What we’re reading (4/24)
“‘Nobody Knows When It’s Going To Happen’: Wall Street Wakes Up To Default Threat.” (Politico). “As the drop-dead date to raise the nation’s $31.4 trillion debt ceiling looms with no deal in sight, traders and executives are starting to get nervous that President Joe Biden and Republicans won’t resolve the impasse until it’s too late. That’s sparked increasing concern about a potential threat that could rock markets and tilt the world’s largest economy into recession.”
“The Fabulous Yields, And Lurking Risks, Of Money Market Funds” (New York Times). “[I]t’s been a glorious time for one part of the financial world: money market mutual funds. The biggest money funds tracked by Crane Data are paying more than 4.6 percent interest, and a handful have yields around 5 percent. Their gaudy interest rates closely follow the Fed funds rate, set by the central bank. The effective Fed funds rate is now about 4.83 percent. That’s onerous for people who need to borrow money, and deliberately so: The Fed is raising rates because it is trying to squelch inflation by slowing the economy.”
“‘Crypto Is Dead In America,’ Says Longtime Bitcoin Bull Chamath Palihapitiya” (CNBC). “Palihapitiya blamed crypto’s demise largely on regulators, who have gotten much more aggressive in their pursuit of bad actors in the industry. Securities and Exchange Commission Chairman Gary Gensler has said crypto trading platforms should abide by strict U.S. securities laws.”
“How Washington Allowed Bank CEOs To Pocket Huge Bonuses Amid Failures” (Washington Post). “Years of research showed that the existing structure for paying Wall Street executives led them to take much bigger gambles with their institutions because they benefited from stock price increases, Sanjai Bhagat, a finance professor at the University of Colorado at Boulder, warned Securities and Exchange Commission attorneys and economists in a closed-door meeting in November 2016. The best fix would be to require top bank officials to hold any stock until one to three years after they left their companies, Bhagat told them. The idea was one of dozens of ways to change how bank CEOs are compensated that federal authorities spent years discussing. But regulators never acted[.]”
“Everything You Don’t Actually Need To Know About The Economics Of Succession” (Financial Times). “Despite the sound, fury and personal drama, in a strictly business sense . . . not much has actually happened. Still, it has got a bit confusing, and even seasoned financial analysts or FT columnists could be forgiven for losing track of things. So FT Alphaville sat down for a fevered quasi-binge of the show and tried to make sense of Succession’s financial plotline(s).”
