• White House chief of staff Mark Meadows and Treasury Secretary Steven Mnuchin sent a letter to Congress asking lawmakers to pass legislation that would permit President Donald Trump to redirect about $130 billion in unused Paycheck Protection Program funding, a measure that’s unlikely to move the needle in the House as Speaker Nancy Pelosi (D-Calif.) continues to push for a more comprehensive deal. Pelosi reiterated yesterday that both parties “remain at an impasse” on economic stimulus package negotiations, following earlier objections to the administration’s $1.8 trillion proposal from Democrats and Republicans. (The Washington Post) 

• Stanford University’s Paul Milgrom and Robert B. Wilson were awarded the Nobel Prize in economics for their improvements on auction theory and the invention of new auction formats. The Royal Swedish Academy of Sciences said that the two economists have used their ideas to help sell goods and services “that are difficult to sell in a traditional way, such as radio frequencies.” (Bloomberg)

• Disagreements over the Municipal Lending Facility have delayed the Congressional Oversight Commission’s September report, according to Bharat Ramamurti, the Democratic commissioner on the commission and a former aide to Sen. Elizabeth Warren (D-Mass.), who said that he’s “disappointed that Republican foot-dragging has caused us to delay the release of the September report, which reflects broad support for expanding the Fed’s state and local lending program — including from one of the Republicans’ own witnesses at our recent hearing.” Talks over a new economic stimulus bill have been stalled in part because of party disagreement over expanding funding to local and state governments, with Democrats pushing for more aid.  (The New York Times)

Hard-hit small businesses face long winter without lifeline
Zachary Warmbrodt, Politico 

The potential failure of economic relief talks in Washington would have dire consequences for small businesses across the U.S., with the lack of new federal aid threatening to trigger mass layoffs and closures that would drag on the economy. The negotiations between Democratic leaders and the White House — which Senate Majority Leader Mitch McConnell said Friday are “unlikely” to succeed before the election — cover a vast range of issues, from an airline rescue to emergency aid for states. 

Small-Business Loans Will Be Forgiven, but Don’t Ask How
Stacy Cowley, The New York Times

When the federal government began the Paycheck Protection Program in April, one rule was clear to small-business owners bedeviled by its chaotic and messy start: If most of the loan money was used to pay employees, the debt would be forgiven. But as the program enters its loan forgiveness phase, those owners — and their lenders — are finding out that although th

Fed’s Bullard Says Enough Resources With Expected Labor Rebound
Linus Chua, Bloomberg

Federal Reserve Bank of St. Louis President James Bullard, a contrarian on the need for immediate fiscal stimulus, reiterated his stance from late last month that there are sufficient resources to get the U.S. economy through the end of 2020 as the job market rebounds. Unlike the job cuts during the 2008 global financial crisis, most of the layoffs during the pandemic have been temporary, he said in an interview with Fox Business on Friday. 

Fed’s Powell is chief cheerleader for fiscal stimulus
James Politi, Financial Times

Politically sensitive interventions reflect fears that recovery could stall without new aid.

Next Big Shift in Economics Takes Shape Under Covid Shadow
Alaa Shahine, Bloomberg

A rare regime-change in economic policy is under way that’s edging central bankers out of the pivotal role they have played for decades. Fiscal policy, which fell out of fashion as an engine of economic growth during the inflationary 1970s, has been front-and-center in the fight against Covid-19. 

Bankruptcies Show a Surprising Decline
Peter Coy, Bloomberg Businessweek

When the Covid-19 recession hit it seemed certain that a wave of bankruptcy filings would follow, swamping the court system and possibly even leading to a systemic collapse. Oddly, though, there hasn’t been any wave.

Jamie Dimon Doesn’t See a Return to Normal Until Middle of Next Year
Michelle F Davis, Bloomberg

Jamie Dimon sees a need to begin returning to what work looked like before the pandemic struck, but he concedes the path to normal is still a long one. JPMorgan Chase & Co.’s chief executive officer said his firm, which has been among the boldest on Wall Street in bringing employees back to the office, is still aiming for just 15% to 25% of capacity.

European Stocks Rise With U.S. Futures; Yuan Falls: Markets Wrap
Anchalee Worrachate and Adam Haigh, Bloomberg

Stocks and U.S. futures rose as investors focused on the prospect for more stimulus and improving corporate earnings. The offshore yuan fell after China’s central bank took steps to restrain a recent rally.

Banks Have Barely Touched the Fed’s Main Street Lending Program. Except This One.
Orla McCaffrey, The Wall Street Journal

Most banks have steered clear of the Federal Reserve’s loan program designed to buoy midsize businesses. One Florida lender is diving in. 

Morgan Stanley rebuilds fixed-income division after 2015 cuts
Laura Noonan, Financial Times

James Gorman says ‘we’d be stupid’ not to take advantage of healthier market.

What to Expect From Bank Earnings: A Bad Quarter, but Not as Bad as Before
Ben Eisen, The Wall Street Journal

The U.S. economy is settling in for a lengthy recovery. Earnings from the largest banks are expected to make that clear. When the pandemic hit and the economy mostly shut down, banks set aside tens of billions of dollars to cover soured loans, took in record deposits and contended with a Wall Street trading bonanza. 

Morgan Stanley: can mega deals widen the gap with Goldman Sachs?
Laura Noonan, Financial Times

James Gorman’s acquisitions of ETrade and Eaton Vance place less emphasis on the investment bank operations.

Banks call back stayaway staff abroad amid tax warning
Laura Noonan and Stephen Morris, Financial Times

Employees working from holiday homes during pandemic could face large bill.

SEC Probes Small Bond Trades That Lead to Big Returns
Justin Baer, The Wall Street Journal

When AlphaCentric Income Opportunities fund made its debut in late May 2015, it began to beat its peers almost immediately, an unusual development for the slow-moving world of bond investing. By June 30 of that year, the fund was up 5.6%. In that same period, its benchmark fell by nearly 1%, according to Morningstar Direct.

BlackRock kicks off earnings for fund management industry in tumult
Michael Mackenzie and Richard Henderson, Financial Times

Third-quarter reports start this week as consolidation among asset managers takes off.

It’s ‘No Time to Die’ for Hedge-Fund Manager Ulrich’s Big James Bond Bet
Juliet Chung, The Wall Street Journal

Hedge-fund manager Kevin Ulrich has a lot riding on the latest James Bond film. But after the coronavirus pandemic destroyed movie-theater attendance and pushed “No Time to Die” out to next year, the odds of a big payday anytime soon are getting longer. Mr. Ulrich’s New York hedge fund, Anchorage Capital Group, is the largest shareholder of the studio that owns the Bond franchise, MGM Holdings Inc.

Black Landowners Will Benefit From New Funding to Prevent Land Loss
Lizzie Presser, ProPublica

A property law scholar who has helped secure state protections to keep Black families from losing their land won a MacArthur “genius” award this week, a year after ProPublica drew attention to the problem and his significant efforts in a story that was published with the New Yorker. Thomas W. Mitchell, a professor at Texas A&M University School of Law, plans to use the $625,000 grant to create a law center where staff will study reforms to protect the real estate and wealth of disadvantaged property owners.

Advocates plead for housing aid as eviction cliff looms
Sylvan Lane, The Hill 

A potentially dire housing crisis could erupt if the Trump administration and Congress fail to reach a deal on further coronavirus relief that includes eviction protections and substantial rent assistance, experts warn. The Centers for Disease Control and Prevention (CDC) issued a sweeping eviction ban last month in an unprecedented flex of its emergency authorities, but the moratorium stands on shaky legal ground — and only runs through the end of the year.

JPMorgan Says U.S. Capital Gains Tax Hike May Briefly Hit Stocks
Joanna Ossinger, Bloomberg

If Democrats do “sweep” the November elections and increase capital gains taxes, it would be unlikely to cause more than a temporary slide in the U.S. stock market, according to JPMorgan Chase & Co. Strategists and prediction markets are increasingly pricing in a “Blue Wave” where Democrat Joe Biden wins the presidency and his party  takes control of the Senate, adding to their hold on the House. 

OECD drafts principles for $100bn global corporate tax revolution
Chris Giles, Financial Times

Technical blueprint would upend taxation of US tech groups but still needs political agreement.

Democratic senators offer bill to make payroll tax deferral optional for federal workers
Naomi Jagoda, The Hill

A group of Democratic senators on Friday rolled out legislation that would make President Trump’s payroll tax deferral optional for workers whose employers are participating, including federal workers and members of the military. “President Trump is using federal employees and our troops as pawns in his payroll tax scheme, and it’s unacceptable,” Sen. Chris Van Hollen (D-Md.), the lead sponsor of the bill, said in a news release.

When Your Last $166 Vanishes: ‘Fast Fraud’ Surges on Payment Apps
Nathaniel Popper, The New York Times

Charee Mobley, who teaches middle school in Fort Worth, Texas, had just $166 to get herself and her 17-year-old daughter through the last two weeks of August. But that money disappeared when Ms. Mobley, 37, ran into an issue with Square’s Cash App, an instant payments app that she was using in the coronavirus pandemic to pay her bills and do her banking.

Robinhood Users Say Accounts Were Looted, No One to Call
Sophie Alexander and Annie Massa, Bloomberg

It took Soraya Bagheri a day to learn that 450 shares of Moderna Inc. had been liquidated in her Robinhood account and that $10,000 in withdrawals were pending. But after alerting the online brokerage to what she believed was a theft in progress, she received a frustrating email.

Central banks are considering their own digital currencies – this is what they could look like
Ryan Browne, CNBC

After Facebook shocked policymakers with its plan to launch a digital currency last year, central banks have been forging ahead with discussions on how they could create their own virtual money. Now, they’ve come up with a rough framework for how such a system could work. On Friday, the Bank for International Settlements and seven central banks including the Federal Reserve, European Central Bank and the Bank of England published a report laying out some key requirements for central bank digital currencies, or CBDCs.

US regulators should prod lenders to help minority communities
Eugene Ludwig, Financial Times

Existing rules can be updated to address inequalities exacerbated by Covid-19.

Trump is in debt. We can’t ignore the national security risks that come with that.
Michael Morrell and David Kris, The Washington Post

There is a powerful reason nearly all federal employees with access to classified information turn over deeply personal details about their lives and finances to security experts: Debts and other vulnerabilities can create weaknesses that our nation’s adversaries could exploit. Multiple studies have shown that, while betrayal of one’s country is a crime that has complex psychological underpinnings, money is a leading motivator.

Monetary Policy Cooperation/Coordination and Global Financial Crises in Historical Perspective
Michael D. Bordo, The National Bureau of Economic Research

The COVID-19 pandemic spawned a global liquidity crisis in March 2020. The global liquidity crisis was alleviated by the Federal Reserve and other advanced country central banks cooperating by extending the swap lines they developed in the Global Financial Crisis 2007-2008. Central bank cooperation in 2020 evolved from a two-century history across several monetary regimes that is surveyed in this paper. I find that in monetary regimes which are rules-based cooperation was most successful.