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A Fed official who was a top-ranking member resigned. trading scandalat theChair Jerome might be helped by the central bank PowellAvoid asking tough questions during his nomination hearing today.
But theRemarks that central bankers were involved in active misconduct tradingFor their own personal gain, while rescuing financial markets dramatically. theHöhe theA pandemic could have reverberating effects for many years and could threaten the stability of the country. the Fed’s effort to rebuild public confidence as it seeks to rein in inflation.
Our Victoria Guida reported that Richard Clarida, Vice Chair, announced he would step down Friday, two week before the expiration of his term. An individual familiar with the matter. theClarida’s term expires Jan. 31 and Clarida was not intending to attend. theJanuary meeting the Fed’s policy-setting committee.
“Resigning before the hearing helps Powell, a political reality the Fed and Clarida is surely aware of,” said Aaron Klein, a senior fellow at theBrookings Institution, former aide of Senate Banking Chair Chris Dodd (D-Conn.).
That doesn’t mean the scandalThis is the end.
Progressive groups have been attacked the Fed over officials’ unusual trading during theThe early months in 2020 were when theFed intervened in cushion assistance theEconomy from theThey continue to demand a deeper investigation into pandemics.
“This is not a good look for an institution that has had issues related to inequities in income and wealth — the accusations coming out of the financial crisis, in the way that very cheap money has benefited equities and equity owners,”Mark Spindel is the chief investment officer at MBB Capital Partners. hasThis has been extensively written about the Fed’s relationship with Congress.
But Powell has bigger problems today, Spindel said.
“The misguided inflation forecasts, the being behind the curve, the complexities of Covid, the [new] framework, rate hikes, balance sheet … [are] more than enough for senators to focus on,”He stated. “He will be asked from both sides what went wrong.”
An ‘Alice-in-Wonderland’ fantasy — That’s how former New York Fed President Bill Dudley, in a Bloomberg opinion piece Monday, described Fed officials’ projections that inflation will melt away by 2024, even as theThe federal funds rate is well below neutral.
“More likely, the Fed will have to leave the enchanted forest,”He stated. “This means becoming a lot more hawkish, both in the near term and over the next few years.”
This was the result of an op-ed published in theFinancial Times Monday, Frederic Mishkin (ex-Fed Governor) said the Fed “has been mugged by reality,”Is it? “behind the curve” in tightening.
Harsh words from former Fed officials and more fodder for Fed critics at today’s hearing.
Support from Sherrod — “Chair Powell, to his credit, recognized the importance of full employment – and what that means for all workers, particularly those at the margins of our economy,”Sherrod Brown, the Chair of Senate Banking Committee (D-Ohio), will make his opening statement. “He held firm against attempts to politicize the Fed, and prevented an economic downturn from becoming far worse.”
—“[S]ome are already suggesting the Fed pull back on its support of the broader economy, and make it harder for people to get jobs …The Fed must not allow Wall Street to recover, while working Americans are left behind.”
—”Chair PowellPresident Biden has renominated your to grow theEconomy for all Americans, not just the at the top. To protect this growth from financial system threats like crypto bubbles and risky Wall Street schemes. We expect you will meet these challenges. I believe that you have. the leadership to do so.”
On a lighter note — Our favorite exchange from Powell’s last confirmation hearing, in January 2018, courtesy of theOfficial transcript
Mr. POWELL. Two of my five siblings, my sister Libby (and my sister Monica) will be here today. All three of my siblings are present in spirit, and will all later claim to have seen this hearing live. [Laughter.]
Chairman CRAPO. This I’m certain will be true. [Laughter.]
Mr. POWELL. We will believe it. Some stories are simply too compelling to verify.
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Senate Banking nomination hearing for Powell at 10 a.m. … House Financial Services oversight hearing on the Community Development Block Grant program at 10 a.m. … U.S. Chamber of Commerce State of American Business Forum at 11 am.. … Tax Policy Center virtual discussion on taxing business income at 12:30 p.m.
BITCOIN, ETHER DIP AS GENSLER HOLDS FIRM ON SEC’S CRYPTO AUTHORITY — Our Sam Sutton: “Bitcoin and Ether dropped to their lowest prices since September on Monday after SEC Chair Gary Gensler doubled down on his agency’s authority to designate digital currencies as securities, leaving the door open to future enforcement action.
“Gensler in an appearance on CNBC Monday morning declined to answer a question about whether Ether, which trades on the decentralized blockchain Ethereum, should be viewed as a security.”
—Also from Sam: The Government Accountability Office is urging theTreasury Department will increase its oversight of cryptocurrency ATMs in order to crack down on illegal drug sales and human trafficking.
CANNABIS BANKING CHAMPION PERLMUTTER WON’T SEEK REELECTION — Our Mona Zhang: “[Rep. Ed] Perlmutter (D-Colo.) tweeted Monday that he’s decided not to run for reelection this fall. Serving in Congress ‘has been the honor of a lifetime,’ he said in a statement, and cited ‘elevating the public safety risk of the cash-only cannabis industry here in our state and across the country’ as one of his proud accomplishments.”
TREASURY WARNS TAXPAYERS TO PREPARE FOR TURBULENT FILING SEASON — Our Aaron Lorenzo: “Americans can start filing their income tax returns Jan. 24, but existing backlogs and longstanding operational problems at the IRS, aggravated by the coronavirus pandemic, are likely to make for a frustrating filing season for taxpayers and tax preparers, a Treasury Department official said Monday.”
SEC PUSHES FOR MORE TRANSPARENCY FROM PRIVATE COMPANIES — WSJ’s Paul Kiernan: “The Securities and Exchange Commission is preparing to force more transparency from big private companies, as regulators grow concerned about the lack of oversight of the private fundraising that has fueled their rise.
“Private capital markets have become an increasingly popular way for companies to raise money in the U.S. in recent decades, allowing firms to acquire funding from institutions and wealthy individuals without the regulatory burdens of going public. The number of so-called unicorns — private companies valued at $1 billion or more — has continued to grow even amid the recent boom in initial public offerings.”
FED WATCH —
— NYT’s Jeanna Smialek: “Senator Elizabeth Warren, Democrat of Massachusetts, asked the Federal Reserve in a letter sent Monday to release more information about a series of financial trades that several top officials made in 2020, when the Fed was actively propping up markets.
— Reuters’ Andrea Shalal: “Emerging economies must prepare for U.S. interest rate hikes, the International Monetary Fund said, warning that faster than expected Federal Reserve moves could rattle financial markets and trigger capital outflows and currency depreciation abroad.”
—Richmond Fed President Thomas Barkin supports the Fed’s hawkish outlook for monetary policy and is open to raising interest rates when the central bank’s bond buying stimulus effort winds down, he told WSJ’s Michael Derby in an interview.
—The Mercatus Center’s David Beckworth spoke with the New York Fed’s Lorie Logan, manager of the Fed’s asset portfolio, for the Macro Musings podcast about theMarch 2020 Treasury market crisis the Fed’s new standing repo facility and theFuture of the Fed’s balance sheet.
TREASURY ROLLS OUT NEW QUARTERS FEATURING MAYA ANGELOU — “Each time we redesign our currency, we have the chance to say something about our country — what we value, and how we’ve progressed as a society,” Treasury Secretary Janet Yellen said in a statement on the first new coin released as part of the American Women Quarters program. “I’m very proud that these coins celebrate the contributions of some of America’s most remarkable women, including Maya Angelou.”
Erica Williams was insworn in theNew chair theMonday, Accounting Oversight Board for Public Companies theSEC. Her term will end in October 2024.
Ligia Vado has joined theCredit Union National Association has hired Vado as a senior economist. Vado was previously a professor in business analytics at Thomas More University, and a disaster risk finance and insurance specialist. theWorld Bank
Kemi Gwa is now the deputy director for comms. theHouse Financial Services Committee. She was previously press secretary for Rep. Seth Moulton, D-Mass. (h/t Playbook).
BIG BANKS EXPECTED TO POST UPTICK IN CORE Q4 REVENUE — Reuters’ David Henry: “Analysts expect big U.S. banks to show an uptick in fourth quarter core revenues thanks to new lending and firming Treasury yields even while headline earnings will be mixed on differences in how each institution accounted for pandemic loan losses.
“On Friday, JPMorgan Chase & Co and Citigroup Inc are expected to post roughly 20 percent and 30 percent declines, respectively, in profits compared with the year-earlier quarter, while Bank of America Corp’s profits will be up 20 percent when it reports on Jan. 19, according to analyst estimates compiled by Refinitiv as of Friday. Wells Fargo & Co, which also reports on Friday, is expected to show a 67 percent jump in profits.”
ELI MANNING THROWS HIMSELF INTO PRIVATE EQUITY — Bloomberg’s Kim Bhasin: Former NFL quarterback Eli Manning is joining a private equity firm as a partner as he enters new endeavors after retiring from football. Brand Velocity Partners, a company that specializes in consumer goods, has hired Manning to help with business development and deals. Manning will be working as part of Brand Velocity Partners, which specializes in consumer products. the arrangement, he’ll advise on leadership and company culture with brands theFirm backs
NEW YORK BUSINESS OWNERS SIDESTEP BILLIONS IN FEDERAL TAXES WITH STATE’S HELP — WSJ’s Richard Rubin and Jimmy Vielkind: “New York business owners are saving billions of dollars in taxes by using a state-approved system for sidestepping the $10,000 federal cap on state and local tax deductions.
“New York’s effort to help business owners dodge the cap marks the latest and most effective step by high-tax states to fight back against the $10,000 limit on deducting SALT, or state and local taxes, from federal income. Congress created the cap over Democratic objections in the 2017 tax law, and lawsuits and other workarounds have fallen short. Federal legislation to raise the cap is mired in intra-Democratic party fights in Washington.”
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