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NJ bank mourns death of longtime CEO Gerald Lipkin

2025-06-20T20:22:57+00:00

Longtime Valley National Bancorp CEO Gerald Lipkin, who built the one-time New Jersey community bank into a regional institution with more than $23 billion of assets, passed away Wednesday at age 84. Gerald Lipkin, who spent nearly three decades as CEO of Valley National Bancorp in New Jersey, presiding over its expansion into a regional institution with more than $23 billion of assets, passed away Wednesday. He was 84.In a statement Thursday, Valley Chairman and CEO Ira Robbins said Lipkin's "leadership and vision" shaped the company "for more than four decades.""Gerry was more than a CEO. He was a mentor, a friend and the heart of our organization for many years," Robbins said. Lipkin joined what was then known as the Bank of Passaic and Clifton in 1975. The following year, the company merged with the Bank of Wayne and rebranded as Valley National Bank.When Lipkin was appointed CEO in 1989, he succeeded another legendary banker, Samuel Riskin, who served for 35 years as CEO. At the time,  Wayne, New Jersey-based Valley had eight branches and less than $1.9 billion of assets. By the time Lipkin  retired, Valley had more than 200 branches in New Jersey, New York, Florida and Alabama.Born in Passaic, New Jersey, Lipkin attended Rutgers University. He joined the Office of the Comptroller of the Currency after graduating in 1963.Lipkin earned an MBA from New York University in 1966. He graduated from the American Bankers Association's Stonier School of Banking in 1972. The OCC promoted him to deputy regional administrator prior to his move to the Bank of Passaic and Clifton. Valley was an active acquirer under Lipkin's leadership, completing 16 whole-bank deals between 1990 and Jan. 1, 2018. Lipkin's final two deals —  the acquisitions of 1st United Bancorp in Clearwater, Florida, and  USAmeriBancorp in Clearwater, Florida — began Valley's expansion outside its original New Jersey-New York footprint.  The USAmeriBancorp deal gave Valley a presence in three Alabama cities.Valley was known under Lipkin for its solid asset quality. Throughout his tenure, the bank finished most years with net charge-offs at or below 10 basis points of total loans.At the same time, Lipkin acted as Valley's number-one pitchman, appearing in commercials to promote the bank's loan products."His passion for this company and the people in it was unmatched and his approach to banking remains at the heart of Valley's culture today," Robbins said of Lipkin.  "He led with integrity, expected the best from those around him and never wavered in his commitment to doing the right thing. Gerry's legacy lives on in the culture he helped create and the countless lives he touched.""He worked [at Valley] more than 40 years and loved everything he did,' Lipkin's son Jeffrey said Friday at a memorial service, adding that "love it or leave it" was one of his father's rules for success. Michael Affuso, chairman and CEO of the New Jersey Bankers Association, described Lipkin's career, from humble beginnings in Passaic to leading a regional bank, as "inspiring.""We lost a titan," Affuso told American Banker on Friday. Beyond his professional accomplishments, Lipkin was "such a decent man," Affuso said. "I loved him. I was so sad when I heard the news."During his career, Lipkin served as chairman of the New Jersey Bankers Association and sat on the board of the Federal Home Loan Bank of New York. He remained close to Rutgers and received the school's distinguished alumni award in 2006.Lipkin married his wife Linda in 1964. The couple had two children and five grandchildren.

NJ bank mourns death of longtime CEO Gerald Lipkin2025-06-20T20:22:57+00:00

High home prices hide broader slowdown as demand drops

2025-06-20T19:22:58+00:00

Home prices continued to rise in May, reaching a new high even as fears of tariffs, trade wars, and economic uncertainty swirl through the broader economy.The median sale price for a home reached an all-time record of $396,500 during the four weeks ending June 15, according to Redfin. This was up 1% from the same time last year.However, the increase belies a continued softening in the housing market nationwide. While sales prices reached record levels, they're 6% lower than the median asking price of $422,238, the report found, indicating that sellers are having to accept lower bids. This is another signal that buyers are getting the upper-hand in markets across the country as rising supply and weaker demand slow price increases."Homes are selling for under asking price because there are many more sellers than buyers in today's market," the report said. "That gives buyers the upper hand and often allows them to negotiate prices down, though it's still difficult for many people to afford homes because costs are so high."Even as home prices rise, their pace is tapering off. Home price increases slowed for the fifth month in a row, according to a separate report from Homes.com. In January, prices rose 3.9% year-on-year, a marked difference from the 1% last month. Even typically stronger markets like ones in the Northeast and Midwest are seeing slowdowns, the report found, with price increases in the top three growing markets falling to between 7.4% and 7.6% in May from between 10.5% and 10.8% in April.Other indicators have also highlighted a slowdown in the market. Data from the Mortgage Bankers Association showed mortgage applications were down 3% this week year-over-year and April saw pending home sales drop by the steepest amount since September 2022. April also marked the fourth month in a row of falling housing permits, a sign that builders are pulling back on construction as they anticipate less demand in the coming months.It's likely this could continue for some time. Affordability continues to be a concern, the Homes.com report noted. Although mortgage rates have fallen slightly in the past week, they're still elevated to where they were a few years ago, creating a lock-in effect for existing home owners and keeping mortgages out of reach for those looking to buy. At the same time, increased construction costs from tariffs and recent immigration crackdowns could push up the costs of new homes.

High home prices hide broader slowdown as demand drops2025-06-20T19:22:58+00:00

Market volatility has not cut valuations: Fed report

2025-06-22T19:22:44+00:00

Bloomberg News The biannual monetary policy report was released Friday, ahead of Fed Chair Jerome Powell's scheduled testimony in front of the House Financial Services Committee and Senate Banking Committee next Tuesday and Wednesday.In the report, the Fed concluded that financial markets continued to function through the period of heightened volatility that followed the April 2 rollout of President Donald Trump's sweeping tariff program, but not without a few hiccups.Notably, liquidity in the Treasury market fell to its lowest level since the short-lived banking crisis of 2023. Markets for corporate bonds, municipal bonds and equities followed suit. Liquidity conditions have since improved, but have remained subject to swings based on subsequent news reports and policy developments — namely the likely expansion of the public debt to fund the next federal budget. Yet, these headwinds and the related uncertainties tied to trade, spending and other policies have not caused investors to write down asset values, the report noted, even those that appear to be overvalued. "Smoothing through this volatility, asset valuations remained high relative to fundamentals in a range of markets, including those for equities, corporate debt, and residential real estate," the report notes.Hedge funds, specifically those involved in Treasury-linked basis trades, might have brought their leverage down "somewhat" as a result of the April volatility, though various parts of the report paint slightly different pictures about the debt load of this corner of the financial system. Hedge fund leverage is also described as being "at" and "near" historic highs. The banking sector, meanwhile, appears to be in good condition, with regulatory capital on balance sheets continuing to rise above minimum levels, liquidity being "ample" and banks reducing their reliance on uninsured deposits. The report nonetheless points to still-high unrealized losses and interest rate risk exposures as potential vulnerabilities going forward.The report also flagged rising delinquencies — particularly in commercial and industrial loans, as well as loans backed by commercial real estate — as a source of concern, though it noted that most of those assets are held by large banks with sufficient loss allowances. Still, banks remain in a cautious position, the report found, as the extension of new credit continued to slow down during the first few months of 2025. Small businesses and households with low credit scores have had the hardest time accessing bank credit, as a result of higher interest rates and stricter lending standards. Large corporations and prime borrowers, by contrast, have generally been able to have their credit needs met. The Fed also delved into its balance sheet management in the report. The central bank has reduced its overall holdings by $176 billion this year, even as it slowed the pace of its asset runoff from $25 billion of Treasuries per month to $5 billion in April. Overall, it has shrunk its balance sheet by $2.2 trillion since June 2022. These reductions efforts have yet to infringe upon banks' access to funds at the central bank, known as reserves — avoiding a scarcity situation that could disrupt market function and the transmission of monetary policy. In fact, the report notes, banks have actually increased their overall reserve holdings by $108 billion since 2022, including $24 billion added since January. Instead, most of the asset reduction has been offset by a different set of liabilities, namely the overnight reverse repurchase agreement facility, which allows money market funds to park assets at the Fed overnight for a modest return. That facility has dropped by $1.7 trillion during the past three years, but has increased slightly since the beginning of 2025, a development the report attributes to a decline in new issuance of short-term Treasury bills. The bulk of the Fed's recent liability reduction has come from the Treasury's general account, which has fallen by more than $300 billion this year. Overall, the report paints a picture of monetary policy that continues to be effective in bringing inflation toward the Fed's 2% target. But, it also notes that recent policy changes have created an uncertain environment for the economy and, with it, have necessitated keeping monetary policy adjustments on-hold. Still, it points to medium- and long-term expectations for both inflation and the future position of monetary policy as evidence that financial markets are confident in the Fed's approach. "Although measures of shorter-term inflation expectations have moved sharply higher this year, reflecting concerns around tariffs, most measures of longer-term inflation expectations have remained within the range of values seen in the decade before the pandemic and continue to be broadly consistent with the FOMC's longer-run objective of 2% inflation," the report reads.

Market volatility has not cut valuations: Fed report2025-06-22T19:22:44+00:00

Home flipping bears less fruit for investors in Q1

2025-06-20T17:23:02+00:00

Flipping homes is becoming a less profitable business venture for investors, an Attom Data Solutions report finds.The return on investment for fix-and-flip properties dipped to 25% in the first quarter of 2025, down from 28% the previous quarter. In the fall of 2020, the ROI on flipping homes was 48.8%, per the data vendor.The decline is attributed to a combination of elevated home prices, economic uncertainty and sluggish homebuying demand. Attom's report also shows that the average time it took for investors to buy and resell a property rose to 164 days in the first quarter, up from 157 days the previous quarter.According to Rob Barber, CEO of Attom, the high cost of homes makes "it harder to find underpriced homes to buy up and it's ultimately squeezing profit margins for the industry.""It's tricky to balance at times when the market looks like it could take a downturn," Barber added in a statement. "Investors don't want to buy a property when prices are high and then see them drop before they're ready to sell."As flipping returns decline, so have gross profits. Investors earned an average gross profit of $65,000 per property in the first quarter, down from $75,000 the previous quarter. On average, investors paid $260,000 for a home and resold it for $325,000.A total of 67,394 single-family homes and condos were flipped in the first quarter, representing 8.3% of all home sales. That's a slight increase from 7.4% in the previous quarter, but a decrease from 8.7% year-over-year.Investors saw the best returns in parts of the Northeast and Midwest. These markets include Buffalo, New York; Pittsburgh and Scranton, Pennsylvania; along with Peoria and Rockford, Illinois.Meanwhile, some markets that were once highly sought after saw the smallest profit margins. These included Austin, Dallas, Houston, San Antonio and Salt Lake City.Attom data also shows that cash remains dominant in the flipping market. Nationwide, 62.2% of homes flipped in the first quarter were purchased with all cash.Metro areas with the highest share of cash purchases included Rockford (81.6%); Toledo, Ohio (81.2%); Buffalo (81.2%); Cape Coral, Florida (81.1%); and Naples, Florida (81.1%).The share of flipped homes financed with Federal Housing Administration-backed loans was 10.9%, up from 10.5% in the previous quarter, per the report.

Home flipping bears less fruit for investors in Q12025-06-20T17:23:02+00:00

Pulte Blames Powell for High Mortgage Rates and Trapping Borrowers in Their Homes

2025-06-20T17:22:56+00:00

It’s no secret certain folks don’t like Fed Chair Powell. You may have heard of one of them, President Donald Trump, who refers to him as a “Too Late Powell.”He also calls him other names that I won’t repeat here.Now he’s got another strong critic in FHFA Director Bill Pulte, whose agency oversees Fannie Mae and Freddie Mac.These two companies are responsible for most of the mortgages in existence, with conforming loans far and away the most common loan type out there.For this reason, Pulte has called on Powell to lower rates or resign, the strongest words he’s uttered since taking the helm at the FHFA.Cut Rates or Resign PowellPulte went off in a series of posts on X, saying very directly, “I am calling for Federal Reserve Chairman, Jay Powell, to resign.”He followed that tweet with more one-liners, including, “There is no legitimate factual basis to keep rates high. None.”And this one: “Americans are sick and tired of Jerome Powell. Let’s move on!”But he was just getting started. He went on to write, “…he is hurting Americans and hurting the mortgage market, which I am responsible for regulating.”Then explained how Powell is “the main reason” we have a so-called housing supply crisis in our country.That “by improperly keeping interest rates high,” Powell has trapped homeowners in low-rate mortgages while choking off for-sale supply.He ended that tweet by repeating that “He must lower rates.”So it’s pretty clear Pulte, like Trump, isn’t a fan of Powell. That’s fine. Everyone has a right to their own opinion.And perhaps interest rates should be lower today. But it should be noted that the Fed doesn’t control mortgage rates.They control their own policy rate, the short-term fed funds rate, which doesn’t have a clear relationship with the 30-year fixed over time.Meaning if Powell were to cut the Fed rate tomorrow, or a couple days ago at their meeting, the 30-year fixed wouldn’t necessarily respond in any expected way.In fact, the 30-year fixed could be higher as a result. If you recall back in September when the Fed cut rates, mortgage rates increased.I wrote about that already, and the takeaway is that it’s a complicated relationship.We Can’t Bully Our Way to Lower Mortgage RatesAt the end of the day, we can’t force mortgage rates lower by yelling at Powell and the other Fed members to lower rates.They don’t control long-term rates like the 30-year fixed. Not sure how many times that needs to be said, but it’s getting tiresome.The only way they can actually, directly lower mortgage rates is via another round of Quantitative Easing (QE), where the Fed buys Treasuries and residential mortgage-backed securities (MBS).This was how mortgage rates hit record lows in 2021 in the first place, and also why we’re in this mess today.To Pulte’s point about homeowners being trapped in low-rate mortgages, that’s a phenomenon known as the mortgage rate lock-in effect.It’s the result of homeowners taking out 2-4% fixed-rate mortgages and now facing rates closer to 7%.The big gap in rates (see chart above from the Urban Institute) makes it less compelling to move, and thus homeowners stay put, which further exacerbates the existing housing supply shortage.Housing Supply Is Finally Growing and Up 13% From a Year AgoHowever, supply is growing rapidly and at last glance, is up 13% from a year ago, per Redfin.And it’s finally getting back to pre-pandemic levels, when home buyers scrambled to take advantage of the lowest mortgage rate in history, depleting supply in the process.So we’re moving in the right direction in part because of higher mortgage rates, which have cooled demand and led to better equilibrium between buyer and seller.Cutting rates just to boost affordability might not allow that process to continue. And as noted, that’s not how it works anyway.The underlying economic data needs to support rate cuts, which would also drive bond yields lower (and by extension mortgage rates too) before a Fed rate cut.It’s a process that takes time and it’s playing out. We just need to be patient and we’ll get there, while also creating a sustainable path to affordability.The housing market doesn’t need rock-bottom mortgage rates again. It needs normalcy. And if we’re patient, that’ll come.If we manipulate the market (how we got in this mess to begin with), yet again, as we did with multiple rounds of QE, we’ll just create bigger problems and continue to kick the can.(photo: iandesign) Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 19 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.Latest posts by Colin Robertson (see all)

Pulte Blames Powell for High Mortgage Rates and Trapping Borrowers in Their Homes2025-06-20T17:22:56+00:00

Parliamentarian knocks CFPB funding cut out of megabill

2025-06-22T19:22:47+00:00

Senate Banking Committee Chair Tim Scott, R-S.C., left, and committee ranking member Elizabeth Warren, D-Mass. Bloomberg News WASHINGTON — The Senate parliamentarian has decided to disallow the slash to Consumer Financial Protection Bureau funding in President Donald Trump's so-called "big, beautiful bill" to reform government taxes and spending. Senate Parliamentarian Elizabeth MacDonough has advised that several provisions in Senate Banking Committee Republicans' spending legislation would violate the Byrd rule, which bars "extraneous" items from being included in reconciliation bills. The parliamentarian's decision means that Republicans would need to overcome the point of order against the bill with 60 votes to move forward with the contested provisions. The party currently holds a 53-47 seat majority and is unlikely to win any Democratic votes for the highly partisan measure. The decision effectively sends Tim Scott, the chairman of the Senate Banking Committee, back to the drawing board on his portion of the spending bill and represents a major blow to the South Carolina Republican's agenda for the committee. "I remain committed to advancing legislation that cuts waste and duplication in our federal government and saves taxpayer dollars," Scott, R-S.C., said in a statement. "As it stands now, the Banking Committee's reconciliation provisions will delay the implementation of Section 1071 of Dodd-Frank, which reduces CFPB spending and protects the privacy and data of small business owners; rescind unused funds earmarked for green initiatives to give HUD discretion in funding critical housing programs; and save taxpayer dollars by eliminating an unnecessary reserve fund at the SEC. My colleagues and I remain committed to cutting wasteful spending at the CFPB and will continue working with the Senate parliamentarian on the Committee's provisions." The Senate Banking bill would have drastically changed the funding structure of the CFPB by removing its ability to be funded through disbursements from the Federal Reserve. The bureau would instead be subject to regular congressional appropriations, a longtime goal of the bureau's opponents. The bill would have also cut the pay of Federal Reserve staffers, which the Senate parliamentarian ruled against. It would also have eliminated the Public Company Accounting Oversight Board and the Office of Financial Research; the former was established by Sarbanes-Oxley in the wake of the Enron accounting scandal and the latter was established by Dodd-Frank in 2010 as a research arm of the Financial Stability Oversight Council. The Senate Parliamentarian struck down both of those provisions as Byrd rule violations as well. A group of prominent economists and financial experts — among them former Fed Chairs Janet Yellen and Ben Bernanke — sent a letter earlier this week to congressional leadership warning against the elimination of the Office of Financial Research. The group said that eliminating the office would leave regulators flying blind during the next financial crisis. "The proposed legislation does more than end the OFR. It would also cripple FSOC, because FSOC relies heavily on the OFR for data and analysis and because the provision permanently caps FSOC's budget at what will inevitably be much lower spending levels," the letter said. "Eliminating the OFR and crippling FSOC would not reduce the federal budget deficit but would undermine America's capacity to maintain a stable financial system." The Senate Banking bill was Republicans' latest attempt to restructure the funding of the CFPB. Democratic lawmakers, particularly Senate Banking Committee ranking member Elizabeth Warren, D-Mass., who helped set up the bureau as an academic before she was elected to the Senate, have said they will fight against any attempts to dismantle the CFPB. The parliamentarian allowed some of the GOP's provisions, including the slashing of all unobligated funds for a green housing program and the delay of Dodd-Frank Section 1071, the small-business lending data-collection rule. A section that would sweep all unused money from and eliminate a fund at the Securities and Exchange Commission that allowed the agency to spend money on technology modernization was also allowed.  What power does the parliamentarian have?The Senate parliamentarian is the upper chamber's rule keeper, providing nonpartisan advice about rules and precedent.Elizabeth MacDonough has served in the position since 2012. Only six people have held the title. Her role is technically advisory — she gives advice, not binding rulings, to lawmakers.While the Senate parliamentarian can be overruled, that's a tricky prospect both logistically and politically. On items like the Byrd Rule, which says that lawmakers can't use reconciliation on “extraneous” policy items to the spending and tax bill, the Senate would need 60 votes to overcome MacDonough's advice. Senate Majority Leader John Thune, R-S.D., has said that Republican senators won't try to overturn the parliamentarian's rulings.That said, firing or overruling the Senate parliamentarian has happened. In 2001, when then-parliamentarian Robert Dove gave advice that would have stymied President George Bush's tax plans, Majority Leader Trent Lott, R-Miss., saw to it that Dove was dismissed. Vice President Nelson Rockefeller in 1975 ignored the advice of the parliamentarian as the Senate debated filibuster rules, and MacDonough herself was overruled in 2013 when Democrats moved to eliminate filibusters to approve presidential nominees, and again in 2017 when Republicans expanded the filibuster ban to include Supreme Court nominees.

Parliamentarian knocks CFPB funding cut out of megabill2025-06-22T19:22:47+00:00

Stocks gain as Fed's Waller offers hope on July rate cut

2025-06-20T15:23:04+00:00

U.S. stocks rose early Friday as investors returned from the Juneteenth holiday break to evaluate recent comments from a top Federal Reserve official as well as the latest developments in the conflict between Israel and Iran.The S&P 500 Index gained 0.6% at 9:43 a.m. in New York, with the benchmark teetering between a weekly gain or loss. The tech-heavy Nasdaq 100 Index advanced 0.8%. The VIX Index hovered around 19.In an interview on CNBC, Fed Governor Christopher Waller said Friday that the central bank could lower interest rates as soon as next month, reiterating his view on the inflation hit from tariffs likely being short-lived. Waller said economic data shows GDP growth and inflation are running close to the Fed's targets."I think we've got room to bring it down, and then we can kind of see what happens with inflation," Waller said, adding the central bank could pause cuts if needed due to a shock from events, such as the crisis in the Middle East.The comments follow the Fed's decision on Wednesday to keep interest rates on hold. Fed officials continued to pencil in two interest-rate cuts this year, though new projections showed a growing divide among policymakers over the trajectory for borrowing costs as tariffs make their way through the U.S. economy. Officials also downgraded estimates for economic growth this year and projected higher inflation. "The Fed appears to be keeping all options open, which we believe helps support market confidence in a rapidly changing geopolitical environment," said Brian Buetel, managing director at UBS Wealth Management.President Donald Trump indicated on Thursday that a decision on striking Iran would be made within two weeks, but signaled that he would give diplomacy a chance. Trump, who is scheduled to attend a national security meeting in the Oval Office on Friday, has publicly mused for days about the US joining the conflict with Israel and Iran.Hostilities between those countries continued for an eighth day. Iran on Friday restated that it would not negotiate with the U.S. while an Israeli attack continues. The only way to end the imposed war is to "unconditionally stop" the enemy's aggression, Iranian President Masoud Pezeshkian said in a post on X. "There were already a lot of unknowns for investors to contend with and we've added another with the Israel/Iran conflict," wrote Tom Essaye, founder of The Sevens Report newsletter. "Those unknowns will act as a weight on equities near term and make rallies a bit harder to manufacture, but these unknowns are not, by themselves, enough to cause a correction."Among singular stocks, Olive Garden owner Darden Restaurants Inc. rose after the company reported comparable sales growth that topped estimates and authorized a new $1 billion share buyback program. Meanwhile, Kroger Co. shares advanced after sales surpassed expectations, providing a sign that consumers are still spending on groceries and other essentials, even amid economic turbulence. Accenture plc fell as analysts flagged bookings as a weak spot."It's important for investors to stay disciplined in the second half of this year, which could be defined by more volatility based on geopolitical tensions and elevated headline risk," said UBS Wealth Management's Buetel. "Maintaining portfolio diversification without reacting to short-term noise is the name of the game for 2025."

Stocks gain as Fed's Waller offers hope on July rate cut2025-06-20T15:23:04+00:00

Summers sees Trump naming 'respected' replacement for Powell

2025-06-20T16:22:48+00:00

Former Treasury Secretary Lawrence Summers said he expects Donald Trump to name a mainstream candidate to replace Federal Reserve Chair Jerome Powell, despite the president's bashing of the U.S. central bank leader for failing to cut interest rates this yearBloomberg News Former Treasury Secretary Lawrence Summers said he expects Donald Trump to name a mainstream candidate to replace Federal Reserve Chair Jerome Powell, despite the president's bashing of the U.S. central bank leader for failing to cut interest rates this year."I would be quite surprised if he did not make a choice that fair-minded observers on both sides recognized as a reasonable person," Summers said on Bloomberg Television. "I am considerably more confident than some" that Trump would make such a decision, thanks to the swift financial-market reactions to the news when it comes, he said.Powell's term as chair is up in May 2026, and Trump said this month his pick would be "coming out very soon." In April, Treasury Secretary Scott Bessent had said the timeline for interviewing candidates to succeed Powell was "sometime in the fall." Bessent himself has emerged as a potential candidate on a list that includes former Fed board member Kevin Warsh, Bloomberg has reported.Trump this week repeated his criticism of Powell and his colleagues for keeping benchmark rates unchanged, saying they should be at least 2 percentage points lower. During an event Wednesday, he also quipped, "Am I allowed to appoint myself at the Fed? I'd do a much better job than these people.""My guess is that — influenced by the desire not to gratuitously destabilize markets, and influenced by the fact that there are still some sound voices among Republicans in the Senate — my bet would be that the president will make a respected person the next Fed chair," said Summers, a Harvard University professor and paid contributor to Bloomberg TV.Summers also said that Trump's repeated calls for Fed rate reductions are likely more of an effort to shift blame for any economic downturn than they are an outright attempt to influence the central bank's policy."What he's doing is setting up a situation where, if we have a recession, he will be able to blame it on something other than his administration's policies," he said.The former Treasury chief also highlighted the role of Trump's policies in the latest update of economic forecasts by Fed board members and district-bank presidents, released Wednesday alongside the decision to keep rates unchanged.While energy costs have come down this year, and the application of artificial intelligence bodes for an improvement in productivity, the new Fed forecasts suggest a negative, not a positive, supply shock for the economy, Summers said."It doesn't happen that often that the Fed revises up on inflation and unemployment at the same time," he said. "So you see a supply shock coming," he said. "What is it? It's the tariffs. We're imposing a supply shock on ourselves, and that's leading to expectations of both higher inflation and higher unemployment — making the Fed's job that much more difficult."

Summers sees Trump naming 'respected' replacement for Powell2025-06-20T16:22:48+00:00

Cuts to Fed staff pay, CFPB funds blocked from tax bill

2025-06-20T15:23:07+00:00

The Senate rules-keeper has decided that Republicans can't use President Donald Trump's multitrillion-dollar tax bill to strip all funding from the Consumer Financial Protection Bureau and to cut salaries for many Federal Reserve employees. The parliamentarian ruled that the GOP-backed policy provisions are outside the scope of the fast-track budget process Republicans are using to push Trump's legislative agenda through without any Democratic backing, Senate Democrats said. Republicans didn't respond to a request for comment.The budget process, which is immune to a filibuster, can be used for legislation primarily aimed at revenue and spending, not for making other changes to public policy. Senate Republicans are planning to begin voting on their version of the $3 trillion tax and spending cut bill next week.The GOP bill would have eliminated CFPB's funding and would have saved $1.4 billion by cutting non-monetary policy employee pay at the Fed to match levels at the Treasury Department. The rules-keeper also rejected provisions eliminating the Public Company Accounting Oversight Board and the Environmental Protection Agency air-pollution emissions standards for vehicles. The ruling on the CFPB is the latest blow to the Trump administration's attempt to gut the agency, which has been the subject of court fights. Democrats plan to challenge dozens of other provisions as violating Senate rules. These include sections curtailing regulations on short-barrel shotguns and silencers as well as applying financial pressure to states to stop them from regulating artificial intelligence. "We will continue examining every provision in this Great Betrayal of a bill and will scrutinize it to the furthest extent," the Senate Budget Committee's top Democrat, Jeff Merkley of Oregon, said in a statement. Senate Majority Leader John Thune told reporters this month that he would oppose efforts to overrule the Senate parliamentarian. When the GOP is in the minority, Thune has argued, the 60-vote threshold for such bills is a vital tool.  More decisions from the Senate rules-keeper are expected in the coming days.Elizabeth MacDonough is the Senate's parliamentarian, a post she was appointed to in 2012. She is the first woman to hold the position. LOOKING FOR MORE? Webster, UMB set to win if HSA expansion stays in tax bill

Cuts to Fed staff pay, CFPB funds blocked from tax bill2025-06-20T15:23:07+00:00

Leave some Sprout execs out of messy saga, judge says

2025-06-20T10:23:03+00:00

Former executives of failed lender Sprout Mortgage could be off the hook in a long-running lawsuit from laid-off employees seeking millions of dollars in backpay.The non-qualified mortgage lender abruptly shuttered in July 2022 and allegedly left hundreds of employees without their final two paychecks. Sprout Mortgage was one of several industry players to fold that year when rising mortgage rates effectively ended the refinance boom.Over 100 fired workers sued the company and its leadership that summer, and the case has taken many twists and turns since, including a short-lived settlement agreement. A federal judge last week recommended three ex-lieutenants be dismissed from the complaint, suggesting plaintiffs have failed to clarify the accusations against those former bosses.The executives in question are Christopher Wright, former chief financial officer; Shea Pallante, ex-president and chief production officer; and Elliot Salzman, Sprout's former chief credit officer."Plaintiffs have had four opportunities over the course of more than two years to plead a viable case against moving defendants," wrote U.S. Magistrate Judge Lee Dunst, in a report to his superior. "Yet the (third amended complaint) continues to rely on vague, conclusory, and undifferentiated allegations while dramatically expanding the factual and legal complexity of this case."In a 35-page legal analysis, Dunst recommended Pallante, Salzman and Wright be dismissed with prejudice, meaning plaintiffs can't sue them again. The magistrate said the lawsuit had widespread inconsistencies, making it difficult for the executives who were only mentioned in a few paragraphs to understand the accusations and defend themselves. Neither embattled ex-CEO Michael Strauss nor the company have responded to the employee lawsuit and were not recommended for dismissal, as the class action remains pending. District Judge Joan Azrack, of the U.S. District Court for the Eastern District of New York, still has to rule on the executives' motions.Salzman, who today is president of Miami-based Foundation Mortgage, is representing himself in the case. "While I am gratified by the recommended dismissal with prejudice, I remain mindful that many former employees of Sprout Mortgage were affected by the company's abrupt closure," said Salzman in a statement this week. "I sincerely empathize with them and hope that any ongoing proceedings solely against Sprout Mortgage and Michael Strauss will be resolved in a way that provides clarity and closure for all involved. For my part, I look forward to finally putting this matter behind me."Attorneys for other parties didn't return requests for comment. What happened to Sprout workers?The proposed class of Sprout workers sued for wage claims, including Sprout failing to submit a Worker Adjustment and Retraining Notification ahead of the mass layoff. The parties agreed to a $3.5 million settlement in 2023, which was halted by subsequent Chapter 11 proceedings that December. A federal bankruptcy court at the time rescinded $1.95 million slated for ex-Sprout workers already sitting in an escrow account. Plaintiffs filed another amended complaint, adding numerous violations of federal and state labor laws. Over the past year, Pallante, Salzman and Wright filed their defenses, and Salzman wrote his own legal filings.Ex-Sprout leaders remain employed in the industry. Wright is vice president of finance at advisory firm Stearns Financial, and Pallante is listed on LinkedIn as a senior sales executive at Brokers First Funding.Ex-Sprout CEO leaves professional, personal messSprout's bankruptcy case remains pending and the company still has over $60 million in liabilities to numerous financial counterparties, according to case filings. The trustee for Sprout has blamed Strauss's financial maneuvering for the company's failure, describing his dealings akin to money laundering. Strauss' past includes paying a $2.45 million fine to feds in 2009 over his alleged role in the demise of American Home Mortgage, and losing his origination license in 2023 after trying to start yet another mortgage firm.Federal and state court filings also reveal Strauss is facing foreclosures for his two multimillion dollar New York homes. A state judge has yet to rule on the foreclosure of his Southampton domicile.A federal court in March allowed the condominium association for Strauss' Upper East Side penthouse to pursue its lien, after Strauss allegedly filed for bankruptcy minutes before a foreclosure auction in January. Despite his debts, the condo board alleges Strauss was receiving $67,000 monthly rent payments from a subtenant. An attorney for Strauss in his Manhattan bankruptcy case didn't return requests for comment. 

Leave some Sprout execs out of messy saga, judge says2025-06-20T10:23:03+00:00
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