Latest news with #Trump-appointed
Yahoo
18 hours ago
- Politics
- Yahoo
Jackson warns of ‘existential threat to law' posed by court's nationwide injunctions ruling
Justice Ketanji Brown Jackson issued a scathing dissent in response to the Supreme Court's majority opinion on Friday that limited federal judges' ability to temporarily pause President Donald Trump's executive orders nationwide. The 6-3 decision, authored by Trump-appointed Justice Amy Coney Barrett, allows the president to implement his order to end automatic birthright citizenship as litigation on the matter continues. As The New York Times reported, 'the practice of giving citizenship automatically to the U.S.-born children of undocumented immigrants and some temporary residents and visitors would end in the 28 states that have not challenged the order.' The decision is expected to have far-reaching impacts on other aspects of the president's agenda, as he stated later Friday that his administration 'can now promptly file to proceed' with policies that had been subject to nationwide injunctions. Jackson, the newest member of the court, joined fellow Democratic-appointed Justice Sonia Sotomayor in a dissent that was also joined by Justice Elena Kagan, an Obama appointee. But Jackson wrote a separate dissent as well, in which she warned that the court's 'decision to permit the Executive to violate the Constitution with respect to anyone who has not yet sued is an existential threat to the rule of law.' She continued: It is important to recognize that the Executive's bid to vanquish so-called 'universal injunctions' is, at bottom, a request for this Court's permission to engage in unlawful behavior. When the Government says 'do not allow the lower courts to enjoin executive action universally as a remedy for unconstitutional conduct,' what it is actually saying is that the Executive wants to continue doing something that a court has determined violates the Constitution—please allow this. That is some solicitation. With its ruling today, the majority largely grants the Government's wish. But, in my view, if this country is going to persist as a Nation of laws and not men, the Judiciary has no choice but to deny it. Scroll to Page 98 below to read Jackson's full dissent, or click here. This article was originally published on
The Age
2 days ago
- Business
- The Age
Beware the doom loop: New bank rules raise debt fears
Yet at the urging of not just the banking sector, but the Trump administration, the Fed now wants to lower that ratio to levels similar to those of the largest non-US banks. Such a move would, on some calculations, release more than $US210 billion ($322 billion) of capital from the eight big US banks deemed to be of global systemic importance. Loading The proposal – it will be subjected to public comment – is supported by Fed chairman Jerome Powell and the new Trump-appointed vice chair, Michelle Bowman, who said it would help build resilience in the bond market, thus reducing the risk of market dysfunction and the need for the Fed to intervene in a future stress event. Bowman, who took up the role earlier this month, is the most senior US bank regulator. Her view is in stark contrast to her predecessor, Michael Barr, who said the move would reduce bank capital levels and significantly increase the risk that a G-SIB bank would fail and precipitate another crisis. The different stances reflect the differing priorities of those engaged in the debate about bank regulation. The proponents for lowering the leverage ratio, and also for excluding Treasury securities and bank deposits with the Fed from the calculations of leverage (which the US central bank is also considering), point to the periodic bouts of stress within the Treasury bond market. They argue that the leverage ratio has constrained the banks' ability to support that market in times of stress by limiting their capacity to buy bonds or fund other investors' trades. There have been bouts of limited liquidity in the market for Treasuries, most recently after Donald Trump's 'Liberation Day' announcement of tariffs, which have forced the Fed to intervene to shore up the market. Some recent auctions of Treasuries have also experienced weak demand, with the Trump administration's policies, particularly his tariffs, being blamed for what's been described as the 'Sell America' trade. The level of demand for Treasuries is about to become even more significant. If the Republicans can agree on the final form of Trump's One Big Beautiful Bill Act – their mega budget bill – they will add something around $US3.3 trillion to the US government's $US36.2 trillion of debt over the next decade. That makes the depth of demand for Treasuries critical because it will determine the prices at which the securities can be issued. The balancing item in the supply-demand equation is price, or the yield required for the market to absorb the issues. Treasury Secretary Scott Bessent has said lowering the leverage ratio and increasing banks' capacity to buy Treasuries could cut tens of basis points from the cost of government debt. On debt levels approaching $US40 trillion, that could mean very substantial savings. Loading Critics of the leverage ratio say it has kept bank balance sheets from potentially growing at the same rate as the supply of government debt, which exploded during the initial Trump administration and Joe Biden's term in the White House. There are at least two potential problems with looking at the leverage ratio as the solution to malfunctions within the government debt market. One is that the cause of the problem isn't the leverage ratio, but the rate at which the volumes of government debt have been pouring into the market - a rate that will only accelerate if the One Big Beautiful Bill Act passes. Cut the deficits and debt, and that would alleviate the perceived problem. Instead, the proponents of deregulation want to expand the balance sheet of the banks and raise their risk profiles, so that the deficits and debt can keep mounting. Both the government and bank balance sheets would be weakened. The second problem is that, if the regulators do free up more than $US200 billion of big bank capital, there is no certainty that the banks would use that to buy more Treasuries or prop up the market during times of stress. They could do what their shareholders would inevitably demand and buy back that suddenly-surplus capital, with no benefit to the Treasury market at all. The other measure being touted by the deregulation proponents, and being canvassed by the Fed, is whether Treasury securities and deposits with the Fed should be excluded from the banks' leverage calculations. The inclusion of supposedly 'risk-free' assets, like government bonds, from leverage calculations – even though they carry zero weighting in the core capital adequacy calculations – is based on the fact that they aren't risk-free. As the 2008 crisis demonstrated, if America's financial system teeters, it sends shockwaves throughout the world. The regional bank crisis in the US in 2023 started when a run on the Silicon Valley Bank forced the lender to sell its holding of government bonds at discounts to face value – incurring significant losses -- to generate liquidity to meet the calls on its deposits. Macro events like Trump's tariff announcements, or government inflation data, can move bond yields significantly and create paper losses that, if the bond had to be sold to raise cash, would become very real and reduce the capital levels of the bank involved. Carving Treasuries out of the ratio might free up even more bank balance sheet capacity to buy Treasuries (or return capital to shareholders), but it would make the biggest US banks even more vulnerable to external events, and render the US system more fragile. In Europe, that nexus between government bonds and banks was dubbed the 'doom loop,' or a vicious and circular relationship between levels of government debt and banking system risk. During the European debt crisis that followed the global financial crisis, banks hoovered up their country's sovereign debt. As concerns about the creditworthiness of governments, particularly the over-leveraged southern European countries, mounted, the balance sheets of the banks holding piles of their government's supposedly risk-free debt were weakened. There's a direct relationship between fiscal stability and financial stability. Loading The continuing explosion of US government debt on issue is undermining the fiscal stability of the US and increasing levels of financial system risk, even as the administration and its regulators propose weakening the levels of insurance against another banking and financial crisis. The shape of US bank regulation matters beyond America because of the dominance of the US dollar and the US financial markets within the global financial system. As the 2008 crisis demonstrated, if America's financial system teeters, it sends shockwaves throughout the world. No one wants history to repeat.
Sydney Morning Herald
2 days ago
- Business
- Sydney Morning Herald
Beware the doom loop: New bank rules raise debt fears
Yet at the urging of not just the banking sector, but the Trump administration, the Fed now wants to lower that ratio to levels similar to those of the largest non-US banks. Such a move would, on some calculations, release more than $US210 billion ($322 billion) of capital from the eight big US banks deemed to be of global systemic importance. Loading The proposal – it will be subjected to public comment – is supported by Fed chairman Jerome Powell and the new Trump-appointed vice chair, Michelle Bowman, who said it would help build resilience in the bond market, thus reducing the risk of market dysfunction and the need for the Fed to intervene in a future stress event. Bowman, who took up the role earlier this month, is the most senior US bank regulator. Her view is in stark contrast to her predecessor, Michael Barr, who said the move would reduce bank capital levels and significantly increase the risk that a G-SIB bank would fail and precipitate another crisis. The different stances reflect the differing priorities of those engaged in the debate about bank regulation. The proponents for lowering the leverage ratio, and also for excluding Treasury securities and bank deposits with the Fed from the calculations of leverage (which the US central bank is also considering), point to the periodic bouts of stress within the Treasury bond market. They argue that the leverage ratio has constrained the banks' ability to support that market in times of stress by limiting their capacity to buy bonds or fund other investors' trades. There have been bouts of limited liquidity in the market for Treasuries, most recently after Donald Trump's 'Liberation Day' announcement of tariffs, which have forced the Fed to intervene to shore up the market. Some recent auctions of Treasuries have also experienced weak demand, with the Trump administration's policies, particularly his tariffs, being blamed for what's been described as the 'Sell America' trade. The level of demand for Treasuries is about to become even more significant. If the Republicans can agree on the final form of Trump's One Big Beautiful Bill Act – their mega budget bill – they will add something around $US3.3 trillion to the US government's $US36.2 trillion of debt over the next decade. That makes the depth of demand for Treasuries critical because it will determine the prices at which the securities can be issued. The balancing item in the supply-demand equation is price, or the yield required for the market to absorb the issues. Treasury Secretary Scott Bessent has said lowering the leverage ratio and increasing banks' capacity to buy Treasuries could cut tens of basis points from the cost of government debt. On debt levels approaching $US40 trillion, that could mean very substantial savings. Loading Critics of the leverage ratio say it has kept bank balance sheets from potentially growing at the same rate as the supply of government debt, which exploded during the initial Trump administration and Joe Biden's term in the White House. There are at least two potential problems with looking at the leverage ratio as the solution to malfunctions within the government debt market. One is that the cause of the problem isn't the leverage ratio, but the rate at which the volumes of government debt have been pouring into the market - a rate that will only accelerate if the One Big Beautiful Bill Act passes. Cut the deficits and debt, and that would alleviate the perceived problem. Instead, the proponents of deregulation want to expand the balance sheet of the banks and raise their risk profiles, so that the deficits and debt can keep mounting. Both the government and bank balance sheets would be weakened. The second problem is that, if the regulators do free up more than $US200 billion of big bank capital, there is no certainty that the banks would use that to buy more Treasuries or prop up the market during times of stress. They could do what their shareholders would inevitably demand and buy back that suddenly-surplus capital, with no benefit to the Treasury market at all. The other measure being touted by the deregulation proponents, and being canvassed by the Fed, is whether Treasury securities and deposits with the Fed should be excluded from the banks' leverage calculations. The inclusion of supposedly 'risk-free' assets, like government bonds, from leverage calculations – even though they carry zero weighting in the core capital adequacy calculations – is based on the fact that they aren't risk-free. As the 2008 crisis demonstrated, if America's financial system teeters, it sends shockwaves throughout the world. The regional bank crisis in the US in 2023 started when a run on the Silicon Valley Bank forced the lender to sell its holding of government bonds at discounts to face value – incurring significant losses -- to generate liquidity to meet the calls on its deposits. Macro events like Trump's tariff announcements, or government inflation data, can move bond yields significantly and create paper losses that, if the bond had to be sold to raise cash, would become very real and reduce the capital levels of the bank involved. Carving Treasuries out of the ratio might free up even more bank balance sheet capacity to buy Treasuries (or return capital to shareholders), but it would make the biggest US banks even more vulnerable to external events, and render the US system more fragile. In Europe, that nexus between government bonds and banks was dubbed the 'doom loop,' or a vicious and circular relationship between levels of government debt and banking system risk. During the European debt crisis that followed the global financial crisis, banks hoovered up their country's sovereign debt. As concerns about the creditworthiness of governments, particularly the over-leveraged southern European countries, mounted, the balance sheets of the banks holding piles of their government's supposedly risk-free debt were weakened. There's a direct relationship between fiscal stability and financial stability. Loading The continuing explosion of US government debt on issue is undermining the fiscal stability of the US and increasing levels of financial system risk, even as the administration and its regulators propose weakening the levels of insurance against another banking and financial crisis. The shape of US bank regulation matters beyond America because of the dominance of the US dollar and the US financial markets within the global financial system. As the 2008 crisis demonstrated, if America's financial system teeters, it sends shockwaves throughout the world. No one wants history to repeat.
Yahoo
3 days ago
- Politics
- Yahoo
Trump wants to declare 'Mission Accomplished' on Iran. Not so fast.
President Donald Trump wants to declare 'Mission Accomplished' after U.S. airstrikes on Iran were followed by a fragile ceasefire between Israel and Iran. But as the smoke clears, we have no clear evidence that Trump's shoot-from-the-hip strategy achieved its goal of preventing Iran from obtaining nuclear weapons. And there's even reason to think his abrupt decision to blow up talks over a new nuclear deal and then drop bombs on the country could backfire by convincing Iran it needs to secure nuclear deterrence more than ever. Trump has repeatedly said that the U.S. has destroyed 'all' of Iran's nuclear facilities and capabilities, and trumpeted his ability to just as quickly make 'peace' abroad, as he helped negotiate a delicate ceasefire between Israel and Iran. (Both countries accused each other of violating the ceasefire immediately after it was scheduled to go into effect; IDF Chief of General Staff Eyal Zamir said 'the campaign against Iran is not over' but entering a 'new phase.') In an apparent bid to instantly commemorate the attacks on Iran, Trump proposed deeming the episode 'THE 12 DAY WAR.' But what exactly did Trump accomplish? He claims to have 'completely obliterated' Iran's key nuclear capabilities, a claim echoed by Defense Secretary Pete Hegseth. But as my colleague Steve Benen pointed out, some top players within the Trump administration have offered more cautious appraisals of the damage done: Gen. Dan Caine, the Trump-appointed chairman of the Joint Chiefs of Staff, said [on Sunday] it was 'way too early' to offer a meaningful assessment of the damage done by U.S. strikes. Soon after, JD Vance appeared on NBC News' 'Meet the Press,' and when host Kristen Welker asked if the Iran nuclear sites had, in fact, been completely and totally obliterated, the vice president hedged, saying only that the U.S. offensive 'substantially delayed [Iranians'] development of a nuclear weapon.' Expert observers of nuclear programs have cast doubt on Trump's claims as well. Jeffrey Lewis, a professor at the Middlebury Institute of International Studies at Monterey who tracks Iran's nuclear facilities, said, 'Israel and the U.S. have failed to target significant elements of Iran's nuclear materials and production infrastructure.' Among other things, he pointed out that it appears that locations in which Iran has stored highly enriched uranium have apparently gone unscathed and that other facilities where Iran can manufacture more centrifuges weren't targeted. Rafael Mariano Grossi, the director general of the International Atomic Energy Agency, told The New York Times that he believes the Iranians' claims that they have moved a stockpile of 60% enriched fuel to protect it. (The Times said Grossi's claim might explain why Vance has said, 'We are going to work in the coming weeks to ensure that we do something with that fuel and that's one of the things that we're going to have conversations with the Iranians about.') The Times, citing two Israeli officials familiar with the intelligence, also reports that the Israeli military's initial analysis estimated that Iran had moved equipment and uranium to protect them from airstrikes, after Trump's repeated threats to take military action. David Albright, the president of the Institute for Science and International Security, which tracks Iran's nuclear program, has said of Iran's nuclear capability after the strikes, 'I think you have to assume that significant amounts of this enriched uranium still exist, so this is not over by any means.' NBC News, citing three people with knowledge of an initial assessment by the Defense Intelligence Agency, reported Tuesday that the agency concluded that "the U.S. airstrikes on Iran's nuclear enrichment sites over the weekend were not as effective as President Donald Trump said and that they set the country's nuclear program back by only three to six months." CNN, which first reported on the intelligence assessment, noted that 'the analysis of the damage to the sites and the impact of the strikes on Iran's nuclear ambitions is ongoing and could change as more intelligence becomes available.' The White House acknowledged the existence of the assessment but denied the accuracy of its findings. White House press secretary Karoline Leavitt said in a statement, 'This alleged assessment is flat-out wrong and was classified as 'top secret' but was still leaked to CNN by an anonymous, low-level loser in the intelligence community. The leaking of this alleged assessment is a clear attempt to demean President Trump.' A number of experts, including Middlebury's Lewis, also believe Iran likely retains the capability to pursue nuclear bombs if it wishes to. And some point out that even extremely effective airstrikes by the U.S. forces would not prevent Iran from rebuilding destroyed infrastructure: Darya Dolzikova, a senior research fellow at the London-based Royal United Services Institute think tank, said that 'Iran retains extensive expertise that will allow it to eventually reconstitute what aspects of the programme have been damaged or destroyed.' What's worse is that Iran now has more incentive than ever to pursue a nuclear weapon. Consider the bigger picture: During his first term, Trump unilaterally withdrew from the nuclear deal with Iran brokered by President Barack Obama's administration and reimposed aggressive sanctions on the country in one of the most senseless diplomatic blunders in living memory. Then President Joe Biden, who was vice president during the Obama administration, foolishly refused to re-enter the deal and instead insisted on more stringent conditions than under the original deal — even though it was the U.S. that had unilaterally torpedoed the deal in the first place. Then, during negotiations with Iran in his second term, Trump abruptly shifted the goal posts on enrichment standards, supported Israel's surprise attack on Iran and then carried out his own strikes. It makes sense that recent events would strengthen the voice of factions in Iran who believe that negotiating with the U.S. is a fool's errand and that a nuclear deterrent is the only way to achieve Iranian security. 'Politically, there's greater impetus now to weaponize,' Kelsey Davenport, the director for nonproliferation policy at the Arms Control Association, told NBC News. Lewis said the U.S. and Israeli air strikes on Iran 'have not slowed the Iranian program nearly as much as' Obama's long-defunct Iran deal did. In other words, Trump has exerted tremendous resources, backed attacks on Iran that have killed hundreds of civilians, and risked a sustained international war only to end up in a position that may have increased Iran's appetite for nuclear weapons without destroying its capabilities. That doesn't sound like a mission accomplished. It sounds like a mission that has been set back. This article was originally published on
Axios
4 days ago
- Business
- Axios
The Fed sees biggest divide over rate cuts in years
Two President Trump-appointed Fed officials favor interest rate cuts as soon as next month. Seven of their colleagues don't envision cutting rates this year at all. Why it matters: It amounts to the biggest divide over the proper course for policy in years, one with delicate political optics as the Trump administration and some Republican lawmakers beat the drum for lower rates. The tension boils down to whether the Fed should hold back from adjusting policy, despite falling inflation in backward-looking data, because of the inflation risks ahead due to tariffs. State of play: Fed chair Jerome Powell, in his news conference last week and in Tuesday morning's congressional testimony, stuck to the wait-and-see message. He argued that the uncertainty around how prices will evolve calls for patience. It comes after governors Christopher Waller and Michelle Bowman said in recent days that rate cuts could make sense at the Fed's July policy meeting. They emphasized that any tariff-driven inflation would be a one-time adjustment, not a driver of ongoing inflation. Yes, but: They appear to be outliers on the committee. In projections last week, seven of 19 top Fed leaders envisioned leaving interest rates steady through the end of the year. Ten officials envisioned one or two rate cuts this year. Two officials envisioned three rate cuts this year. The projections do not have names attached, but it is reasonable to guess that those were Waller and Bowman. Between the lines: It's rare for two governors to openly adopt a policy view that diverges from the Fed leadership's party line. In contrast to reserve bank presidents, governors work in Washington alongside the chair, and in their publicly stated views, they rarely stray too far from the consensus. Governors tend to play an inside game rather than an outside game, which makes the open disagreement in the last few days all the more surprising — and evidence of wider-than-usual divides within the central bank. What they're saying: Asked why the Fed has not cut interest rates as aggressively as many other global central banks, Powell said, "[Y]ou're right that if you just look in the rearview mirror and look at the existing data that we've seen, you can make a good argument that would call for us to be at a neutral level, which would be a couple of cuts, maybe more." "The reason we're not [cutting rates] is forecasts ... that do expect meaningful inflation over the course of the next year." Asked about Bowman's and Waller's arguments for a potential July rate cut, Powell said that "if it turns out that inflation pressures do remain contained, we will get to a place where we cut rates sooner rather than later."
