moving forward with the payroll tax deferral in the Senate,” Blunt, a member of the Senate GOP leadership, told reporters.
What would a Biden White House mean for fintech?
Jim Saksa, Roll Call
A combination of Joe Biden’s steady lead in the polls and its own political hopes has the financial technology world wondering: What would a Biden presidency mean for fintech policies? The former vice president’s campaign hasn’t said much specifically about financial technology, but its ideas on traditional financial services — credit reporting, redlining, access to banking services — could have a profound impact on the companies that have eroded the strength of big financial institutions by using technology to encroach on their territory.
U.S. crypto, fintech firms to benefit from slimmed down regulatory process
Pete Schroeder, Reuters
Money transmitters like Western Union, PayPal, and cryptocurrency firms will be able to more easily expand across the United States, after 48 state regulators agreed to a single set of supervisory rules that should reduce their compliance costs. The Conference of State Bank Supervisors (CSBS) will on Tuesday unveil the new regulatory regime for money services businesses, which will undergo a single exam by a joint group of state regulators that oversee licensing, instead of dozens of individual state exams.
Square launches payroll feature that could boost its banking business through the Cash App
Kate Rooney, CNBC
Square is letting workers access some of their earned wages ahead of schedule, which could add fuel to the company’s recently booming banking business. San Francisco-based Square on Tuesday launched “On-Demand Pay,” which lets those using Square for payroll give employees up to $200 of a paycheck ahead of the normal biweekly schedule.
Opinions, Editorials and Perspectives
Keeping America Ahead of Its Competitors
James P. Pinkerton, Morning Consult
The realization that America’s too-high tax rate was problematic began to crystallize when corporations began “inverting”— that is, switching themselves out of the United States and into another country, often while being swallowed up by a foreign corporation. Such actions were damaging to our economy and demoralizing to our nation.
Save Stars and Stripes
The Editorial Board, The New York Times
The battle of the budget is an annual rite of America’s military spending that is rarely resolved on time. This year, as in nine of the 10 past years, the Pentagon is likely to start its fiscal year on Oct. 1 under a continuing resolution — basically a stopgap measure that keeps funding at roughly existing levels.
Disease, Downturns, and Wellbeing: Economic History and the Long-Run Impacts of COVID-19
Vellore Arthi and John Parman, The National Bureau of Economic Research
How might COVID-19 affect human capital and wellbeing in the long run? The COVID-19 pandemic has already imposed a heavy human cost—taken together, this public health crisis and its attendant economic downturn appear poised to dwarf the scope, scale, and disruptiveness of most modern pandemics. What evidence we do have about other modern pandemics is largely limited to short-run impacts.