• Sen. Kyrsten Sinema (D-Ariz.) announced she would support Democrats’ reconciliation bill after reaching an agreement to drop the provision to narrow the carried interest loophole for investment income and add a 1% excise tax on stock buybacks that is expected to raise $73 billion. Senate Democrats tomorrow will move forward with the legislation, which is now expected to increase its original $300 billion deficit reduction figure with Sinema’s changes. (Politico)
• Goldman Sachs Group Inc. revealed in a regulatory filing that the Consumer Financial Protection Bureau is investigating how the bank’s credit card unit has handled customer refunds and billing disputes, as well as practices around its advertising and the reporting of consumer information to credit bureaus. Goldman Sachs entered the credit card business about six years ago and at the end of June had roughly $12 billion in outstanding credit card loans. (The Wall Street Journal)
• Federal Reserve Bank of Cleveland President Loretta Mester said the U.S. central bank should aim to continue tightening through the first half of 2023, and that keeping rates “a bit above” 4% would be appropriate. A voting member of the Federal Open Market Committee, Mester reiterated her view that she would like to see several months of decreasing inflation before easing back on interest rate hikes, and said it was “not unreasonable” to think the bank may issue another 75 basis point hike at its September meeting. (Reuters)
• Internal Revenue Service Commissioner Charles Rettig said the agency will not increase audits on filers making less than $400,000 per year should the passage of the Inflation Reduction Act provide the IRS with an infusion of billions of dollars to help the agency increase enforcement. Rettig wrote in a letter to lawmakers that improved customer service at the IRS should help honest taxpayers avoid audits, and he noted that it was wealthy taxpayers and large corporations who often pursue “unsettled or sometimes questionable interpretations of tax law.” (The New York Times)

Future of ESG Investing Unclear Amid Inflation, Regulatory Scrutiny

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3 Republican lawmakers just countered Biden’s student-loan-forgiveness plans with a bill of their own to help borrowers ‘most in need’

Ayelet Sheffey, Insider

Three Republican lawmakers think President Joe Biden is going about the $1.7 trillion student-debt crisis the wrong way — and they have some ideas on what he could do instead. On Thursday, Reps. Virginia Foxx, Elise Stefanik, and Jim Banks introduced the Responsible Education Assistance Through Loan, or REAL, Reforms Act, which is intended to act as an “alternative” to proposals the Education Department has put forth to reform student-loan programs.

Toomey Chides Fed for Withholding Documents in Raskin Fight

Steven T. Dennis, Bloomberg

Senator Pat Toomey is again demanding transparency by the Federal Reserve after learning the central bank withheld documents he and other Republicans sought related to former Fed nominee Sarah Bloom Raskin during her confirmation fight.

Biden’s big bill: Two GOP strategists on how to kill it

Ryan Lizza, Politico

Senate Parliamentarian Elizabeth MacDonough will continue to host Democratic and Republican aides behind closed doors today (no press allowed) to scrub the reconciliation bill for potential violations of the Byrd Rule.

National taxpayer advocate appeals IRS response on scanning tech

Paul Bonner, Journal of Accountancy 

National Taxpayer Advocate Erin Collins escalated her push for the IRS to adopt barcode scanning of paper tax returns, which she had directed the Service to implement by 2023, by appealing its response, which she called disappointing.

IRS Expands Crypto Question on Tax Form

Kevin Helms, Crypto.com

The Internal Revenue Service (IRS) has modified the crypto question asked on Form 1040, the tax form used by all U.S. taxpayers to file an annual income tax return.

U.S. Jobless Claims Rose Last Week to Near High for Year

Bryan Mena, The Wall Street Journal

Worker filings for unemployment benefits rose last week, holding close to the highest level of the year as the U.S. labor market showed several signs of cooling. Initial jobless claims, a proxy for layoffs, increased slightly to a seasonally adjusted 260,000 last week from a downwardly revised 254,000 the prior week, the Labor Department said Thursday.

Hiring slowdown? U.S. seen adding just 258,000 jobs in July

Jeffry Bartash, MarketWatch

Scattered reports of layoffs, declining job openings and a softening economy all point to a slowdown in hiring. And that’s why the number of new jobs created in July is forecast to fall to the lowest level in 19 months.

Fed’s Powell pummeled from all sides over rate hikes

Kate Davidson, Politico

A debate over whether the U.S. is in a recession is consuming Washington. But some in the nation’s capital are asking a more complicated question: Does the U.S. need a recession?

Health care costs are so high that 98 million Americans say they’ve had to cut spending on food and gas

L’Oreal Thompson Payton, Fortune

Gas and groceries aren’t the only necessities costing more these days. In an effort to accommodate higher health care costs, Americans have been delaying or skipping treatments altogether.

The Fed Keeps Getting More Powerful. Is It Bad for America?

Jesse Eisinger, ProPublica

Law professor Lev Menand has a new book out on that strange institution, the Federal Reserve, what it does and how its power and responsibility have grown over time.

Lawmakers amplify scrutiny of U.S. Bank after sham accounts fine

Brendan Pedersen, American Banker

Democrats on the Senate Banking Committee pressed U.S. Bank for more details about fake consumer accounts that were recently revealed by regulators — the latest sign of government scrutiny as the nation’s fifth-largest bank pursues approval of a major acquisition. In a letter sent Thursday morning and first reported by American Banker, the Democratic senators told U.S. Bank Chairman and CEO Andrew Cecere that they were “deeply concerned” by recent revelations of misconduct at the bank.

FDIC promises more scrutiny of banks’ commercial real estate loans

Kevin Wack, American Banker

The Federal Deposit Insurance Corp. plans to increase its scrutiny of banks’ exposure to commercial real estate loans, citing uncertainty about the future of work and commerce in the wake of the COVID-19 pandemic.

USAA sues Truist in patent case over mobile deposit tech

Dan Ennis, Banking Dive

San Antonio-based USAA sued Truist last week, claiming the Charlotte, North Carolina-based bank is infringing on three patents related to mobile deposit capture technology.

A ‘shakeout’ among mortgage lenders is coming, according to CEO of bank that left the business

Hugh Son, CNBC

Banks and other mortgage providers have been battered by plunging demand for loans this year, a consequence of the Federal Reserve’s interest rate hikes. Some firms will be forced to exit the industry entirely as refinance activity dries up, according to Tim Wennes, CEO of the U.S. division of Santander.

Kashkari calls CBDC a threat to privacy, defends regional bank independence

Kyle Campbell, American Banker

The Federal Reserve has a neutral stance on whether it pursues its own digital currency, but at least one regional bank president remains deeply skeptical of the idea. Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said consumers already had access to instant digital payments through private-sector platforms without the privacy concerns that arise from a government-backed alternative.

Mastercard, Visa suspend ties with ad arm of Pornhub owner MindGeek

Michelle Price, Reuters

Visa and Mastercard on Thursday said they had suspended ties with the advertisement arm of MindGeek, owner of website Pornhub, after a lawsuit raised questions over whether the payment firms could be facilitating child pornography.

Schwab officially jumps into crypto, and warns about it

Crystal Kim, Axios

Charles Schwab this week warned customers against crypto scams posing as investments that are “too good to be true. The firm also launched its first crypto investment fund.

Meta Makes Bond-Market Debut With $10 Billion Jumbo Deal

Josyana Joshua and Brian W Smith, Bloomberg

Meta Platforms Inc., one of the few S&P 500 companies without debt, sold $10 billion in its first ever corporate bond deal as its cash flow and stock price fall.

Michael Burry of ‘Big Short’ Fame Says ‘Silliness’ in Markets Is Back

Claire Ballentine, Bloomberg

The man who predicted the financial crisis is warning about “silliness” in markets. Michael Burry, the founder of Scion Asset Management who’s best known for betting against the housing market ahead of the 2008 crash, said Thursday that the “familiar Covid-era silliness is not dead yet.”

Apollo raises $13bn for first flagship buyout fund since Leon Black exit

Antoine Gara, Financial Times

Fundraising being closely watched on Wall Street as a marker for chief Marc Rowan’s tenure

Allianz shells out 140 million euros to shut U.S. fund unit after fraud

Tom Sims and Alexander Hübner, Reuters

Allianz spent around 140 million euros ($143.11 million) on restructuring to wind down a U.S. funds unit at the centre of a multi-billion fraud, the German insurer disclosed on Friday, an expense that added to a worse-than-expected 23% fall in quarterly profit.

NYSE-owner ICE profit beats as volatility drives up trading volumes

Manya Saini, Reuters

Intercontinental Exchange beat Wall Street estimates for second-quarter profit on Thursday, as the New York Stock Exchange’s owner benefited from choppy global markets that led to a surge in trading volumes, sending its shares up over 4%.

Mortgage Rates Drop Below 5% for First Time Since April

Ben Eisen, The Wall Street Journal

Mortgage rates dropped to their lowest level since April, offering a reprieve to prospective home buyers who have been hit this year with higher rates and surging prices. The average rate on a 30-year fixed-rate mortgage is 4.99% this week, down from 5.30% a week earlier, according to a survey by mortgage giant Freddie Mac published Thursday.

Rocket’s earnings plummet, but its liquidity remains solid

Bill Conroy, Housing Wire

During this period of rising rates and general rate volatility, having the cash and credit lines on hand to ride out the rough patches in the market — known as liquidity — can be what separates the winners from the losers in the mortgage industry.

Almost Half of Mortgaged Homes in US Now Considered Equity-Rich

Alexandre Tanzi, Bloomberg

Home ownership has reached a milestone in the US. Nearly half of mortgaged properties were considered equity-rich in the second quarter — meaning owners had at least 50% in home equity.

Finance of America eliminates big chunk of workforce as losses mount

Connie Kim, Housing Wire

Finance of America posted steep losses in the second quarter and has pledged to eliminate a significant percentage of its workforce to contain the financial fallout.

Voyager Digital Is Cleared to Return $270 Million to Customers

Soma Biswas, The Wall Street Journal

Cryptocurrency brokerage firm Voyager Digital Holdings Inc. secured approval to return $270 million in customer cash, settling one of the larger issues it faced after filing for bankruptcy.

Warren urges OCC to abandon Trump-era crypto guidance

Brendan Pedersen, American Banker

One of the Senate Banking Committee’s top progressive lawmakers  circulated a letter this week to pressure the Office of the Comptroller of the Currency to abandon Trump-era guidance that cleared the banking sector to explore crypto-related banking activity.

BlackRock Teams Up With Coinbase in Crypto Market Expansion

Silla Brush, Bloomberg

BlackRock Inc. is partnering with Coinbase Global Inc. to make it easier for institutional investors to manage and trade Bitcoin, taking the world’s largest asset manager into a cryptocurrency market hammered by plunging prices and government investigations.

Retail investors perceive stocks, bonds to be more arcane than crypto, survey shows

Medha Singh, Reuters

Retail investors find well-established stocks and bond markets to be more arcane than the wild world of cryptocurrencies, a survey by the World Economic Forum (WEF) showed on Thursday.

AMTD Digital, Parent Plunge in Wake of Baffling 32,000% Rally

Claire Ballentine and Matt Turner, Bloomberg

The massive rally in two little-known Hong Kong-based financial services firms is ending just as quickly as it began. Financial services provider AMTD Idea Group dropped 31% Thursday, following a blistering surge that left market watchers baffled, while its subsidiary AMTD Digital Inc. fell 27%.

GOP Frets Over the Inflation Reduction Act’s Tiny Tax Increase

Alan S. Blinder, The Wall Street Journal

Senate Majority Leader Chuck Schumer pulled a rabbit out of his hat when he announced a budget agreement with Sen. Joe Manchin (D., W.Va.). But faster than you can say “supply-side economics,” Republicans gave their rote objection to any tax increase: It will destroy the economy.

Is Federal Home Loan Bank reform a sure thing or a show?

Cornelius Hurley, The Hill

Move over Fannie and Freddie. Until now, popular wisdom was that Sandra Thompson’s tenure as director of the Federal Housing Finance Agency would be judged by how she managed the enduring conservatorships of Fannie Mae and Freddie Mac. Little note would be taken of how she manages the sleepy Federal Home Loan Banks.