• Wells Fargo & Co. was fined $97.8 million by the Federal Reserve and the Treasury Department’s Office of Foreign Assets Control after the agencies found that lax oversight at the bank enabled it to process transactions in violation of U.S. sanctions against Iran, Syria and Sudan. Wells Fargo processed $532 million in prohibited transactions from 2010 to 2015. (Reuters)
• Treasury Secretary Janet Yellen said that the rollback of banking regulations under the Trump administration may have gone too far, and warned of the damage that  “fire sales” by panicked investors can cause to the economy. In prepared remarks, Yellen pointed to other areas of financial risk, including nonbanks, open-ended funds, hedge funds, stablecoins and money-market funds, saying of the latter that “if there is any place where the vulnerabilities of the system to runs and fire sales have been clear-cut, it is money-market funds.” (Bloomberg)
• The White House has called on several federal agencies to work in tandem with the Treasury Department to reinstate rules for mid-size banks with assets between $100 billion and $250 billion, including rules around liquidity requirements, stress testing and strengthening supervisory tools to ensure banks can weather climbing interest rates. The rule changes, which may have been proposed under the advice of National Economic Council Director Lael Brainard, an opponent of the 2018 regulatory rollbacks, would not require congressional approval, and while the administration had conferred with the regulators beforehand, it was unclear if any of the involved agencies would move forward with the changes. (Bloomberg)
• House Speaker Kevin McCarthy (R-Calif.) said House Republicans could move ahead with their own bill to raise the federal debt ceiling and slash up to $130 billion in federal spending, noting that the GOP is “very close” on moving forward with a bill, and “if the president doesn’t act, then we will.” The White House has remained firm in its position that it would not entertain the use of the debt ceiling as a bargaining chip in federal spending negotiations, and while McCarthy and President Joe Biden have not met on the issue since February, McCarthy told reporters he was ready to meet with the president “at any time, at any moment.” (The Washington Post)

Worth watching:

• Fed Governor Christopher Waller will deliver a speech on “The Unstable Phillips Curve” at the San Francisco Fed’s Macroeconomics and Monetary Policy Conference.

Retirement has become much longer across the rich world

The Economist

CFPB finalizes rule targeting discrimination in small business lending

Sam Sutton, Politico Pro

Washington’s top consumer watchdog finalized new rules on Thursday that will force Wall Street banks and online lending outfits to hand over racial and demographic data on small business loan applications.

World Court rules US illegally froze some Iranian assets

Stephanie van den Berg, Reuters

In a partial victory for Iran, judges at the International Court of Justice (ICJ) on Thursday ruled Washington had illegally allowed courts to freeze assets of some Iranian companies and ordered the United States to pay compensation but left the amount to be determined later.

US Favors Raising World Bank’s Risk Tolerance for More Aggressive Lending

Eric Martin, Bloomberg

The Biden administration favors potentially increasing the World Bank’s risk tolerance in the future more than the institution’s shareholders have decided for now, a move that could enable the lender to provide billions more for global challenges including climate change.

New Corporate Minimum Tax Could Ensnare Some Firms Over One-Time Moves

Jennifer Williams-Alvarez, The Wall Street Journal

Companies including CenterPoint Energy and American Water Works seek government guidance on how the sale of a business unit might trigger the 15% levy.

Biden skirts bank bailout backlash

Zachary Warmbrodt and Eleanor Mueller, Politico

“Biden has been a steady hand through this financial crisis,” Sen. Elizabeth Warren (D-Mass.), one of the party’s most scathing critics of the banking industry.

Gen Z Graduates Stare Down Their First Student Loan Payments

Claire Ballentine and Ella Ceron, Bloomberg

Millions of students graduated during the pandemic with student debt. They have yet to make a single payment.

Americans Are Losing Faith in College Education, WSJ-NORC Poll Finds

Douglas Belkin, The Wall Street Journal

Confidence in value of a degree plummeted among women and senior citizens during pandemic.

Americans lost a lot of financial ground last year. Is the worst over?

Janna Herron, Yahoo Finance

Americans have been falling behind financially over the last year. Two reports released Thursday show just how much. The share of Americans who feel financially healthy declined by a whopping nine percentage points in March from a year ago, according to a J.D. Power 2023 U.S. Retail Banking Satisfaction Study, while the percentage of consumers who feel financially vulnerable increased by eight percentage points.

Citigroup sees global profits shrinking 5% in aftermath of banking turmoil

Reuters

Citigroup equity strategists flagged a likely 5% contraction in global profits this year as turmoil in the banking sector raises the risk of a recession.

Banking crisis won’t hurt America’s credit rating unless stress intensifies, Moody’s says

Matt Egan, CNN

The banking crisis that caused US officials to launch emergency interventions is unlikely to have significant direct costs for the federal government, according to Moody’s Investors Service.

No view yet on rate hike appropriate for May meeting

Howard Schneider, Reuters

Richmond Federal Reserve bank president Thomas Barkin said Thursday that he had not come to a view yet on what rate increase might be appropriate at the Fed’s May 1-2 session, and is “comfortable” with meeting-by-meeting decisions on whether or not to move by a quarter of a basis point.

Fed Officials See More Work on Inflation Despite Bank Strains

Jonnelle Marte et al., Bloomberg

Federal Reserve officials continued to stress the need to lower inflation even as they keep an eye on the fallout from the collapse of Silicon Valley Bank earlier this month.

US labor market remains tight; corporate profits decline

Lucia Mutikani, Reuters

The number of Americans filing new claims for unemployment benefits rose moderately last week, showing no signs yet that tightening credit conditions were having a material impact on the tight labor market.

The final estimate for GDP shows the US economy grew at 2.6% last quarter

Alicia Wallace, CNN

The US economy grew at a slower pace in the fourth quarter than initially estimated, as consumer spending continued to trail off. Inflation-adjusted gross domestic product — the broadest measure of economic activity — increased 2.6% for the final three months of 2022, according to the Commerce Department’s third and final reading for the quarter.

Consumer Spending Report to Show Whether Strength Continued in February

Gwynn Guilford, The Wall Street Journal

A government report Friday will offer insight into how the U.S. economy fared in February, as elevated inflation continued to weigh on consumer purchasing power and interest rates remained high.

Lobbyists Begin Chipping Away at Biden’s $80 Billion I.R.S. Overhaul

Alan Rappeport, The New York Times

The tax preparation industry is alarmed over the prospect that the Internal Revenue Service will devise its own free tax-filing system.

Indiana GOP senator carves out dealmaking niche on taxes

Laura Weiss, Roll Call

Sen. Todd Young has a pitch to clear a path forward on tax legislation after a partisan standoff last year gave way to a monthslong chill. He’d pair a more generous research and development benefit for businesses with affordable housing measures to aid low-income families.

San Francisco Fed’s Daly Stays Mum While Criticism Mounts Over SVB Oversight

Catarina Saraiva, Bloomberg

One of the Federal Reserve’s most prolific policy messengers is laying low at a crucial moment for the central bank, after finding herself at the center of controversy over turmoil in the banking sector.

Only a Quarter of Unemployed US Workers Filed for Benefits in 2022

Alexandre Tanzi, Bloomberg

Only about a quarter of unemployed US workers applied for jobless benefits in 2022, suggesting unemployment claims could be much higher, according to an analysis by the Bureau of Labor Statistics.

U.S. labor force gap mostly due to pre-pandemic trends, study finds

Howard Schneider, Reuters

Almost all of the remaining shortfall in U.S. labor force participation is the result of demographic and other trends that predate the COVID-19 pandemic, according to new research that suggests little chance that growth in the number of workers will help ease a tight American job market.

SEC seeks $2.4 billion in funding to boost staff numbers

Brian Croce, Pensions & Investments

Congress should approve the Securities and Exchange Commission’s fiscal year 2024 budget request so the agency can hire an additional 170 full-time employees and better oversee markets and protect investors, SEC Chairman Gary Gensler testified.

Jamie Dimon Reprises 2008 Role as Rescuer of a Failing Bank

Rob Copeland and Maureen Farrell, The New York Times

The JPMorgan chief executive led an effort to raise $30 billion for First Republic, but no one is sure if it did any good.

Fed’s Emergency Loans to Banks Fall in Sign of Easing Turmoil

Craig Torres and Alex Harris, Bloomberg

Banks reduced their borrowings from two Federal Reserve backstop lending facilities in the most recent week, a sign that liquidity demand may be stabilizing.

Dealmaking at 10-year low in first quarter as bank crisis hits confidence

Ivan Levingston et al., Financial Times

Value of mergers and acquisitions drops 45% year on year to $550.5bn.

Lex in depth: how safe are America’s regional banks?

Pan Kwan Yuk et al., Financial Times

After the recent failures of Silicon Valley Bank and others, the FT has analysed more than 100 institutions to identify those that are the biggest cause for concern.

Here’s What Retirement Looks Like in America in Six Charts

Veronica Dagher et al., The Wall Street Journal

From 401(k)s to healthcare, a look at how Americans spend time and money in retirement.

Flood of cash into US money market funds could add to banking strains

Kate Duguid et al., Financial Times

Treasury secretary Janet Yellen warns over ‘structural vulnerabilities’ of sector.

Wall Street Bonuses Fall by Most Since 2008

Alyssa Lukpat, The Wall Street Journal

Average bonus was $176,000 last year, down 26% from 2021.

More home sellers are sitting out of the spring housing market

Diana Olick, CNBC

New listings continued to fall in March, according to Realtor.com, down 20% from the same month last year. The active inventory of homes for sale is, however, 60% higher than the start of last spring, but that is only because homes are taking longer to sell.

Mortgage rates fall for the third week in a row

Anna Bahney, CNN

Homebuyers saw another week of falling mortgage rates, with the average rate dropping last week for the third week in a row, according to data from Freddie Mac released Thursday.

FHFA watchdog finds lapses in conservatorship record-keeping

Bonnie Sinnock, National Mortgage News

The Federal Housing Finance Agency’s watchdog asked the regulator to improve its record keeping for decisions made as the government-sponsored enterprises’ conservator after finding shortcomings in a sample of 40 files.

FTX Founder Sam Bankman-Fried Pleads Not Guilty to Latest Federal Charges

James Fanelli, The Wall Street Journal

FTX founder Sam Bankman-Fried pleaded not guilty Thursday to new federal charges tied to the collapse of the crypto exchange while his lawyer said he plans to challenge the new criminal counts, arguing they violate the terms of the former chief executive’s extradition.

Crypto founder Do Kwon indicted in US following Montenegro arrest

Jonathan Stempel et al., Reuters

Do Kwon, the cryptocurrency entrepreneur behind two digital currencies that lost an estimated $40 billion or more last year, has been charged with fraud by U.S. prosecutors.

It’s becoming increasingly clear that fintech has a fraud problem

Bianca Chan and Paige Hagy, Insider Premium

A report from a short-seller alleging fraud on Cash App, a personal finance app that’s part of Jack Dorsey’s fintech giant Block, highlights concerns some have about the wider industry.