Jerome Powell’s future


Jay Powell, Fed chairman, has been praised for how he used the powers of the central bank to prop up the economy through the pandemic. His term as chair ends in February, and insiders say he has a good chance of being reappointed. But the decision is subject to an unusually high level of uncertainty, with increasing complexities surrounding his nomination, Jenna Smielek and Jim Tankersley report by The Times.

Powell’s critics cite ethical flaws at the Fed and his mixed record as a regulator. Senator Elizabeth Warren, who opposed Powell’s nomination, said the chair was to be blamed for recent revelations that top Fed officials traded in their personal accounts last year when central bank policy moves affected their portfolios. could have benefited.

The business scandal has added gunpowder to Powell’s critics, Joe says the former investment banker and private equity executive has blind spots on banking regulation. It’s a story that’s been growing since this summer, when Better Markets, a non-profit group that suspects big banks, issued a report Criticism of Powell’s regulatory record.

Rate Powell’s record on regulationDealbook: The dealbook reached out to banking regulation experts to assess the Fed chairman’s tenure. His opinion was mixed:

  • Stanford professor and large bank gadfly Anat Admati said Powell “allowed banks to pay dividends at the height of the pandemic, when we were facing massive uncertainty. It was clearly a bad decision.”

  • James Barth of Auburn University and the Milken Institute said, “In my view, they have taken no action to significantly change any of the current major US banking laws to classify them as a loose or stringent president.” could.”

  • Federal Financial Analytics co-founder Karen Petro said the “fundamental construction” of post-crisis regulation remained intact, so the debate over Powell’s regulatory role was “larger arguments over infallible changes.” Powell’s problem is that fintech, cryptocurrency and other sectors outside the Fed’s authority now have the greatest risks outside the traditional banking system, Petro noted. Congress has the power to fix it, but not by sending Powell packing, she said.

There is also a fight over who will head another banking regulator, the Office of the Comptroller of the Currency. Soule Omorova, a favorite of the Progressives, is the White House’s choice facing opposition From business groups representing both the largest banks and the smallest community lenders, that could sway moderate Democratic support for his nomination.

A new report paints an apocalyptic picture of US debt defaults. As Congress Struggles to Raise the Federal Debt Limit, White House Economists published a report today If the government cannot pay its bills it will result in what is called an “economic crisis”. President Biden and Treasury Secretary Janet Yellen meet the CEO today Debt limit discussion

Facebook says its outage was linked to a series of mistakes. one in blog post, the social media giant reported that a wrong command during routine maintenance shut down its network. The cut of hours on Monday has increased the number of advertisers. growing suspicion About the effectiveness of the platform.

Kellogg workers walkout. about 1,400 employees went on strike In grain factories in Michigan, Nebraska, Pennsylvania and Tennessee. The action, by the same union that recently led the walkout in Nabisco, saw unions tap into the frustrations of workers during the pandemic.

Biden cut his social spending bill by more than $1 trillion. White House and Democratic leaders said they would Proposal to spend $2.3 trillion At social events for more than a decade. This is far less than his original $3.5 trillion plan, which could mean some initiatives are scrapped altogether.

OG Media is being sued. Lifeline, which manages the money of athletes and celebrities, invested $2 million in Ozzy in February. in his suit, LifeLine says Ozy failed to disclose relevant facts about its business prior to investing, including infamous conference call In which an Ozy executive impersonated someone from YouTube.

Mark Cuban and Todd Wagner-owned film distributor Magnolia Pictures has hired an investment bank to drive sales of the company, Dealbook hears. The move reflects the growing value of movie libraries as streaming services collect content. (See: MGM acquired by Amazon for $8.45 billion in May.) Magnolia President Cuba and Eamon Bowles did not respond to requests for comment.

Magnolia has managed to survive in a difficult corner of Hollywood. Its business model includes purchasing the rights to films produced at festivals such as Cannes and Sundance, and attracting audiences through grassroots marketing and awards. While films with mass appeal have started making a comeback at the box office, art-house films have not followed suit, as their audiences tend to be older and therefore more concerned about the coronavirus.

There are about 500 films in Magnolia’s library. The company, founded in 2001, is known for documentaries such as “Blackfish,” “I’m Not Your Negro” and “Capturing the Friedman.” It generated about $30 million in sales last year and is expected to bring in about $40 million this year.

It was once part of a larger media play. Wagner & Cuban’s 2929 Entertainment Wanted Bring out the big-media idea of ​​vertical integration into the art-house world when it acquired Magnolia and indie cinema chain Landmark Theaters in 2003. but group sold milestone For billionaire Charles Cohen’s real estate conglomerate in 2018, when Netflix was emerging as an art-film superpower.

Many small film companies are looking for deals In hopes of tapping streamers’ appetite for content. Blackstone’s yet-to-be-named media venture Reese Witherspoon’s Sunshine Productions Acquired For example, for about $900 million, and the media company of Will Smith and Jada Pinkett Smith, Westbrook also reportedly in talks with the organization. Springhill, an entertainment company controlled by LeBron James, who helped produce the “Space Jam” reboot, is reportedly In conversation with Redbird Capital.


In more than three hours of testimony in the Senate yesterday, former whistle-blower Facebook product manager Frances Haugen gave lawmakers. A rare look into the inner workings Tech giant’s.

“As long as Facebook is operating in the shadows, hiding its research from public scrutiny, it is not accountable.”

Haugen on the need for more regulation of Facebook. Of the company’s founding and controlling shareholder, she said, “No one is currently holding Zuckerberg accountable other than himself.” “The buck stops with Mark.”

“I’ve rarely, if ever, seen the kind of unanimity on display today.”

— Senator Richard Blumenthal, Democrat of Connecticut, at a news conference after the hearing, on Bipartisan appetite for regulation of Facebook. During the hearing, Republican Senator Jerry Moran of Kansas told Blumenthal, “The conversations so far remind me that you and I should settle our differences and introduce legislation.”

“Facebook and other big tech companies are throwing a bunch of money around this city, and people are listening to them.”

—Senator Amy Klobuchar, Democrat of Minnesota, who has held up regulation of Big Tech to this day.

“Most of us simply don’t recognize the false picture of the company that is being portrayed.”

— Mark Zuckerberg memo to facebook employees sent after the hearing.


President Biden’s choice to become antitrust chief of the Justice Department, Jonathan Cantor, will hear his nomination before the Senate Judiciary Committee today. It comes during the push by progressives remake antitrust law, which coincides with the record deal volume.

If approved for the position, some say Cantor could be the toughest antitrust enforcer since Joel Klein—who famously took on Microsoft. this will make the container an impossible economic populist, since he once represented … Microsoft in private practice.

Cantor is a big law partner with progressive leanings. In his years of private practice, Cantor handled Big Tech on behalf of clients such as Microsoft and News Corp. He has said that the work inspired him to see the dangers of corporate concentration. While tech companies may insist on Cantor’s backing given his previous work, legal experts said it shouldn’t be a problem unless he is placed in a position to oversee the case against a company like Microsoft. go.

His nomination has bipartisan support. Senator Elizabeth Warren, whom Kantor advised last year to run for the Democratic presidential nomination, has offered her support. Two of the nine former Justice Department chiefs who wrote in support of Cantor’s nomination worked in the Republican administration: Charles Rule from the Reagan administration and Makan Delrahim from the Trump administration. “I don’t agree with him,” Rule told The Times, “but he has the ideology he wants, and he is at the top of the antitrust lawyers of his generation.”

There are some $1.9 trillion pending deals, according to bloomberg. Strict scrutiny could thwart some of those mergers, such as the aborted combination of Aon and Willis Towers Watson, which Abandoned its $30 billion tie-up Instead of facing a lengthy court battle with the Justice Department in July. Last month, the department filed an antitrust lawsuit. Against American Airlines and JetBlue For a partnership it was argued that the amount of “actual merger”.

Trade groups are concerned about the direction of antitrust enforcement. “The government already has the power it needs to review and challenge comparatively few mergers and acquisitions that raise competitive concerns,” A coalition of industry groups wrote In a letter to the Senate subcommittee ahead of Cantor’s hearing.

deal

  • Private equity firms are offering the highest premium for listed companies in over 20 years. (foot)

  • Carl Icahn wants to block a $2 billion deal between Southwest Gas and the Questar pipeline. (WSJ)

  • Nvidia has given the EU concessions to get the green light for its $54 billion acquisition of Arm. (Reuters)

Policy

  • Lawmakers are seeking details on the revolving door between accounting firms and the Treasury Department. (NYT)

  • “I designed algorithms at Facebook. Here’s how to regulate them.” (Times Opinion)

  • A start-up is seeking approval from the SEC to conduct the first round of the US stock exchange. (WSJ)

  • “Why Wall Street Pleases China, Despite Rising Trade Tensions” (NYT)

the best of the rest

  • Amazon CEO Andy Jesse said the company’s pandemic illness leave program had been cut short. (CNBC)

  • “Diversity at Elite Law Firms Is So Bad Clients Are Docking Fees” (Bloomberg Businessweek)

  • “Squid Game,” the Netflix hit show, taps into South Korea’s economic anxiety. (NYT)

  • “OG shows that serious black media needs a new business model.” (Times Opinion)

  • Hank Paulson, James Gorman and others discuss the legacy of former Merrill Lynch chief David Komansky, who died last week at the age of 82. (NYT)

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