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Biden wants to go big — I wrote Monday about how Democratic nominee Joe Biden is haunted by blowback from the left over the size of the 2009 stimulus and wants to go as big as possible should he win and get a Democratic Senate. And he has mostly surrounded himself with progressive advisers who also believe it’s going to take another massive federal investment to prevent Covid-19 economic damage from becoming permanent.
Biden has stopped short of some progressive wish list items like a wealth tax and Medicare for All. And he actually does care about paying for stuff long-term. But he’s also committed to pushing as much as possible upfront spending to aid states and the jobless and build new infrastructure and otherwise unleash the federal government in every way possible. He’ll also push hard on boosting taxes on the wealthy and corporations as we noted here on Monday.
Biden’s senior policy adviser Jake Sullivan tells me: “The magnitude of the crisis in 2008 was enormous, but this time we’ve got multiple overlapping crises … As a result, the sense of possibility in both policy terms and political terms is big both in the scope of the agenda and the size of the investments the vice president wants to make.”
Immediate pressure on the left — If Biden does win and Democrats take the Senate there will be heavy pressure not to repeat what many on the left view as the mistakes of the early Obama years.
Via Dean Baker, senior economist at the Center for Economic Policy and Research and a frequent critic of the size of Obama’s 2009 stimulus bill: “The idea that the U.S. faces any major risk from our debt burden is simply wrong …
“As a group [Biden’s economic advisers] are pretty progressive and at the very least they will have his ear. Whether they carry the day in arguments or not who knows … But Biden was there under Obama and I think he recognizes what is universally recognized among Democrats that they made a really big mistake in not getting more.”
How big a stimulus? — Via Better Markets’ Dennis Kelleher: “The catastrophic damage of the economic crisis caused by the health crisis is going last for years. Addressing that will require an immediate $2+ trillion stimulus package that has to be focused on saving Main Street families and businesses by keeping people on payrolls, supporting front line health care workers, and saving our cities and states from debilitating deficits”
HAPPENING TODAY — Better Markets is hosting a virtual event on the anniversary of the Lehman Brothers collapse on Wall Street regulation at 2:30 p.m. featuring Sen. Sherrod Brown (D-Ohio) and releasing a report “The Road to Recovery: Protecting Main Street from President Trump’s Dangerous Deregulation of Wall Street.”
EVICTION BAN HITS LANDLORDS — Our Katy O’Donnell: “The White House’s move to ban evictions across the country during the coronavirus crisis is having an unintended side effect: It’s threatening the livelihood of millions of landlords.
“The sweeping order effectively requires landlords to subsidize distressed tenants’ housing through the end of the year or face criminal penalties and hefty fines. That’s a tall order for the country’s 8 million independent landlords — most of whom lease a unit here or there on property they own without the financial backing of professional management companies.”
FED ANNOUNCES PLAN FOR INPUT ON CRA — Our Victoria Guida: “The Federal Reserve board announced … that it will vote Sept. 21 to request input on an overhaul of the Community Reinvestment Act, which offers an alternative vision from the one finalized by its fellow regulator, the Office of the Comptroller of the Currency.
“Lael Brainard, the Fed’s point person on CRA, in January outlined a possible approach to rewriting the rules under the historic anti-redlining law. CRA requires banks to lend to low-income borrowers in their communities, which are based around their branch networks.”
WALL STREET POSTS SOLID GAINS — AP’s Alex Veiga and Damian J. Troise: “Wall Street kicked off the week with a broad rally Monday, clawing back much of the stock market’s losses from last week. The S&P 500 rose 1.3 percent, led by gains in technology, health care and financial stocks.
“Small company stocks were among the biggest gainers. The rally reversed a big slice of the index’s 2.5 percent slide last week, when the S&P 500 posted its biggest weekly decline since June. Treasury yields were mostly higher. The market’s strong start to the week is a reversal after a mostly downward shift in the market this month led by a sell-off in high-flying tech stocks that many analysts said was long overdue.”
BILLIONAIRES LINE UP TO TAKE THEIR UNLOVED COMPANIES PRIVATE — Bloomberg’s Dinesh Nair and Ruth David: “Move over, private equity: There are some new buyers in town, and they know their targets better than anyone. …
“Companies have already announced $26 billion of transactions to be taken private by a related party this year, up about 2,500 percent from the same period in 2019, according to data compiled by Bloomberg. Many of the deals involve ultra-rich founders who have been helped by cheap financing and the sluggish share performance of their businesses at a time when the broader market is surging.”
WALL STREET FUNDRAISERS TURN INTO WALLFLOWERS — Reuters’ Svea Herbst-Bayliss: “Early this year, a prominent billionaire tried several times to organize a fundraiser for presidential candidate Pete Buttigieg, a moderate who gained favor among Wall Street Democrats. No one responded to the outreach, and the fundraiser never happened, two people familiar with the matter said.
“That was just one sign that Wall Street has become a detour on the road to the White House, more than a dozen hedge fund managers, bankers and political analysts told Reuters. Wealthy bigwigs who were once super-fundraisers now find themselves largely sidelined ahead of the Nov. 3 presidential election.”
FED NAMES TREVOR REEVE AS NEW MONETARY AFFAIRS CHIEF — WSJ’s Nick Timiraos: “The Federal Reserve named Trevor Reeve, a senior adviser to Chairman Jerome Powell, to the powerful role of director of its monetary affairs division on Monday. Mr. Reeve has served as the division’s deputy director since 2017. Thomas Laubach, who served as the division’s director since 2015, died on Sept. 2 after being treated for cancer.
“Mr. Reeve joined the Fed’s staff of economists in 1998 and was appointed to its official staff in 2006, serving in key roles in its division of international finance and, later, monetary affairs. He has a doctorate in economics from Harvard University.”
WILDFIRES DURING PANDEMIC INTENSIFY ECONOMY PAIN IN THE WEST — AP’s Paul Wiseman: “The fires consuming the forests of California and Oregon and darkening the skies over San Francisco and Portland are also damaging a regional economy already singed by the coronavirus outbreak.
“Wildfires are destroying property, running up huge losses for property insurers and putting a strain on economic activity along the West Coast that could linger for a year or more. The credit rating agency A.M. Best estimates that insured losses from the blazes in California could top the unprecedented $13 billion recorded in 2017 when the state was hit by three of the five costliest fires in U.S. history.”
JPMORGAN’S DIMON: ECONOMIC RECOVERY COULD BE DERAILED — Reuters: “JPMorgan Chase & Co Chief Executive Jamie Dimon said the economic recovery from the coronavirus recession could be derailed by a lack of additional economic stimulus, the election and a second wave of infections.
“Dimon made the comments on Friday to stock analyst Brian Kleinhanzl of Keefe, Bruyette & Woods, who wrote about their meeting in a report. Dimon added that earlier government stimulus had delayed the full effects of the recession. As it hits, customers who have borrowed from the banks will feel the impact, the note said.”
TIPSTER GETS $10M FOR AIDING SEC CASE — Bloomberg’s Gregory Mott: “The U.S. Securities and Exchange Commission will pay $10 million to a whistle-blower whose ‘persistent efforts’ to expose financial misconduct helped the agency bring a successful enforcement action.
“The reward recognizes the tipster’s ‘extensive and ongoing assistance to the investigative team over the course of the investigation, including identifying witnesses and helping staff understand complex fact patterns and issues related to the matters under investigation,’ the SEC said in a statement Monday.”
TRANSITIONS — Per release: “The National Association of Realtors will promote Shannon McGahn to chief advocacy officer as Bill Malkasian, the trade group’s current chief advocacy officer, and Joe Ventrone , its top lobbyist, prepare to retire at the end of the year.” …
Eric B. Lorber of the Financial Integrity Network and Virginia Boney of the Commerce Department have been named fellows for the International Strategy Forum of Schmidt Futures, the philanthropic initiative started by former Google CEO Eric Schmidt and wife Wendy Schmidt. The full list.