• Walmart Inc. filed a lawsuit against Capital One Financial Corp. to end its credit-card partnership with the company, alleging that Capital One did not meet its contractual obligations, including customer service-related duties such as replacing lost cards and quickly posting transactions to cardholders’ accounts. A Capital One spokesperson said the company resolved those “immaterial” issues quickly and said the suit was an attempt to renegotiate the economic terms of the partnership or end the agreement early. (The Wall Street Journal)
• In a sign that credit conditions are beginning to tighten, commercial bank lending fell to about $105 billion in the two weeks ending March 29, the most in Federal Reserve data collected back to 1973. The lending pullback was broad and included fewer loans made across sectors, including real estate, commercial and industrial loans. (Bloomberg)
• After the collapse of Signature Bank, Binance.US is struggling to find a new banking partner and is using at least one middleman to hold funds on its behalf, people familiar with the matter said. Binance.US faces particular difficulty in managing its users’ dollar deposits, which were previously held at either Signature Bank or Silvergate Capital Corp., and Binance was unsuccessful in recent months in creating new relationships with banks in New Jersey and Pennsylvania, the people said. (The Wall Street Journal)
• FTX debtors said in a report that the fall of the crypto exchange was rooted in “hubris, incompetence and greed” among its executives, including founder Sam Bankman-Fried, engineering director Nishad Singh and former technology chief Gary Wang, who the debtors claim lied, stifled dissent, commingled and misused funds and “joked internally about their tendency to lose track of millions of dollars in assets.” The debtors said FTX executives had little desire to build appropriate oversight and “lacked fundamental financial and accounting controls,” and the report stated that so far, digital assets worth more than $1.4 billion have been recovered and secured in cold storage. (Bloomberg)

Worth watching:

• New York Fed President John Williams will participate in a moderated discussion organized by the Economics Review at New York University.
• Treasury Undersecretary Jay Shambaugh joins the Brookings Institution for a fireside chat to discuss the global economic outlook, financial stability and geopolitical dynamics.

See the fastest growing (and shrinking) U.S. states

Axios

Battle over Biden labor nominee Julie Su heats up

Nandita Bose, Reuters

“Biden nominee Julie Su wants to turn the lights off” reads a billboard in West Virginia; another in Montana warns that Su, U.S. President Joe Biden’s nominee for labor secretary, will turn the state into California; in Arizona, the message is, “Su’s gig could be destroying your gig.”

Student loan ‘train wreck’: As return of regular payments loom, servicers have less staff to field expected deluge of calls

Jillian Berman, MarketWatch

‘Longer wait times’ with Saturday call center hours at two major services finished. Changes come after Congress declined to increase funding.

Biden’s economic chief draws doubts over her Fed past

Ben White, Politico

Behind the scenes, Brainard has been taking a lead role in the administration’s efforts to deal with the failed banks and reassure depositors that their money is safe, according to half a dozen senior administration officials.

Car Breakdowns Are Making More People Fall Behind on Their Loans

Ben Eisen and Gina Heeb, The Wall Street Journal

Borrowers have big monthly payments for older cars and face steep bills when the vehicles need repairs

Gensler wants to overhaul private equity. It’s scaring some investors.

Sam Sutton, Politico Pro

Everyone knew that Wall Street would fight SEC Chair Gary Gensler’s bid to crack down on private equity powerhouses and hedge funds. Few predicted the backlash from the investors Gensler is trying to protect.

Inside the US jobs report: Record-low Black unemployment

Dan Burns and Howard Schneider, Reuters

The Black unemployment rate hit a record low in March, a milestone for a U.S. labor market that most policymakers and economists expect to begin cooling in the face of higher interest rates, jeopardizing those historic gains.

Food Prices Are New Inflation Threat for Governments and Central Banks

Paul Hannon, The Wall Street Journal

With food commodity prices down, widening profit margins might explain why consumers are paying more

Can Congress Make an End-Run Around a Debt Limit Impasse? It’s Tricky.

Carl Hulse and Jeanna Smialek, The New York Times

Some Democrats are urging their colleagues to lay the groundwork for using an arcane procedural process to bypass Republicans and stave off economic peril.

Corporate tax leaders anticipate more audits and risks

Michael Cohn, Accounting Today

Tax leaders at companies around the world are predicting the number of tax audits will increase by more than a third over the next two years.

Fathers in particular take advantage of new laws and changing workplace culture

Gwynn Guilford, The Wall Street Journal

Shawna Freeman Lane, 34, continued to teach college-level business by laptop after she gave birth by C-section in 2017. Her husband, Eric Lane, was home with her in Fircrest, Wash., for three weeks. The same thing happened in 2018, when their second child was born—except this time, Mr. Lane only got two weeks at home.

First Republic Suspends Dividends on Preferred Stock

Rachel Louise Ensign, The Wall Street Journal

First Republic Bank beset by concerns over loan values and deposit flight, said in a regulatory  filing Friday that it will suspend payments of quarterly cash dividends on its preferred stock.

Nuns urge Citigroup to rethink financing of fossil fuel projects

Attracta Mooney in London and Aime Williams

Sisters of St Joseph of Peace accuse bank of trying to ‘minimise its role’ in providing cash to oil pipeline company.

Banks Are Closing Customer Accounts, With Little Explanation

Tara Siegel Bernard and Ron Lieber, The New York Times

Increasing attention to suspicious-seeming transactions has led to some people suddenly losing access to their bank accounts. The reasons are often a mystery.

Bank Regulator Drops Case Against Ex-Rabobank U.S. Compliance Chief

Richard Vanderford, The Wall Street Journal

A U.S. banking regulator has dropped a case against a former Rabobank NA compliance chief who allegedly tried to cover up problems in the bank’s anti-money-laundering program, finding the judge in the case hadn’t given her a fair hearing.

Ex-Wells Fargo executive Carrie Tolstedt shows up in court

Kate Berry, American Banker

Carrie Tolstedt, Wells Fargo’s former head of its community bank, entered a “not guilty” plea at an arraignment hearing on Friday, kicking off a legal battle that could result in prison time for the accused.

Auditors Didn’t Flag Risks Building Up in Banks

Jean Eaglesham, The Wall Street Journal

When KPMG LLP gave Silicon Valley Bank a clean bill of health just 14 days before the lender collapsed, the Big Four audit firm flagged potential losses on loans as a so-called critical audit matter. But the audit opinion was silent on what actually brought down the bank—its unrealized bond losses and ability to hold them given a reliance on potentially flighty deposits.

Declines in Loan Values Are Widespread Among Banks

Jonathan Weil, The Wall Street Journal

Lenders could face pressure on earnings or liquidity, or to pay higher rates for deposits.

Wall St struggles to meet Mifid rules as waiver comes to an end

Jennifer Hughes, Financial Times

SEC shrugs off calls for longer exemption on changes governing investment research

Fintech founder parlayed connections for JPMorgan deal before fraud charges

Sujeet Indap and Joshua Franklin, Financial Times

Charlie Javice’s Frank had early high-profile backers before persuading the bank to pay $175mn

Swiss finance minister sees no ‘stumbling blocks’ to UBS takeover of Credit Suisse

Reuters

UBS’s multi-billion state-sponsored takeover of Credit Suisse should proceed smoothly without political obstructions, Swiss Finance Minister Karin Keller-Sutter said in an interview published on Saturday.

Short sellers play heroes and villains in the U.S. bank crisis

Lawrence Delevingne, Reuters

As First Republic Bank’s share price fell by double-digits in the aftermath of the collapse of Silicon Valley Bank last month, some people close to the San Francisco-based lender were worried short sellers were exacerbating its travails, according to a source familiar with the situation.

Digging Into a $344 Billion Investing Mystery

Jason Zweig, The Wall Street Journal

Preposterous claims in private investment offerings illustrate an important point about red-hot ‘Reg D’ securities: No one is checking to see if the details in these filings are even remotely true.

Investors View Corporate Earnings Season as Next Test for Stocks

Hannah Miao, The Wall Street Journal

First-quarter profits are projected to drop from a year earlier.

Calif. pauses mortgage aid program in less than two weeks because of demand

Erica Werner, The Washington Post

State officials thought funding would last months for a program to provide people with money for 20 percent down payments on a home

Zillow to pay $15 million settlement in shareholder suit

Andrew Martinez, National Mortgage News

A judge has given preliminary approval to a $15 million settlement from Zillow Group to shareholders who sued the firm over a previously undisclosed federal probe into its co-marketing program between lenders and real estate agents.

More than 10% of recent homebuyer loans are slipping underwater

Bonnie Sinnock, National Mortgage News

The share of recent homebuyers with negative equity has moved into the double digits, two recent reports show. More than 11% of borrowers who took out loans to buy houses last year had properties worth less than the debt on them in February.

A Great Credit Score, but She Can’t Get a Mortgage

Paula Span, The New York Times

Despite solid financial track records, many older Americans have a hard time refinancing because of their mortality risks and lower retirement incomes.

Half of millennials now own homes, new data finds

Adam Barnes, The Hill

The nation’s largest generation made the jump to a homeowner majority last year, reaching more than 18 million, according to a recent report from Rent Café.

A different kind of mortgage crisis

Felix Salmon, Axios

The 2008 financial crisis was caused, in part, by mortgage lenders taking on too much risk. Now, the pendulum has swung so far in the opposite direction that the private sector has all but ceased taking on mortgage risk any more.

A $1.5 Trillion Wall of Debt Is Looming for US Commercial Properties

Neil Callanan, Bloomberg

Almost $1.5 trillion of US commercial real estate debt comes due for repayment before the end of 2025. The big question facing those borrowers is who’s going to lend to them?

How Binance turned regular people who plug crypto into millionaires: Inside its 26,000-person influencer army

Alexandra Sternlicht and Shawn Tully, Fortune

Growing up in Malawi, Grey Jabesi spent most of his childhood sleeping on a sand floor. But rather than pursue a path of hard labor on tobacco or cattle farms, Jabesi dreamed of a different life.