General
Trump, Xi Face Pressure at Home Over Trade Lingling Wei and Bob Davis, The Wall Street Journal
Despite their sharp differences in style, background and policies, Chinese leader Xi Jinping and President Trump share a common problem: growing concerns on the home front that they are going to cave in to the other side. Shortly before President Xi’s special envoy jetted to Washington on Tuesday to continue trade talks, an influential Communist Party journal published a speech by Mr. Xi in which he vowed not to give ground on the kind of political and legal reform needed to protect foreign intellectual property in China, a key U.S. demand.
US importers shift to smaller orders from China on trade war Alice Woodhouse and Nicolle Liu, Financial Times
Uncertainty over US-China efforts to avoid a trade war — with the two sides due to resume negotiations in Washington on Thursday — is leading US importers of Chinese-made goods to alter buying habits and spread risk as the deadline for a deal looms. Manufacturers who export directly from mainland China have reported a shift to smaller, more frequent orders from US customers as importers try to minimise their exposure to a potential increase in tariffs on their business.
Malaysia Orders Arrest of Ex-Leader Najib’s Former Media Adviser Yantoultra Ngui, The Wall Street Journal
A British national who worked as a media adviser to former Malaysian Prime Minister Najib Razak is facing two counts of money-laundering charges over $3.5 million that was allegedly linked to his former boss, a government prosecutor said Thursday. The former adviser, Paul Stadlen, left Malaysia last year, shortly after Mr. Najib’s surprise defeat in national elections that were dominated by a multibillion-dollar corruption scandal at state investment fund 1Malaysia Development Bhd., or 1MDB.
Why Kraninger’s CFPB is mandating fewer consumer refunds Kate Berry, American Banker
The Consumer Financial Protection Bureau appears to have shifted away from requiring financial institutions to refund customers in response to enforcement actions. Of the six settlements signed so far this year by Director Kathy Kraninger, only one — against a bank — resulted in restitution paid to consumers.
Fed Superstars Lay Out a Map for the Central Bank’s Big Rethink Jeanna Smialek, Bloomberg
Federal Reserve officials will face the next recession with limited ammunition. Their ongoing search for backup firepower could shape the future of American central banking.
Fed’s Bullard: Rate hikes, balance sheet reduction ‘coming to an end’ Jeff Cox, CNBC
The Federal Reserve is likely near the end of interest rate increases and the program to reduce the bonds it holds on its balance sheet, St. Louis Fed President James Bullard said Thursday. “I think the message from my point of view is the normalization process in the United States is coming to an end,” the central bank official told CNBC in a “Squawk Box” interview.
Trump trade chief to face lawmakers ahead of crucial China deadline Sylvan Lane, The Hill
The Trump administration’s top trade negotiator is set to face questions from House lawmakers two days before a crucial deadline to strike a deal with China. U.S. Trade Representative Robert Lighthizer will appear before the House Ways and Means Committee on Feb. 27 for a hearing on trade talks between the White House and Beijing, the panel announced Wednesday.
U.S. Stock Futures Drift as Treasury Yields Climb: Markets Wrap Samuel Potter, Bloomberg
U.S. equity futures pared a gain, European stocks edged lower and Asian shares rose as investors grappled with a mixed bag of headlines on global trade. Treasuries fell, the greenback was steady and the Aussie dollar slumped.
Banking
Goldman Sachs Plaintiffs Vie for Lead Role in 1MDB Group Suit Chris Dolmetsch, Bloomberg
Five law firms are vying to take control of litigation against Goldman Sachs Group Inc. over the 1MDB scandal, asking a judge to appoint their clients as lead plaintiff in a group lawsuit accusing the bank of misleading investors about its work with the Malaysian state fund. The lawyers who are selected as main counsel in the class action will map strategy, file legal motions, manage settlement talks and divvy up the work among collaborating firms.
UBS Is Fined $4.2 Billion in French Tax-Evasion Case Noemie Bisserbe and Brian Blackstone, The Wall Street Journal
French judges ordered UBS UBS -3.56% Group AG on Wednesday to pay a record €3.7 billion ($4.2 billion) fine for helping wealthy clients in France evade taxes, as Switzerland’s largest bank struggles to turn the page on legal entanglements stemming from its core wealth-management business. Judges in Paris found the Zurich-based bank guilty of illegally recruiting clients in France and helping them to launder money that wasn’t declared to French fiscal authorities. In handing down the largest-ever fine in France, the judges described the lender’s crimes as “exceptionally serious.”
Financial Products and Investments
Apple, Goldman Sachs Team Up on Credit Card Paired With iPhone Tripp Mickle et al., The Wall Street Journal
Apple Inc. AAPL and Goldman Sachs Group Inc. plan to start issuing this spring a joint credit card paired with new iPhone features that will help users manage their money. The card will be rolled out to employees for testing in the next few weeks and officially launch later this year, according to people familiar with the matter.
Insuring Against Disaster Amanda Foreman, The Wall Street Journal
Living in a world without insurance, free from all those claim forms and high deductibles, might sound like a little bit of paradise. But the only thing worse than dealing with the insurance industry is trying to conduct business without it.
Consumer lenders could feel most pain from CECL John Reosti, American Banker
A new accounting standard for loan losses could be particularly harsh for consumer lenders. The Current Expected Credit Loss standard, or CECL, will require banks to estimate the losses tied to a loan when it is originated.
Florida remains hotbed for deals between credit unions, banks Ken McCarthy, American Banker
Florida remains a popular market for credit unions keen on buying community banks. The $2.2 billion-asset Fairwinds Credit Union in Orlando has agreed to buy the $95 million-asset Friends Bank in New Smyrna Beach.
Housing and GSEs
HUD toughens housing inspections to prevent landlords from ‘gaming the system’ Suzy Khimm, NBC News
The U.S. Department of Housing and Urban Development has taken a step toward tougher health and safety inspections of taxpayer-subsidized housing, amid recent reports of substandard living conditions at the properties. The agency said it would provide landlords only 14 days’ advance notice that it would be conducting an inspection, rather than a heads-up of up to three or four months.
Taxes
Wall Street, Seeking Big Tax Breaks, Sets Sights on Distressed Main Streets Matthew Goldstein and Jim Tankersley, The New York Times
Distressed America is Wall Street’s hottest new investment vehicle. Hedge funds, investment banks and money managers are trying to raise tens of billions of dollars this year for so-called opportunity funds, a creation of President Trump’s 2017 tax package meant to steer money to poor areas by offering potentially large tax breaks.
Democrats Embrace Tax-the-Rich Label After Years of Ducking It Laura Davison, Bloomberg
Some of the top Democratic presidential candidates are trying to make a name for themselves by calling for higher taxes on the wealthy. And for some wealthy donors, that’s not a problem.
California lawmakers propose soda tax, outlawing super-size sugary drinks Patrick McGreevy, Los Angeles Times
California restaurants and stores would be prohibited from selling “Big Gulp”-style sodas and consumers would face taxes on sugar-sweetened soft drinks under bills announced Wednesday by five state lawmakers to address a “public health crisis” of obesity in the Golden State. The proposals include a ban on the sale of unsealed “sugar-sweetened beverage” portions larger than 16 ounces at food-service businesses, including restaurants with self-service soda fountains, stores such as 7-Eleven, and sports arenas.
Financial Technology
States, consumer groups blast CFPB’s fintech protections Steven Harras, Roll Call
State attorneys general, consumer advocates, community activists, and banking regulators are criticizing proposed legal protections for banks and technology firms that develop “innovative” financial products. The protections would come from the Consumer Financial Protection Bureau, which in December unveiled what it calls a “regulatory sandbox” that will allow firms to develop untested fintech products and services without fear of reprisals from regulators.
Community activists oppose Square’s ILC bid Rachel Witkowski, American Banker
Thirty-seven community groups are jointly asking the Federal Deposit Insurance Corp. to reject Square’s landmark application to become an industrial loan company. The groups, led by the California Reinvestment Coalition, submitted a letter Feb. 19 after the FDIC extended its comment period on Square’s application to form an ILC based in Utah.
Opinions, Editorials and Perspectives
Trump-Appointed ‘Consumer Watchdog’ Trapping Americans in Debt Mike Calhoun, Morning Consult
Mary Schmidt, a lifelong resident of the St. Louis region, had a good job with a school district. In an attempt to cover a financial shortfall, she took out a payday loan of a few hundred dollars. Unable to afford to repay the loan principal and fee, she repeatedly reborrowed — more than a dozen loans in total.
Lower tax refunds show how the Republican tax cut is keeping money in your hands all year Chuck Grassley and Kevin Brady, USA Today
When Republicans transformed America’s broken tax code for the first time in three decades, then-Democratic Leader Nancy Pelosi famously predicted “this is Armageddon” for the nation’s economy. Barely a year later, how things have changed.
‘Every Billionaire Is a Policy Mistake’ Karl Rove, The Wall Street Journal
It’s not your parents’ Democratic Party anymore. Once upon a time, Democrats worked to reduce income inequality by raising up those on the bottom of the economic ladder with the government’s help.
A Partial Payday Reprieve The Editorial Board, The Wall Street Journal
The Obama Administration too often crushed legal industries that aren’t politically fashionable—for-profit colleges, for instance. So it’s welcome news that the Consumer Financial Protection Bureau is unwinding parts of a needlessly punitive rule on payday lenders, though a wholesale rewrite would be better. The bureau rolled out the payday rule under Richard Cordray, the former director best known for refusing to be fired.
Research Reports
How Prevalent Is Downward Rigidity in Nominal Wages? International Evidence from Payroll Records and Pay Slips Michael W. Elsby and Gary Solon, The National Bureau of Economic Research
For more than 80 years, many macroeconomic analyses have been premised on the assumption that workers’ nominal wage rates cannot be cut. Contrary evidence from household surveys reasonably has been discounted on the ground that the measurement of frequent wage cuts might be an artifact of reporting error.
Are Big Banks Getting Bigger? A Review of the Facts Sean Campbell, Financial Services Forum
Overall, the entire banking sector is growing. As seen in Figure 1, real assets in the banking industry have more than doubled from $9.1 trillion in 2000 to $18.8 trillion in 2018.
|