Infrastructure talks to continue (for a bit)

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Infrastructure talks to continue — As we scooped on Wednesday, the White House is not willing to accept any GOP infrastructure proposal that relies on hundreds of billions of dollars in reallocated Covid funds from previous relief bills. But officials do seem willing to let the Memorial Day Weekend deadline slip in order to keep trying for some kind of bipartisan deal.

Via our Christopher Cadelago and Laura Barrón-López: “White House officials and other Democrats close to the bipartisan infrastructure talks are willing to let the negotiations stretch past their Memorial Day deadline — but not too far.

“Senate Republicans are slated to bring forward their latest proposal on Thursday, a plan that is unlikely to approach $1 trillion in new spending — making it far less palatable to the White House. …

“White House aides and Democrats say they’re giving Republicans ample time to put forward their offers on ‘hard’ infrastructure — money to build roads, repair aging bridges and expand broadband. Barring breakthroughs on a long list of sticking points, Biden advisers and Democrats are preparing to wind down talks within a week or possibly two”

Get ready for round two — Big bank CEOs took something of a beating from both sides on Wednesday with Democrats ripping them for overdraft fees, compensation and the environment, among other things. Republicans ripped them for “woke capitalism” and opposing funding for fossil fuels and fire arms.

Things could get considerably more raucous when the show heads to House Financial Services today where Chair Maxine Waters and other Democrats are likely to take an even tougher line while committee Republicans could exceed their Senate counterparts in ripping the CEOs for taking public stands on contentious issues.

GOOD THURSDAY MORNING — Email me on [email protected] and follow me on Twitter @morningmoneyben. Email Aubree Eliza Weaver on [email protected] and follow her on Twitter @AubreeEWeaver.

President Biden heads to Cleveland and will tour the Cuyahoga Community College Manufacturing Technology Center and deliver remarks on the economy at the Cuyahoga Community College Metropolitan Campus … House Financial Services Committee at noon will hear from the big six bank CEOs

Treasury Secretary Janet Yellen at 11:00 a.m. testifies before House Appropriations on “Department of the Treasury Oversight” … Jobless claims at 8:30 a.m. expected to drop to 425K from 444K

YELLEN SMACKED BY HOUSE CHAIR — Our Zachary Warmbrodt: “House Small Business Chair Nydia Velázquez … slammed … Yellen for declining to appear at a committee hearing, saying the Biden administration’s top economic official was showing ‘complete disregard’ for the law. Velázquez, a senior New York lawmaker, called out Yellen at the beginning of a hearing focused on Covid-19 relief programs for small businesses.

“Velázquez’s panel wanted Yellen to appear because Treasury played a major role implementing the nearly $1 trillion Paycheck Protection Program in partnership with the Small Business Administration, whose chief, Isabel Guzman, was the only official to testify Wednesday. The clash marked a rare public dispute between congressional Democrats and the Biden administration”

WARREN TANGLES WITH DIMON ON OVERDRAFT FEES — Our Victoria Guida: “Sen. Elizabeth Warren … said federal regulators should be more aggressive in policing bank overdraft charges, after she slammed JPMorgan Chase CEO Jamie Dimon for profiting off the fees during the coronavirus pandemic.

“In an interview following a tussle with Dimon at a Senate hearing, the Massachusetts Democrat said big banks imposing overdraft penalties ‘sucked about $4 billion out of the pockets of families that were struggling.’ … Warren’s focus on overdraft fees at Wednesday’s high-profile hearing signaled that she will try to make it a priority for both banks and regulators”

HAPPY BIRTHDAY, DOW — WSJ’s Karen Langley and Peter Santilli: “One hundred twenty-five years ago, the Dow Jones Industrial Average made its debut. The index of 12 smokestack companies closed that first trading day, May 26, 1896, at 40.94. It included General Electric Co. as well as long-forgotten names like American Cotton Oil and Distilling & Cattle Feeding.

“Since then, the Dow has evolved with the U.S. economy, giving investors from Wall Street to Main Street a measure of financial markets through the Great Depression, two world wars and all the events that shaped the 20th and early 21st centuries.”

MEME STOCKS, SPACS REBOUND — Bloomberg’s Bailey Lipschultz and Katherine Greifeld: “Investors are rediscovering their appetite for the market’s speculative fringes. The shares of GameStop Corp. and AMC Entertainment Holdings Inc. — the poster-children of this year’s Reddit boom — are surging.

“Interest in special purpose acquisition companies has reignited with Chamath Palihapitiya’s blank-check firms leading the way. And Bitcoin and Ether are up after last week’s bonfire in cryptocurrencies.”

SEC CONSIDERING NEW RULES TO TACKLE SPACS, CRYPTO TOKENS — Reuters’ Katanga Johnson: “The U.S. Securities and Exchange Commission (SEC) is considering new rules to protect investors amid a surge in the use of special purpose acquisition companies as capital-raising vehicles, its new chair will tell lawmakers. SPACs are listed shell companies that raise cash to acquire and take public a private company, allowing targets to sidestep the stricter regulatory checks of an initial public offering.

“Gary Gensler, in prepared testimony to the financial services and general government subcommittee of the U.S. House Appropriations panel on Wednesday, said that overseeing SPACS has also placed demands on the resources at the watchdog, which has seen a 4 percent decline in its staff overall since 2016.”

JEROME POWELL’S FATE IS CRITICAL TO BIDEN PRESIDENCY — WSJ’s Greg Ip: “Few things matter more to the success of … Biden’s administration than employment and inflation, and few institutions influence those more than the Federal Reserve. Which is why so much is riding on whether Mr. Biden decides in coming months to reappoint or replace its chairman, Jerome Powell, whose four-year term expires next February.

“Presidents going back to Ronald Reagan reappointed chairmen installed by their predecessors, nurturing the institution’s reputation for nonpartisan independence. President Trump broke that tradition by replacing Chairwoman Janet Yellen, a Democrat, after a single term, with Mr. Powell, a Republican.”

WARREN LABELS DIMON ‘STAR OF THE OVERDRAFT SHOW’ — Bloomberg’s Robert Schmidt: “JPMorgan Chase & Co.’s Jamie Dimon is the longest serving bank chief who testified before Congress Wednesday, but to the Senate’s biggest critic of Wall Street, he’s also “the star of the overdraft show.”

“Massachusetts Democrat Elizabeth Warren lit into Dimon, as she sought to make the point that banks kept charging onerous fees to customers struggling during the pandemic — even as regulators in Washington eased rules for lenders. JPMorgan, Warren noted, made almost $1.5 billion from overdrafts last year, seven times more per account than its competitors. Still, it didn’t automatically waive the penalties as the government had suggested.

BANK CEOS OUTLINE PANDEMIC SUPPORT — AP’s Ken Sweet and Marcy Gordon: “Eager to lay out their support for struggling consumers and small businesses in the pandemic, the CEOs of the six biggest U.S. banks went before Congress Wednesday. But lawmakers focused more keenly in a Senate hearing on the contentious social and political issues that are dividing the country.

“Climate change, voting rights and racial inequity animated the debate and questioning of the executives in a hearing by the Senate Banking Committee, as Democrats demanded the Wall Street powerhouses do more to help struggling minority communities and Republicans warned against promoting social activism through banking practices.”

BANK PROFITS ROSE 29 PERCENT — Reuters’ Katanga Johnson: “U.S. bank profits rose 29.1 percent during the first quarter of 2021 from the previous quarter as banks adjusted expectations for future credit losses downward, a bank regulator said on Wednesday.

“The industry posted $76.8 billion in first-quarter profits, up from $58.3 billion a year prior and $17.3 billion in the final quarter of 2020, the U.S. Federal Deposit Insurance Corporation said in its quarterly banking profile report.”

MORTGAGE APPLICATIONS TICK DOWN AS REFINANCE ACTIVITY DECLINES — Reuters Evan Sully: “Mortgage applications decreased last week as fewer homeowners sought to refinance their loans, offsetting a modest rise in applications for loans to buy homes.

“The Mortgage Bankers Association (MBA) said on Wednesday its seasonally adjusted Purchase Index decreased 4.2 percent in the week ended May 21 from a week earlier, reflecting a 7.2 percent decline in applications for refinancing.”

MORE TRUMP ADMINISTRATION OFFICIALS HEAD TO K STREET — The tax lobbying firm Federal Policy Grouphas hired Aharon Friedman, making him one of the latest former Trump administration officials to head to K Street.

Friedman was a senior adviser to Dave Kautter, the Treasury Department’s assistant secretary for tax policy. He’s also a former senior tax counsel on the House Ways and Means Committee and “played a key role” in helping to pass the 2017 tax law, Ken Kies, Federal Policy Group’s managing director, said in a statement.

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