Tag: Feds

Feds turn antitrust focus to digital pharma ads

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At issue in the FTC probe is whether the deal would help IQVIA, a $35 billion pharmaceutical data and analytics company, lock up the bulk of the market for digital advertising of pharmaceuticals aimed at doctors and patients, thereby harming rivals and potentially increasing costs for drugmakers, said three of the people, who were granted anonymity to discuss a confidential investigation. IQVIA is already the largest player in health data and analytics.
The FTC is nearing the end of its investigation, and staff lawyers reviewing the deal are leaning toward filing a lawsuit to block it, according to two of the people. No final decision has been made, and the agency could ultimately choose to not bring a case.
“There are many companies — from very large, well-known companies (e.g., Google, Microsoft/Xandr, WebMD) to smaller recent entrants — providing technology, data, and services to support digital advertising from life science companies to doctors and patients,” IQVIA spokesperson Trent Brown said. “IQVIA began providing some of these services only in the past few years, and the DeepIntent business will fill a gap in IQVIA’s offerings by adding a demand-side platform.”
Brown said the company will continue working with the FTC to clear the deal.
A DeepIntent spokesperson did not respond to a request for comment. A FTC spokesperson declined to comment.
IQVIA is the leading provider of pharmaceutical sales and reference data, and also sells software for analyzing that information. Drug companies use IQVIA’s trove of information — which includes over 800 million de-identified patient records and petabytes of sales, promotional and prescription data — to gauge the likely demand for the drugs they’re developing and accurately compensate their sales forces. Generic drug companies, for example, can use the data to determine if it is financially feasible to introduce a competitor to a branded drug.
DeepIntent is a privately held advertising technology company that works with pharmaceutical companies to market drugs to doctors and patients. It also helps client companies measure and improve the success of those ad campaigns.
IQVIA made multiple moves in 2022 to build out an advertising business, including the separate purchase of Lasso Marketing, another health care ad tech company.

The FTC is investigating both the combination of the two direct competitors — Lasso and DeepIntent — as well as so-called “vertical” concerns of whether IQVIA would be able to leverage its mountain of pharmaceutical sales data to monopolize the pharmaceutical advertising market, three of the people said.
In its most recent annual report, IQVIA said the scope of its data covers more than 85 percent of the world’s pharmaceuticals. That includes “more than 1.2 billion comprehensive, longitudinal, non-identified patient records spanning sales, prescription and promotional data, medical claims, electronic medical records, genomics, and social media” from around 150,000 data suppliers.
Pharmaceutical advertising is big business. The total U.S. market for pharma ads is at least $11.5 billion, based on data collected by advertising analytics company Standard Media Index. Darrick Li, SMI’s vice president of sales in North America said anecdotal evidence could put that number as high as $15 billion. Of that, he said, around 53 percent (roughly $8 billion at the high estimate) is digital, which is growing at a rapid 17 percent clip, in the first quarter of 2023 compared to the year-earlier period, Li said.
And while the pharmaceutical industry has been slow to evolve from traditional television ads, the digital shift is happening, and that’s where companies like DeepIntent come in. According to industry participants, it is one of a handful of companies helping drugmakers target ads at both doctors and patients. Last year the company said it could offer guarantees on the number of verified patients reached.
In targeting ads at doctors, IQVIA is already a key supplier of data to DeepIntent.
Part of the FTC investigation is focused on how the deal could pose a threat to competing ad platforms serving the pharmaceutical industry including The Trade Desk, which uses IQVIA data, as well as Pulse Point, according to three of the people with knowledge of the investigation. Those companies help advertisers, including drugmakers, place ads around the internet. The latter is owned by Internet Brands, which also owns WebMD and Medscape, an informational service for health care providers.
The FTC is concerned that with both DeepIntent and Lasso, the bulk of these ads will run through IQVIA, those people said. Those ads show up on health care-focused websites used by doctors, and general websites across the internet.
Spokespeople for The Trade Desk and Pulse Point did not respond for comment.
The FTC is also focused on IQVIA’s ability to control the market for services that measure the success of digital advertising campaigns. IQVIA offers this service, as do companies including Veeva Systems and PurpleLab. Those companies can currently measure the success of advertising campaigns run by DeepIntent, but if the merger goes through, the FTC is concerned IQVIA would make it more difficult for them to do so, according to three of the people.
Spokespeople for Veeva and PurpleLab did not respond for comment.
“Does this give IQVIA the incentive and ability to withhold the data or raise prices to people who access it today? If the answer to that is ‘yes,’ then maybe there’s an antitrust issue here,” a health care lawyer said on the condition of anonymity, due to client conflicts.
The FTC is concerned with exactly that scenario, the people said.
However, at least one ad tech expert disagrees.
“IQVIA in this case is just buying a revenue stream,” said Augustine Fou, a digital advertising consultant who advises companies including drugmakers. “They are unlikely to turn away revenue from selling data if other companies are willing to pay for it. While it’s possible that IQVIA could favor its own platform, for example by only selling outdated data to competitors, that would be difficult to prove before it happened.”
When a company controls a key input used by its competitors — in this case pharmaceutical sales data — it only works to withhold that data from rivals if it facilitates a price increase that would justify the lost revenue.
In this case, Fou said IQVIA would be unlikely to recoup its losses by raising prices for its advertising services. And even though DeepIntent’s lower data costs post-merger would allow it to theoretically undercut its rivals on price, it would take years to get advertisers and agencies to switch to DeepIntent, even with prolonged, deeply discounted pricing, because of long-term contracts, Fou said.
IQVIA is no stranger to antitrust scrutiny or the FTC. The company was previously investigated by the agency’s lawyers for how it bundles various products, and its unwillingness to allow competing software companies to access its data. The related FTC investigation, first reported by The Capitol Forum, did not result in an enforcement action.
Antitrust enforcers in recent years have been wading deeply into the complex world of digital advertising, primarily targeting Google, which was sued by the Justice Department in January over allegations it has illegally monopolized the market.
Within the greater world of programmatic advertising, DeepIntent is a relatively small player. However, specializing in health care gives it an edge in its specific niche over larger players. For example, Google allows pharmaceutical companies to run search ads and place ads in health care-focused websites. However, the platform does not allow advertisers to target consumers based on health information and also cannot target doctors directly.
A Google spokesperson declined to comment.
Google’s leading position in the overall digital ad market is not a factor in the FTC’s investigation, according to three of the people with knowledge of the probe.
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#Feds #turn #antitrust #focus #digital #pharma #ads
( With inputs from : www.politico.com )

May 9, 2023
Fed’s Powell spoke with prankster posing as Ukraine’s Zelenskyy

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An alleged video of Fed Chair Jerome Powell’s conversation was shown on Russian state television and reported by Bloomberg News. | (Francis Chung/POLITICO
Federal Reserve Chair Jerome Powell spoke on the phone early this year with someone posing as Ukrainian President Volodymyr Zelenskyy, the Fed confirmed — an embarrassing episode for the central bank chief.
An alleged video of Powell’s conversation was shown on Russian state television and reported by Bloomberg News. The Fed said the footage appears to have been edited and therefore could not confirm its accuracy.
“Chair Powell participated in a conversation in January with someone who misrepresented himself as the Ukrainian president,” a Fed spokesperson said in a statement. “It was a friendly conversation and took place in a context of our standing in support of the Ukrainian people in this challenging time. No sensitive or confidential information was discussed.”
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#Feds #Powell #spoke #prankster #posing #Ukraines #Zelenskyy
( With inputs from : www.politico.com )

April 27, 2023
U.S. adds a healthy 236,000 jobs despite Fed’s rate hikes

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Despite last month’s brisk job growth, the latest economic signs increasingly suggest that an economic slowdown may be upon us. Manufacturing is weakening. America’s trade with the rest of the world is declining. And though restaurants, retailers and other services companies are still growing, they are doing so more slowly.
For Fed officials, taming inflation is Job One. They were slow to respond after consumer prices started surging in the spring of 2021, concluding that it was only a temporary consequence of supply bottlenecks caused by the economy’s surprisingly explosive rebound from the pandemic recession.
Only in March 2022 did the Fed begin raising its benchmark rate from near zero. In the past year, though, it has raised rates more aggressively than it had since the 1980s to attack the worst inflation bout since then.
And as borrowing costs have risen, inflation has steadily eased. The latest year-over-year consumer inflation rate — 6% — is well below the 9.1% rate it reached last June. But it’s still considerably above the Fed’s 2% target.
Complicating matters is turmoil in the financial system. Two big American banks failed in March, and higher rates and tighter credit conditions could further destabilize banks and depress borrowing and spending by consumers and businesses.
The Fed is aiming to achieve a so-called soft landing — slowing growth just enough to tame inflation without causing the world’s biggest economy to tumble into recession. Most economists doubt it will work; they expect a recession later this year.
So far, the economy has proved resilient in the face of ever-higher borrowing costs. America’s gross domestic product — the economy’s total output of goods and services — expanded at a healthy pace in second half of 2022. Yet recent data suggests that the economy is losing momentum.
On Monday, the Institute for Supply Management, an association of purchasing managers, reported that U.S. manufacturing activity contracted in March for a fifth straight month. Two days later, the ISM said that growth in services, which accounts for the vast majority of U.S. employment, had slowed sharply last month.

On Wednesday, the Commerce Department reported that U.S. exports and imports both fell in February in another sign that the global economy is weakening.
The Labor Department on Thursday said it had adjusted the way it calculates how many Americans are filing for unemployment benefits. The tweak added nearly 100,000 claims to its figures for the past two weeks and might explain why heavy layoffs in the tech industry this year had yet to show up on the unemployment rolls.
The Labor Department also reported this week that employers posted 9.9 million job openings in February, the fewest since May 2021 but still far higher than anything seen before 2021.
In its quest for a soft landing, the Fed has expressed hope that employers would ease wage pressures by advertising fewer vacancies rather than by cutting many existing jobs. The Fed also hopes that more Americans will start looking for work, thereby adding to the supply of labor and reducing pressure on employers to raise wages.
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#U.S #adds #healthy #jobs #Feds #rate #hikes
( With inputs from : www.politico.com )

April 7, 2023
Feds: Fugees rapper Pras Michel ran global influence-peddling scheme for cash

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Some of Low’s money went to Barack Obama’s 2012 presidential campaign and an associated super PAC, while other funds helped back an effort in 2017 to get former President Donald Trump to stop the probe into Low, Lockhart alleged.
Jurors also heard that Michel allegedly enlisted a close Trump ally, former Republican National Committee Deputy Finance Chair Elliott Broidy, to aid Low and to advance another purported goal: getting a wealthy Chinese businessperson, Guo Wengui, deported back to China. Low funded those efforts as well, Lockhart said.
Michel made a staggering $88 million off Low between 2012 and 2017, she added.
“Low had money to burn and the defendant was willing to cash in,” Lockhart said.
The trial in federal court in Washington D.C. is a chance for the government to recover from a string of high-profile courtroom defeats it has suffered in recent years as it followed through on promises to crack down on foreign-influence efforts.
Last November, Trump ally and inaugural committee chair Tom Barrack and an aide were acquitted by a federal jury in Brooklyn on charges they acted as unregistered foreign agents for the United Arab Emirates.
In 2019, a federal jury in Virginia convicted a member of the Trump transition team, Bijan Rafiekian, of acting as an unregistered foreign agent for Turkey. However, a judge later overturned that verdict and ordered a new trial for Rafiekian, who was a business partner of Trump National Security Adviser Michael Flynn. Rafiekian’s case is currently on appeal.
Also in 2019, a jury acquitted former Obama White House Counsel Greg Craig of a felony charge of scheming to mislead the Justice Department about his work for Ukraine.

Justice Department officials have defended the enforcement drive, stressing that despite the setbacks more people involved in lobbying for foreign interests are registering under the Foreign Agents Registration Act.
At the Michel trial Thursday, the entertainer’s attorney, David Kenner of Encino, Calif., passed up the chance to offer an opening statement. He will get another opportunity to do so after the government presents its case.
Michel’s defense team has signaled plans to argue that he believed he was working to advance U.S. interests in his dealings related to Guo and in related efforts to free U.S. citizens held by China.
The trial is expected to bring some star power from Hollywood and the political arena to the federal district courthouse near the Capitol. Actor Leonardo DiCaprio is likely to testify, along with casino mogul Steve Wynn, Broidy and top figures from the Trump administration such as National Security Adviser H.R. McMaster and Attorney General Jeff Sessions.
Judge Colleen Kollar-Kotelly has rejected Michel’s attempts to seek testimony from Trump and Obama, but actors Jamie Foxx and Mark Wahlberg, director Martin Scorsese, and civil rights activist Jesse Jackson have also appeared on lists of potential witnesses for the trial.
In her opening statement, Lockhart glossed over Michel’s fame and his musical career, saying only that he had “a successful music album in the 1990s” but was in need of money by the time the alleged scheme began in 2012. Lockhart also seemed eager to de-personalize the case with any jurors who might recognize Michel. After briefly referring to him by name, she called him “the defendant” over and over again throughout her opening argument.
Whatever Michel’s financial condition at the time of the alleged scheme, there’s no doubt that it became dire following his initial indictment on the campaign-finance charges in 2019 and the addition of the unregistered-foreign-agent charges in 2021.
Last year, Michel sold his interest in the rights in his Fugees’ recordings to a private equity group in order to raise money. He also has sought to fundraise for his defense by offering potential financiers a stake in $75 million the government seized from him — a sum he plans to try to recover if he’s acquitted, Reuters reported.
Lockhart spent a half-hour detailing four conspiracies the government is alleging in the complex case. Jurors seemed attentive during her argument, with some taking notes, but the disparate allegations against Michel may have been difficult to absorb in such a brief presentation.
In particular, jurors may puzzle at the bizarre claim that a hip hop star who supported Obama orchestrated an attempt to influence the Trump administration’s decisions about criminal investigations and foreign policy.
Michel is the highest-profile defendant from outside the political world to go on trial in federal court in Washington since Major League Baseball pitcher Roger Clemens stood trial in 2012 on perjury charges. A jury acquitted him on all counts.
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#Feds #Fugees #rapper #Pras #Michel #ran #global #influencepeddling #scheme #cash
( With inputs from : www.politico.com )

March 31, 2023
Feds target alcohol pricing in new antitrust probe

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The investigation is in the early stages, said the people, who were granted anonymity to discuss a confidential matter. FTC investigations can stretch on for years and are often closed without the agency taking any action. Any case would have to be brought either in federal court or the FTC’s in-house administrative court, and, if successful, the agency could get an order prohibiting the offending business practices.
The FTC recently opened a similar investigation into Pepsi and Coca-Cola involving pricing in the soft drink market.
The FTC declined to comment. Southern Glazer did not respond for comment.
The alcohol investigation is yet another sign that the Biden administration is expanding its efforts to rein in big companies and flex its antitrust powers, in the technology world and beyond. That includes the world’s biggest tech firms, such as Apple and Google, and more traditional companies like Southern Glazer.
According to a December 2022 Forbes report, Southern Glazer is the 11th largest privately held company in the U.S., with around $25 billion in revenue and distributing over 7,000 different brands of alcohol, wine, beer and other beverages. Republic National Distributing Company, the second largest alcohol distributor, which is not known to be a target in the probe, had 2022 revenues of around $12 billion, according to Forbes. Combined, the two companies account for the bulk of U.S. alcoholic beverage distribution.
The Robinson-Patman Act, aimed at promoting a level playing field between small retailers and large chain stores, has been largely dormant for more than 20 years.
The law was enforced regularly for decades by the FTC, then all but abandoned more than 20 years ago. The agency’s last case under the law was a settlement with spice company McCormick. Prior to that its most recent case was from 1988 against book publishers including Simon & Schuster and Random House. The move away from Robinson-Patman enforcement came amid increasing focus at the FTC and Justice Department on harm to consumers, namely higher prices, rather than harm to competitors.
The FTC however wants to revive enforcement. The agency’s chair, Lina Khan, as well as Democratic commissioner Alvaro Bedoya, have, since they joined the agency, stated their intention to bring more cases under the law.

The FTC has “been looking closely at the Robinson-Patman Act,” Khan said at an event on Monday. “We’re looking closely at areas where we might be able to do that in short order.”
President Biden, in his 2021 executive order on competition policy, specifically called out the need to stop “unlawful trade practices in the beer, wine, and spirits markets, such as certain exclusionary, discriminatory, or anti-competitive distribution practices, that hinder smaller and independent businesses or new entrants from distributing their products.”
In its investigation, the FTC is seeking detailed sales data on thousands of brands of alcohol and wine sold around the U.S. by both Southern Glazer and its competing distributors, according to the people. The probe includes questions about pricing and benefits Southern Glazer offers to retailers including quantity-based discounts, rebates, promotions, as well as marketing, warehousing, merchandising and other services.
The agency is also asking about the competitive dynamics in the retail market for wine and alcohol and how Southern Glazer allocates wine and alcohol between different retailers, including whether and how it limits distribution to certain customers, the people said.
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#Feds #target #alcohol #pricing #antitrust #probe
( With inputs from : www.politico.com )

March 30, 2023
US adds a robust 311,000 jobs despite Fed’s rate hikes

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Last month, the government reported a surprising burst of hiring for January — 517,000 added jobs — though that gain was revised down slightly to 504,000 in Friday’s report. Consumers also ramped up their spending in January, suggesting that the economy had strengthened at the start of the year. The Fed’s preferred inflation gauge also accelerated.
With February’s sizable job growth coming after January’s expansive gain, the Fed may accelerate its rate hikes to combat inflation. When the Fed tightens credit, it typically leads to higher rates on mortgages, auto loans, credit card borrowing and many business loans.
What the Fed may decide to do about interest rates when it meets later this month remains uncertain. The decision will rest, in part, on its assessment of Friday’s jobs data and next week’s report on consumer inflation in February. Last month, the government’s report on January inflation had raised alarms by showing that consumer prices had reaccelerated on a month-to-month basis.
The vigorous job growth for January, reported early last month, was the first in a series of reports to point to an accelerating economy at the start of the year. Sales at retail stores and restaurants also jumped, and inflation, according to the Fed’s preferred measure, rose from December to January at the fastest pace in seven months.
The stronger data reversed a cautiously optimistic narrative that the economy was cooling modestly — just enough, perhaps, to tame inflation without triggering a deep recession. Now, the economic outlook is hazier.
High borrowing rates have cratered the housing market, with home sales having dropped for 12 straight months, a consequence of the average mortgage rate nearly doubling over that time. Manufacturing is also showing signs of weakness. Higher rates have made it harder for businesses and consumers to borrow to buy major factory goods, from machinery to cars to appliances.
By contrast, spending for services — things like traveling, dining out and attending entertainment events — remains strong. Many Americans continue to engage in activities that were restricted during the COVID lockdowns.
Hiring at February’s pace is about triple the level the Fed would prefer. Job gains of about 100,000 a month would be just enough to keep up with population growth and prevent unemployment from rising. A figure that low would also mean that employers weren’t so desperate for workers and wouldn’t have to keep raising wages.

Higher pay is great for employees, of course. But Fed officials say it is contributing to higher inflation, particularly in labor-intensive service industries like restaurants, health care and hotels.
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#adds #robust #jobs #Feds #rate #hikes
( With inputs from : www.politico.com )

March 10, 2023
George Santos masterminded 2017 ATM fraud, former roommate tells feds

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Santos, whose full name is George Anthony Devolder Santos, often went by Anthony Devolder before his first congressional bid in 2020. The New York Republican won a Long Island swing district last November after lying on the campaign trail about his education, work experience and supposed Jewish ancestry. The House ethics panel initiated an investigation into Santos last week to explore possible “unlawful activity” related to his run. State, federal and Brazilian authorities are also probing Santos related to a string of potential financial crimes. Santos has admitted to “embellishing” parts of his background, but said he never broke any laws.
He was previously questioned about the Seattle scheme by investigators for the U.S. Secret Service, CBS News has reported. He was never charged, but the investigation remains open. Santos also told an attorney friend he was “an informant” in the fraud case. Trelha insists he was its mastermind.
“Santos taught me how to skim card information and how to clone cards. He gave me all the materials and taught me how to put skimming devices and cameras on ATM machines,” Trelha said in the declaration that was submitted to authorities by his New York attorney, Mark Demetropoulos. POLITICO obtained a copy of the declaration.
Spokespeople for the FBI did not return messages. Representatives for the Secret Service and the U.S. Attorney’s Office declined to comment.
A lawyer for Santos also did not respond to emails and text messages for comment.
Trelha and Santos met in the fall of 2016 on a Facebook group for Brazilians living in Orlando, Fla., he said in the declaration and in an interview with POLITICO. By November, Trelha had rented a room in Santos’ Winter Park, Fla., apartment, according to a copy of the lease viewed by POLITICO.
“That is when and where I learned from him how to clone ATM and credit cards,” Trelha wrote in the declaration that was translated from his native Portuguese.
Santos kept a warehouse on Kirkman Road in Orlando to store the skimming equipment, according to the declaration.

“He had a lot of material — parts, printers, blank ATM and credit cards to be painted and engraved with stolen account and personal information.
“Santos gave me at his warehouse, some of the parts to illegally skim credit card information. Right after he gave me the card skimming and cloning machines, he taught me how to use them,” Trelha wrote.
Trelha then flew out to Seattle where he was caught on a security camera removing a skimming device from a Chase ATM on Pike Street, according to law enforcement records. He was arrested on April 27.
A spokesperson for the U.S. Attorney’s Office in Seattle previously told POLITICO it’s not unusual for credit card thieves to go far from home to nab numbers so there’s less chance of the stolen numbers being traced back to the perpetrators. That spokesperson, Emily Langlie, said she didn’t have any information about Santos’ involvement in the Trelha case.
At the time of his arrest, Trelha had a fake Brazilian ID card and 10 suspected fraudulent cards in his hotel room, according to police documents. An empty FedEx package police found in his rental car was sent from the Winter Park unit he shared with Santos.
Trelha told federal authorities in the declaration Wednesday that his “deal with Santos was 50% for him and 50% for me.”
“We used a computer to be able to download the information on the pieces. We also used an external hard drive to save the filming, because the skimmer took the information from the card, and the camera took the password,” he wrote.
“It didn’t work out so well, because I was arrested,” he admitted.
Trelha said Santos visited him in jail in Seattle, but told him not to implicate him in the scheme.
“Santos threatened my friends in Florida that I must not say that he was my boss,” he wrote.
Trelha agreed to say he was working for someone in Brazil and not with Santos, because he was worried Santos would have his friends in Orlando deported, he said in a telephone interview last month. Trelha recalled Santos warning he could “make things worse for him” since he was already in jail and Santos was a U.S. citizen.
In an audio recording of Trelha’s May 15, 2017 arraignment in King County Superior Court, Santos tells the judge he’s a “family friend” who was there to secure a local Airbnb if the defendant was released on bail.
Santos also claimed to the judge he worked for Goldman Sachs in New York, a key part of his campaign biography he later admitted wasn’t true.
Trehla was unable to post the $75,000 bail. He pleaded guilty to felony access device fraud, served seven months in jail and was deported to Brazil in early 2018.
“Santos did not help me to get out of jail. He also stole the money that I had collected for my bail,” Trelha told federal investigators in the declaration.
Trelha told POLITICO that before flying to Seattle, Santos had traveled to Orlando to pick up $20,000 in cash he instructed Leide Oliveira Santos, another roommate, to give him from a safe. Santos had promised to hire El Chapo’s lawyer for Trelha, he said. A third roommate in the Winter Park apartment told POLITICO in a phone interview that Oliveira Santos told him Santos had come to get money for Trelha. The third roommate spoke on condition of anonymity because he was in the country as an undocumented immigrant.
But Trelha never heard from Santos after Santos visited him in Seattle, the third roommate said. He later learned from Oliveira Santos that her attempts to contact Santos over the next few months were futile.
Trelha realized he had been conned, he said, when no lawyer appeared — let alone El Chapo’s.
But he still didn’t want to name Santos as a co-conspirator, fearing retaliation against Oliveira Santos, who was also an undocumented immigrant, he said.
Trelha told the federal authorities in the declaration that he had witnesses to support his statements. Oliveira Santos declined to discuss the matter with POLITICO.
“I am available to speak with any American government investigator,” Trelha wrote before providing his email address and cellular phone number and attesting that he signed the declaration “willingly and truthfully.”
A federal prosecutor who handled Trelha’s case described the scheme as “sophisticated,” adding that the Seattle portion was only “the tip of the iceberg,” according to court records reported by CBS News. But a person close to the investigation who is not authorized to speak publicly said they saw no evidence that prosecutors did forensic reports on Trelha’s phone or seemed motivated to pursue international co-conspirators.
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#George #Santos #masterminded #ATM #fraud #roommate #tells #feds
( With inputs from : www.politico.com )

March 10, 2023
How the Fed’s Powell answered 3 big questions about jobs

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Fed officials had already estimated that unemployment could rise more than 1 percentage point — which could equate to about 2 million lost jobs — and they may update those projections at their next meeting this month. Friday’s jobs report for February will offer further clarity on a labor market that has shown stunning growth even in the face of higher rates.
Powell suggested that he’s still holding out hope that joblessness won’t have to rise significantly, but he also made it clear that fighting inflation is his top priority. The unemployment rate — a more than 50-year-low of 3.4 percent — may not be sustainable without further stoking price spikes, he indicated.

Federal Reserve Chair Jerome Powell testifies before the Senate Banking, Housing, and Urban Affairs Committee on Capitol Hill on March 7, 2023.
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Francis Chung/POLITICO
“We’re very far from our price stability mandate and, in effect, the economy is past most estimates of maximum employment,” he told the committee in his semiannual testimony. Still, he said, inflation has been fed by unprecedented factors related to the pandemic that, as they fade, might aid the central bank.
Here are some key exchanges between the Fed chair and lawmakers:
Sen. John Kennedy (R-La.): “You’re trying to raise the unemployment rate, are you not?”
Powell: “No, we’re not — we’re trying to realign supply and demand, which could happen through a bunch of channels, like for example, just job openings.”
While Powell flatly denied that his goal was to see unemployment increase, he acknowledged that the Fed does want to see the labor market weaken. Those might seem contradictory, but the thinking is that if there are fewer open jobs, it will help cool wage gains, which feed inflation, without necessarily causing a rise in joblessness.
For the record, Kennedy was driving at a separate but related point: It’s a good idea, in his mind, to cut government spending to help reduce inflation because the Fed’s tools are much blunter and potentially more painful to the labor market.

Many Republicans have been pressing for spending cuts as a condition for agreeing to raise the government’s borrowing limit this year.
Sen. Elizabeth Warren (D-Mass.): “Chair Powell, if you could speak directly to the 2 million hardworking people who have decent jobs today who you’re planning to get fired over the next year, what would you say to them? How would you explain your view that they need to lose their jobs?”
Powell: “I would explain to people more broadly that inflation is extremely high, and it’s hurting the working people of this country badly — all of them. Not just 2 million, but all of them are suffering under high inflation, and we are taking the only measures we have to bring inflation down.”
Warren: “And putting 2 million people out of work is just part of the cost, and they just have to bear it?”
Powell: “Will working people be better off, if we just walk away from our jobs and inflation remains 5, 6 percent?”
This was an unusually testy moment from Powell, who is generally calm and collected under questioning, including from Warren.
But this conversation highlights the key points that both officials have been making. In the senator’s mind, inflation is largely caused by problems like supply chain issues and corporate greed — issues that are unrelated to overspending, which is what the Fed is designed to counteract. (To get to that two million number, she’s pulling from Fed projections that unemployment could rise to 4.6 percent.)

Sen. Elizabeth Warren (D-Mass.) speaks with reporters outside a Senate Democratic Caucus policy luncheon at the U.S. Capitol on March 7, 2023.
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Francis Chung/POLITICO
For Powell and his fellow Fed officials, they have a key role to play in bringing down price spikes, and they’re the ones who have been tasked to do it, even if there is a cost.
Sen. Catherine Cortez Masto (D-Nev.): “I want to have the opportunity to address Sen. Warren’s conversation with you earlier about the tools that you have and the impact that it has on causing potentially more people to be unemployed.”
Powell: “We do not seek, and we don’t believe we need to have a very significant downturn in the labor market. … You’re starting from such a strong labor market, it seems as though you’re a long way away from anything that looks like a recession, just looking at the labor market by itself.”
Here, the Fed chief is making a point that even if unemployment rises to 4.6 percent, as central bank officials projected in December, that would still be relatively low by historical standards.
He’s being relatively hopeful here about the prospects for the job market and the economy as a whole, but the words “very significant” are notable; it suggests he’s still expecting unemployment to rise at least somewhat.
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#Feds #Powell #answered #big #questions #jobs
( With inputs from : www.politico.com )

March 8, 2023
Feds say Proud Boys associates fanned out to facilitate Jan. 6 breach

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In case after case, prosecutors said, the alleged offenders had links to the Proud Boys — some explicit, some tenuous — and either joined them on their march from the Washington Monument to the Capitol or participated in encrypted text message channels with the group’s leaders ahead of their actions on Jan. 6. But it’s the most specific effort by the Justice Department to capture the breadth of what it sees as the most significant case to arise from the Jan. 6 attack.
None of the 23 associates identified by prosecutors are charged as co-conspirators alongside Tarrio and the other leaders: Ethan Nordean, Joe Biggs, Zachary Rehl and Pezzola. Rather, the Justice Department contends that those in the broader group were handpicked by the leaders and acted as “tools” of the alleged seditious conspiracy.
“The people who marched with them, all the way from before Trump started speaking and who marched onto Capitol grounds, trampled police barricades before he finished speaking, were acting jointly with these defendants,” Assistant U.S. Attorney Eric Kenerson said on Monday.
Whether the jury ever sees this evidence is a question in the hands of U.S. District Court Judge Timothy Kelly, who must decide whether prosecutors have made a clear enough case that these individuals acted — knowingly or not — to further the goals of the alleged seditious conspiracy.
The prosecution’s assertion that the some defendants acted as “tools” of those charged in a separate case and that their acts should be imputed to those on trial on conspiracy charges drew outrage from defense attorneys.
Lawyers for the Proud Boys leaders contended that prosecutors were seeking to prove “guilt by association,” tagging Tarrio and others with the violent actions of a loosely connected group of rioters.
“We’ve cut the baloney now so thin that I can see through it and read the other side of the paper,” said Norm Pattis, an attorney for Biggs.
Pattis suggested that the government’s theory that individuals were “activated” by the Proud Boys to help advance their conspiracy could equally apply to other Jan. 6 influencers, including former President Donald Trump himself. Pattis has indicated that he hopes to subpoena Trump to testify in the trial, though it’s unclear whether he has served the subpoena as of this week. He described the government’s theory as “tenuous.”

Prosecutors described varying degrees of relationships between the so-called tools and the Proud Boys leaders. Some, like Paul Rae, crashed at an Airbnb with Nordean and others the night before Jan. 6, or like Gabriel Garcia, who was invited into pre-Jan. 6 encrypted chat groups by Tarrio. Others, like Barton Shively and Trevor McDonald, joined the Proud Boys somewhere along their march to the Capitol, which came even before Trump finished addressing a rally crowd assembled near the White House. Prosecutors said one defendant appeared to fist-bump with a man who later joined a violent push against police.
Kelly said he intends to consider the evidence prosecutors described on Monday and determine whether to permit the government to show it to jurors.
Nevertheless, prosecutors described about a dozen discrete examples of actions by associates of the Proud Boys that they say underscored the group’s influence during the riot.
The most compelling example was the case of Ronald Loehrke and James Haffner, two associates of Nordean. Prosecutors displayed text messages in which Nordean tells Loehrke, “I want you with me,” on Jan. 6. “I’ll have you on the front lines with me,” he says. Haffner came to Washington with Loehrke and is seen on video spraying police officers during a melee outside Capitol doors.
Other examples include Robert Gieswein, who was one of the first rioters to enter the Capitol and joined the confrontation with Capitol Police outside the Senate chamber; Paul Rae and Gilbert Fonticoba, who entered the Capitol with Biggs; and Nicholas Ochs, who scrawled “Murder the Media” on a Capitol door.
Prosecutors said they don’t intend to introduce the Gieswein evidence in front of the jury, which prompted Carmen Hernandez, the defense attorney for Rehl, to assert that Gieswein was invited to join the Proud Boys march by a “confidential human source” working with the government.
Prosecutors also said a group of five associates — A.J. Fischer, Dion Rajewski, Zach Johnson, Brian Boele and James Brett — who they consider “tools” of the Proud Boys’ conspiracy were part of the mob that besieged the Capitol’s Lower West Terrace tunnel, the scene of the day’s worst violence.
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( With inputs from : www.politico.com )

March 7, 2023
Fed’s Powell faces Wall Street firing line on Capitol Hill

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It’s clear the push is already getting traction. Sen. Tim Scott (R-S.C.), joined by nine other Republicans who will be in a position to grill Powell this week, told the Fed chair in a letter Friday that there’s no reason to hike capital requirements for the banks.
“Nobody is going to miss the point of this letter, which is hammering Jay Powell to testify the way Wall Street’s biggest banks want him to testify, with the suggestion that there will be political consequences if he doesn’t do that,” said Dennis Kelleher, president and CEO of the watchdog group Better Markets.
In a financial policy space where crypto has become the bright, shiny object for Congress, the hearings are poised to reveal how much juice the big bank lobby still has in Washington. For Powell, it’s a test of whether he wants to take on Wall Street in addition to the battle he’s waging on inflation. The banks have framed the potential increase in regulation as a threat to the economy because they say it would force them to retrench in the services they provide — a familiar lobbyist talking point that may have new political salience as the U.S. stares at a potential recession.
“In response to higher capital requirements, banks have two choices,” JPMorgan Chase CFO Jeremy Barnum said last week, summing up the banks’ case at a Washington symposium hosted by the Bank Policy Institute trade association. “We can charge higher prices or we can do less lending. Both of those choices are ultimately bad for consumers and businesses.”
Barnum’s appearance in Washington was part of a broad lobbying effort by the industry to grab the attention of policymakers. The Bank Policy Institute, the Financial Services Forum and the Securities Industry and Financial Markets Association have been flooding email inboxes for weeks with arguments against raising capital requirements, in addition to closed-door meetings with lawmakers and their staffs. It’s the industry’s top issue in Washington this year.
The calibration of bank capital requirements has major ramifications for the economy. It requires regulators to strike a balance between preventing a financial crisis — which could be triggered by an unforeseen event, like a pandemic — while not limiting banks so much that it crimps economic growth.
“Every decision a bank makes first factors capital costs or benefits,” Federal Financial Analytics managing partner Karen Petrou, who advises lenders on policy, wrote last month.
The largest banks in the U.S. were subject to higher capital requirements after the 2008 global financial crisis, as regulators around the world sought to protect taxpayers from having to bail out the industry again during a future meltdown. Banks survived the depths of Covid-19, armed with bigger capital buffers and buoyed by a flood of government rescue money across the economy.

The issue is returning to the top of banks’ agenda again because U.S. regulators are in the process of finalizing the last piece of the post-2008 capital rules, with a proposal expected by the summer.
But the Fed in the last couple of months has upped the ante.
Fed Vice Chair for Supervision Michael Barr, a Biden-appointed official who is the central bank’s point man on regulation, triggered the banking lobby late last year when he announced plans for a “holistic” review of bank capital. He also signaled that he already had a view that the current rules aren’t strong enough.
“History shows the deep costs to society when bank capital is inadequate, and thus how urgent it is for the Federal Reserve to get capital regulation right,” Barr said in December. “In doing so, we need to be humble about our ability, or that of bank managers or the market, to fully anticipate the risks that our financial system might face in the future.”
The lenders are complaining that Barr should be more transparent about the process, though he has taken time to speak with bank executives. Barr said in December that any rule changes would be subject to public notice and comment.
“It is an internal process,” said Kevin Fromer, who represents executives of the largest U.S. banks as CEO of the Financial Services Forum. “We, as well as the rest of the public, are outside looking in.”
Barr isn’t the only threat. Banks expect the Federal Deposit Insurance Corp., which is also led by a Biden appointee, is going to push for stricter rules as well. Senate Banking Chair Sherrod Brown (D-Ohio), who leads Congress’s Fed oversight, has long argued for higher capital requirements and may provide political cover.
Now the big banks and their allies in Congress want to know whether Powell plans to defer to his colleagues or will intervene.
Scott, who is seen as a likely 2024 GOP presidential candidate, told Powell with fellow Republicans Friday that it was “incumbent on you” to oversee the capital review launched by Barr. They warned Powell against violating a 2018 law that eased bank regulations. And they echoed points made by the banking industry about the potential impact on borrowing costs, investment and the competitiveness of U.S. markets.
“We have received the letter and plan to respond,” a Fed spokesperson said.
It’s unclear where Powell will come down on the issue. But during the Trump administration, he responded to calls by big banks to lower their capital requirements by saying that the levels were “about right,” and he dismissed suggestions that strict regulations were hurting their ability to compete with foreign banks. He supported moves to loosen rules around the edges.
The Republican-led House has made the issue a priority as it ramps up scrutiny of the Biden administration. Rep. Andy Barr (R-Ky.), who leads the subcommittee overseeing the Fed, said in a statement that he is planning “vigorous oversight” of the capital review. He will be one of the lawmakers grilling Powell this week.
“I am particularly focused on preventing regulators from imposing excessive requirements that would sideline capital as we continue to battle forty-year high inflation,” Barr said.
Kelleher’s group Better Markets is pushing back, arguing that capital standards should be raised to protect the economy from bank failures and taxpayer-funded bailouts.
“Congress’s job is to ask questions,” he said. “But their job isn’t to try and basically work the refs by trying to bully them into an outcome that is not actually data-driven or risk-driven.”
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( With inputs from : www.politico.com )

March 7, 2023