Libra

• President Donald Trump criticized Facebook Inc.’s plan to create Libra, a digital currency, which would have “little standing or dependability,” while also weighing in on cryptocurrencies, saying they are “not money” and that their value is based on “thin air.”  Trump also said Facebook should seek a banking charter. 

• Facebook could pose a risk to financial stability with its digital currency project because of the tech giant’s sheer size, Federal Reserve Chairman Jerome Powell said. During the hearing, Powell outlined his concerns that the social media company’s reach is so broad that the impact of Libra, its digital currency, could be unprecedented.

• Facebook seems unprepared for potential lashback from lawmakers at upcoming hearings over its digital currency Libra scheduled for July 16-17 before the Senate Banking and House Financial Services committees, according to congressional aides.

National debt

• The United States might not be able to pay its bills as early as the first half of September, according to the Bipartisan Policy Center, a faster-approaching deadline than the group’s previous estimate of October or early November. The Bipartisan Policy Center moved up its so-called X date because of weaker-than-expected revenue. 

• The estimate is pushing Treasury Secretary Steven Mnuchin and congressional leaders to find a way to increase the debt limit in the next few weeks. While Mnuchin has met with House Speaker Nancy Pelosi (D-Calif.) and GOP leaders, Pelosi has said she wants an increase in the federal debt limit to come as part of a wider-encompassing two-year budget deal. 

• The U.S. deficit grew 23 percent in the first nine months of the fiscal year as growing government tax receipts weren’t enough to offset rising federal spending. Interest on debt and growing military spending pushed federal outlays up 7 percent, according to the Treasury Department.

Banks

• Randal Quarles, the head of banking supervision at the Fed, said he would like to further tailor banking regulation and simplify the stress testing regime, easing obligations for even large banks. Quarles said the changes could be enacted before next year’s stress tests. 

• Without any major overhaul of post-crisis Wall Street laws, banks have managed to escape strict oversight under the Trump administration as regulators such as the Federal Reserve and the Office of the Comptroller of the Currency have taken on a friendly approach to the industry, according to interviews with more than two dozen current and former industry executives and bank regulators. While it’s illegal to release supervisory information about specific banks, people with knowledge of the matter said top banking agencies under the Obama administration informally discouraged banks from expanding while compliance issues remained unresolved.

• Powell said at an event at the Boston Fed that stress tests need to evolve to avoid “risk becoming a compliance exercise, breeding complacency from both supervisors and banks.” The tests need to change year to year to cover “even quite unlikely” potential situations, Powell said.

• Deutsche Bank AG will slash 18,000 jobs and exit its global equities and trading business entirely as part of a major overhaul that will also reorganize the bank’s senior leadership under Chief Executive Christian Sewing. The changes, which amount to a retreat from Deutsche Bank’s U.S. ambitions 20 years after the German lender acquired Bankers Trust, represent a “fundamental rebuilding” of Deutsche Bank as it pulls back into Germany, Sewing said.

SEC

• Securities and Exchange Commission Chairman Jay Clayton called criticisms of the agency’s Regulation Best Interest rule “false” and “misleading.” Sen. Elizabeth Warren (D-Mass.) and House Financial Services Committee Chairwoman Maxine Waters (D-Calif.) have claimed that the new rules will lower the fiduciary duty for investment advisers, a point that Clayton challenged. 

• House Republicans opposed legislation that would require the SEC to write rules that would make companies include more environmental, social and governance information in financial statements. The United Kingdom, following other European countries, has said it will explore a mandate to require disclosure of ESG risks.

• The House and Senate are in session this week.

• The Senate Banking Committee will hold a hearing on Facebook’s digital currency “Libra” on Tuesday and the House Financial Services Committee will hold one on Wednesday. 

• Citigroup Inc. will report second-quarter earnings on Monday. JPMorgan Chase & Co., Goldman Sachs Group Inc. and Wells Fargo & Co. will report second-quarter earnings on Tuesday. Bank of America Corp. will report on Wednesday, and Morgan Stanley will report on Thursday.

1) The age of winner-take-all cities
Kim Hart, Axios

2) It’s not just paychecks: The surprising society-wide benefits of raising the minimum wage
Andrew Van Dam, The Washington Post

3) Debt Limit Deadline Accelerates, Research Group Finds, Raising Pressure on Congress
Richard Rubin, The Wall Street Journal

4) Facebook’s Digital Currency Could Pose a Systemic Risk, Fed’s Powell Says
Claire Williams, Morning Consult

5) Maxine Waters threatens Facebook’s cryptocurrency plans
Zachary Warmbrodt, Politico

6) Congress Is Coming for Your IRA
Phillip DeMuth, The Wall Street Journal

7) With Wall Street’s Secret Shackles Gone, Dimon Prowls for Deals
Michelle Davis, Bloomberg

8) SEC Chief Defends Rules That Warren Called a Gift to Wall Street
Benjamin Bain, Bloomberg

9) Deutsche Bank to Exit Global Equities, Trading Business
Jenny Strasburg, The Wall Street Journal

10) France approves digital tax on American tech giants, defying US trade threat
Elizabeth Schulze, CNBC