Tag: Feds

Feds looking to block $13 billion mortgage software deal

[ad_1]

A lawsuit would also be the latest volley from President Joe Biden’s antitrust enforcers, FTC Chair Lina Khan and Assistant Attorney General for antitrust Jonathan Kanter, who have both pledged to rein in corporate consolidation. The FTC is currently challenging deals including Microsoft’s takeover of video game giant Activision Blizzard, and the DOJ is likely to challenge JetBlue’s takeover of Spirit Airlines.
ICE founder and CEO Jeffrey Sprecher is a major GOP donor. His wife is former Georgia Republican Sen. Kelly Loeffler.
Spokespeople for ICE and Black Knight declined to comment. An FTC spokesperson declined to comment.
The ICE-Black Knight merger would bring together the two largest companies offering loan origination software, essentially the pipe connecting brokers with lenders. The companies have offered to sell Black Knight’s loan origination platform Empower, to resolve the so-called horizontal overlap between the companies, one of the people said. That is not enough, however, to allay the FTC’s concerns that the merger would give the combined company too much control over data and technology in the residential mortgage market, that person said.
The FTC believes that just selling Empower though does not curtail all of the head-to-head competition between the companies, two of the people said. Both companies offer a variety of services that operate with the loan origination platform, including the data analytics business Optimal Blue.
Reuters previously reported that Black Knight had hired bankers to help sell Empower.
ICE, which operates major financial exchanges and clearinghouses, has expanded into the mortgage market in recent years. It recently acquired Encompass, its loan origination offering, through its $11 billion purchase of mortgage software company Ellie Mae in 2020. And in 2018 it completed its buyout of Merscorp, which operates a national electronic registry of U.S. mortgages.
In 2019 and 2020, Black Knight bought a pair of companies — Compass Analytics and Optimal Blue — that provide a variety of data and analytics services to lenders to help them price loans. Through those deals it has a leading position in the software used by banks to price loans.

Companies including the government-backed Fannie Mae and Freddie Mac as well as financial technology start-ups like Roostify and Blend rely on the loan origination platforms from Black Knight and ICE.
In another example of the rapidly consolidating mortgage technology market, Roostify was bought last week by CoreLogic, which itself fended off an earlier takeover bid by Black Knight.
“We depend on the interoperability of our platform across third-party applications and services that we do not control,” Blend says in securities filings. While it does not mention either Black Knight or ICE by name, it says it relies on loan origination and pricing tools that the combined company would dominate.
The companies’ Surefire and Velocify services also compete head-to-head in the marketing of mortgage services from lenders.
The deal has faced opposition from lawmakers, consumer groups, customers and competitors, with FTC hearing a number of concerns from companies who rely on Black Knight and ICE that their access will either be lost or degraded after the merger, two of the people said.
The deal “would make ICE the largest mortgage services company in the housing ecosystem” said Rep. Maxine Waters (D-Calif.), the top Democrat on the House Financial Services Committee. The new company “could exert significant market power over loan pricing for consumers, access to and sale of consumer data, and mortgage software pricing,” she said in a late December letter to Khan urging the FTC to block the deal.
Federal Financial Analytics managing partner Karen Petrou urged the FTC to block the acquisition in an early February report, arguing that combining ICE’s “critical mortgage services” with Black Knight would give it “unrivaled power to control the prices set on each mortgage, the terms on which credit is provided, the lenders offered the most advantageous terms, and the extent to which home ownership is available on affordable, equitable terms in rural, urban and majority-minority communities.”
That report outlining Petrou’s case was funded by an anonymous company opposing the deal, but Federal Financial Analytics said it had complete control over the final product.
Zachary Warmbrodt contributed to this report.
[ad_2]
#Feds #block #billion #mortgage #software #deal
( With inputs from : www.politico.com )

February 28, 2023
Biden taps Fed’s Brainard as top economic adviser

[ad_1]

She will be leaving the Fed at a crucial juncture when it’s deciding how long to keep interest rates at punishingly high levels to kill inflation. If central bank officials press too hard, they could trigger a recession that pushes millions of people out of work.
Still, the job market has remained resilient even as price spikes have cooled, raising the prospect that the Fed — and Biden — might be able to avoid widespread economic pain.
POLITICO previously reported that Brainard and Bernstein were both poised to take these positions. Bloomberg earlier reported Biden’s decision.
At the White House, Brainard will face lingering skepticism from the left over her time working as an adviser in Bill Clinton’s administration, where she was involved in implementing the North American Free Trade Agreement and negotiating China’s entry to the World Trade Organization. Many progressives viewed both moves as detrimental to the interests of American workers.
Brainard, a Ph.D. economist, also served at Treasury under President Barack Obama, where she was the department’s top diplomat from 2010 to 2013, dealing with the euro crisis and working to pressure China to allow the value of its currency to be more influenced by market forces.
She arose as a top contender for Treasury secretary when Hillary Clinton was running for president in 2016 — and faced criticism for donating to Clinton’s campaign. That was an unusual move for an official at the Fed, which is given extensive policy freedom in part because it’s expected to stay above the political fray.
But she then built credibility with progressive Democrats by dissenting more than 20 times on moves by President Donald Trump’s appointees at the central bank. These included proposed rollbacks of regulations placed on big banks after the 2008 financial crisis.
She also earned support from Fed Chair Jerome Powell for her resistance to efforts by another bank regulator to ease rules designed to combat discrimination against poor and minority borrowers, a historic practice known as redlining.

Brainard has charted her own vision for reform of that law, the Community Reinvestment Act, that fellow Democrats are hopeful will be more responsive to the needs of lower-income communities. That regulation has not yet been finalized and is now facing legal threats from banks.
She chairs four of the Fed’s internal committees, leading policy in key areas like whether the Fed should issue a central bank digital currency. It’s unclear who will take up those portfolios after she departs.
She is married to Kurt Campbell, who served in the State Department under Obama and now is a top adviser to Biden on Asia.
Bernstein, currently a member of the Council of Economic Advisers, will likely be nominated as its head, a Senate-confirmed position, unlike NEC director. He would replace Cecilia Rouse at the helm of the White House’s in-house economic research office. Rouse is returning to Princeton.
Deese, 45, is leaving the NEC — which is housed inside the West Wing and is the more powerful of the two offices — to be closer to his family.
He joined the White House from Wall Street investment giant BlackRock, which created some blowback from progressives wary of anyone with a history in the banking industry.
Deese joined BlackRock as Global Head of Sustainable Investing after serving in senior roles in the Obama White House. During his time in the Biden administration, he played major roles in the president’s economic plans including the CHIPS Act and the Inflation Reduction Act.
[ad_2]
#Biden #taps #Feds #Brainard #top #economic #adviser
( With inputs from : www.politico.com )

February 14, 2023
While Biden celebrates a soft landing, the Fed’s Powell is worrying

[ad_1]

The path ahead will come into clearer focus on Tuesday when the Labor Department reports the Consumer Price Index for January, which is likely to show that inflation fell for the seventh consecutive month. It ran at an annualized rate below 3 percent during the second half of 2022 — an encouraging trend.
With job growth surging and wage gains leveling off, there is more hope now than in almost a year that the economy can slow along with inflation without a painful recession — a so-called soft landing. But prices still rose faster than they had in four decades last year, and Powell says he’ll do what it takes to keep borrowing costs high and prevent price increases from becoming a more permanent feature of the economy.
“We’re in an economy right now that obviously has some bright spots and darker spots with inflation still in the process of coming down,” said Tobin Marcus, a senior policy and politics strategist at Evercore ISI who was an economic adviser to then-Vice President Biden. “The president, for very clear reasons, is more interested in highlighting the bright spots, whereas Powell still needs to keep some focus on the need to finish the job.”
So if inflation is running close to the Fed’s 2 percent target rate even amid a hot labor market, why does the central bank feel the need to repeatedly warn that it’s poised to continue raising interest rates and risk a recession? Inflation is a complicated beast, and there’s a lot of history here.
Here are five key questions about what’s going on with consumer prices and what might be ahead for the economy, Biden and Powell.
You said the job market is booming. Why am I always reading about how there might be a recession?
The Labor Department recently reported that unemployment had hit its lowest level since 1969 at 3.4 percent. The only time it has been lower in modern U.S. history was during the Korean War. It’s an ideal bragging point for Biden, who has touted his record on jobs in his annual State of the Union address and on the road since then. But Powell is eyeing low joblessness with worry that it might lead wages to skyrocket, pushing up labor costs for employers and therefore prices — what’s known as the wage-price spiral.
As far as the Fed is concerned, inflation is what’s important, but the job market is an important signal about where prices might be headed. Demand for goods and services is what creates jobs, and it’s also what gives people money to spend. That is, a very strong job market is a sign that consumers and businesses will be able to support rising prices.

Basically, the Fed is willing to risk a recession if it means avoiding what happened in the 1970s — when the central bank backed off on interest rate hikes and inflation repeatedly came back with a vengeance. The logic is essentially this: We know how to deal with recessions. Killing inflation is harder. So it’s better to err on the side of overdoing it, since you can always change course and cut borrowing costs.
Does the Fed really need to hurt the job market to bring down inflation?
That’s the multitrillion-dollar question. A lot of experts would say no, pointing to idiosyncratic factors — supply shortages, government spending, Russia’s war in Ukraine — that have driven this bout of inflation and can’t be cured by higher interest rates. Certainly, to the extent that inflation has cooled, a big part of that is the fading of those temporary factors.
But if inflation doesn’t continue its downward trajectory, Fed officials will want to raise rates higher, or perhaps just keep them at punishing levels for longer, until they see what they call a softening in the labor market — fewer job openings, slower wage growth, and, more than likely, somewhat higher unemployment.
Wait, did you say inflation has been running just above 2 percent for the last six months? Isn’t that the Federal Reserve’s target? Are they almost done?
Yes, the Fed’s goal is 2 percent inflation, but no, they’re not done. A big reason price spikes have come down so much is because of gas prices, which are volatile and driven by global circumstances. Powell and his fellow policymakers want to be sure that inflation is cooling across the board. The prices of goods like furniture and cars have dropped, while rents may be slowing their ascent. But for the Fed, swelling prices are still a concern in core services businesses (think restaurants, transportation, health care), where labor costs are a major expense. Over the last six months, prices there have risen 4.7 percent.
So that’s where wages come in. Are wages growing progressively faster?
No, wage growth isn’t accelerating. But Fed officials and other economists think that worker pay, which grew about 5 percent in 2022 (compared to a 6.5 percent increase in the CPI), is still rising too fast for inflation to sustainably come back to 2 percent. For comparison, wages were growing about 3.5 percent annually before the pandemic, when inflation was a bit below 2 percent.
There’s an argument that the Fed doesn’t need to be too concerned because incomes are simply recovering after getting hammered by inflation, and workers will stop pushing for as big raises once price spikes get more under control. But the fact that the unemployment rate is so low has the Fed worried that worker shortages will shift that trend. At the very least, they’d like to see a reduction in job openings.
All this doesn’t seem to bode well for 2024, and anyone trying to get reelected then.
Yeah, the Fed chief has suggested that unemployment could rise a percentage point or more as the central bank continues to increase borrowing costs to slow spending. The tension between where the economy is and where it might be heading has been thrown in stark relief in recent days: both Biden and Powell want to bring down inflation, but the Fed is likely to undermine one of the president’s biggest selling points heading into 2024.
“I believe both [Biden] and Powell would order the same items off the menu,” said Jason Furman, who served as chief economist to former President Barack Obama. “But they think the menu is very different, with POTUS seeing the soft landing as an item that is on it while Powell is much less certain that it is.”
[ad_2]
#Biden #celebrates #soft #landing #Feds #Powell #worrying
( With inputs from : www.politico.com )

February 13, 2023
Feds probing Santos’ role in service dog charity scheme

[ad_1]

“I’m glad to get the ball rolling with the big-wigs,” Osthoff said in an interview Wednesday. “I was worried that what happened to me was too long ago to be prosecuted.”
The alleged fundraising scheme is one of many scandals plaguing the freshman Republican, who has refused to leave office despite a series of allegations of lying and fraud that first came to light in December shortly after he won a swing seat on Long Island.
New York Democratic Reps. Ritchie Torres and Daniel Goldman, who called for a Federal Election Commission investigation into Santos’ campaign finances last month, welcomed the news that the Eastern District investigation is proceeding at a serious clip.
“Only the U.S. attorneys are capable of moving at the speed that’s necessary,” Torres said in an interview.
“There’s no one that poses a greater threat in Congress than Santos. It’s undeniable that he’s broken the law. We have to protect Congress from George Santos, who threatens it from within,” Torres said.
Goldman, an ex-federal prosecutor who has a seat on the House Committee on Oversight and Accountability, echoed Torres’ comments in a separate interview.
“Given that a serial liar like Santos is still walking the halls of the Capitol, it is imperative that the Justice Department move quickly to determine whether an indictment is appropriate.”
On Tuesday, Santos stepped down from his Congressional committee assignments, telling colleagues he was trying to avoid becoming a further “distraction” for House Republicans. The announcement followed a meeting a day earlier with House Speaker Kevin McCarthy, who declined to disclose the reason for the discussion.

McCarthy made his strongest statement yet on Santos last week. He told Capitol Hill reporters that if Santos is found to have broken the law by the House Ethics Committee he will be removed from Congress.
Joshua Schiller, a senior trial lawyer who has practiced in the Eastern District, said the veteran’s encounter with Santos could offer prosecutors a quick way to hit the Republican congressman with criminal charges even though they’re also investigating heftier possible financial crimes.
“I think there is an urgency here because Santos is currently in a position to make laws,” Schiller said. “I can think of examples where the government used a lesser indictment to seize assets and try to cause the defendant to plea to a deal before bringing a second or third indictment on more serious charges, and I bet that is the case here.”
Santos’ attorney, Joseph Murray, declined to comment. Santos has previously said he merely exaggerated portions of his resume and denied that he broke any laws.
Spokespeople for the U.S. Attorney’s Office in the Eastern District of New York and the FBI did not immediately respond to requests for comment.
Osthoff was sleeping in a tent on the side of the road in New Jersey in 2016 when a veterinary technician connected him with a pet charity. Anthony Devolder, who ran Friends of Pets United, promised to help Osthoff get a tumor removed from his dog’s stomach, the veteran said.
Devolder, a version of Santos’ full name he used before entering politics, set up the GoFundMe account and promoted it on social media saying, “When a veteran reaches out to ask for help, how can you say no?” according to screenshots of the postings.
When the account had reached its $3,000 goal, Devolder gave a series of excuses about why he couldn’t help Sapphire get treatment, then became difficult to reach, text messages between the two show.
Osthoff says Santos deliberately used his story of being a homeless disabled veteran with a sickly service dog to extract donations, then took off with the funds, leaving him unable to afford Sapphire’s surgery.
Osthoff said the experience was so traumatic it prompted him to contemplate suicide. Sapphire died from the tumor in 2017.
Friends of Pets United was not a registered charity, The New York Times reported in December when it first broke the story that Santos had fabricated much of his campaign biography.
Schiller said the GoFundMe allegations could result in several types of charges, including wire and mail fraud as well as bank fraud. Santos could have also committed tax crimes if he claimed exemptions for an unregistered charity, Schiller said.
CBS News first reported that federal investigators in New York were “looking into” Santos following the Times articles and other reporting that raised more questions about his background and how he funded a successful run that flipped his Long Island district from blue to red in November.
Last week, the Department of Justice asked the FEC to pause any enforcement action against Santos as the department worked on its own case, according to a report last week in the Washington Post.
Over $700,000 Santos initially listed as a personal loan to his campaign may have been an illegal straw donor scheme, according to FEC complaints.
The New York Attorney General’s office, as well as the Queens and Nassau County district attorneys, are also probing Santos.
Osthoff said the New York Attorney General’s Office Public Integrity Bureau, which handles fraud and criminal inquiries into elected officials, began investigating the GoFundMe drive last month.
A spokesperson for Attorney General Tish James said on Dec. 22 that her office was “looking into” several issues surrounding Santos, but did not get into specifics. The Attorney General’s office did not reply to questions about the status of its GoFundMe inquiry.
A spokesperson for GoFundMe declined to comment on specifics, but indicated the company has been cooperating with ongoing investigations.
Joe Anuta contributed to this report.
[ad_2]
#Feds #probing #Santos #role #service #dog #charity #scheme
( With inputs from : www.politico.com )

February 2, 2023
Fed’s Powell warns of more pain ahead: Key takeaways

[ad_1]

“We have more work to do,” he said. “We’re going to be cautious about declaring victory and sending signals that we think the game is won.”
Still, Wednesday’s move, the smallest rate increase since last March, brings policymakers another step closer to an expected pause in their inflation fight sometime this year — and stock markets rose on the day. The Fed’s main borrowing rate now sits between 4.5 percent and 4.75 percent, up from near zero early last year.
Unemployment is still at modern lows, even after all the aggressive rate hikes, feeding hopes that the U.S. may be able to avoid a recession — a crucial goal for President Joe Biden before the 2024 election. But that will hinge on how much more the central bank increases rates and then how long it waits to lower them again.
Powell gave some hints on what the Fed might do. Here are some key quotes from the Fed chief and what he meant:
“We are not yet at a sufficiently restrictive policy stance, which is why we say that we expect ongoing hikes will be appropriate.”
The central bank has raised interest rates high enough to bite into economic growth, but Powell says it needs to go further to bring inflation to heel. The key word here is “ongoing,” which suggests it will be more than one additional increase. He later signaled that could mean “a couple more” — which would be consistent with what officials had forecast in December.
According to those forecasts, the Fed expects to raise rates to about 5 percent before stopping, but that will depend on whether inflation continues its downward trend. Powell also held open the possibility that rates could rise even more if incoming data starts to look worse.
“Finding out in six or 12 months that we actually were close but didn’t get the job done, inflation springs back and we have to go back in … This is a very difficult risk to manage.”

The message here is that it’s better to err on the side of whipping inflation a little too soundly — even if it means throwing the economy into a painful recession — than risk that the price surges come roaring back. But his best guess right now is that no downturn is in store — a view that clashes with that of many economists and Wall Street CEOs.
The economy grew at a healthy 2.9 percent annualized pace in the last three quarters of the year, suggesting the U.S. is still far from dipping into a recession. But there’s always a lag in the impact of monetary policy, and growth could slow further as the Fed’s rate moves feed through to economic activity.
A closely watched survey on Wednesday showed that manufacturing is contracting, and the housing market has been hammered for months by high mortgage rates, though the job market has remained resilient.
“Generally, it is a forecast of slower growth, some softening in labor market conditions and inflation moving down steadily, but not quickly. And in that case, if the economy performs broadly in line with those expectations, it will not be appropriate to cut rates this year.”
Powell and his fellow officials have been struggling to convince markets that rate cuts are unlikely later this year. This matters because the Fed wants market-set rates to remain high and stock prices to stay muted, as part of its efforts to restrain spending and investment. Investors haven’t bought into that message though and are overwhelmingly betting on rate cuts in 2023.
Here he seems to be striking a balance by saying that he expects inflation to come down only slowly, which will mean holding rates higher for longer. That could also come alongside fewer job openings, slower wage growth and higher unemployment — euphemistically called “softening in labor market conditions.”
But he also left the door open to rate cuts if inflation comes down more quickly.
“We are neither pessimistic nor optimistic.”
Powell repeatedly acknowledged that inflation is coming down but also said the fight isn’t over. The prices of goods like furniture and cars have dropped, he said, while there are signs that rents may be slowing their ascent. But surging prices are still a concern in core services sectors, where labor costs are often the biggest expense.
Here he is saying that Fed officials are trying to watch how the economy evolves and not assume how close they are to beating inflation yet.
[ad_2]
#Feds #Powell #warns #pain #ahead #Key #takeaways
( With inputs from : www.politico.com )

February 2, 2023