Tag Archives: Treasury department

A Multitrillion dollar federal spending bill that cost zero dollars?

Rev 6:6 NAS And I heard something like a voice in the center of the four living creatures saying, “A quart of wheat for a denarius, and three quarts of barley for a denarius; and do not damage the oil and the wine.”

Important Takeaways:

  • How Magical Thinking Led America To $30 Trillion In Debt
  • In the Wizarding World of Washington, you can now say a multitrillion dollar federal spending bill “costs zero dollars.”
    • President Biden tweeted https://twitter.com/POTUS/status/1441924106765602819
    • My Build Back Better Agenda costs zero dollars.
    • Instead of wasting money on tax breaks, loopholes, and tax evasion for big corporations and the wealthy, we can make a once-in-a-generation investment in working America.
    • And it adds zero dollars to the national debt.
  • Unfortunately, Americans are now paying a heavy price for this magical thinking. Inflation—spurred at least in part by record government spending and inaction on other issues—is running at its highest rate since 1982. The prices for meat and eggs are up 12.2% since last year. Furniture and bedding is up 17% and used cars and trucks are up 40.5%.
  • Meanwhile, the Treasury Department recently reported America’s total national debt is now over $30 trillion—the highest ever. To put this in context: If you stacked $30 trillion of $100 bills you could almost reach the weather satellites orbiting the earth at over 20,000 miles above us.

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Biden order bans investment in dozens of Chinese defense and tech firms

By Michael Martina and Karen Freifeld

WASHINGTON (Reuters) -President Joe Biden signed an executive order on Thursday that bans U.S. entities from investing in dozens of Chinese companies with alleged ties to defense or surveillance technology sectors, a move his administration says expands the scope of a legally flawed Trump-era order.

The Treasury Department will enforce and update on a “rolling basis” the new ban list of about 59 companies, which bars buying or selling publicly traded securities in target companies, and replaces an earlier list from the Department of Defense, senior administration officials told reporters.

The order prevents U.S. investment from supporting the Chinese military-industrial complex, as well as military, intelligence, and security research and development programs, Biden said in the order.

“In addition, I find that the use of Chinese surveillance technology outside the PRC and the development or use of Chinese surveillance technology to facilitate repression or serious human rights abuse constitute unusual and extraordinary threats,” Biden said, using the acronym for the People’s Republic of China.

A White House fact sheet on the order said the policy would take effect for those companies listed on Aug. 2.

Major Chinese firms included on the previous Defense Department list were also placed on the updated list, including Aviation Industry Corp of China (AVIC), China Mobile Communications Group, China National Offshore Oil Corp (CNOOC), Hangzhou Hikvision Digital Technology Co Ltd, Huawei Technologies Ltd and Semiconductor Manufacturing International Corp (SMIC).

SMIC is key to China’s national drive to boost its domestic chip sector.

“We fully expect that in the months ahead … we’ll be adding additional companies to the new executive order’s restrictions,” one of the senior officials said.

A second official told reporters that the inclusion of Chinese surveillance technology companies expanded the scope of the Trump administration’s initial order last year, which the White House argues was carelessly drafted, leaving it open to court challenges.

Biden has been reviewing a number of aspects of U.S. policy toward China, and his administration had extended a deadline for implementation set by former President Donald Trump’s order while it crafted its new policy framework.

The move is part of Biden’s broader series of steps to counter China, including reinforcing U.S. alliances and pursuing large domestic investments to bolster American economic competitiveness, amid increasingly sour relations between the world’s two most powerful countries.

Biden’s Indo-Pacific policy coordinator Kurt Campbell said last month that a period of engagement with China had come to an end and that the dominant paradigm in bilateral ties going forward would be one of competition.

Senior officials said the Treasury Department would give guidance later on what the scope of surveillance technology means, including whether companies are facilitating “repression or serious human rights abuses.”

“We really want to make sure that any future prohibitions are on legally solid ground. So, our first listings really reflect that,” a second senior administration official said.

Investors would have time to “unwind” investments, a third official said.

The new list provided few surprises for investors looking to see if they need to unload even more Chinese stocks and bonds.

But some previously identified companies, such as Commercial Aircraft Corp of China (COMAC), which is spearheading Chinese efforts to compete with Boeing Co and Airbus, as well as two companies that had challenged the ban in court, Gowin Semiconductor Corp and Luokung Technology Corp, were not included.

In May, a judge signed an order removing the designation on Chinese mobile phone maker Xiaomi, which was among the more high-profile Chinese technology companies that the Trump administration targeted for alleged ties to China’s military.

Stewart Baker, a former Department of Homeland Security official, said the Treasury’s “settled regulatory and legal regime” made it a better place than the Defense Department to enforce the ban.

“This follows in a growing tradition of the Biden administration coming along and saying ‘Trump was right in principle and wrong in execution, and we’ll fix that,'” Baker said.

(Reporting by Michael Martina and Karen FreifeldEditing by Alistair Bell and Jonathan Oatis)

Under government pressure, big U.S. lenders rush to launch more pandemic loans: sources

By Koh Gui Qing, Michelle Price and Pete Schroeder

WASHINGTON (Reuters) – The U.S. government is pressuring large lenders to go live this week with another round of a key federal pandemic loan program despite many unresolved issues, sparking an industry scramble to get lending platforms ready, five people familiar with the discussions said.

The Paycheck Protection Program (PPP) reopens to large lenders on Tuesday, with many big banks including JPMorgan Chase & Co, Wells Fargo & Co and Bank of America, ready to start accepting applications, their representatives said.

But with dozens of changes to the rules and government technology system, the latest round is much more complex. Some industry executives worry that the government pressure to launch with so many unresolved issues could cause a rerun of the paperwork and technology snags that dogged last year’s launch.

While the program helped millions of small businesses, last year’s problems contributed toward some needy borrowers missing out while some ineligible companies and fraudsters got funds, oversight watchdogs have said.

A spokesman for the Small Business Administration (SBA), which jointly administers the PPP with the Treasury Department, said Congress expected the latest round to be launched swiftly to get cash to needy businesses as quickly as possible.

“SBA, in consultation with Treasury, is working around the clock to fulfill this congressional desire … and urges lending partners of all sizes to continue assisting eligible small businesses,” he added in an emailed statement.

As of Friday, the industry was circulating an eight-page document, seen by Reuters, of questions on the rules, required documentation and technology processes.

“Everyone is trying to move really quickly … but it’s just really difficult to launch a $300 billion program in a few weeks. People are struggling,” said Dan O’Malley, chief executive of Numerated, which provides PPP loan processing software to banks.

“The SBA and Treasury are pushing because of the economic need. They’re just trying to do the right thing,” he added.

Last week, officials contacted large lenders to ensure they would start accepting applications on Tuesday, said one of the five people, who spoke on condition of anonymity. Another person with knowledge of the discussions said officials are also anxious to get as much cash out the door as possible before Democratic President-elect Joe Biden takes over on Wednesday.

Under the program, lenders make loans to be repaid by the government provided borrowers spend the cash on eligible costs.

Last year, lenders issued 5.1 million loans worth $525 billion. As the pandemic drags into a second year, Congress granted $284 billion more in funds and changed the rules on eligible borrowers and expenditures.

Richard Hunt, chief executive of the Consumer Bankers Association, said the industry had “dedicated thousands of bank employees to make the process as efficient as possible.”

In addition to changes to the rules for first-time PPP loans, borrowers will be allowed a second loan provided they can show a 25% hit to their revenues. To fix technology capacity issues seen last year, the SBA has introduced a new loan application technology platform for lenders.

Combined, lenders say these amount to substantial changes. As of Friday, outstanding questions ranged from how to calculate employee numbers, which revenue documents were needed and how closely lenders must review them, to how borrower affiliates should be treated and requirements for loans to be forgiven, according to the document and sources.

The second source with knowledge of the discussions said more time to iron out the wrinkles could help mitigate “bad behavior.” But the first industry source said with so much confusion over who was eligible for second-time loans, he was more worried the SBA would reject applications.

Still, some small lenders which went live last week noted they’d had longer to prepare than last year and that their experience had so far been positive. A different industry source said big banks had tested their systems over the weekend and were “cautiously optimistic” Tuesday would go smoothly.

(Additional reporting by Pete Schroeder; editing by Jonathan Oatis)

Coming next from the Fed: How much for Main Street?

By Howard Schneider

WASHINGTON (Reuters) – The U.S. Federal Reserve responded fast to the coronavirus crisis with open-ended programs to keep financial markets running and ensure major companies could raise cash as they usually do through large capital markets.

By forcing major parts of the economy to simply stop operating, however, the current crisis poses a direct threat to the hundreds of thousands of small and medium-sized businesses that don’t raise money by issuing stocks or bonds, but rely on myriad combinations of bank loans, owner’s capital and, in some cases, personal credit cards or home equity loans.

The Fed, in coordination with the Treasury Department, is planning a Main Street Lending Facility as one of its linchpin programs in the crisis. U.S. Treasury Secretary Steven Mnuchin said on Wednesday he hoped to announce details of the program this week.

Ahead of that, the following summarizes what is known about the Main Street program and what analysts who watch the Fed closely think it might look like:

WHO WILL PAY FOR IT?

In the $2.3 trillion emergency response bill enacted on March 27, $454 billion is set aside for the U.S. Treasury to use for new programs at the Fed, including the one for “Main Street.”

HOW BIG WILL IT BE?

This is the crisis where “trillions” have become the go-to denomination. Joseph Brusuelas, an economist with business consulting firm RSM who has followed the Fed’s crisis response closely, expects the Fed to receive an $85 billion capital contribution from Treasury and turn that into $1 trillion of lending power for businesses.

HOW DOES THE FED DO THAT?

The Fed gets its punch through “leverage,” or taking a given amount of money from Treasury and allowing financial institutions to create perhaps 10 times that amount in credit. The Fed is not supposed to take losses, since that would amount to laying out taxpayers’ money that it is not authorized to spend. But most loans don’t go bad: in effect every dollar provided by Treasury allows many more dollars of lending, because most of it will be repaid. The Treasury’s funds are there to cover only the small portion expected to go bad.

HOW WILL IT WORK?

The Fed is restricted from lending directly to companies or individuals. But it can provide financing to a “special purpose vehicle” that then either lends to or buys assets from, say, a bank that does provide business and consumer loans. Because those lending institutions now know they can send the loans to the SPV, they are willing to make deals with companies and consumers even in a risky environment. Cornerstone Macro analyst Roberto Perli said the Fed’s SPV could either buy loans directly, one at a time, from banks, or have banks bundle them into larger securities.

WHO WILL BE ELIGIBLE?

This may be the most difficult issue. Large companies get credit ratings from independent agencies such as Standard & Poor’s or Moody’s, and the Fed has used those credit ratings to draw a line around which companies are eligible for its programs. For “Main Street” lending, the Fed may have to lean on banks to assess the finances of midsize companies and sift those struggling only because of the coronavirus from those that were struggling anyway. The focus may be on firms with 500 to 10,000 employees, since those below the cutoff can get small business loans and those above it typically use the capital markets. As of early 2019 there were about 18,000 companies with more than 500 workers – including more than 2,000 midsize manufacturers that are an important piece of the U.S. industrial base.

(Reporting by Howard Schneider; Editing by Dan Burns and Andrea Ricci)

U.S. Republican senators ask Treasury for suspicious activity reports on Hunter Biden

By Richard Cowan and Valerie Volcovici

WASHINGTON (Reuters) – The Republican chairmen of two U.S. Senate committees have asked the Treasury Department to provide any reports of money laundering or fraud related to former Vice President Joe Biden’s son’s business dealings with a Ukraine energy firm, according to a letter seen by Reuters on Friday.

The letter seeks “suspicious activity reports,” which are documents that financial institutions file with the Treasury Department’s Financial Crimes Enforcement Network whenever there is a suspected case of money laundering or fraud. It was unclear whether any such reports exist related to Hunter Biden, the former vice president’s son.

The request comes as Republicans seek to defend President Donald Trump against a Democrat-led impeachment probe into whether the president improperly pressured Ukraine to investigate the Bidens to improve his reelection chances.

Senate Finance Committee Chairman Chuck Grassley and Homeland Security and Governmental Affairs Committee Chairman Ron Johnson sent the request in a letter dated Nov. 15 to Treasury Department Director of Financial Crimes Enforcement Network Ken Blanco.

The chairmen said they want information by Dec. 5 related to Hunter Biden, who was on the board of directors of Burisma Holdings, which had been under investigation in Ukraine.

In their letter the senators noted Burisma was paying Hunter Biden as much as $50,000 a month and that their panels are investigating “potentially improper actions by the Obama administration with respect to Burisma Holdings and Ukraine.”

Grassley and Johnson, citing a story by a reporter with conservative ties, said Burisma’s consulting firm Blue Star Strategies used Biden’s board membership to gain access to Obama administration officials at the State Department.

The Bidens have denied any wrongdoing.

The elder Biden is a leading Democratic candidate for president in next year’s U.S. elections in which Trump is seeking a second four-year term.

Grassley and Johnson also said on Friday that they have asked the U.S. National Archives and Records Administration for records of 2016 White House meetings between Obama administration officials, Ukrainian government representatives and officials of the Democratic National Committee.

Trump and Republicans in Congress have been ramping up their rhetoric on the Bidens as the November 2020 U.S. elections near and as Democrats in the House of Representatives intensify their impeachment investigation of Trump.

Democrats are looking into whether Trump used the withholding of U.S. aid to Ukraine as leverage to press Kiev to launch investigations into the Bidens and allegations Ukraine meddled in the 2016 U.S. elections to hurt the Trump campaign. U.S. intelligence agencies have concluded it was Russia that tried to influence the 2016 election in favor of Trump.

On Thursday, Senate Judiciary Committee Chairman Lindsey Graham, an ally of Trump’s, wrote to Secretary of State Mike Pompeo requesting documents related to 2016 contacts between the Bidens, other Obama administration officials and former Ukrainian President Petro Poroshenko.

Trump has denied doing anything improper in Ukraine and has called the impeachment inquiry a witch hunt.

(Reporting by Valerie Volcovici and Richard Cowan; editing by Richard Valdmanis and Cynthia Osterman)

U.S. blacklists North Korean officials over rights abuses

Kim Jong Un leader of North Korea leading a meeting

WASHINGTON (Reuters) – The U.S. Treasury Department has added seven senior North Korean officials, including leader Kim Jong Un’s sister, to its sanctions list because of human rights abuses and censorship by the communist nation.

The department said in a statement on Wednesday that its Office of Foreign Assets Control added six men and one woman, all officials of the government of the Democratic People’s Republic of Korea or the ruling Workers’ Party of Korea, along with the Ministry of Labor and the State Planning Commission, to the Specially Designated Nationals List.

“The North Korean regime not only engages in severe human rights abuses, but it also implements rigid censorship policies and conceals its inhumane and oppressive behavior,” acting OFAC Director John Smith said in the statement, adding that the move aimed to expose the individuals responsible for the abuses.

The U.S. State Department said in a separate statement that the action coincided with the release of its second report on North Korean human rights abuses and censorship, which it called among the worst in the world.

Pyongyang “continues to commit extrajudicial killings, enforced disappearances, arbitrary arrest and detention, forced labor, and torture. Many of these abuses are committed in the political prison camps, where an estimated 80,000 to 120,000 individuals are detained, including children and family members of those subject to persecution and censorship,” the State Department statement said.

Among seven individuals on the Treasury Department blacklist is Kim Yo Jong, 27, who it said is the younger sister of leader Kim Jong Un, as well as the vice director of the Workers’ Party of Korea Propaganda and Agitation Department.

Also on the list is Minister of State Security Kim Won Hong, whose agency the department said “engages in torture and inhumane treatment of detainees during interrogation and in the country’s network of political prison camps.”

(Reporting by Tim Ahmann; Writing by Eric Walsh; Editing by Tom Brown and Steve Orlofsky)

U.S. government posts $107 billion deficit in August up 66% since last year

A security guard walks in front of an image of the Federal Reserve following the two-day Federal Open Market Committee (FOMC) policy meeting in Washington, DC

WASHINGTON (Reuters) – The U.S. government posted a $107 billion budget deficit in August, a 66 percent increase from the same month last year, the Treasury Department said on Tuesday.

This compared to a deficit of $64 billion in August 2015, according to Treasury’s monthly budget statement.

Analysts polled by Reuters had expected a $108 billion deficit for last month.

When accounting for calendar adjustments, August would have shown a $118 billion deficit compared with an adjusted $107 billion deficit in the same month in 2015.

The fiscal year-to-date deficit was $621 billion through August, up 17 percent from a $530 billion deficit at the same time last year. There were no calendar adjustments.

Receipts last month totaled $231 billion, a 10 percent increase from August 2015, while outlays stood at $338 billion, a 23 percent rise from the same month a year ago.

(Reporting by Lindsay Dunsmuir; Editing by Andrea Ricci)

U.S. posts $53 billion budget deficit in May

WASHINGTON (Reuters) – The U.S. government posted a $53 billion budget deficit in May, a 38 percent drop from the same month last year, the Treasury Department said on Friday.

The government had a deficit of $84 billion in May of 2015, according to the Treasury’s monthly budget statement.

Analysts polled by Reuters had expected a $60 billion deficit for last month.

However, when accounting for calendar adjustments, May would have shown a $102 billion deficit compared with an adjusted $84 billion deficit a year prior.

The current fiscal year-to-date deficit was $407 billion, up 11 percent from a $367 billion deficit at this time last year.

On an adjusted basis, the fiscal year-to-date gap was $413 billion compared with $367 billion at this time last year.

Receipts last month totaled $225 billion, a 6 percent increase from May 2015, while outlays stood at $277 billion, a 7 percent decline from the same month a year ago.

(Reporting by Lindsay Dunsmuir; Editing by Paul Simao)

U.S. posts $108 billion dollar deficit in March

U.S. Treasury Secretary Jack Lew holds a two dollar note as he speaks during an event about currency redesign hosted by the University of Maryland in College Park, Maryland

WASHINGTON (Reuters) – The U.S. government posted a $108 billion budget deficit in March, more than double the amount from the same period last year, the Treasury Department said on Tuesday.

The government had a deficit of $53 billion in March of 2015, according to the Treasury’s monthly budget statement. Analysts polled by Reuters had expected a $104 billion deficit for last month.

Accounting for calendar adjustments, March would have shown a $102 billion deficit compared with an adjusted $89 billion deficit in March 2015.

The current fiscal year-to-date deficit was $461 billion, up 5 percent from a $439 billion deficit this time last year.

Receipts last month totaled $228 billion, while outlays stood at $336 billion.

(Reporting by Megan Cassella; Editing by Andrea Ricci)