The executives of failed banks Silicon Valley Bank, Signature Bank and First Republic Bank were rewarded for short-term gains such as a rising stock price rather than long-term company health and risk, leading to a debate over executive pay. Although their banks are now worth next to nothing, CEOs were rewarded with millions of dollars in company stock, which was then sold before the banks failed. Senators are expected to table the question of executive pay to former head executives at the Senate Banking Committee, causing bipartisan legislation for Federal Deposit Insurance Corporation authority to claw back any pay made to executives in the five years leading up to a bank's failure.
US bankers faced scrutiny this week over their handling of a regional banking crisis stemming from the failure of Silicon Valley Bank and Signature Bank. Executives from the banks, which went down in March and led to the collapse of First Republic last month, were accused of prioritising profits over safeguarding customers' deposits. The Federal Reserve's decision to raise interest rates was blamed for much of SVB's trouble, as it had invested a sudden surge of deposits from venture capital firms and tech firms in a securities portfolio. Signature Bank's demise came after it accepted deposits from cryptocurrency investors.
Former US President Donald Trump has described government officials involved in probing his 2016 presidential campaign and alleged Russian links as “scum” and “cockroaches” following the release of a report into the matter by John Durham, a Trump-appointed Special Counsel. Ahead of its publication, Trump had predicted that the Durham report would uncover the “crime of the century.” Meanwhile, former New York City mayor and one-time personal attorney to Trump, Rudy Giuliani, is being sued for sexual harassment by former aide Noelle Dunphy, who alleges that Giuliani told her he and Trump were willing to sell presidential pardons for $2m each. Giuliani’s spokesperson strongly denied the claims.
The US government's showdown with Republicans over the country's debt ceiling threatens the global economy and raises concerns among policymakers over the US' efforts to counter China. Republicans are seeking spending cuts over a decade whereas Democrats prefer smaller spending cuts in defense and social programs over a shorter period. Senior White House economics adviser Shalanda Young said the debt ceiling situation was a "test of what works in this world" and has raised concerns that the US would default on its US$31.4tn borrowing limit.
Elon Musk claims George Soros ‘hates humanity.’ The ADL says Musk’s attacks ‘will embolden extremists’
CNN
23-05-16 16:34
Tesla CEO, Elon Musk, has come under fire for baseless comments on Twitter that accused philanthropist George Soros of hating humanity and eroding the fabric of civilisation. Soros, a Holocaust survivor, is frequently targeted by conspiracy theorists and antisemites. Musk's remarks have been criticised by the Anti-Defamation League and others for potentially fueling further attacks on Soros. Recent data suggests that the volume of hate speech on Twitter has grown significantly under Musk's ownership of the social media network. Soros disclosed, shortly before Musk’s attack, that he had disposed of a modest stake in Tesla. Both men had been targets of short sellers.
The Trump administration’s investigation into alleged links between the 46th president’s presidential campaign in 2016 and the Russian government has ended with a report from Special Counsel John Durham that found the FBI was justified in starting a preliminary investigation into the matter, based on information received from a foreign diplomat. Durham was investigating potential misconduct by US government officials during the investigation. His report gave little new information or significant revelations. Critics say it provides fodder for Trump supporters who have condemned the investigation as a politically motivated witch hunt and evidence of Durham’s own political motivations.
Durham took issue with the FBI’s decision to launch a full counterintelligence probe into the campaign based on information received from an Australian diplomat about George Papadopoulos’s bragging that Russia had acquired and was prepared to release damaging information about the campaign of former Democratic candidate Hillary Clinton. Durham’s report criticised the FBI for not conducting any “collaboration or joint assessments” with friendly domestic or foreign intelligence services regarding intelligence collected.
While the report acknowledges the FBI was justified in opening a preliminary investigation, Durham questions why a counterintelligence probe was launched instead of a limited one. Durham’s report appears at odds with a previous investigation by Michael Horowitz, an inspector general with the Department of Justice, who concluded that the FBI had sufficient cause to justify an investigation into alleged links between Trump’s campaign operatives and the Russians.
Former US vice president Mike Pence faces significant pushback from his own party for his presidential campaign, with polls suggesting that at least 60% of Americans view him unfavourably. However, Donald Trump faced even greater disapproval at the start of his 2016 campaign and went on to win. Pence's poll figures paint him in the same light as KKK leader David Duke, former Speaker of the House of Representative Newt Gingrich and conservative Pat Buchanan, all of whom were candidates that experienced an overwhelming majority of negative poll sentiment.
The US states of Kentucky and Pennsylvania held primary elections on Tuesday with big implications for November’s midterm elections. In Kentucky, Democratic Governor Andy Beshear is up for re-election and is facing several Republican challengers, including a protégé of Senate Minority Leader Mitch McConnell. Meanwhile, Pennsylvania saw a state House special election take place, which would determine whether the chamber stays in Democratic hands, as well as a mayoral race in heavily Democratic Philadelphia. Voters also chose nominees to run for several other non-national level offices.
US President, Joe Biden, has cancelled visits to Papua New Guinea and Australia to return to the US early. The trip has been cut short due to ongoing urgent discussions between White House officials and Congress over how to counter the government's deficit and avoid a potential economic disaster. Without reinforced support, officials estimate that the US government will not have the funds to pay its expenses, should the debt ceiling not be raised, by Jun 1.
The United States Department of the Treasury has warned that it could run out of funds to cover the country’s bills by June 1, heightening fears over the threat of a possible US default. Republican lawmakers are looking to cut social program spending, such as food assistance, in order to raise spending limits. Democrats have said that the situation is particularly galling as the same Republican lawmakers raised spending limits with little resistance when their party was in power. A default in US debt would stump the global economy; leading experts to call for a solution.
US Representative Robert Garcia is attempting to have Republican congressman George Santos expelled following federal charges against him for fraud, money laundering and theft of public funds. Santos has pleaded not guilty, calling the allegations a "witch hunt". He has made false claims about his past, including earning degrees from New York University and Baruch College, having worked at Goldman Sachs and Citigroup, and that he was Jewish and his grandparents escaped the Nazis during World War Two. Two-thirds of the House of Representatives would have to vote in favour for Santos to be expelled, in a chamber that Republicans control by a narrow 222-213 margin.
The CEO of AI firm OpenAI, Sam Altman, has called for the creation of a licensing body for the world's most powerful AI algorithms. Speaking at a hearing of the US Senate this week, Altman said that, as AI became more advanced, people were understandably anxious about its power and how it could change human lives. He recommended that a new agency should ensure compliance with safety standards for use of AI, including its ability to generate misleading and false statements. The proposed agency could license the most powerful AI systems and withdraw that licence where any risks were identified.
The Republican Party is clashing with US corporate America as conservatives rally around social issues. Companies have been caught up in the culture wars before, but legislative moves targeting firms represent a new frontier for Republicans who are traditionally allied with big business on matters such as lower taxes and light regulation. Dozens of US states are considering proposals aimed at stopping governments from doing business with financial firms that consider environmental, social and governance (ESG) factors when making investments, moves that have cost BlackRock more than $4bn in customer funds. However, the financial impact of the conservative backlash has been limited so far.
President Biden and top Congressional Republicans met on Tuesday to discuss a deal over raising the US debt limit. Biden has been asking lawmakers to raise the borrowing limit without conditions to prevent a first-ever default that could trigger a devastating recession, but top Republicans are pushing back, demanding sharp spending cuts to address the growing deficit. While both sides expressed hope about reaching a deal, they acknowledged that they have a lot of work to do in a short amount of time, as a failure to raise the debt limit by June 1 would result in the US Treasury running out of money to pay the government's bills. The Republicans have criticized Democrats for not being more bipartisan in their approach, while Democrats have accused Republicans of not being willing to discuss raising revenues. However, there was an overwhelming consensus among those involved in the meeting that defaulting on the debt is simply not an option, as it would cause considerable harm to the country's economy and families.
The Republican-controlled Senate of North Carolina voted to override the Democratic governor's veto of a bill banning most abortions after 12 weeks of pregnancy with only this veto needing to be overridden to make the policy law. This move comes as lawmakers debate laws to limit or restrict access to abortion in many southern states. Abortion is either banned or severely restricted in many southern states, with nine states throughout the US banning abortions throughout the entire pregnancy. If the recent bills proposed in the Carolinas, Florida and Virginia become law, it is seen as "just devastating for abortion access in the South," said Jamie Lockhart, executive director of Planned Parenthood Advocates of Virginia. The limitations would make the Carolinas two of the few states left that still have relatively easy access to abortions that did not undergo significant restrictions.
The Senate has voted to overturn a law in the District of Columbia that was introduced last year to improve police accountability. This is the second time that Democrats have joined with Republicans this year to try and block the district’s crime regulations. President Biden is expected to veto the resolution, which the House passed last month. While Congress should respect the District of Columbia’s right to pass measures that improve public safety and public trust, the President claimed that he does not support every clause of the D.C. law, which was passed in the wake of the police killing of George Floyd in 2020. Donald Trump had been the first president to interfere in D.C.’s local affairs in 30 years, using the same “disapproval” process that was employed in March to overturn Mr. Floyd’s Law. D.C.’s attorney general has stated that if Biden signs the current resolution, it will not be valid, as the time period for Congress to act had already expired.
The pandemic has created the wrong sort of decoupling for emerging markets, hurting their performance over the past three years, warns John Authers in Bloomberg Opinion. However, he added "none of this means that there won’t be a decoupling; but it’s not going to be the panacea that many have long wanted it to be". If China becomes the pole of what is effectively a different financial system, reshoring and deglobalisation will create opportunities in the emerging world, but it will also make them much harder to take advantage of, warns Authers. Nevertheless, these markets are experiencing some signs of recovery after a decade of underperformance, following the brief bull market which came to an end in the Global Financial Crisis in 2008.
Meanwhile, there is concern over the budget strategies of the US. Ted Decker, CEO of Home Depot, expects comparable sales to drop as much as 5% this fiscal year — the first annual decline in 14 years. Despite problems so far being driven by unusual conditions such as the price of lumber falling, according to Authers, if the recession risks loom larger over the US economy, and workforces normalize with new return-to-office policies, then support will fade for such firms that have been doing so well during the pandemic’s economic conditions. This would spell the end of the trends that Authers calls the home-building boom, e-commerce and working from home/home improvement.
Under President Joe Biden's Inflation Reduction Act, the US Internal Revenue Service (IRS) is set to receive $80bn over the next 10 years, a move that should aid the agency in auditing high-income taxpayers and securing more tax income for the government. The IRS recently posted new guidelines and has hired a new commissioner, Danny Werfel, who has said a primary objective is to acquire expertise such as accountants and lawyers needed to pursue high-wealth individuals and large corporations that are not paying their taxes. The overhaul will be done in stages over several years.
Tuesday saw an array of primary elections take place across the US, including for governors and mayors that will have spillover effects for the 2024 presidential elections. Among the early takeaways were that Republicans in Kentucky have chosen Daniel Cameron as their candidate for governor in November, after he bested a field of 12 contenders. Cameron, the state's first Black attorney general, also received an endorsement from former President Donald Trump. Other takeaways were that Pennsylvania Democrats retained their first majority in the state's house in 12 years in a recent special election outside Philadelphia, and Cherelle Parker is likely to be Philadelphia's first female mayor after the recent primary. Elsewhere, elections in Florida and Colorado saw Republicans lose their seats to Democrats and independents, respectively. Finally, in nationally significant developments, election deniers failed to gain traction in Kentucky, and Parker distinguished herself for proposing a tough-on-crime approach in Philadelphia.
Following the release of China's economic data for April, which came in below expectations, and Germany's growth rate which has flatlined, concerns about the global economy are rising. If there is no resolution for the negotiations over the US debt ceiling, this could compound issues for the global economy and even a quota deal may result in the Federal Reserve Board throttling the growth rate in the world's largest economy due to its determination to stamp out US inflation and recent bank collapses that have impacted the availability of credit. All three of these issues could have an impact on China's contribution to global growth as well.
