Axios

The Chamber of Commerce and some business groups filed a lawsuit Wednesday against the Consumer Financial Protection Bureau over a new policy that targets discrimination in the financial sector.

Why it matters: The lawsuit, which claims the agency is overstepping its authority, is among the first to argue against a federal regulator by pointing to a recent Supreme Court ruling, West Virginia v. EPA, in which the court's conservative majority sharply limited the authority of the environmental agency to regulate carbon emissions.

• The consumer agency's policy is also an example of how federal regulatory agencies have tried to more aggressively combat race discrimination in the wake of the 2020 racial protests, the NYT notes.
• Co-plaintiffs include the American Bankers Association and Consumer Bankers Association.

Catchup quick: The CFPB announced its new "unfair discrimination" policy back in March, part of an update to its "exam manual," which helps banks understand regulations.

• The gist was that the agency will consider whether financial institutions are discriminating against customers, intentionally or otherwise. "Consumers can be harmed regardless of whether it is intentional," the agency said in a release.
• The CFPB had no comment on the lawsuit, but said in a statement to Axios that its policy was to help financial institutions "ensure they are following the law, and help make certain that consumers are receiving the fair and equitable treatment they deserve.”

What they're saying: "The CFPB decided to act despite the fact that Congress did not give them the authority to act, particularly in light of the West Virginia EPA case," Tom Quaadman, an executive vice president at the Chamber, told Axios.

• In its lawsuit, the Chamber emphasized that it is not in favor of discrimination, but that the agency doesn't have the explicit authority to police that kind of conduct.
• The CFPB, under Dodd-Frank, is explicitly tasked with making sure financial institutions treat consumers fairly — that would include ensuring that they don't discriminate, consumer advocates told Axios.
• "It just strikes me as so obvious that racial and gender discrimination is unfair," said Christopher Lewis Peterson, a law professor at the University of Utah, who worked at the agency during the Obama administration. "It surprises me that banking industry lobbyists struggle with that question."

What to watch: The lawsuit also alleges that the CFPB's funding mechanism is unconstitutional.

• Going after its funding could be an even bigger deal than the fight over the discrimination policy, said Peterson. "It's just the latest in a long line of attacks trying to weaken the CFPB."

Workers are set to hold onto the upper hand they gained over the past two years as more states start requiring pay disclosures on job postings. 

Why it matters: Salary transparency in job postings will prompt people to talk more openly about their own compensation and enable job seekers to gain more information about their value in the marketplace.

The Food and Drug Administration is poised to add new restrictions to the use of the term "healthy" on food products.

Driving the news: The agency on Wednesday announced a proposed rule that it said "would align the definition of the 'healthy' claim with current nutrition science," including the Dietary Guidelines for Americans.

Google Ventures has mothballed an algorithm that for years had served as a gatekeeper for new investments, Axios has learned from multiple sources.

Why it matters: This is a strategic sea change for one of venture capital's most data-driven firms, and a Big Tech acknowledgement that human judgement shouldn't always be automated away.

The market for government debt of big, rich countries like the United States and United Kingdom is, famously, supposed to be the deepest and most liquid on earth. They are the bedrock of the world financial system; bond prices aren't supposed to bounce around like a penny stock.

• That hasn't really applied in recent days, particularly in Britain. Bond prices are careening around wildly, in ways that indicate serious strains in the global financial system.

Why it matters: Government debt markets are showing signs of the kinds of turbulence and lack of liquidity that, should it persist, will make all financial assets more volatile and make a looming economic downturn worse.

• It's painful enough when interest rates rise because the Federal Reserve or Bank of England hikes them to fight inflation.
• It's all the worse if they rise beyond the point justified by those fundamentals. The sense of panic in the market and a lack of liquidity have undermined the desire or ability to buy bonds recently, even at attractive prices.

Driving the news: The BoE announced Wednesday morning it will buy long-term government debt on whatever scale necessary to "restore orderly market functioning." It also delayed the start of its quantitative tightening program meant to unwind securities acquired in its pandemic stimulus.

• This is an unusual situation, and comes after some of the biggest single-day swings in U.K. interest rates ever recorded. There were reports from the British press that the bank was trying to prevent runs on some pension funds.
• Britain's central bank is simultaneously tightening policy (by raising interest rates to try to bring down inflation) and, de facto, loosening policy (by buying bonds to try to restore functioning to the bond market).
• It is a highly uncomfortable balancing act, especially at a time the value of the pound is plunging and the credibility — and competence — of British policymakers is in question.

Meanwhile, things aren't nearly as worrying stateside as they are in Britain. But there are some signs that the market for U.S. Treasuries, a bigger and more globally important market than that for U.K. gilts, is seeing strains.

• A Bloomberg index that captures illiquidity in the bond market has soared in recent days, to levels only just shy of those reached during the worst of the pandemic in March 2020, Jim Bianco of Bianco Research notes.
• Probably not coincidentally: This month, the Fed's quantitative tightening has gone into full effect. By design, the Fed right now is seeking to remove liquidity from the market.
• For that reason, there would probably be a high bar for the Fed to follow the BoE's lead.

What they're saying: "There is no doubt that the Treasury market is illiquid these days, but it is not dysfunctional," said Roberto Perli and Benson Durham of Piper Sandler, in a research note. "Markets can function even with poor liquidity; it is a sharp and fast reduction in liquidity that makes them dysfunctional."

• "The Treasury market simply is not there, and the Fed won't do anything different unless the situation changes," they write.

The bottom line: These turbulent times in markets could make the economic pain ahead worse. But don't count on the Fed to come to the rescue, given its resolution to bring down inflation.

One of the largest players in decentralized finance (DeFi) is sitting with an offer that looks hard to refuse, but one that would divert it from a larger vision seeking to distance the protocol from centralized, authoritarian threat.

The big picture: MakerDAO's own stablecoin is collateralized in part by some 1.6 billion in another, which could become another revenue stream. The U.S.'s largest crypto exchange, Coinbase Global, is proposing to hold those assets for a 1.5% annual yield — offering some $20 million in recurring revenue. The problem is, Maker's co-founder, Rune Christensen, thinks it should leave vulnerable real-world assets, including other stablecoins, behind.

Oil and gas companies should not use the impending landfall of Hurricane Ian to raise gas prices, President Biden warned in a speech Wednesday.

Driving the news: Biden said Ian provided "no excuse" for price increases at the pump and that he would ask officials to look into potential "price gouging" if gas companies are found using the storm as a reason to raise rates.

More than 2,000 flights into, within or out of the U.S. were canceled as of mid-morning Wednesday as Hurricane Ian prepares to make landfall in Florida, according to flight tracking website FlightAware.

By the numbers: Florida's Orlando International Airport had canceled at least 316 scheduled departure flights as well as 385 arrival flights, per the tracker.

Millions of homeowners in the U.K. could see their mortgage rates skyrocket to 6% over the next year or so — from as low as 2% — a massive hit to monthly budgets at a time of soaring inflation.

Why it matters: The coming "rate shock" is a prime example of how homeowners in the U.K. feel the pain of central bank rate hikes faster than in the U.S., where the Federal Reserve's similarly steep increases generally only impact those making a new purchase.

Macy's is taking a step in Amazon's direction today with the launch of a third-party marketplace.

Why it matters: Retailers are looking for ways to source more products to sell, and to do so in cost efficient ways.

Cities and states across the country are looking to transform vacant office buildings into housing — a solution for both empty downtowns and housing shortages.

Why it matters: Commercial districts with little to no residential presence turned into near ghost towns during the pandemic, becoming a blight on the cityscape and a detriment to local businesses like shops and restaurants.

Our outer circle of people — friends of friends and casual acquaintances — are more important than we think.

Why it matters: We invest the most time and effort in our nearest and dearest relationships — family members and close friends — but the weak ties can be fruitful too.

White House officials are quietly preparing for the potential departure of Treasury Secretary Janet Yellen after the midterms, the first and most consequential exit in what could be a broad reorganization of President Biden's economic team, according to people familiar with the matter.

Why it matters: While her potential departure would give Biden an opportunity to respond to public concern over his handling of the economy, it would also create an immediate political headache: finding a successor who can be confirmed by the Senate.