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    Jobless claims edge up to 198,000, higher than expected

    Jobless claims for the week ended March 25 totaled 198,000, up 7,000 from the previous period and a bit higher than the 195,000 estimate.
    Continuing claims, which run a week behind, edged up 4,000 to 1.689 million.
    The final GDP reading for the fourth quarter of 2022 showed the economy grew at a 2.6% annualized rate in the fourth quarter.

    Initial filings for unemployment insurance ticked higher last week but remained generally low in a tight labor market.
    Jobless claims for the week ended March 25 totaled 198,000, up 7,000 from the previous period and a bit higher than the 195,000 estimate, the Labor Department reported Thursday.

    Though the number was slightly higher than expectations, the total indicates that companies are slow to lay off workers despite expectations that the unemployment rate will rise through the year.
    Continuing claims, which run a week behind, edged up 4,000 to 1.689 million. That was below the FactSet estimate for 1.6935 million.
    The four-week moving average of weekly claims, which smoothes volatility in the numbers, edged up to 198,250, but has been below 200,000 since mid-January.
    The relatively benign claims numbers come despite aggressive Federal Reserve efforts to slow down inflation. In large part, the central bank is targeting a labor market beset by a sharp supply-demand imbalance in which there are nearly two open jobs for every available workers.
    According to estimates last week, central bankers expect the unemployment rate to rise to 4.5% this year, from its current 3.6% level. Doing so would require the loss of more than 540,000 jobs, according to an Atlanta Fed calculator.

    A separate economic report Thursday showed that growth was a bit less strong to close 2022 than previously thought.
    The final Commerce Department reading for gross domestic product showed the economy grew at a 2.6% annualized rate in the fourth quarter, slightly below the previous estimate of 2.7%. That change came primarily due to downward revisions in consumer spending and exports, the department said.
    Growth likely accelerated for the first three months of 2023, according to the Atlanta Fed’s GDPNow tracker. That gauge shows GDP rising at a 3.2% pace.
    Markets reacted little to the fresh batch of data, with futures pointing to a higher open on Wall Street. More

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    Do We Know How Many People Are Working From Home?

    New Labor Department numbers indicate that fewer Americans worked remotely last year. But many experts criticize the government’s data collection.Millions of workers, employers, square feet of real estate and dollars of downtown economic retail are wrapped up in the question of how many people are working from home — yet there remain large discrepancies in how remote work is measured.The Labor Department, last week, released data indicating a decline in remote work: 72.5 percent of businesses said their employees rarely or never teleworked last year, up from 60.1 percent in 2021 and quite close to the 76.7 percent that had no such work before the pandemic. But while the Labor Department found that remote work was almost back to prepandemic levels, many other surveys show it is up four- to fivefold.Outside research, including a monthly survey of workers from researchers at Stanford University and the Census Bureau’s household survey, indicate that remote work remains prevalent, with Stanford’s finding that it accounts for over a quarter of paid full-time workdays in the United States, just slightly down from 33 percent in 2021. Some scholars suggested that the Labor Department’s survey may overcount fully in-person work, though the comparisons among the various surveys aren’t direct.“I see this survey as an outlier and not the most reliable measure,” said Adam Ozimek, chief economist of the Economic Innovation Group, a public policy organization, describing the Labor Department’s survey. “We need to think hard as we try to develop better measures of working from home.”Remote work is having profound effects on nearly every dimension of the economy: foot traffic to downtown businesses, housing markets in big cities and far-flung areas, methods of assessing productivity and child care. Public transportation ridership sank during the pandemic, and suburban real estate values rose.Nearly one billion square feet of office real estate was available but in search of a tenant at the end of 2022. People refashioned their lives and routines, working 28 percent more after traditional hours, according to Microsoft.The stakes of measuring remote work’s prevalence are high. And researchers said the wording of the Bureau of Labor Statistics survey on remote work, which was distributed to businesses, might have caused some confusion among respondents.“Telework is a work arrangement that allows an employee to work at home, or from another remote location, by using the internet or a computer linked to one’s place of employment, as well as digital communications, such as email and phone,” the survey read. “Do any employees at this location CURRENTLY telework in any amount?”By defining telework so broadly — as any worker sending an email or making a call outside the office — the Labor Department’s survey question should most likely have turned up a fully in-person figure lower than the one released last week, said Nick Bloom, an economist at Stanford, suggesting that some businesses may have been confused by the question.This particular Labor Department figure on telework also combines fully remote work with hybrid arrangements. But hybrid work has eclipsed fully remote policies, with just over half of the workers who can do their jobs from home combining in-person and remote work, according to Gallup.A spokeswoman for the Labor Department said the survey most likely did not reflect informal work-from-home arrangements.“Taking into account that the self-employed and the public sector are not included in the sample, and that this is a survey of establishments rather than individuals, our estimates do not appear out of line with other estimates,” the spokeswoman said.Stanford’s monthly study on working from home, which surveys 10,000 workers across cities and industries, found that 27 percent of paid full-time days were worked from home in early 2023.Much of that remote work came from hybrid setups. Last month, the survey found that 12 percent of workers were fully remote, roughly 60 percent fully in person and 28 percent hybrid.Other sources of data confirm that working-from-home patterns remain entrenched in certain industries. The building security firm Kastle, for example, tracks data on office badge swipes and reported this month that offices remained at roughly 48 percent of their prepandemic occupancy.A closer look at New York, from the Partnership for New York City, found that 52 percent of Manhattan office workers were working in person on an average day at the start of this year, up from 49 percent in September. But only 9 percent of employees were in the office five days a week, underscoring the reach of hybrid arrangements. And Square, the retail technology company, which tracks payments at food and drink establishments, found that sales growth at bars and restaurants in Brooklyn had recently outpaced growth of those in Manhattan.“It’s clear that the work-from-home trends induced by the pandemic have transformed the food and drink scene in the city,” said Ara Kharazian, an economist at Square.The Partnership for New York City’s data indicated that financial service firms were back in the office in greater numbers than many other companies. Financial service firms reported 59 percent daily office attendance in late January, according to the partnership. The tech industry, by contrast, was at 43 percent.All this data is emerging as hundreds of companies formalize their policies on hybrid work, with many trying to persuade their employees to spend more time at the office.Amazon told corporate workers last month that they had to be in the office three days a week starting in May, and Starbucks called its 3,750 corporate workers back three days a week as well. Disney asked employees to return to the office four days a week. Its chief executive, Robert A. Iger, cited the need for in-person creative collaborations.Other chief executives have also begun to question the merits of remote work. Even Marc Benioff, chief executive of Salesforce, which told all its employees that they could go permanently remote, began voicing concern this year that productivity among some employees has been lower.As executives clamp down on in-person work, worker resistance has become more vocal. At Amazon, more than 29,000 employees joined a Slack channel, called Remote Advocacy, protesting the shift to in-person work. At Starbucks, more than 40 corporate employees signed an open letter opposing the new return-to-office policy.Wherever people are doing the jobs they already have, mostly in person per the Labor Department or over a quarter of the time at home per others, one metric does indicate that hybrid work is here to stay: job postings.A study from researchers at Stanford, Harvard and other institutions analyzing over 50 million job postings last month found that postings explicitly mentioning remote work are at 12.2 percent — a fourfold increase since before the pandemic. More

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    Former Starbucks CEO Howard Schultz Spars With Democrats at Senate Hearing

    Howard Schultz faced rancor from Senate Democrats at a hearing where he chafed at “propaganda that is floating around” about company labor practices.Howard Schultz was the star witness, but the hearing revealed almost as much about the party in power as it did about the longtime Starbucks chief executive.When Mr. Schultz appeared Wednesday before the Senate Committee on Health, Education, Labor and Pensions, at a session titled “No Company Is Above the Law: The Need to End Illegal Union Busting at Starbucks,” he encountered a Democratic Party much changed since some of his earlier trips to Washington.In 1994, President Bill Clinton invited Mr. Schultz to the White House for a private briefing on the company’s health care benefits. Two years later, the president praised Starbucks when introducing Mr. Schultz at a conference on corporate responsibility. At the time, Bernie Sanders was a backbencher in the House of Representatives.On Wednesday, Mr. Sanders, now chairman of the Senate committee, appeared to regard Mr. Schultz with something bordering on disdain.Before a question, Mr. Sanders, a Vermont independent who caucuses with the Democrats, felt the need to remind Mr. Schultz that federal law prohibits a witness from “knowingly and willfully making” a false statement relevant to an inquiry. The chairman then asked him if he had participated in decisions to fire or discipline workers involved in a union campaign. (Mr. Schultz said he had not.)Mr. Sanders noted that an administrative law judge had found “egregious and widespread misconduct” by Starbucks in its response to the campaign, in which nearly 300 of the roughly 9,300 corporate-owned stores in the United States have voted to unionize. And he chided Mr. Schultz for what he said was the company’s “calculated and intentional efforts to stall, to stall and to stall” rather than bargain with the union in good faith.Senator Bernie Sanders accused Starbucks of “calculated and intentional efforts to stall, to stall and to stall” in contract talks.Kenny Holston/The New York TimesThe hearing was held on the same day Starbucks reported that its shareholders had backed a proposal asking the company to commission an independent assessment of its practices as they relate to worker rights, including the right to bargain collectively and to form a union without interference.Though the proposal is nonbinding, the 52 percent vote in its favor suggests unease among investors over Starbucks’s response to the union campaign.Mr. Schultz, who recently ended his third tour as the company’s chief executive and remains a board member and major shareholder, seemed as mystified as anyone by his personal change of fortune in the capital. He chafed at what he described as “the propaganda that is floating around” the hearing and told Senator Bob Casey, Democrat of Pennsylvania, that “I take offense with you categorizing me or Starbucks as a union-buster.”When another Democrat, Senator Patty Murray of Washington — the home state of Starbucks — said she had heard from constituents about “widespread anti-union efforts,” Mr. Schultz reminded her that they had known each other for years and that she had “many times actually talked about Starbucks as a model employer.”He responded to Mr. Sanders’s accusation that Starbucks was not bargaining in good faith by noting that the company had met with the union over 85 times. (The union points out that most of these sessions ended within 15 minutes; Starbucks says this is because union members sought to take part remotely.) And he denied that Starbucks had broken the law; it has appealed the rulings against it.Aside from the accusations of labor law violations, the question at the heart of the hearing was: Can chief executives be trusted to treat their workers fairly?Mr. Schultz’s answer was an emphatic yes, at least in his case. He highlighted the company’s wide-ranging benefits — not just health care, including for part-time employees, but stock grants, paid sick leave, paid parental leave and free tuition at Arizona State University. He said that the average wage for hourly workers at Starbucks was $17.50, and that total compensation, including benefits, approached $27 an hour.“My vision for Starbucks Coffee Company has always been steeped in humanity, respect and shared success,” he said near the outset of the hearing.Some attending the hearing wore T-shirts signaling their support for the Starbucks union.Kenny Holston/The New York TimesRepublicans on the committee were quick to agree. Senator Rand Paul of Kentucky called Starbucks an “extraordinary tale of a company that started out of nothing and employs tens of thousands of people all making great wages.”Senator Mitt Romney of Utah, a former chief executive, said it was “somewhat rich that you’re being grilled by people who have never had the opportunity to create a single job.” He suggested that while a union might be necessary at companies “that are not good employers,” that was not the case at Starbucks.Democrats’ response came at two levels of elevation. First, they said the company was excluding unionized stores from the benefits that Starbucks had introduced since the union campaign began, such as faster accrual of sick leave and a credit-card tipping option for customers, showing that its commitment to such benefits was tenuous.The National Labor Relations Board has issued complaints calling the denial of benefits to union stores an attempt to discourage workers from organizing. Mr. Schultz said at the hearing that the company couldn’t offer the new benefits at union stores because the law said it must bargain over them first; legal experts have cast doubt on that interpretation.More broadly, Democrats argued that unions acted as a corrective to a basic power imbalance between workers and management. A company might treat workers generously under one chief executive, then harshly under another. Only a union can ensure that the favorable treatment persists, said Senator Edward J. Markey of Massachusetts.Yet in illustrating how far the politics of labor have changed in Washington in recent decades, there was perhaps no better bellwether than Senator John Hickenlooper of Colorado, a former business owner and self-described “extreme moderate.”Mr. Hickenlooper conducted himself more respectfully and deferentially than most of his Democratic colleagues, applauding Mr. Schultz for “creating one of the most successful brands in American history” and declaring that “you know more about economics than I will ever know.” But in his questioning he aligned himself squarely with his party, pointing out that the rise of inequality in recent decades had coincided with the weakening of unions.“I certainly respect the desire to be directly connected with all your employees,” he told Mr. Schultz. “But in many ways that right to organize, and that opportunity for people to be part of a union, is a crucial building block for the middle class and, I think, gave this country stability.” More

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    Biden Highlights Economic Investments Ahead of Expected 2024 Announcement

    The president has warned that a strong economy could be weakened under Republican leadership, a point he and a host of advisers will make at 20 events across the country in the coming weeks.DURHAM, N.C. — President Biden visited North Carolina on Tuesday and said Republicans would undermine his administration’s gains on American manufacturing, as the president began to sharpen his political message ahead of an expected re-election announcement.Mr. Biden spoke at Wolfspeed, a semiconductor manufacturer that recently announced a $5 billion investment to expand operations in the state, a move that would create about 1,800 jobs, according to the White House. The company, based in North Carolina, has deals to supply the material to General Motors, among other buyers.But Mr. Biden’s visit was less about semiconductors than it was about making an argument that he sees as key to a re-election bid — essentially, that the American economy has recovered since the coronavirus pandemic, his administration has helped keep it strong and Republican policies would undo that progress.“I’ve got news for you and for MAGA Republicans in Congress: Not on my watch,” Mr. Biden said, referring to the far-right wing of the party that is loyal to former President Donald J. Trump.The White House has argued for months that Mr. Biden has presided over a steady economy and strong job growth, but the data presents a more complicated reality: The high pace of job creation is undercut by a continued deceleration in wage increases, and there are growing concerns that the Federal Reserve may move to raise interest rates. The Biden administration has also tried to assuage fears of instability after the collapse of Silicon Valley Bank this month.Mr. Biden’s visit to North Carolina was the start of three weeks of related events to be held across the country by the president and Vice President Kamala Harris, plus their spouses and a host of cabinet officials. The group plans to visit 20 states and will highlight investments in American manufacturing, supply chains and job-creation efforts, according to a summary of efforts sent by the White House.During his trip to Durham, Mr. Biden highlighted legislation passed last year, including the CHIPS and Science Act, which contains $52 billion in subsidies and tax credits for companies that manufacture chips in the United States. More than half of the amount is dedicated to helping companies build facilities for making, assembling and packaging some of the world’s more advanced chips. In his remarks, the president said that over $435 billion had been invested in American companies since he took office.“America’s coming back,” Mr. Biden said, standing beside Gina Raimondo, the commerce secretary, who traveled with him to Durham. “We are determined to lead the world in manufacturing semiconductors.”Ms. Raimondo, who is expected to participate in the tour over the coming weeks, told a crowd gathered at Wolfspeed that the pandemic had “opened all of our eyes” to the importance of maintaining the global supply chain and protecting competitive advantages in technology.“The truth of it is the United States was for a long time a manufacturing powerhouse,” she said. “Still is, but for a long time we took our eye off the ball, and we watched manufacturing leave our shores in search of cheap labor in Asia.”.css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.The president spoke directly to people he said might feel “left behind” by technological changes, but said his administration would focus on programs that could train workers to produce technological projects without a college degree. Mr. Biden said the “vast majority” of jobs created by Wolfspeed would not require college degrees and could pay around $80,000.Events like the one held on Tuesday will provide Mr. Biden and his surrogates with an opportunity to hone his argument against Republicans.At the same time, a collision course looms in Washington over the debt ceiling.On Tuesday, Speaker Kevin McCarthy, Republican of California, wrote a letter urging the president to negotiate on the federal debt limit. “With each passing day,” Mr. McCarthy wrote, “I am incredibly concerned that you are putting an already fragile economy in jeopardy by insisting upon your extreme position of refusing to negotiate any meaningful changes to out-of-control government spending.”Mr. Biden has said he will refuse to negotiate on the debt limit, pointing out that Republicans voted to raise the ceiling several times under his predecessor, Mr. Trump.“It’s time for Republicans to stop playing games, pass a clean debt ceiling bill and quit threatening our economic recovery,” Karine Jean-Pierre said in a statement responding to Mr. McCarthy’s letter.In his own letter sent on Tuesday evening, Mr. Biden urged Mr. McCarthy and congressional Republicans to present a full budget proposal before Congress leaves for Easter recess.The president and his advisers have signaled that the situation would be worse under Republican leadership, a point he underscored in North Carolina. The White House says that companies have made $16 billion in private sector investment commitments since Mr. Biden took office, a development they have attributed to corporations taking advantage of tax breaks and federal funding that bolsters innovation.Mr. Biden has argued that the flow of money would be at stake if Republicans tried to repeal policies passed under his administration, including the Inflation Reduction Act. He has also said that individual Americans are at risk of losing access to lower health care, energy and internet costs that are provided for in the bills that were passed by a Democratic-majority Congress.“We’re not going to let them undo all the progress,” Mr. Biden said. More

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    Top Fed Officials Criticize Silicon Valley Bank Executives at Senate Hearing

    Officials blamed executives at Silicon Valley Bank for its failure on March 10, while adding that Federal Reserve oversight is in for a revamp.WASHINGTON — A top regulator at the Federal Reserve on Tuesday blamed Silicon Valley Bank’s executives for its collapse and provided little explanation for why supervisors had failed to stop its demise, saying that the central bank was examining what went wrong.Michael S. Barr, the Fed’s vice chair for supervision, testified for more than two hours before the Senate Banking Committee alongside Martin Gruenberg, chairman of the Federal Deposit Insurance Corporation, and Nellie Liang, the Treasury’s under secretary for domestic finance.They faced skeptical questioning from lawmakers about why their agencies — in particular the Fed, which was Silicon Valley Bank’s main regulator — had not done more to stop the bank from imploding. Democrats pressed the officials on whether gaps in regulation had allowed problems in the banking system to build after rollbacks under the Trump administration. Republicans, by contrast, blasted Fed supervisors for either missing obvious risks or not addressing them effectively.It is unclear whether the intense scrutiny will spur any new laws or changes to existing ones, especially in a divided Congress. But the episode is likely to prompt regulatory and supervisory changes at the Fed. The central bank is conducting an investigation into how it failed to stop growing vulnerabilities at the bank. Mr. Barr suggested repeatedly on Tuesday that tighter regulation and supervision would most likely be the result of that inquiry, which is set to conclude by May 1.Fed supervisors were aware of at least some of the problems plaguing Silicon Valley Bank beginning in late 2021, though it was unclear how detailed of a grasp they had on the risks. Mr. Barr said on Tuesday that he learned of some of the worst vulnerabilities at the bank only in February, just ahead of its collapse.Lawmakers from both parties questioned why the Fed wasn’t more successful at forcing the bank’s leadership team to change its practices, which included a misguided and unprotected bet that interest rates would remain low. Even as the Fed was still vetting what happened, Mr. Barr said, poor management at Silicon Valley Bank allowed its weaknesses to build to a point that the bank failed on March 10.Martin Gruenberg, chairman of the Federal Deposit Insurance Corporation, with Senator Elizabeth Warren at the hearing.Kenny Holston/The New York Times“Fundamentally, the bank failed because its management failed to appropriately address clear interest rate risk and clear liquidity risk,” Mr. Barr said. “The Federal Reserve Bank brought forward these problems to the bank, and they failed to address them in a timely way — that exposure led the firm to be highly vulnerable to a shock.”Silicon Valley Bank invested heavily in long-term bonds that became less valuable as interest rates rose last year. And it did not hold protection against higher borrowing costs. When it sold some of its assets and disclosed losses in early March, the announcement spooked depositors — many of whom had accounts in excess of the $250,000 that is guaranteed by the F.D.I.C.Customers, afraid of losing their money, raced to pull out their deposits: $42 billion left the bank on Thursday, March 9, and Mr. Barr said another $100 billion was about to head out the door the next day, when the bank collapsed and was seized by the F.D.I.C.The bank’s failure set off a chain reaction that has coursed through the global banking system in the weeks since. Regulators tried to find a buyer for SVB that weekend but could not: Of two bids from interested banks, Mr. Gruenberg said, one was ineligible because the bank’s board had not approved the offer, and the other was not a good enough deal for the government to legally accept it.To contain the fallout, that Sunday evening officials made a sweeping rescue — announcing that another firm, Signature Bank, had failed but promising that the government would make sure depositors were paid back in full. The Fed simultaneously set up an emergency lending program that gives banks access to cash in a pinch in exchange for bonds and other securities.The Fed was conscious of at least some of the problems that plagued Silicon Valley Bank starting from late 2021Jim Wilson/The New York TimesThe efforts to stop depositors from pulling their cash did not immediately stem the bleeding. First Republic took an injection of capital from other banks, and in Europe, the Swiss lender Credit Suisse was rushed through a takeover by UBS.But in recent days, government officials have said deposit outflows are stabilizing in the United States. Regulators reiterated on Tuesday that the banking system was sound — and said the actions they had taken were necessary to ensure that it remained so.“I think there would have been a contagion,” Mr. Gruenberg of the F.D.I.C. said.The turmoil brought to light a number of problems in the American financial system, including the question of whether federal deposit insurance is correctly calibrated.A big share of U.S. deposits are not protected by the government, and the businesses or individuals holding those accounts are more likely to pull their money at the first sign of trouble. The F.D.I.C. explicitly insures up to $250,000, but the government’s rescue calls into question whether it is implicitly backing all deposits.In the case of the two failed banks, officials invoked a rule that allowed regulators to pay out even uninsured depositors — something they would not usually be able to do — if the fallout otherwise posed a risk to the entire system. Ms. Liang reiterated on Tuesday that the government would be prepared to take such steps again, if they were deemed necessary.“We have used important tools to act quickly to prevent contagion,” Ms. Liang said. “And they are tools we would use again if warranted to ensure that Americans’ deposits are safe.”Mr. Gruenberg said regulators would also be looking at a longer-term fix to the way deposits were insured, including coverage levels.“The decision to cover uninsured depositors at these two institutions was a highly consequential one that has implications for the system,” Mr. Gruenberg said. “We want to try to be responsive on that.”Still, much of the hearing focused not on deposit insurance, but on bank oversight.Senators during a hearing on Tuesday to examine recent bank failures.Kenny Holston/The New York TimesSenators wanted to know whether Silicon Valley Bank failed because supervisors and regulators at the Federal Reserve Bank of San Francisco and the Fed’s board in Washington dropped the ball, or whether they lacked the authority to react aggressively enough.Democrats suggested on Tuesday that the problems tied back to deregulation under the Trump administration and greed on the part of Silicon Valley Bank’s executives.“Monday morning quarterbacking aimed only at the actions of regulators this month is as convenient as it is misplaced,” Senator Sherrod Brown, Democrat of Ohio, said at the start of the hearing.Republicans also fired shots at bank managers, but said Fed supervisors were to blame for allowing problems to slip through the cracks.“What were the supervisors thinking?” Senator Tim Scott, Republican of South Carolina, said during the hearing. He implied, with no evidence, that the San Francisco Fed might have overlooked risks at Silicon Valley Bank because they shared a focus on climate change.Republicans and bank lobbying groups have tried to minimize the role that regulatory changes made during the Trump administration — which relaxed rules for midsize banks — played in Silicon Valley Bank’s demise. But Mr. Barr made it clear on Tuesday that the episode was likely to result in tougher oversight.Randal K. Quarles, Mr. Barr’s predecessor, carried out a number of changes to bank oversight before stepping down in October 2021. Without the tweaks, Silicon Valley Bank would almost certainly have come under more intense scrutiny from Fed supervisors earlier.Mr. Barr, who was nominated by President Biden and took his post in July, said those changes would get a second look.“The decision to set those lines by asset size and other risk factors was made back in 2019,” Mr. Barr said. “I believe we have substantial discretion to alter that framework.”He said the Fed would revisit how firms were bucketed by size when it came to supervision and regulation. And he acknowledged that the Fed would look into whether its bank examiners had taken reasonable actions to address problems at the bank.He added that “the staff are reviewing the steps that supervisors took, and whether they should have taken more aggressive action.”The F.D.I.C. is reviewing the collapse of Signature Bank, which it oversaw, and the Fed’s inspector general on March 14 opened a review of the conduct of the Fed Board of Governors and the Federal Reserve Bank of San Francisco’s supervision.Some lawmakers want more. A group of Democrats on Tuesday asked the Government Accountability Office to examine the supervisory practices of bank regulators.“The collapse of these banks brings into focus matters related to the supervision and examination of our nation’s large banks,” the letter said.Emily Flitter More

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    Lawmakers Rebuke Biden for Bypassing Congress in Trade Deal With Japan

    A statement from two Democrats called the Biden administration’s deal “unacceptable,” saying it should have been made available to Congress and the public for review.WASHINGTON — Lawmakers on Tuesday issued a sharp rebuke of a limited trade deal the Biden administration reached with Japan, saying that it should have been made available to Congress and the public for review and that it lacked important protections for the environment and workers.In a statement viewed by The New York Times, Representative Richard E. Neal of Massachusetts, the Democratic ranking member of the Ways and Means Committee, and Senator Ron Wyden, Democrat of Oregon and the chairman of the Finance Committee, called the agreement “unacceptable.”“Without enforceable environmental or labor protections, the administration abandons worker-centric trade policy and jeopardizes our climate work by opening the door for another environmental catastrophe,” wrote the lawmakers, who are the two most powerful Democrats in Congress on trade issues.“Agreements should be developed transparently and made available to the public for meaningful review well before signing,” they added, “not after the ink is already dry.”The Biden administration announced late Monday that it had reached an agreement with Japan over supplies of critical minerals like lithium, cobalt and nickel, which are used to make car batteries. The agreement provides a potential workaround for the Biden administration in its disagreement with allies over the terms of the Inflation Reduction Act, which invests $370 billion to transition the United States to cleaner cars and energy sources.That law has angered some allies who were excluded from its benefits, which include generous tax incentives for companies that make electric vehicles in North America or source material for batteries from the United States or countries with which it has a free-trade agreement. That category does not include Japan or European Union countries.But because the Inflation Reduction Act does not technically define what constitutes a free-trade agreement, U.S. officials have found what they believe to be a workaround. They are arguing that countries will be able to meet the requirement by signing a more limited trade deal instead. The Treasury Department is expected to issue a proposed rule this week clarifying the provisions of the law..css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.A fact sheet distributed late Monday by the Office of the United States Trade Representative said that the United States and Japan had promised to encourage higher labor and environmental standards for minerals that power electric vehicles. The parties also promised to promote more efficient use of resources and confer on how they review investments from foreign entities in the sector, among other pledges.In a call with reporters on Monday, a senior official said the Biden administration had consulted with Congress and received input from lawmakers. But the official said the administration had the authority to negotiate limited agreements without submitting them to Congress for approval.Katherine Tai, the United States trade representative, had been expected to sign the agreement on Tuesday.“It’s clear this agreement is one of convenience,” Mr. Neal and Mr. Wyden said in the statement. “As we warned Ambassador Tai last week, the administration does not have the authority to unilaterally enter into free trade agreements.”Administration officials have argued that key members of Congress always intended U.S. allies to be included in the law’s benefits. But other lawmakers have also criticized the Biden administration for sidestepping Congress’s authority over new trade deals, a tactic that the Trump administration also frequently used.In a statement on Tuesday, Representative Jason Smith, Republican of Missouri and the chairman of the Ways and Means Committee, said the agreement with Japan did not shift critical mineral supply chains from China.“Equally shameful is the fact that the Biden administration is distorting the plain text of U.S. law to write as many green corporate welfare checks as possible,” Mr. Smith said. “The administration has not been transparent with the American people and has ignored major concerns raised by Congress, including failing to provide an analysis of the effects this agreement would have on American workers.”Representative Dan Kildee, Democrat of Michigan, said on Tuesday that the administration was taking the wrong approach with the deal.“I believe the administration must come to Congress if they want to enter new free trade pacts,” he said in a statement. 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    SVB Hearing Takeaways: Bank Failures Spur a Blame Game, But Few Solutions

    Federal regulators faced more than two hours of intense questioning from lawmakers on Tuesday about what caused the failures of Silicon Valley Bank and Signature Bank, the red flags that went unheeded and the steps that must be taken to avoid future collapses that could rattle the United States financial system.There was bipartisan concern about the state of the nation’s banks that in many cases blurred the usual party lines, where Democrats want more strict oversight and Republicans call for looser regulations. But there was also a substantial amount of buck-passing and finger pointing as the officials from the Federal Reserve, the Federal Deposit Insurance Corporation and the Treasury Department sought to make sense of the second largest bank failure in American history.The hearing — featuring Michael S. Barr, the Federal Reserve’s vice chair for supervision, Martin Gruenberg, chair of the Federal Deposit Insurance Corporation and Nellie Liang, the Treasury’s under secretary for domestic finance — marked the beginning of what will be an extended inquiry by Congress and the regulators themselves into what went wrong.Regulators blamed the banks.From the outset, the regulators made clear what they believed to be the primary reason that Silicon Valley Bank failed: It was poorly managed and allowed risks to build up to the point that the bank collapsed.Mr. Barr said in his testimony that “SVB’s failure is a textbook case of mismanagement.” He added that Fed officials flagged problems to the bank as far back as November 2021, but the bank failed to deal with them.Punishment for executives is on the table.Lawmakers remained intent on ensuring that the executives of the banks are punished if they did anything improper leading up to the failures. They also expressed particular concern about last minute stock sales by Silicon Valley Bank officials.Regulators said that they were limited in their power to claw back compensation but that they can impose financial and other penalties if their continuing investigation finds wrongdoing.Regulators blamed Silicon Valley Bank’s collapse on poor management during more than two hours of questioning, Kenny Holston/The New York TimesThe Fed could have done more.The Federal Reserve is under particular scrutiny regarding when it knew that things were amiss at SVB.Even though Fed supervisors had flagged weaknesses at SVB as far back as 2021, Mr. Barr said he first learned of SVB’s problems last month — suggesting it took a long time for concerns to be escalated to the Fed board and its vice chair of supervision.Mr. Barr said that the Federal Reserve officials will be discussing any potential missed warning signs in their internal review and that “we expect to be held accountable.”Regulators say they need more authority.All three regulators said that they believed that financial regulations needed to be tightened following the recent stress in the banking sector.Mr. Barr pointed to Federal Reserve regulations, which were enacted during the Trump administration in 2019, that exempted Silicon Valley Bank from being stress tested and suggested that those need to be revisited.Some Democrats on the committee emphasized the notion that deregulation left agencies without the tools they needed to address issues at smaller banks.What’s next?The House Financial Services Committee will hold its own hearing on Wednesday, and question the same officials.Reviews by the F.D.I.C. and the Fed are expected to be completed by May 1 and members of the Senate committee from both parties suggested they’d be interested in hearing from regulators after those inquiries are concluded.There is also an ongoing debate about raising the bank deposit insurance cap from $250,000 and imposing stiffer penalties on executives at banks that fail.Lawmakers have also asked the Government Accountability Office to study the effectiveness of the bank supervisory regime and make recommendations for changes. But it’s not clear whether any suggested changes would have enough bipartisan support to overcome a divided Congress. More

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    Congress grilled regulators on their actions before and after the failures.

    Top officials from the Federal Reserve, the Treasury and the Federal Deposit Insurance Corporation on Tuesday defended their response to the collapse of two banks that shocked the global financial system this month and ramped up the risk of a recession in the United States.The officials blamed the leaders of the two failed banks, Silicon Valley Bank and Signature Bank, saying gross mismanagement had led to the crisis. While members of the Senate Banking Committee also cited executives’ failures, they sharply questioned the regulators about their actions.Michael S. Barr, the vice chair for supervision at the Fed, SVB’s primary regulator, said the bank failed because “its management failed to appropriately address” clear risks that were pointed out to it more than two years ago. But he later acknowledged that he did not learn about the severity of the bank’s problems until the middle of last month.Here’s what to know:The officials who testified were Mr. Barr; Martin Gruenberg, the chair of the F.D.I.C.; and Nellie Liang, the Treasury’s under secretary for domestic finance. Read more about them.Mr. Barr said the run that led to the failure of Silicon Valley Bank was of “an extraordinary pace and scale.” The bank had $42 billion flow out on March 9 — the fastest run ever — and the bank expected an outflow of $100 billion the next day, when regulators stepped in. Catch up on what happened with the banks at the center of the crisis.Some Democrats on the committee emphasized the notion that deregulation left agencies without the tools they needed to address issues at smaller banks like SVB. Some Republicans sought to link government spending and the Fed’s broader agenda — including on issues like climate change — to the crisis. Both sides expressed concern about the effect the turmoil could have on the broader economy. In response to questions about their actions to backstop deposits at the failed banks, Mr. Gruenberg said that there would have been “contagion” — a spreading of the crisis. Ms. Liang agreed, saying without federal action, bank runs “would have intensified and caused serious problems.” Here are the regulatory proposals that the White House is weighing. This was the first of two days of testimony. The same officials will appear before the House Financial Services Committee on Wednesday. More