Aurelia Butler

(Reuters) -U.S. banks should incorporate the Federal Reserve’s emergency lending facility known as the “discount window” as part of their contingency funding plans, federal banking regulators said in updated guidance on Friday. The discount window is “an important tool” banks can use to manage liquidity risk, bank regulators including the Federal Reserve and Federal Deposit Insurance Corp said in an updated interagency policy statement.Bank runs in mid-March that forced regulators to shut down Silicon Valley Bank and Signature Bank (OTC:SBNY) “underscored the importance of liquidity risk management and contingency funding planning,” the agencies said.Dallas Fed President Lorie Logan said in May that banks should be prepared to borrow regularly from the Fed’s discount window, particularly after the March bank failures showed the importance of effective liquidity risk management.Fed Chair Jerome Powell said at a press conference on Wednesday the central bank found in March that the discount window could be “a little clunky,” slowing down borrowing time. “Banks are now working to see that they are ready to use the discount window, and we are strongly encouraging them to do that,” he said.The guidance also said financial institutions should establish and maintain operational readiness to use the discount window, including conducting periodic small value transactions. Firms should also ensure that they are familiar with the pledging process for different types of collateral and even consider pre-pledging collateral in case a need for liquidity were to arise quickly, the agencies said. Discount window borrowing hit a record of nearly $153 billion in March following the SVB and Signature collapses, and the Fed was forced to set up a new emergency lending facility as well. Total emergency credit from the Fed in that period rocketed to more than $350 billion when FDIC-guaranteed loans to the failed banks are included, and remains near $260 billion as of Wednesday, Fed data shows.Lending from the traditional discount window – which will remain in place after the other emergency programs expire in the months ahead – has since dropped to $2.25 billion, the lowest in about a year. More

NEW YORK (Reuters) – Sam Bankman-Fried must be jailed pending his October fraud trial over the collapse of the FTX cryptocurrency exchange he founded because he is trying to intimidate witnesses and influence their testimony, prosecutors said on Friday. Bankman-Fried, a former billionaire, has lived mainly under house arrest at his parents’ Palo Alto, California, home since his December 2022 extradition from the Bahamas. His bail, which includes a $250 million bond, became an issue after the New York Times on July 20 published an article containing excerpts from his former romantic partner Caroline Ellison’s personal Google (NASDAQ:GOOGL) documents prior to FTX’s collapse.Bankman-Fried, 31, acknowledged sharing the documents with a Times reporter. The U.S. Attorney’s office in Manhattan said that crossed the line, and that Bankman-Fried’s efforts to intimidate witnesses amounted to witness tampering. ” (T)he defendant certainly has the right to speak and defend himself to the press,” prosecutors said in a letter to U.S. District Judge Lewis Kaplan.”What the defendant may not do, and what he has now done repeatedly, is seek to corruptly influence witnesses and interfere with a fair trial through attempted public harassment and shaming,” prosecutors added.A spokesperson for Bankman-Fried declined to comment. His lawyers have until Aug. 1 to respond to the government’s letter.Bankman-Fried has pleaded not guilty to stealing billions of dollars in FTX customer funds to plug losses at his Alameda Research hedge fund, where Ellison was chief executive.Prosecutors first made their surprise request to detain Bankman-Fried before his Oct. 2 trial at a Wednesday hearing, where Kaplan barred Bankman-Fried from discussing the case.His lawyer said at Wednesday’s hearing that Bankman-Fried’s communications with journalists were simply a means to protect his reputation.Prosecutors had in January accused Bankman-Fried of seeking to influence the testimony of an FTX lawyer.In writings cited by the Times, Ellison described being “unhappy and overwhelmed” with her job and feeling “hurt/rejected” from her breakup with Bankman-Fried.Ellison pleaded guilty to fraud charges and is expected to testify against Bankman-Fried at trial.She said in court last December that Bankman-Fried and other FTX executives received billions of dollars in hidden loans from Alameda. Two former FTX executives, Gary Wang and Nishad Singh, have also pleaded guilty over FTX’s collapse and agreed to cooperate with prosecutors. More

WASHINGTON (Reuters) -The White House on Friday revised its fiscal 2023 U.S. budget deficit forecast to $1.543 trillion, a decrease of $26 billion from its March budget forecast, due largely to a major reduction in outlays after the Supreme Court struck down President Joe Biden’s student loan forgiveness program in June. The Office of Management and Budget said that the student loan decision would reduce fiscal 2023 outlays by $259 billion, partly reversing an up-front charge of $430 billion taken by the Biden administration against fiscal 2022 results to cover the program’s costs.But after the Supreme Court blocked the program to forgive up to $20,000 in student debt for many borrowers, Biden announced revisions to an income-driven student loan repayment program to reduce the amount that low-income workers pay by around $1,000 a year and end their repayments sooner.An administration official said these changes and other changes to would result in $74 billion in added costs in 2023, reducing the overall savings from the court’s decision. OMB said the same changes would add $85 billion in additional outlays through 2033. The OMB’s Mid-Session Review update estimated a net reduction in 2023 outlays of $242 billion, incorporating the student loan savings, and lower unemployment compensation, increased costs for well as increased costs for Social Security and Medicare and clean energy tax credits.Estimates for these credits associated with Biden’s Inflation Reduction Act, including for electric vehicle purchases and investments in battery production, were $4 billion higher than previously forecast for 2023, and $120 billion higher over a decade.The reduction in outlays for 2023 was substantially offset by a $215 billion net reduction in receipts, mostly due to lower collections to date and technical revisions based on new tax reporting data, the budget office said.Economic forecast changes had little impact on the budget forecast revisions, increasing 2023 receipts by only $4 billion compared to March forecasts. Based on data as of June 1, OMB left unchanged its forecast for 2023 U.S. real GDP growth of 0.4%, while decreasing its 2024 growth forecast to 1.8% from 2.1%But OMB forecast lower unemployment in 2023 at 3.8% compared to 4.3% in March, while it forecast 4.4% unemployment in 2024, down from 4.6% in March.Over the 10 year budget window, OMB estimated that if Biden’s fiscal 2024 budget proposals were enacted – including substantial tax increases on the wealthy and corporations – cumulative deficits would be $107 billion higher than estimated in March. But the 10-year deficits would still be roughly $2.6 trillion lower than OMB’s current-law baseline. More

WASHINGTON/LONDON (Reuters) -The International Monetary Fund said on Friday that it has reached a staff-level agreement with Argentina to unlock about $7.5 billion and complete the fifth and sixth reviews of the struggling country’s $44 billion loan program.The agreement, which still needs IMF Executive Board approval, eases some program requirements because a devastating drought has created a “very challenging” economic environment in Argentina, causing some end-June financial targets to be missed.Reuters first reported that the agreement would combine the fifth and sixth reviews of Argentina’s IMF program — a move that provides additional loan funds sooner. The IMF said its board would meet to consider the agreement in the second half of August.The Fund said in a statement that since the fourth review of the loan program in March, Argentina’s economic situation has become very challenging due to the larger-than-anticipated impact of a drought, which had a significant impact on exports and fiscal revenues.””There have also been policy slippages and delays, which have contributed to strong domestic demand and a weaker trade balance,” the IMF added.MEASURES AHEADTo sustain demand for Argentina’s peso currency, the agreement calls for authorities to ensure that policy interest rates remain “sufficiently positive in real terms.”The agreement projects a more gradual accumulation of reserves, with a target of around $1 billion by the end of 2023, compared to a $8 billion goal set in March.The agreement calls for Argentina to tamp down import demand with new foreign exchange taxes for imported goods and to strengthen expenditure controls. But its 2023 primary fiscal deficit target remains unchanged at 1.9% of GDP, the IMF said.With no liquid currency reserves in the central bank, Argentina has recently introduced more peso exchange rates to stop the drainage. The Fund said that the program will need waivers because these measures are “against the introduction of multiple currency practices.”The government will need to take some additional measures, known as prior actions, between the staff level agreement and the board approval, according to a source familiar with the matter, who asked not to be named because the measures are still not public. The next review is expected to take place in November, a month earlier than originally scheduled.Argentina is set to have another three reviews on its 2022 IMF program by September 2024, though the IMF statement didn’t specify what would happen with those.The IMF’s board approval of the reviews would come after a primary vote on Aug. 13 in which Economy Minister Sergio Massa runs as one of the presidential candidates for the ruling coalition.Massa said the fresh disbursement will provide some stability through the second half of the year. Following the announcement, Argentina’s over-the-counter sovereign debt rose nearly 2% on average and the country’s main stock index was up 1.68%.The country still needs to avoid a default with the Fund next week, with maturities of $2.6 billion due on July 31 and almost $800 million due on Aug. 1. Argentine officials are working to “get financing from several sources” to meet these obligations, the source added, without providing any further details. While it is not clear how the country will make those payments, Buenos Aires could potentially use a swap line with Beijing, a move it recently made to complete part of its June payment to the IMF. More

Unemployment in Latin America’s largest economy hit 8.0% in the three months through June, down from 8.3% in the previous rolling quarter and below market expectations, as economists polled by Reuters had a median forecast of 8.2%.It was the fourth consecutive drop for a rolling quarter, according to IBGE, which said the move reflected seasonally lower vacancy rates. There are now 8.6 million unemployed people in Brazil, it added.Finance Minister Fernando Haddad cautioned that despite the positive data, the unemployment rate should not be perceived as an indicator of a strong economy, given the country’s 10% real interest rate leading to an activity slowdown.Brazil’s benchmark interest rate stands at a six-year high of 13.75% since August 2022 as part of the central bank’s bid to lower inflation, although an easing cycle is widely expected to start early next month.Talking to journalist, Haddad said he sees plenty of room for the central bank to kick off its monetary easing cycle with a “reasonable” rate cut.Some economists also expect high interest rates to take their toll going ahead, as economic growth softens in the country.”All in all, the labor market remained strong in the second quarter, defying the drag from stiflingly high interest rates,” Pantheon Macroeconomics’ chief economist for Latin America, Andres Abadia, said.”But we still expect conditions to deteriorate at the margin in Q3 and early Q4, due to the lagged effect of increased borrowing costs in key sectors.”Even so, the latest data were still welcomed by President Luiz Inacio Lula da Silva’s government, as the leftist leader campaigned last year pledging to reduce unemployment in the country.”The result shows that nothing resists hard work and that Brazil is on the right track,” Lula’s chief of staff Rui Costa wrote on messaging platform X, formerly known as Twitter. More