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WASHINGTON, May 18 (Reuters) - Vice President Kamala Harris and top White House economic adviser Lael Brainard said on Thursday that a default on the U.S. debt of $31.4 trillion would throw the American economy into a recession. In a conference call for Democratic activists, Harris and Brainard urged them to contact lawmakers to express opposition to a debt default that could be less than two weeks away. "A debt default could trigger a recession," she said. Negotiators for the White House and congressional Republicans met again on Capitol Hill to discuss their search for common ground on lifting the $31.4 trillion debt ceiling, and plan to meet again on Friday, a White House official said. Brainard said the administration's goal, in its talks with House Speaker Kevin McCarthy's team, is to work toward a reasonable, bipartisan budget agreement.

U.S. West Texas Intermediate (WTI) crude fell 97 cents, or 1.3%, to settle at $71.86. A stronger dollar can weigh on oil demand by making the fuel more expensive for holders of other currencies. High interest rates boost borrowing costs, which can slow the economy and reduce oil demand. The strength of April U.S. economic data in addition to optimism about the debt ceiling negotiations have strengthened market expectations of a further hike, ANZ Research said in a note on Thursday. Another factor that could reduce oil demand was a fire in Mexico at the Salina Cruz refinery owned by Mexican state oil company Pemex.

The White House has not ruled out the annual spending caps that Republicans say must accompany any increase in the nation's $31.4 trillion debt limit. Republicans, who control the House, have said they will not vote to raise the debt ceiling unless Democrats agree to sharp spending cuts. BUDGET TALKSBiden has insisted that Congress must increase the country's borrowing capacity without conditions, but the White House says it is also willing to discuss budget matters with House Republicans. House Republicans passed legislation in April that pairs a $1.5 trillion debt-ceiling hike with $4.8 trillion in spending cuts, largely achieved by cutting annual discretionary spending by 8% next year and capping growth in the years to come. The White House and Republicans may agree to ease permitting requirements for pipelines and other energy infrastructure - though that would require time to draft into legislation, said Brian Riedl, a fellow at the conservative Manhattan Institute.

The White House has not ruled out the annual spending caps that Republicans say must accompany any increase in the nation's $31.4 trillion debt limit. Republicans, who control the House, for their part, are not insisting on other conditions that the White House has deemed off limits, such as a repeal of the green-energy incentives in Biden's Inflation Reduction Act of 2022. Biden told reporters on Sunday that he thought both sides wanted to reach a deal. "I still think we're far apart," McCarthy told reporters. BUDGET TALKSBiden has insisted that Congress must increase the country's borrowing capacity without conditions, but the White House says it is also willing to discuss budget matters with House Republicans.

Biden told reporters on Sunday that he thought both sides wanted to reach a deal. Staff from the two camps met through the weekend for talks that White House officials described as constructive. Republicans say there is plenty of time. Biden has insisted that Congress must increase the country's borrowing capacity without conditions, but the White House says it is also willing to discuss budget matters with Republicans who control the House of Representatives. The longer the two sides take to reach a deal, the smaller it is likely to be, he said.

☆ Fed Governor Philip Jefferson named as new vice chair to succeed Lael Brainard
▼ + stars: | 2023-05-12 | by ( Jeff Cox | ) www.cnbc.com time to read: +3 min

Federal Reserve Governor Philip Jefferson will be nominated by President Joe Biden to be vice chairman of the central bank's board, the White House announced Friday. As vice chair, he takes a position last occupied by Lael Brainard, who is now Biden's director of the National Economic Council. Before coming to the Fed, Jefferson was a professor of economics as well as vice president for academic affairs and dean of faculty at Davidson College. The nomination was not unexpected; multiple media outlets had reported that Jefferson was Biden's likely choice as vice chair. If confirmed, Jefferson would be the second Black person to hold the vice chair position.

If confirmed, Kugler, a Colombian-American, would be the first Latino to serve on the Fed board, marking the latest effort by Biden to improve the central bank’s diversity. Kugler, who is currently on leave from Georgetown University, previously worked in the Obama administration as the Labor Department’s chief economist. Getty Images/AlamyJefferson, who joined the Fed as a governor a year ago, has been tapped by Biden to the influential role of vice chair, serving as the No. He joined the Fed board in May 2022, after winning broad bipartisan support during his congressional confirmation process. He taught economics at Swarthmore College, Columbia University and the University of Virginia, and served as a high-ranking administrator at Davidson College.

Leading AI developers, including Anthropic, Google, Hugging Face, NVIDIA Corp (NVDA.O), OpenAI, and Stability AI, will participate in a public evaluation of their AI systems. Shortly after Biden announced his reelection bid, the Republican National Committee produced a video featuring a dystopian future during a second Biden term, which was built entirely with AI imagery. Such political ads are expected to become more common as AI technology proliferates. In February, Biden signed an executive order directing federal agencies to eliminate bias in their AI use. The Biden administration has also released an AI Bill of Rights and a risk management framework.

☆ White House to meet Microsoft, Google CEOs on AI dangers
▼ + stars: | 2023-05-04 | by ( Nandita Bose | ) www.reuters.com time to read: +4 min

REUTERS/Dado Ruvic/IllustrationWASHINGTON, May 4 (Reuters) - The White House will host CEOs of top artificial intelligence companies, including Alphabet Inc's Google (GOOGL.O) and Microsoft (MSFT.O), on Thursday to discuss risks and safeguards as the technology catches the attention of governments and lawmakers globally. Leading AI developers, including Anthropic, Google, Hugging Face, NVIDIA, OpenAI, and Stability AI, will participate in a public evaluation of their AI systems at the AI Village at DEFCON 31 - one of the largest hacker conventions in the world - and run on a platform created by Scale AI and Microsoft. Such political ads are expected to become more common as AI technology proliferates. In February, Biden signed an executive order directing federal agencies to eliminate bias in their use of AI. The Biden administration has also released an AI Bill of Rights and a risk management framework.

[1/3] U.S. President Joe Biden delivers remarks during an event marking National Small Business Week, in the Rose Garden of the White House in Washington, U.S., May 1, 2023. REUTERS/Leah Millis/File PhotoWASHINGTON, May 2 (Reuters) - The chief executives of Alphabet Inc's Google (GOOGL.O), Microsoft (MSFT.O), OpenAI and Anthropic will meet with Vice President Kamala Harris and top White House officials to discuss key artificial intelligence (AI) issues on Thursday, said a White House official on Tuesday. Concerns about fast-growing AI technology include privacy violations, bias and worries it could proliferate scams and misinformation. In April, the Biden administration said it was seeking public comments on proposed accountability measures for AI systems, as concerns grow about its impact on national security and education. The meeting will emphasize the importance of driving innovation "with safeguards that mitigate risks and potential harms," the official said.

After hitting the $31.4 trillion borrowing cap on Jan. 19, Treasury Secretary Janet Yellen previously told Congress Treasury would keep up payments on debt, federal benefits and make other outlays at using cash receipts and extraordinary cash management measures. The Republican bill would implement $4.5 trillion in spending cuts - or about 22% - in exchange for a $1.5 trillion increase in the U.S. debt limit. It has no chance of passing the Democrat-controlled Senate and the White House has said President Joe Biden would veto the legislation. The White House has asked Congress to raise the debt limit without conditions; administration officials are already making plans to negotiate with Republicans over the president's 2024 budget plan. What we can’t see is that the debt limit be used by a part of Congress to hold an entire agenda of unrelated items hostage to this threat of default," she said.

☆ US may run short of cash after June 1 without debt limit hike, Treasury says
▼ + stars: | 2023-05-01 | by ( ) www.reuters.com time to read: +3 min

The debt ceiling could become binding by June 1, she said. In 2011, a similar debt ceiling fight took the country to the brink of default and prompted a downgrade of the country's top-notch credit rating. The Republican bill would implement $4.5 trillion in spending cuts - or about 22% - in exchange for a $1.5 trillion increase in the U.S. debt limit. It has no chance of passing the Democrat-controlled Senate and the White House has said President Joe Biden would veto the legislation. What we can’t see is that the debt limit be used by a part of Congress to hold an entire agenda of unrelated items hostage to this threat of default," she said.

☆ White House Considers Two Key Nominations at the Fed
▼ + stars: | 2023-05-01 | by ( Jeanna Smialek | Jim Tankersley | ) www.nytimes.com time to read: +1 min

WASHINGTON — President Biden is closing in on two nominations for the Federal Reserve’s Board of Governors that would give the Fed its first Latina board member and its second ever Black vice chair, according to several people familiar with the process. Mr. Biden is close to nominating Adriana Kugler, an economist with Colombian heritage who is the U.S. executive director of the World Bank, to the Fed’s only remaining open governor position. In a corresponding move, he is likely to elevate Philip Jefferson, an economist who was confirmed overwhelmingly to the board when Mr. Biden nominated him to an open governor position, to be the board’s vice chair. A White House spokesman declined to comment on Monday. If confirmed by the Senate, Ms. Kugler would fill a governor position recently vacated by Lael Brainard, who became director of the White House National Economic Council in February.

WASHINGTON—As a top Federal Reserve official, Lael Brainard sounded an alarm four years ago that rolling back rules on midsize banks could sow the seeds of a future crisis. Last month, after two regional lenders failed, Ms. Brainard found herself on a video call with President Biden explaining how to clean up the very mess she had warned about.

☆ Fed Governor Bowman casts doubt on the need for a U.S. digital dollar
▼ + stars: | 2023-04-18 | by ( Jeff Cox | ) www.cnbc.com time to read: +3 min

Federal Reserve Governor Michelle Bowman expressed skepticism over the possibility of a digital U.S. dollar, noting Tuesday the multiple risks such a system could impose. For the past few years, Fed officials have been studying whether to join a handful of other central banks to implement its own type of cryptocurrency. However, she said an interest-bearing Fed digital dollar could provide harmful competition for banks, limiting their ability to lend. Like other Fed officials, Bowman said the looming implementation of the FedNow payments system also will address many of the needs cited by central bank digital currency promoters. Perhaps the CBDC's biggest Fed advocate has since left the central bank: Former Governor Lael Brainard is now director of the National Economic Council.

☆ Premarket stocks: Inflation just reached an inflection point
▼ + stars: | 2023-04-13 | by ( Nicole Goodkind | ) edition.cnn.com time to read: +5 min

According to some experts, inflation rates have reached an inflection point and painful interest rate hikes could soon ease. Some economists believe that this level — around 5% — is the point at which inflation is no longer considered an emergency issue. That means the Federal Reserve could feel less pressure to quickly stabilize prices through aggressive, economically painful interest rate hikes. “The Fed … will insist that their job is done when inflation hits 2%,” Ball told Before the Bell on Wednesday. The US Treasury, Federal Reserve and Federal Deposit Insurance Corporation all intervened to ensure bank customers could access all their money and to attempt to stave off future bank runs.

☆ Oil rises 2% on lower-than-expected US inflation data
▼ + stars: | 2023-04-12 | by ( Arathy Somasekhar | ) www.reuters.com time to read: +4 min

Prices rose about 2% on Tuesday. The CPI rose 6% year-on-year in February. Markets shrugged off a small build in U.S. crude oil stocks, attributing it in part to a congressionally mandated release of oil from the U.S. emergency reserve and lower exports at the start of the month. Meanwhile, the global oil market could see tightness in the second half of 2023, which would push oil prices higher, said Fatih Birol, executive director of the International Energy Agency. In a negative for oil demand, the International Monetary Fund on Tuesday trimmed its 2023 global growth outlook, citing the impact of higher interest rates.

☆ Brainard: US banking system is ‘sound’ and ‘stable’
▼ + stars: | 2023-04-12 | by ( Alicia Wallace | ) edition.cnn.com time to read: +3 min

Minneapolis CNN —The broader US banking system remains sound and stable, but the two regional banks that failed were “poorly managed” and “took unacceptable risks,” White House economic adviser Lael Brainard told CNN’s Poppy Harlow in an interview Wednesday at Semafor’s World Economy Summit in Washington, DC. “The banking system, it’s very sound, it’s stable; the core of the banking system has a great deal of capital that was put in place in the wake of the 2008-2009 global financial crisis,” said Brainard, director of the White House National Economic Council. They failed, and the president took strong actions along with the Secretary of the Treasury and the banking regulators,” she said. “Those actions reassured Americans their deposits are safe, the banking system is sound; but it was also important to the president that the executives of those failed banks were held accountable and, very important, that taxpayer money not be at risk,” she continued. “When those strong safeguards were put in place [through Dodd-Frank], it materially strengthened the banking banking system,” she said.

☆ Senate Democrats led by Elizabeth Warren press federal bank regulators to implement stronger capital requirements
▼ + stars: | 2023-03-30 | by ( Chelsey Cox | ) www.cnbc.com time to read: +4 min

WASHINGTON — Senate Democrats are pressing federal banking regulators to toughen bank capital requirements following back-to-back congressional hearings where officials testified about the failures of Silicon Valley Bank and Signature Bank. "We write to urge you follow through with establishing strong capital requirements that protect consumers and taxpayers, and preserve the safety and soundness of our banking system," Warren, along with Sens. Under the "stress capital buffer" implemented at the time, the capital requirements for banking firms is determined annually according to supervisory stress tests. The lawmakers urged regulators to enforce strong capital requirements to fend off aggressive lobbying from Wall Street and safeguard against more bank failures. "In order to prevent future bank crises and protect working Americans, I urge your agencies to quickly implement strong capital requirements and resist industry pressure to weaken or delay these requirements."

☆ Premarket stocks: How big of a problem is greedflation?
▼ + stars: | 2023-03-29 | by ( Nicole Goodkind | ) edition.cnn.com time to read: +9 min

“Executives at SVB and Signature [Bank] took wild risks and must be held accountable for exploding their banks,” Warren said. Republican Senators say the Fed’s focus on climate change led to banking turmoilRepublican Senators repeatedly insinuated on Tuesday that the recent US banking turmoil came as a result of the Federal Reserve’s focus on climate change. In his opening statement, Republican Sen. Tim Scott of South Carolina, the ranking member of the banking committee, called the Fed’s focus on climate change a waste of time. It’s what our supervisors do all the time.”In an interview with Montana Public Radio in 2014, Daines said that “the jury’s still out” on whether climate change is real. The public reasonably expects supervisors to require that banks understand, and appropriately manage, their material risks, including the financial risks of climate change.”

The index of top European banks (.SX7P) was down 1% in early trading, with German banking giants Deutsche Bank (DBKGn.DE) and Commerzbank (CBKG.DE) both falling 0.8%. The rescue of Credit Suisse, which followed the collapses of California-based Silicon Valley Bank (SVB) (SIVB.O) and New York-based Signature Bank (SBNY.O) ignited broader concerns about investors' exposure to a fragile banking sector. The decision to prioritise shareholders over Additional Tier 1 (AT1) bondholders rattled the $275 billion AT1 bond market and some Credit Suisse AT1 bondholders are seeking legal advice. "The AT1 instruments issued by Credit Suisse contractually provide that they will be completely written down in a 'viability event', in particular if extraordinary government support is granted," FINMA said. However, some watchers think the banking system is more vulnerable to rumour and rapid moves in an era of widespread social media use, posing a challenge for regulators trying to tamp down instability.

Morgan Stanley analyst Manan Gosalia, in a report earlier this week, set a target price of $54 for First Republic shares in a best-case scenario. "I have not considered or discussed anything having to do with blanket insurance or guarantees of deposits," she said. The Morgan Stanley report considered that a potential extension of FDIC insurance could bring a majority of First Republic's customers back. Even if it clinches a cash infusion, the lender will probably need to take losses on securities in its so-called held-to-maturity portfolio, the Morgan Stanley analysts wrote. In the worst-case scenario, First Republic's shares would sink to just $1, Morgan Stanley analysts estimated.

Fed Chairman Jerome Powell sought to reassure investors about the soundness of the banking system, saying that the management of Silicon Valley Bank "failed badly," but that the bank's collapse did not indicate wider weaknesses in the banking system. "These are not weaknesses that are running broadly through the banking system," he said, adding that the takeover of Credit Suisse seemed to have been a positive outcome. The Federal Open Market Committee policy statement also said the U.S. banking system is "sound and resilient." The much-anticipated rate cut by the Fed, which had delivered eight previous rate hikes in the past year, sought to balance the risk of rampant inflation with the threat of instability in the banking system. The banking sector has been in turmoil after California regulators on March 10 closed Silicon Valley Bank in the largest U.S. bank failure since the 2008 financial crisis.

Morgan Stanley analyst Manan Gosalia, in a report earlier this week, set a target price of $54 for First Republic shares in a best-case scenario. That hope was reduced on Wednesday, after Yellen told a hearing of the U.S. Senate's Appropriations Subcommittee on Financial Services that the government "is not considering insuring all uninsured bank deposits." The Morgan Stanley report considered that a potential extension of FDIC insurance could bring a majority of First Republic's customers back. Even if it clinches a cash infusion, the lender will probably need to take losses on securities in its so-called held to maturity portfolio, the Morgan Stanley analysts wrote. In the worst-case scenario, First Republic's shares would sink to just $1, Morgan Stanley analysts estimated.

NEW YORK, March 22 (Reuters) - JPMorgan (JPM.N) Chief Executive Jamie Dimon met Lael Brainard, the director of the White House National Economic Council on Wednesday, while in Washington this week, according to a person familiar with the situation. Brainard met with a range of business leaders including Dimon, part of a series of meetings she has had over the last month with business, labor, advocacy, and academic leaders, the source said. The CEOs of major banks gathered in Washington for a two-day meeting which started on Tuesday, sources familiar with the matter previously said. The banks were aiming to work out details for what needs to be done for First Republic within the coming 24 hours, another source said. On Tuesday, Reuters reported First Republic is examining how it can downsize and sell parts of its business, including some of its loan book, in a bid to raise cash and cut costs.

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