Stimulus

• White House officials and President Donald Trump’s advisers said Trump is reluctant to pursue another stimulus package as he is confident that the reopening of states will boost the economy ahead of the presidential election, with conservatives telling Trump that instead of giving aid to states, he should work on cutting business taxes, slashing regulations and focusing on the trade war with China. Trump’s aides and his allies on Capitol Hill, however, are prepared for Trump to switch his strategy and push for another stimulus package, depending on the economic pressure and how he fares in the polls against the presumptive Democratic presidential nominee, former Vice President Joe Biden.  

• The Federal Reserve said it will widen its municipal bond program, allowing states that don’t have at least two cities and counties large enough to fit the original criteria — those with populations of 250,000 or more and counties with populations of at least 500,000 — to designate up to two city or county issuers to tap the program. Governors from each state will also be able to select two bond issuers whose revenue comes from operating government activities, including public transit, airports or toll facilities, to use the program.

• The Senate confirmed Brian Miller, a White House lawyer, in a 51-40 vote as special inspector general for pandemic recovery, overseeing the Treasury Department’s use of $500 billion in stimulus funds. 

• As Treasury Deputy Secretary Justin Muzinich has largely taken the reins of the $3 trillion federal coronavirus bailout, a major beneficiary of that bailout has been Muzinich & Co., the asset manager that Muzinich’s father founded and in which Muzinich still holds financial ties via transferring his shares to his father, who received no money for them up front. Muzinich & Co. recouped billions in losses, according to a review of its holdings since the Federal Reserve and Treasury Department launched efforts to buy corporate debt in late March, but a Treasury spokesperson said that Muzinich “takes his ethics obligations very seriously” and that the arrangement was approved by the Office of Government Ethics. 

Economy

• The unemployment rate dropped to 13.3 percent in May from April’s 14.7 percent, with employers adding 2.5 million jobs in the last month, the most in a single month on the records from 1948.

• Trump touted the new jobs numbers, saying an economic recovery could help calm racial tensions in the country. He also said the White House will ask for additional economic aid “despite the numbers and how good they are” and seek a payroll tax cut and help for restaurants.

• Economic output will shrink a combined $7.9 trillion over the next decade in real terms, or 3 percent of cumulative gross domestic product, due to the coronavirus pandemic, according to the Congressional Budget Office. Stimulus packages passed by Congress will at least “partially mitigate the deterioration in economic conditions,” the CBO said. 

Financial regulators

• Trump said in a memo to the presidential working group on financial markets, including Treasury Secretary Steven Mnuchin, Federal Reserve Chairman Jerome Powell, Securities and Exchange Commission Chairman Jay Clayton and Commodity Futures Trading Commission Chairman Heath Tarbert, that he wants them to recommend actions the executive branch could take to limit Chinese listings in the United States that don’t follow U.S. accounting standards, setting a 60-day deadline. 

• The acting head of the Office of the Comptroller of the Currency, Brian Brooks, said that as soon as this month, the agency could again begin to ease lenders’ margin requirements by billions of dollars. 

• Brooks sent a letter to the National League of Cities, the U.S. Conference of Mayors and the National Association of Governors saying that a prolonged shutdown amid the coronavirus pandemic could harm banks by contributing to higher loan defaults and lowering the value of some assets, including commercial real estate. Brooks also warned that banks haven’t allowed customers to wear face masks in the past and that recent reports of robberies at banks “make clear that broadly applicable face mask requirements are not safe or sustainable on a permanent basis.”

• The New York Department of Financial Services has spent months investigating Jeffrey Epstein’s dealings with Deutsche Bank AG, which set up several accounts for Epstein and served as his lender from 2013 until last year, four people briefed on the matter said, which could mean the German lender faces an enforcement action as soon as this month. The people said the investigation in part examines Deutsche Bank’s decision to continue doing business with Epstein, who committed suicide while in federal custody in August, after employees raised concerns about his status as a registered sex offender and about suspicious transactions in which he moved his money overseas. 

Paycheck Protection Program

• Trump signed the revised rules creating flexibility for small businesses that took money through the Paycheck Protection Program. Some senators, including Senate Small Business Chair Marco Rubio (R-Fla.), however, are already saying they need to fix what they called drafting errors in the law.

• Anthony Wilkinson, president of the National Association of Guaranteed Government Lenders, told the Pandemic Response Accountability Committee that confusing guidelines from the federal government held back the PPP and put the banks making the loans at risk. Wilkinson’s statements were made at the first public event for the Pandemic Response Accountability Committee, which is made up of inspectors general from more than a dozen government agencies and one of several oversight bodies set up in the CARES Act.

• Many small businesses received loans two or more times via the PPP due to a technical issue, according to nearly a dozen people with knowledge of the matter. The total aid accidentally handed out could add up to hundreds of millions of dollars, which the government and lenders have been trying to recover in the past few weeks, one of the people briefed on the matter said.

• The Senate is in session, and the House is operating remotely this week.

• The Federal Open Markets Committee will meet Tuesday and Wednesday.

• Director of the Federal Housing Finance Agency Mark Calabria and Housing and Urban Development Secretary Ben Carson will testify in front of the Senate Banking Committee on Tuesday.

• Treasury Secretary Steven Mnuchin and U.S. Small Business Administrator Jovita Carranza will testify in front of the Senate Small Business Committee on Wednesday.

1) Senate passes small business loan revamp, overcoming resistance
Zachary Warmbrodt, Politico

2) Exclusive: U.S. small business program handed out virus aid to many borrowers twice
Michelle Price and Pete Schroeder, Reuters

3) Racial inequality in Minneapolis is among the worst in the nation
Christopher Ingraham, The Washington Post

4) JPMorgan, Citi CEOs Condemn Racism After George Floyd Death
Michelle F Davis, Bloomberg

5) Voter Sentiment on Trump’s Pandemic Response Hits New Low
Eli Yokley, Morning Consult

6) Trump Team Envisions Up to $1 Trillion for Next Stimulus Round
Saleha Mohsin and Justine Sink, Bloomberg

7) IRS Fails to Pursue Thousands of Rich Tax Cheats, Watchdog Says
Laura Davison, Bloomberg

8) ‘The recession is over’: Economist Mark Zandi says new data shows start of recovery
Lance Lambert, Fortune

9) Top bank regulator says lockdowns are threat to lenders
Victoria Guida, Politico

10) Why housing prices aren’t dropping in the pandemic
Emily Stewart, Vox