• Amid an uptick in short-selling activity and share volatility, U.S. federal and state officials are looking into whether market manipulation has played any role in banking equity fluctuations given strong fundamentals and capital levels in the sector, a source familiar with the matter said. White House press secretary Karine Jean-Pierre said the Biden administration was monitoring the situation, but the Securities and Exchange Commission would be responsible for taking any related actions. (Reuters)
  • Most consumers surveyed by Morning Consult believe that banks are fundamentally sound: About 1 in 3 national bank customers said in March that they’re “very confident” in their banks’ ability to provide them with all of the money in their accounts if they requested it, compared with just 5% who said they’re “not confident at all.” 
• Goldman Sachs Group Inc. said it is providing information to and cooperating with “various governmental bodies” with regard to investigations into the collapse of Silicon Valley Bank. Goldman Sachs, which has been criticized for serving as both a buyer of SVB securities and as an adviser to SVB for a failed equity raise, said in a regulatory filing that regulators were looking into those relationships with SVB in or around March. (Financial Times)
  • 38% of voters said SVB management was most responsible for the bank’s failure, per a March Morning Consult survey. 
• Volatility in regional bank stocks continued yesterday, leading to halts on trading in shares of PacWest Bancorp and Western Alliance Bancorp., which fell by as much as 50% and 45%, respectively. (The Guardian) Western Alliance shares fell after the Financial Times reported that the bank was considering strategic options including a sale, but Stephanie Whitlow, Western Alliance’s chief marketing officer, told Bloomberg that “this story is absolutely false, there is no truth to this.” (Bloomberg)
• Sen. Elizabeth Warren (D-Mass.) sent a letter to Michael Roffler, the former chief executive of First Republic Bank, seeking more information on matters including management’s awareness of problems at the bank, executive pay and stock sales, as well as the bank’s lobbying activities in support of rules implemented in 2018 that rolled back regulations for mid-size banks. (The Wall Street Journal)

These Charts Show How Concerned Investors Are About the US Debt-Limit

Bloomberg

Half in US Lack the Cash to Cover a Surprise $400 Bill

Alexandre Tanzi, Bloomberg

Most Americans don’t have the financial resources to cover a surprise expense of $400 without taking on debt, according to a new survey. Just over one-third of respondents said they have cash on hand to cover the expense, and the figure rises to 48% when including those who said they’d use a credit card but pay it off immediately before incurring interest charges, according to a poll conducted by decision intelligence company Morning Consult for Bloomberg News.

The exact six-figure salary that Gen Z and millennials need to feel like they’ve ‘made it’

Orianna Rosa Royle, Fortune

As a child, it was easy to fantasize about the many things that would symbolize reaching success.

Jobs Report to Show How Labor Market Weathered Bank Failures, High Interest Rates

Sarah Chaney Cambon, The Wall Street Journal

Friday’s jobs report will show how the labor market fared in April, as the economy faced banking turmoil, rising interest rates and still-high inflation.

A recession is more likely under the Republican debt-ceiling plan, Moody’s chief economist warns

Filip De Mott, Reuters

A Republican proposal to lift the debt ceiling would slow the economy and increase the likelihood of a recession, Moody’s Analytics chief economist Mark Zandi said.

What a Fed response to a US debt default could look like

Howard Schneider, Reuters

Federal Reserve Chair Jerome Powell, asked on Wednesday about what the Fed would do in the event of a U.S. debt default, repeated the mantra of Fed leaders on that issue: A default is unthinkable, the U.S. government needs to pay its bills, and there was little the central bank could do to prevent an economic meltdown if it didn’t.

Scrambling to Avoid Default, White House Weighs Debt-Limit Fallback Options

Andrew Duehren and Annie Linskey, The Wall Street Journal

The Biden administration and Capitol Hill leaders are scrambling to avoid a first-ever government default that could arrive as soon as June 1, taking potential alternative strategies more seriously after months of deadlock over raising the country’s borrowing limit.

GOP Senators Say ‘Nobody Believes’ Yellen’s June 1 Debt Ceiling Deadline—Here’s Why They Might Be Right

Sara Dorn, Forbes

Senate Republicans are casting doubt on Treasury Secretary Janet Yellen’s June 1 deadline for raising the debt ceiling—a sentiment that bolsters their bid to buy time to negotiate spending cut demands, and one that aligns with views among financial experts.

How Biden Can Win the Debt-Ceiling Fight With One Weird Trick

Eric Levitz, New York magazine

The United States will be unable to pay its bills in one month absent a change in government policy. That was Treasury Secretary Janet Yellen’s message to Congress on Monday, in which she revealed that failure to increase the debt limit by June 1 (or, potentially, a little after) would leave the government incapable of meeting its obligations to borrowers and constituents, likely leading to financial chaos.

‘The last thing that markets need’: White House focuses on economic costs of default

Ben Werschkul, Yahoo Finance

Commerce Secretary Gina Raimondo added during Wednesday’s Yahoo Finance conversation that “when I talk to US CEOs, there’s a lot of anxiety about the debt ceiling and a view that it’s not time to play politics.”

Senate Democrats lambast GOP debt limit bill in Budget hearing

Aris Folley, The Hill

Senate Democrats used a Thursday Budget Committee hearing to ramp up attacks on a GOP bill that would raise the debt ceiling in exchange for steep spending cuts. “Since the House didn’t hold a single hearing on this extreme and dangerous measure, the Senate will,” Senate Budget Committee Chairman Sheldon Whitehouse (D-R.I.) said at the top of the hearing, before calling the bill a “dangerous” measure that would “gut basic federal programs.”

World Food Prices End Year-Long Slide to Stoke Inflation Risk

Megan Durisin and Mumbi Gitau, Bloomberg

Global food prices rose for the first time in a year, just as the rampant run-up in grocery costs begins to cool in some countries. A United Nations index of food-commodity prices gained 0.6% in April, with pricier sugar offsetting losses for grains and dairy products.

Taxing Wealthy Dynasties Seen Backfiring in States Like New York

Ben Steverman, Bloomberg

Billionaires are more motivated to move out of places with estate taxes as they get older, a new study finds.

FDIC Plans to Hit Big Banks With Fees to Refill Deposit Insurance Fund

Katanga Johnson, Bloomberg

The US is poised to exempt smaller lenders from kicking in extra money to replenish the government’s bedrock deposit insurance fund, and instead saddle the biggest banks with much of the bill.

Fed emergency loans plunge after First Republic seizure

Catarina Saraiva, Bloomberg

Emergency borrowing from the Federal Reserve plunged last week, partly reflecting the seizure of First Republic Bank, which accounted for a large share of outstanding loans.

Charlie Javice in Talks With US Over Alleged JPMorgan Fraud

Bob Van Voris, Bloomberg

Frank founder Charlie Javice is in talks with prosecutors to resolve charges she defrauded JPMorgan Chase & Co. in its $175 million acquisition of the college financial-planning site, according to court records.

US Turns to Familiar Name to Clean Up $114 Billion Banking Mess: BlackRock

Silla Brush, Bloomberg

Once again, Washington is turning to its favorite Wall Street cleaning crew to pick up after the US banking industry. After almost two months of smoldering turmoil in the banking sector — and investors worrying there could be more trouble ahead — BlackRock Inc. has only just begun its work.

JPMorgan’s Dimon to visit mainland China for first time in 4 years – sources

Julie Zhu et al., Reuters

Jamie Dimon, the chief executive of JPMorgan Chase & Co, travels to mainland China this month for the first time in four years, sources said, the latest in a series of visits by top foreign financial executives since the lifting of tough COVID-19 curbs.

Bank executives blamed for failures during Senate hearing

Tobias Burns, The Hill

Experts testifying at a Thursday hearing categorically blamed executive mismanagement for the recent spate of bank failures feared to be hurtling the economy into a recession. At a Senate Banking Committee hearing, banking and regulatory experts from the University of Richmond School of Law, Catholic University and the U.S. Chamber of Commerce lobbying group all said bad management was the primary causes of the failures.

Pressure grows for regulatory intervention as US bank rout deepens

Reuters

Pressure is growing on U.S. regulators to take more steps to shore up the country’s banking sector as a renewed rout in regional lenders’ shares forced PacWest Bancorp (PACW.O) to explore options to bolster its balance sheet.

US banks under fresh pressure as Nelson Peltz calls for Washington to stem crisis

Joshua Franklin et al., Financial Times

Activist investor makes case for an increase on the $250,000 deposit insurance limit.

Oklahoma puts BlackRock, State Street and 11 other financial firms on exclusion list

Margarida Correia, Pensions & Investments

Oklahoma Treasurer Todd Russ included BlackRock and State Street on a list of 13 financial firms prohibited from doing business with the state.

Carlyle’s Revenue Falls as CEO Sees Muted Activity Through the Year

Sabela Ojea and Chris Cumming, The Wall Street Journal

Carlyle Group reported an unexpected decline in revenue for the first quarter amid lower fee-related performance revenue. The investment firm on Thursday reported net income attributable to shareholders of $100.7 million, or 28 cents a share, compared with $571.6 million, or $1.57 a share, for the same period a year earlier.

US banking crisis pushes gold close to all-time high

Harry Dempsey, Financial Times

Chinese consumers and central bank purchases add to demand for precious metal.

Pension Funds Consider Unloading Stocks, Adding Credit

Heather Gillers, The Wall Street Journal

Some of the nation’s largest pension funds are looking at pulling back on stocks and adding private credit, while grappling with the possibility of a prolonged economic slowdown.

Corporate culture ETFs aim to gain from happier employees

Chris Flood, Financial Times

Companies included in indices rated for worker perceptions of autonomy, fairness and trust

The slow-motion trainwreck everyone sees coming

Katy O’Donnell, Politico Pro

Some $1.5 trillion in mortgages will come due in the next two years, a potential time bomb as higher interest rates push down property values.

Mortgage payments have soared 85% in just three years thanks to Fed rate hikes

Zachary Halaschak, The Washington Examiner

The median payment on a mortgage for a new home has exploded in the past three years as the Federal Reserve has hiked interest rates in response to blistering inflation. In March, the median monthly payment sat at nearly $2,100, according to data compiled by the Mortgage Bankers Association.

Cash App’s quarterly Bitcoin sales approach $2.2 billion, up 25% year over year

Ben Weiss, Fortune

Block, the Jack Dorsey–led digital payments giant, announced on Thursday a 25% year-over-year increase in Bitcoin sales on Cash App, one of its flagship products.

AI Is ‘Definitely the Talk of the Town,’ Coinbase CFO Says

Olga Kharif and Hannah Miller, Bloomberg

Crypto exchange is looking at using AI for customer service; The company reported a first-quarter loss of $79 million.

Israel seized Binance crypto accounts to ‘thwart’ Islamic State, document shows

Tom Wilson and Angus Berwick, Reuters

Israel has seized around 190 crypto accounts at crypto exchange Binance since 2021, including two it said were linked to Islamic State and dozens of others it said were owned by Palestinian firms connected to the Islamist Hamas group, documents released by the country’s counter-terror authorities show.

FTX gets approval for LedgerX sale, asserts $3.9 bln Genesis claim

Dietrich Knauth, Reuters

Bankrupt crypto exchange FTX received U.S. bankruptcy court permission on Thursday to sell its LedgerX business for $50 million, raising additional funds to repay creditors.