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Senators scrutinize Visa and Mastercard over transaction fees
The Senate Judiciary Committee revisited the Credit Card Competition Act in a hearing Tuesday, with testimony from industry executives and retailer advocates. While lawmakers seemed supportive, the bill is highly unlikely to pass in the current Congress.
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Supreme Court grapples with Nvidia’s bid to avoid securities fraud case
Justices expressed skepticism about the arguments, highlighting the challenge of balancing the Private Securities Litigation Reform Act (PSLRA) goals of protection for corporations against frivolous lawsuits with ensuring investors can pursue legitimate claims.
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Fed cuts rates, Powell emphasizes independence as Trump administration looms
Facing questions about his future under Trump, Powell firmly asserted that he would not resign if asked by the President-elect.
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“Trump Trade” soars in aftermath of Tuesday’s elections
U.S. stock futures spiked after Donald Trump’s presidential win over Kamala Harris, with the Dow Jones gaining 3.4% and the Russell 2000 jumping over 5%. Investors appear optimistic about a pro-business environment under Trump and a Republican-controlled Senate, fueling gains in financial stocks.
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Supreme Court questions risk disclosure arguments in Facebook case
Facebook Inc. v. Amalgamated Bank examines risk disclosure requirements for companies. During oral arguments, the justices doubted shareholders’ claims.
read morePhotos: IMF and World Bank annual meetings draw climate, humanitarian protesters
WASHINGTON — Around 80 protesters gathered to criticize the World Bank and International Monetary Fund for climate and development policies on Friday. Representatives from various climate action groups met at Edward Murrow Park to hear from global advocacy leaders before marching to the White House to demand federal action.
Speakers highlighted the burden of debt on the global south, the overwhelming effect of climate change on developing nations and support for the Palestinian people. They urged world leaders to cancel debt in developing nations, fund the World Bank’s International Development Association and cut reliance on oil and gas.
“They need to pay us back,” said Shereen Talaat from MENA Fem Movement For Economic, Development, and Ecological Justice, before the march. “Years and years of extracting our resources in the Global South. They need to pay us back. They need to pay the bill of the climate crisis.”
The protest came at the end of the IMF and World Bank’s annual meetings, which have historically drawn protests.
The rally was attended by members of advocacy groups, including The Climate Reality Project. (Hannah Webster/MNS)
Attendees donned shirts and pins with phrases like “#Cancel The Debt,” “Get your a$$ out of oil and gas,” and “Keep 1.5℃ alive.” (Hannah Webster/MNS)
A speaker representing Stop Financing Factory Farming led the crowd in a chant of “World Bank, put your money where your mouth is.” (Hannah Webster/MNS)
After about an hour of speakers, the group began their march to the White House. (Hannah Webster/MNS)
As they walked, the protesters led cheers, including “World Bank, no thanks” and “What do we want? Climate justice.” (Hannah Webster/MNS)
Protesters marched for about 25 minutes, escorted by DC police. (Hannah Webster/MNS)
The march ended on the Ellipse, south of the White House. (Hannah Webster/MNS)
At the Ellipse, speakers commended President Joe Biden’s climate initiatives, while urging further action. (Hannah Webster/MNS)
IMF warns global public debt is nearing over $100 trillion and won’t stop
WASHINGTON — The International Monetary Fund projected global public debt to exceed $100 trillion by the end of 2024 in its bi-annual Fiscal Monitor report, released Wednesday at the Annual Meetings of the World Bank and the IMF.
“Public debt may be worse than it looks.” IMF Director of Fiscal Affairs Vítor Gaspar said at a press briefing Wednesday, noting the propensity for optimism in debt calculations.
The report also predicted that the global debt-to-GDP ratio will approach 100% by the end of the decade, rising above pandemic peak. Public debt is projected to grow faster than the pandemic in about one-third of countries covered by the World Economic Outlook.
High debt levels today raise the risk of financial instability, making economies more vulnerable to negative spillover, especially if borrowing costs rise or revenues fall unexpectedly. They also add higher spreads on future debt levels.
The Fiscal Monitor is prepared by the IMF Fiscal Affairs department and draws from the same database as the World Economic Outlook, which anticipated steady global economic growth, soft landing, and a dip in inflation in its latest report.
Given these circumstances, “most economies are well positioned to deal with fiscal adjustment,” Gaspar said. “The time to act is now.”
The United States and China, the world’s two largest economies, account for a significant share of rising public debt. Taking the U.S. and China out of the equation would drop the global debt-to-GDP ratio by around 20 percentage points, estimated the IMF.
As of Tuesday, U.S. public debt is $35.77 trillion, with $3 billion being added daily, according to Fox Business.
Former IMF Research Department Deputy Director and current Brookings Senior Fellow Gian Maria Milesi-Ferretti said that though U.S. “dynamics are clearly unsustainable,” the U.S. is in a very different position compared some other countries.
“Say, people running from U.S. treasury bonds, or rates spiking up because investors are getting jittery,” he said. “Unless you have a real change in perspective for the U.S. economy, you are unlikely to see that.”
Conversations around fiscal policy are especially relevant as the 2024 U.S. presidential election approaches. Vice President Kamala Harris would increase national debt by $3.50 trillion through 2035, while former President Donald Trump would increase the debt by $7.50 trillion, according to a US Budget Watch analysis of the candidates’ tax and spending plans.
April’s Fiscal Monitor report detailed a look into the ‘Great Election Year,’ with policy-related risks at the forefront of uncertainty.
Gaspar declined to comment on any specific elections at Wednesday’s briefing, but said that the IMF believes the situation in the U.S. is more stable, given that “policymakers have access to many combinations of policy instruments that enable them to put the path of public debt under control.”
“Adjustment in the United States, not only good for the United States, is also good for the rest of the world,” he said.
IMF Deputy Director of Fiscal Affairs Era Dabla-Norris said at the briefing that policymakers are facing a “fiscal policy trilemma”: maintaining sustainability amid very high levels of debt, accommodating spending pressures for private adaptation, and garnering support for reforms.
Poor countries in sub-saharan Africa are most vulnerable, as governments are caught between spending to alleviate poverty and being unable to do so with lower tax and debt-carrying capacity.
Dabla-Norris said that the latest Fiscal Monitor calls for countries to “put their public finances in order” so as to limit public debt risks.
Dabla-Norris also noted that the fiscal efforts need to be “people-focused.” She emphasized that governments needed to “build the trust’ of the taxpayers to ensure that “every dollar that is spent has maximum impact,” because its important to “preserve social spending.”
Doing so would create fiscal space “to combat future shocks surely to come” and will “sustain long-term growth,” she said.
Yellen says U.S. is finalizing $20 billion commitment to Ukraine aid
WASHINGTON — Treasury Secretary Janet Yellen said that the U.S. is finalizing a $20 billion contribution to G7’s $50 billion loan to Ukraine in remarks on Tuesday.
“We’re 99% of the way there,” Yellen said at a Treasury press conference, starting off the World Bank and International Monetary Fund’s annual meetings this week.
“It’s nailing down just a couple of relatively small things,” she added
Yellen emphasized that financing these loans would not be coming out of the pockets of the “American taxpayer,” as the contribution will be repaid from the earnings on frozen Russian sovereign assets.
The loan package is seen as a key element of continued U.S. support for Ukraine as it faces the prolonged economic effects of the war with Russia. The deal is also likely facing internal pressure to be secured, as a victory by Republican presidential candidate Donald Trump in the Nov. 5 election would likely cause blockage.
Last week, Yellen stressed the importance of fostering healthy economic relations at the Council on Foreign Relations. She added that she did not condone the “calls for walling America off.” Rising geopolitical tensions, such as Russia’s invasion of Ukraine, meant that the U.S. cannot afford to abandon its allies or “go it alone.”
Trump has made his critique clear on sending aid to Kyiv and has indicated that he would like to see the U.S. “get out” of the war.
The announcement comes as the European Parliament approved the bloc’s plan earlier Tuesday to use frozen Russian assets to loan up to 35 billion euros, or 38 billion in U.S. dollars.
Yellen also added that the U.S. has pressed the EU for “stronger assurances” that the money will remain frozen for a long period, which would reduce any further risk of U.S. taxpayers repaying the loan.
Despite the EU needing bi-annual renewal of the frozen assets, Yellen said that she had a “high degree of confidence” that the money will remain in place.
“The idea that any member of the European Union would block a continuation of sanctions on Russia, that is something that is unthinkable,” Yellen said. “I think the assurances are already there.”
In recent months, the U.S. has strengthened designated sanctions that have had “significant effects” on their targets, including third-country entities and individuals linked to supplying Russian military inputs.
Yellen announced Tuesday that next week, the U.S. will further escalate its efforts by unveiling “strong new sanctions targeting those facilitating the Kremlin’s war machine.”
She also addressed concerns about potential impacts on oil prices, noting that sanctions against Russia and Iran have not caused price spikes. Many countries maintain significant “spare capacity” in oil production, which has kept global markets well-supplied despite geopolitical tensions.
When asked about the targets of these sanctions, Yellen declined to comment but emphasized that the U.S. should expect to see intermediaries to be designated.
The G-7 intends for the initial funds to reach Ukraine by the end of the year.
IMF growth projections “good news” for the US, underwhelming globally
WASHINGTON — The International Monetary Fund nudged its growth forecast for the United States upward Tuesday, amid steady economic growth and a global dip in inflation.
The latest World Economic Outlook, released during the IMF annual meeting, projected the U.S. economy to grow by 2.2% in 2025, up 0.3% from its July predictions.
The report was good news for the U.S., Pierre-Olivier Gourinchas, IMF Director of Research, said in a press conference Tuesday. As price levels disinflated, growth remained steady and abated recessionary fears.
“The battle against inflation is almost won,” Gourinchas said, later adding that “the decline in inflation without a global recession is a major achievement.”
While U.S. growth was adjusted upward, global growth forecasts steadied at 3.2% for the next two years — 1.8% for advanced economies and 4.2% for emerging economies. The report described the global trend as “stable, yet underwhelming.”
Gourinchas attributed U.S. growth to the labor force, specifically highlighting productivity gains and an expanding workforce fueled by immigration.
A Pew Research study found that the U.S. immigrant population grew by about 1.6 million in 2023, the largest annual increase in over two decades. Pablo Guerron, a Boston College economics professor and former Federal Reserve Bank of Philadelphia economist, added that this influx of immigration has also helped to alleviate inflation.
He explained that without the immigration surge, wages would be higher in sectors typically filled by immigrants, driving up costs for consumers.
During the press conference, Gourinchas said the world was “dominated by supply shocks.” Guerron attributed this to the interconnectedness of global markets.
For example, a company in the U.S. is going to import goods from China, he said. Then, those companies have their own supply needs. “The moment that any of these links in the supply chain breaks, then it has a domino effect,” he said
The IMF report concluded that the unwinding of these supply shocks worked in tandem with effective monetary policy and strong labor markets to avoid a global recession. Still, Gourinchas warned against intervention in the absence of credible market failures or national security threats, be it through trade or industrial policies.
“These measures can sometimes boost investment and activity in the short run,” he said. “But they often lead to retaliation and ultimately fail to deliver sustained improvements in standards of living.”
Guerron echoed the sentiment, adding that, in the U.S., trade policies like tariffs would “not (be) as impactful as in previous trade wars” because many jobs would be automated if firms were forced to return to the U.S.
The IMF projections are based on assumed behavior of central banks. During the press conference, Gourinchas said the Fund’s report was under the assumption that the Federal Reserve will cut rates twice by the end of 2024 and four times in 2025.
The first test of these assumptions will come at the Fed’s November meeting, just days after the U.S. elections.
YELLEN WARNS AGAINST BROAD TARIFFS, STRESSES THE DANGERS TO THE US ECONOMY
WASHINGTON — Treasury Secretary Janet Yellen emphasized the need for the U.S. to maintain healthy economic global relations and warned against former President Trump’s proposed tariffs on Thursday at the Council on Foreign Relations in New York.
“Calls for walling America off with high tariffs on friends and competitors alike or by treating even our closest allies as transactional partners are deeply misguided,” she said.
Yellen, a longtime skeptic of tariffs, refrained from naming Trump but addressed the overuse of tariffs and its threats to national security. She warned that today’s issues — such as Russia’s invasion of Ukraine — meant that the U.S. cannot “go it alone.”
“We cannot simply draw from an old playbook,” she said.
Yellen called attention to key sectors like semiconductors, clean energy, and electric vehicles, where maintaining U.S. production capacity is vital for supply chain resilience and technological advancements reducing dependency on China.
She added that “sweeping, untargeted tariffs” would fuel inflation, harm domestic production, and raise the cost of living in the U.S., particularly for low-income households.
The critique comes just two days after Trump’s interview with Bloomberg Editor-in-Chief John Micklethwait, where he told the journalist that “tariff” was his “favorite word.”
Previously, Trump has threatened to impose across-the-board tariffs by as much as 60% on goods from China.
Though the Biden administration has kept most of the Trump administration’s tariffs on China in place due to fair trade violations, Yellen made it clear that broad-based tariffs “is not something that the Biden-Harris administration is supportive of at all.”
Vice President Kamala Harris has offered little insight into her trade policies, but she previously called Trump’s proposals a “sales tax” on the American people.”
In an interview with the Medill News Service, Matthew Goodman, director of REAL Econ at the Council on Foreign Relations, said that he anticipated “more trade on Harris’ side,” but she may choose to target technology instead.
“The Biden administration has been particularly focused on building this small yard-high fence on some critical technologies, like semiconductors, quantum computing, biotechnology,” Goodman said. “I would expect that work to be continued and strengthened.”
He added that Trump will likely lead with “anti-China rhetoric,” while Harris will take a more diplomatic approach.
Goodman referred to Yellen’s remarks as a “legacy speech,” just in time to direct attention to the Annual Meetings of the World Bank and International Monetary Fund, taking place next week.
Yellen emphasized that multilateral development banks have been “very high” on her agenda and that she expects the World Bank and other MDBs to prioritize global public goods.
While bolstering U.S. competitiveness and supply chains is essential, Yellen said that the nation will be forced to tackle global challenges like pandemics, climate change, and financial instability to mitigate risks of negative spillover to its economy and security. These will likely be the focus of conversation for the U.S. at next week’s meetings.
Last week, undersecretary for international affairs Jay Shambaugh alluded to a Project 2025 proposal for the U.S. to pull out of the IMF and World Bank if Donald Trump wins.
Despite concerns over the looming U.S. election outcome, World Bank President Ajay Banga said this has not been a topic of conversation.
“There’s no point in speculating on something when you don’t even know what the outcome will be,” he said at a press briefing that unveiled the Bank’s new corporate scorecard this morning.
He noted that the World Bank saw a substantial capital increase during Trump’s last term.
For the Bank, global public debt seems to be at the top of the agenda, estimated to top $100 trillion — or roughly 93% of global GDP, according to new projections by the International Monetary Fund.
The bank is providing liquidity to support “some of the poorest countries impacted by debt,” according to Banga.
“My objective at the annual meetings is to focus on what the bank can do to be a good player,” he said, adding that the scorecard will promote transparency of the Bank’s results and progress.
IMF Managing Director Kristalina Georgieva also gave an outlook for the Global Economy and Policy Priorities this morning in a “curtain raiser” for next week’s meetings.
The Annual Meetings of the World Bank and International Monetary Fund will commence on Monday, Oct. 21.
Supreme Court justices seem receptive to granting treble damages for personal injuries
WASHINGTON – Supreme Court Justices appeared receptive to broadening the scope of civil Racketeer Influenced and Corrupt Organizations (RICO) cases during oral arguments for Medical Marijuana, Inc. v. Horn on Tuesday.
The justices seemed likely to side with Daniel Horn, the case’s plaintiff, during their questioning of Attorney Lisa Blatt, who argued for the defendants.
“If you’re harmed when you lose a job, then you’ve been injured in your business, haven’t you?” Justice Elena Kagan asked. “The simplest, clearest reading of this statutory language is it doesn’t distinguish by what causes the harm.”
Those who want to contain the scope of RICO argue that if the Supreme Court allows Horn to plead a civil RICO claim, federal courts will become overwhelmed by the volume of federal RICO lawsuits that would otherwise be prosecuted in state courts.
Horn was injured in a car accident in February 2012 and sought a natural remedy for his pain relief. Employed as a truck driver, Horn purchased Dixie X CBD Dew Drops Tincture. He was regularly subject to random drug testing and thus researched the product, which claimed to contain 0% THC, the active ingredient in marijuana.
After calling Dixie X’s customer service line and consulting the FAQs on the company’s website to confirm the product did not contain THC, Horn consumed Dixie X, but subsequently failed a drug test for his employer. He was fired, and resultantly lost his wages and benefits.
Horn filed suit against Medical Marijuana Inc., Dixie Holdings, LLC and Red Dice Holdings, LLC, the three companies who falsely advertised Dixie X. Horn’s complaint included eight state law claims and one RICO claim, which alleged the companies committed mail and wire fraud.
RICO was enacted in 1970 in order to allow the government to prosecute individuals involved in organized crime. Individuals can sue under RICO and recover treble damages, or three times the amount of damage sustained.
The U.S. District Court for the Western District of New York ruled that Horn’s case lacked RICO standing, reasoning that the loss of wages stemmed from an antecedent personal injury, that is, the unintended ingestion of THC. Horn appealed the case to the U.S. Court of Appeals for the Second Circuit, which vacated the district court’s ruling and determined that Horn could file suit under RICO.
RICO allows plaintiffs to recover damages only if they are injured in their “business or property,” and the appellate court reasoned that “business” included employment, and thus Horn suffered an injury in his business.
The petitioners of the case argue that Horn’s lost wages were not a direct result of their false advertising, but instead a derivative of the antecedent injury. Plaintiffs cannot file suit under RICO for personal injuries, and the defendants claim that civil RICO suits are resultantly also barred for damages from personal injuries.
Justice Sonia Sotomayor questioned Blatt’s argument that personal injury cannot recover damages. “You’re raising an example that leads me to think that what you’re really arguing about is proximate cause, and not really whether personal injury is recoverable or not. It is under, by your own admission, certain circumstances,” said Sotomayor.
Kagan appeared most open to the expansion of RICO’s reach to damages caused by personal injury.
“It sounds like you think maybe the Second Circuit is right,” Blatt responded to Kagan’s argument. “The Second Circuit seemed to think lost wages are always recoverable, but medical expenses never would be because that results from a physical injury.”
Justice Ketanji Brown Jackson also questioned the role of personal injury in Blatt’s argument, given Horn did not allege personal harm but rather economic harm.
Still, other Justices appeared doubtful. Justice Clarence Thomas seemed more skeptical of the plaintiff’s argument, asking Attorney Easha Anand, who represents Horn, what she considered to be the difference between injury and damages. “So, if the harm is a loss of income, aren’t you collapsing or conflating the two?” he asked.
Chief Justice John Roberts similarly seemed doubtful, calling the business or property requirement a “significant limitation” to RICO’s reach. “The business or property requirement is pretty central to the heart of RICO and what separates it from all these other cases,” Roberts said.
Attorney Cory Andrews, General Counsel and Vice President of Litigation for the Washington Legal Foundation, which filed an amicus brief on the case urging the justices to limit the scope of RICO, spoke to Medill News Service about what an expansion of RICO could mean for state tort lawsuits.
“My guess is that justices will allow the suit to go forward,” Andrews said. “It’s going to turn every run-of-the-mill state tort action into a federal RICO action where plaintiffs are able to obtain treble damages.”
Fed Governor Waller, “Shadow Fed” Weigh Monetary Policy Rules
WASHINGTON — Federal Reserve Governor Christopher Waller credited the Shadow Open Market Committee for “[elevating] the public debate about monetary policy” and added to the consideration of monetary policy rules, in a keynote address at the group’s 50th anniversary celebration on Monday.
“For me, the central question is how much and how fast to reduce the target for the federal funds rate,” Waller said during his speech. “To help answer questions like this, I often look at various monetary policy rules to assess the appropriate setting of policy.”
The Federal Reserve is an autonomous agency that maintains a strict independence from other government entities and outside influences. Still, Fed Governor Waller spoke to many of the group’s most consistent critics, members of the SOMC.
In 1973, prominent economic scholars formed the SOMC, an independent, self-appointed watchdog over the Fed’s decisions. Since then, the SOMC has been an active voice in monetary policy debates through policy papers and regular meetings. The group currently consists of academics and past Fed policymakers.
At a retrospective event hosted by Stanford University’s Hoover Institution, the SOMC reflected on its 50 years of influence and highlighted key policy objectives. Discussion frequently returned to rules-based monetary policy, one of the SOMC’s core beliefs, as listed on their website.
Rules-based monetary policy binds central banks to a formulaic approach when determining target interest rates, ensuring predictability. The SOMC has consistently favored rules-based policymaking to central bank discretion.
Opening the conference, Stanford economist John Taylor detailed the implications of a rules-based approach to monetary policy. He highlighted how the federal funds rate approached 20% in the early 1980s.
“Let’s not go back to that, whatever we do,” Taylor said. “But since then, and to some extent, it’s because the Fed has followed a more rules based system… it’s gotten lower.”
About 30 years ago, Taylor invented one of the most common monetary policy rules, the Taylor Rule. Under the Taylor Rule, the target federal funds rate should be calculated using indicators such as the inflation rate and real GDP gap.
The SOMC does not endorse any particular policy rule on their website, instead urging only that central banks share their rules “so that it can be monitored and held accountable.”
Later in the conference, former Federal Reserve vice chair Donald Kohn argued that the Fed ignored policy rules by over-emphasizing employment following the COVID-19 pandemic.
Policy rules prescribed rate hikes in advance of the Fed’s initial raise in March 2022, according to a 2024 working paper by Balint Tatar and Volker Wieland.
“I do think, arguably, Fed policy in 2021 and 2022 didn’t adhere to these systematic things,” Kohn said. “It wasn’t necessarily focused on restoring price stability.”
Waller said that, with the introduction of the Taylor Rule in 1993, there was “immediate interest” within the Fed staff. He added that before each FOMC meeting, policymakers are provided with several analyses based on various monetary rules.
“Rules have become part of the furniture in modern policymaking,” Waller said.
Still, he added, rules have limitations.
Policymakers have access to vast amounts of data, only some of which is considered under each policy rule. Rules also fail to manage risk, a key factor in policy decisions, Waller said.
“While policy rules serve as a good check on discretionary policy, there are times when discretion is needed,” Waller said. “As a result, I prefer to think of them as ‘policy rules of thumb.’”
TRUMP-BACKED DEFI PLATFORM UNDERSCORES WASHINGTON’S CRYPTO PUSH
WASHINGTON – Former President Donald Trump is endorsing a new crypto venture, fortifying his support for digital currency, which has evolved into a key campaign stance.
The decentralized finance platform, World Liberty Financial, is founded by longtime crypto entrepreneurs Chase Herro and Zachary Folkman, and backed by the Trump family. It’s now accepting user registration for eligible candidates.
Trump is among a growing number of politicians who are throwing their support behind digital currencies ahead of the November election. Regardless of who takes the White House, lawmakers will be forced to reconsider how crypto is regulated amid growing industry criticism.
World Liberty Financial will launch a governance token, WLFI, members of the team said in an X Spaces live audio stream on Sept. 16.
Trump has marketed the platform to everyday Americans, but the whitelist is only open to accredited investors.
Ogle — an advisor for the platform and crypto security expert— said the platform’s exclusivity is a product of Securities and Exchange Commission regulation, which has come under scrutiny in the build up to the 2024 election. To qualify as an accredited investor, an individual must have a net worth of at least $1 million, under the Regulation D exemption for the SEC.
“Basically it’s saying you’re too stupid because you’re poor, and so you can’t make your own decisions,” he said. “That’s unjust, and it’s not American.”
Ogle said he joined as an advisor because he expected an influx of new users, given Trump’s following. He added that bringing on new users posed security risks, but had the potential to expand the industry’s reach.
“If people do onboard here, and nothing does go wrong, then a lot of people are going to get exposure and learn about a system where they otherwise would not have had access just because of ignorance, which I’m excited about,” Ogle said.
World Liberty Financial said on X that the team is not “turning (their) backs on the everyday American.” Ogle added that, while the whitelist is limited to accredited investors, once the DeFi project’s tokens are released to the public, WLFI will no longer oversee them, allowing other users to participate freely.
But Trump’s efforts to brand himself as a pro-crypto candidate contradict his prior stances. On July 11, 2019, Trump criticized cryptocurrencies on X for being “based on thin air” and highlighted their role in illegal activity. Two years later, he told Fox Business that Bitcoin seemed like a “scam.”
More recently, Trump has been an outspoken crypto supporter. At a July 27 Bitcoin conference in Nashville, Tenn., Trump threw his support behind Bitcoin, pledging to make the United States the “crypto capital of the world” if re-elected in November. He also said that he would fire SEC Chair Gary Gensler, who drew criticism from the crypto space for his aggressive regulatory stance.
Though Trump’s shift in crypto sentiment may seem sudden, DeFi platforms actually align with his “anti-regulation, pro-business” rhetoric, according to Michael Dambra, a professor at the University at Buffalo.
DeFi platforms are blockchain-based tools that allow users to directly trade, borrow, lend and invest assets without government intervention or use of a traditional middleman.
“A future president, deregulating, and allowing more access to crypto is something that I think would be very, very pleasing to someone who mistrusts the government,” Dambra said. “Because Bitcoin, Ethereum, is sort of independent of government control.”
But support for crypto is not limited to just one side of the ballot.
Vice President Kamala Harris notably stepped away from President Joe Biden’s stance against cryptocurrencies. Since becoming the Democratic nominee, Harris has refrained from taking any strong position, mirroring the conflicting stances of her party, but on September 24, Mark Cuban said on X that the Harris team told him they opposed “regulation through litigation.”
Since 2021, spending on federal crypto lobbying nearly tripled, according to the campaign finance non-profit, Open Secrets. Lobbyists spent a record high $24.8 million in 2023, contributing to campaigns across the political spectrum.
In response to this surge, lawmakers from both parties have adopted pro-crypto stances and introduced legislation to deregulate digital currencies. Both House Majority Whip Tom Emmer (R-MN) and Senate Majority Leader Chuck Schumer (D-NY) have suggested that bipartisan crypto legislation could pass their chambers by early 2025.
With the amount of “money involved,” Ogle said that cryptocurrency may not be a divisive issue among voters in the upcoming November election. He said that the division will exist more amongst “fuddy duddy” politicians who are “behind the times.”
“The people who are complaining are kind of yelling about the rain coming,” he said.
Neither World Liberty Financial nor the Trump campaign responded to a request for comments.
Supreme Court Weighs Federal Jurisdiction in Class Action Case
WASHINGTON – The U.S. Supreme Court heard oral arguments Monday in a case that could significantly impact when federal courts can retain jurisdiction over cases after plaintiffs amend their complaints to remove federal claims, with major implications for businesses facing lawsuits in state courts.
At the core of Royal Canin U.S.A., Inc. V. Wullschleger is the question of whether federal courts should assess their jurisdiction at the time a case is removed from the state court or when plaintiffs amend their complaints. The Supreme Court’s ruling can affect future litigation strategies involving federal and state law claims drawing significant attention from business groups such as the U.S. Chamber of Commerce and 22 state governments, highlighting its importance to both corporate and state court systems.
The case began when two Missouri pet owners, Anastasia Wullschleger and Geraldine Brewer, filed a class action lawsuit against Royal Canin and Nestlé Purina, alleging deceptive practices over pet food prescriptions.
The companies removed the case to federal court due to “federal ingredients” in the claims, but the plaintiffs later amended the complaint to remove those references, seeking a return to state court where Missouri consumer protection laws apply.
The Eighth Circuit held that there was no valid federal question jurisdiction and rejected supplemental jurisdiction over state claims thus remanding the case to state court.
The petitioner argues that the plaintiff’s post-removal amendment, which removed federal claims from the complaint, does not divest the court’s jurisdiction. The supplemental jurisdiction statute allows the court to continue adjudicating state claims, even when federal claims are no longer present in the complaint.
They cited precedents such as St. Paul Mercury Indemnity. Co. v. Red Cab Co. and Carnegie Mellon University v. Cohill to support their case. “Your Honor, we think, if you were to rule for the other side, that would be upsetting a hundred years of precedent, every single court of appeals decisions,” argued Katherine B. Wellington, counsel on behalf of petitioners, in response to Justice Sonia Sotomayor. “That would be changing the rules.”
However, Robin Effron, civil procedure and litigation law scholar, said, “When you’re looking at the statutory text here, you get a different answer… It would put some precedent in a different light, but not overturn it.”
Justice Ketanji Brown Jackson also expressed skepticism. “So what I don’t understand is why the plaintiff has to be stuck with the jurisdictional consequences of claims they are no longer bringing? They’ve given up their ability to seek relief on the federal claims,” Jackson said.
The respondent contends that their amended complaint is a valid strategy that should allow the case to return to state court. Their legal team asserts that the removal of federal claims eliminates federal-question jurisdiction and that retaining the case in federal court would undermine the principles of federalism.
Further, they argue that a case originally filed in federal court must be dismissed when federal claims are dropped, the same should apply to removed cases. The respondents said they believe the text of Section 1367 should not be interpreted differently for original and removed cases and that the Supreme Court, as a supervisory body, should adhere to the statutory text, even if it contradicts lower court rulings.
While the case may have implications for businesses, mechanisms like the Class Action Fairness Act (CAFA) already exist to keep class actions in federal court. “CAFA is the main barrier for keeping class actions mainly in state court – CAFA is already there to get class actions into federal court,” said Effron.
Legal experts have raised concerns about potential inefficiencies if courts lose jurisdiction based on amendments.
“Jurisdictional issues could be put into pleadings or not at the whim of the parties,” said Scott Dodson, Director of the Center for Litigation and Courts, who filed an amicus brief. “That could result in inefficiency down the road, with cases having to be dismissed late in the game because there’s no longer jurisdiction.”
The case presents the justices with a complex decision that will balance the integrity of federalism, statutory text, and longstanding precedents.
Employment surges, shifting expectations for interest rate cuts
WASHINGTON – The U.S. economy added 254,000 jobs in September, the United States Bureau of Labor Statistics (BLS) reported Friday. The report dramatically surpassed economists’ projections; the Dow Jones consensus forecast, for instance, predicted a gain of only 150,000.
BLS also revised employment data from July and August upward by 55,000 and 17,000 respectively. The unemployment rate came in at 4.1% — a slight downtick from 4.2% in August.
Source: US Bureau of Labor Statistics
September’s employment data will impact the Federal Reserve’s monetary policy decisions during their next meeting in November.
“(The report) does a couple things,” said Jason Schenker, Chairman of The Futurist Institute and President of Prestige Economics. “One, it should reduce and assuage fears and risks about recession. And two, it reduces the probability that the Federal Reserve will be under pressure to cut rates by 50 basis points on November 7.”
Between March 2022 and July 2023, the Federal Reserve raised its target interest rate from near 0% to 5.25-5.50%. After holding rates steady for a year, the Federal Reserve cut rates by a hefty half a percentage point in September. Before Friday’s employment data was released, Chairman Jerome Powell of the Board of Governors of the Federal Reserve signaled that September’s decision was not indicative of future aggressive cuts.
“We are not on any preset course,” he said at a National Association for Business Economics meeting in Nashville, Tenn. last Monday.
Source: Fedprimerate.com
Still, prior to Friday’s report, many experts predicted another strong rate cut at the Federal Reserve meeting in November. On September 30, CME FedWatch projected around a 35% chance of an additional 50 bps cut.
Since the report, that figure has dropped significantly. As of October 7, the group predicts about an 87% chance of a 25 bps cut in November.
Some economists believe the September data spurs confidence in the labor market, which some worried was slowing in the past months.
“I think this is better than a soft landing in a lot of ways,” said Tara Sinclair, a macroeconomist and professor at George Washington University.
A ‘soft landing’ is how many experts describe the economy’s best-case scenario for post-pandemic recovery. It entails reducing inflation, while limiting unemployment and dips in GDP.
Sinclair added that the September data was especially optimistic considering the falling unemployment rates for Black and Latino workers, groups who are “typically overexposed to risk of weakening labor market.”
Even so, future data could sway the economic outlook. September’s inflation data will be released this week, and before the Federal Reserve’s November meeting, there will be an additional jobs report. Inflammatory data in these reports could turn the tide toward stronger rate cuts.
Schenker suggested that election uncertainty could also motivate aggressive action from the Federal Reserve.
“Look back to what happened in 2000 with the hanging chads, and that led to a recession in the beginning of 2001,” Schenker said. “The Fed members have been around long enough to know that, and they will know that if it looks like you're going to be in an intractable, politically uncertain place after the election, then a 50 basis point rate cut could very well be on the table.”
Gen Z looks for more financial guidance and protection amid rising debt and consumerist culture
WASHINGTON — “Money comes & goes, but I’ll never be in my 20’s again.” Meet the generation that has opened their wallets to this TikTok trend.
They’d rather spend money now than invest for retirement or write monthly budgets.
Generation Z demonstrates the lowest levels of financial literacy of any adult generation, according to a 2023 report by the TIAA Institute, an arm of the giant retirement firm. This generation is goaded by a consumerist social media culture that promotes exhibition while underplaying the finances needed to sustain it.
Gen Z, born between 1997 and 2012, has prioritized living in the now. A survey by Experian, one of the three giants that set consumer credit scores, revealed that 63% of the group would rather spend on an experience than invest in their retirement.
Economists like Laurence Kotlikoff, a Boston University professor and research associate at the National Bureau of Economic Research, agree that rampant consumerist culture has stifled the generation’s financial mobility.
“Everything is about advertising, and you’re looking at Instagram and you’re getting ads every instant,” said Kotlikoff.
TickPick, a popular marketplace for entertainment tickets, recently advertised on Instagram with the slogan “money will come back.” They are one of several companies that have capitalized on a TikTok trend encouraging users to spend money to live in the present.
“We’re constantly bombarded with people telling us to buy this, buy that,” said Stephen Lin, co-founder of an advocacy group called Gen-Z for FinLit.
Stephen Lin (right) and Matthew Shadid (left) of Gen Z for FinLit are fighting for more.
Only 25 U.S. states require some financial literacy course to graduate.
Matthew Shadid is Gen-Z for FinLit’s other co-founder and an undergraduate student at Babson College in Massachusetts. He calls these kinds of advertisements “psychological manipulation.”
“From a marketing standpoint, that is an amazing advertisement,” Shadid responded. “But that is a horrible sentiment, and that’s the reason so many young people don’t really think about their futures.”
Now, nearly half of Gen Z already carries some form of debt, including through credit cards and student loans, according to BankRate. Another report, this one from the online financial site CreditKarma, said the generation is racking up debt faster than any other.
Gen Z’s financial stresses aren’t all a result of their decision-making. Many in their generation faced an uphill climb as they entered the job market amid the COVID-era recession.
Credit is tempting: Consumers tend to view it like free money, according to Shadid. He says the recent statistic on credit card debt is a measure of how accessible capital is for their generation.
“It just leads to so much pain down the road,” said Shadid.
President Joe Biden touted his administration’s crackdown on junk fees and corporate greed at his State of the Union address this year, while just last week, the Consumer Financial Protection Bureau announced a cap of $8 on credit card late fees that will go into effect later this spring. Currently, credit card companies charge an average of $32. The bureau estimates the ruling will save consumers $10 billion in late fees.
Several groups representing big banks, including the U.S. Chamber of Commerce, have mobilized to sue, but the CFPB is doubling down.
The Gen-Z for FinLit founders say it is a step in the right direction, but not enough.
“There are a lot of predatory consumer practices, whether it be overdraft fees, buy now, pay later, or other payday loans that are really affecting Gen Z consumers,” said Lin, himself a college student at New York University’s Stern School of Business. “These Gen Z consumers, who don’t have that financial knowledge, can’t really handle this themselves.”
Lin and Shadid acknowledge there are many economic factors working against their generation–rising prices, inflation that is outpacing wage growth, and student loan debt, to list a few.
Generation Z is more likely to be college-educated, employed full-time, and earning higher wages than their parents were at the same age three decades ago, according to Elizabeth Renter, a data analyst at American personal finance company NerdWallet.
But, Renter said, Generation Z contends with their own unique challenges.
“Student loan debt and housing affordability weigh more heavily now than they did in the 1990s,” she said.
In the face of these stressors, Lin calls personal finance education an “equalizer” and “game changer.”
Currently, only 25 U.S. states require some financial literacy course to graduate; the youth-run advocacy group is pushing for more.
“The only thing you can control is your education and the decisions you make based off that. The macro factors are the macro factors – and that’s it,” said Shadid.
Haley Sacks, affectionately known as Mrs. Dow Jones online, is a financial expert who has made herself an educational resource to younger generations.
People’s money mindsets – the way they approach money – are fixed by the age of 7, Sacks said during a talk sponsored by Washington Post Live.
With the proliferation of social media and streamlined payment mechanisms that younger generations have grown accustomed to like “tap to pay” and “buy now, pay later” – Sacks says it’s harder for young people to foster healthy spending habits.
Sacks said younger generations have evolved their definition of the American Dream.
“With the changing tides and the world that we’ve inherited, the financial education needs to change too,” Sacks continued. “It’s a completely different economy and world that we’ve inherited.”
For Gen Z, the American Dream is all about freedom of choice, whether that be the traditional path of home ownership or paving your own way, Shadid said.
For some, that means breaking societal expectations, and choosing to live at home with their parents.
“Looking at your own financial circumstance, and understanding that your financial journey is yours and not someone else’s is an important mindset to have,” Lin said.
Published in conjunction with 
Sanders presses for 32-hour workweek in new bill and hearing
WASHINGTON — Sen. Bernie Sanders (I-Vt.) is calling on Congress to press for a 32-hour workweek without any loss in pay, noting that Americans are working longer hours than people of any other wealthy nation even with the advancement of technology.
“Despite these long hours, the average worker in America makes almost $50 a week less than he or she did fifty years ago after adjusting for inflation,” Sanders said, chairman of the Health, Education, Labor and Pensions Committee, during a hearing on Thursday that focused on the issue.
He noted that it has been 80 years since Congress had held a hearing on the topic, and he called several worker advocates to testify about the benefits of reducing standard work hours. He is introducing new legislation that has the backing of several unions including the AFL-CIO.
Shawn Fain, the president of the Union Auto Workers, testified on Thursday in favor of the legislation, saying working fewer hours has advantages such as higher productivity and employee well-being.
“Those who make this country run, who build the products and contribute the labor, have less and less time for themselves, for their families, and for their lives,” Fain said in his testimony.
“The working class people are not lazy, they are fed up, they are fed up with being left behind, stripped of dignity, as wealth inequality in this nation spirals out of control,” he said.
He added that workers today are living paycheck to paycheck and working deep into their 70s and 80s because they cannot afford to retire.
Sanders said that over the past 50 years, technology has undergone tremendous progress, yet the majority of the financial benefits have gone to the wealthiest, while worker wages have either stagnated or declined.
“Today’s CEOs earn 350 times more than the typical employee, and workers across the nation are witnessing the disintegration of their families. … people have to miss out on family time in order to work longer hours,” he said,
Sanders’s proposal has the backing of other Democrats, including Rep. Mark Takano (D-Calif.) who introduced companion legislation in the House. In practice, many companies could implement the measure by instituting four, eight-hour work days.
But it is unclear whether the bill will garner enough bipartisan support to become law. Sen. Bill Cassidy (R-La.), ranking member of the committee, said businesses need to maintain a 40-hour workweek to remain competitive not just locally but globally and a government mandate for a 32-hour workweek will be catastrophic.
“Government should not undermine an employer’s ability to keep their doors open with unreasonable mandates,” Cassidy said in his opening statement. He suggested that requiring such a cut in work hours will require companies to pay at least 25% more to employees, which could result in jobs being shipped overseas.
He added that businesses are always allowed to voluntarily try out a 32-hour workweek themselves.
Some representatives of the business sector also came out in favor of the shorter workweek. Jon Leland, chief strategy officer of Kickstarter, a crowdfunding platform, testified that his company went to a four-day workweek in 2022 after the pandemic.
“The truth is, a lot of time at work is not used efficiently,” Leland said in his testimony. “In the six months of the pilot, our ability to hit our company goals jumped from 62% to 95%”
Leland found so much benefit in the concept that he co-founded WorkFour, an organization to help companies transition to a four-day workweek.
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Medill Today | November 21, 2024