Axios AM

May 05, 2023
🇲🇽 Happy Friday! It's Cinco de Mayo. Read the backstory from Axios' Russell Contreras.
- Smart Brevity™ count: 1,468 words ... 5½ mins. Edited by Jennifer Koons.
1 big thing — Scoop: Hunter's clash with White House

Top aides to President Biden have clashed with Hunter Biden's team over strategies for dealing with the legal battles and Republican attacks that surround the president's son, Axios' Alex Thompson reports.
- Why it matters: The tensions led Hunter — without involving the president's top aides — to hire prominent lawyer Abbe Lowell in December, as part of a plan to take a more combative approach than the White House and Hunter's previous lawyer had taken.
Hunter's team also is moving toward creating a legal defense fund, and hiring ethics advisers for it. High-level Democrats and others are worried about the idea of the president's son soliciting money to pay for his legal troubles.
- "For this fund to work, it must be extraordinarily transparent and even restrictive by prohibiting foreign citizens and registered lobbyists from contributing," Anthony Coley, the former top spokesman for the Justice Department who was senior adviser to Attorney General Merrick Garland, told Axios.
- "Without these type of guardrails, the fund will be a legitimate headache for the White House.”
Lowell's hiring was abrupt — and unwelcome among some involved in Hunter Biden's legal matters. Hunter, 53, is facing a Justice Department investigation into his taxes and a potential gun charge, probes from House Republicans and a child-support court case in Arkansas.
- Longtime Biden lawyer Bob Bauer, who is married to White House senior adviser Anita Dunn, had recommended Hunter's previous lawyer for the congressional investigations, Josh Levy. Bauer had no role in hiring Lowell.
- Instead, Bauer was simply informed that Lowell was being hired. Levy resigned soon afterward, according to people familiar with the episode.
In January, Lowell — who recently represented Jared Kushner, former President Trump's son-in-law — met privately with Bauer and top White House officials, including Dunn and special counsel Dick Sauber, to clear the air and discuss the new strategy.
- White House officials and Bauer asked Lowell to improve the communication from Hunter's team.

What's happening: Hunter's team has shifted from largely not commenting on GOP attacks or stories in conservative tabloids to publicly fighting back.
- Lowell has become an increasingly powerful force in Hunter's orbit as a result.
The White House press team has been wary of commenting on Hunter, preferring to distance President Biden from the legal matters involving his son as a private citizen.
- But White House spokespeople charged with responding to House GOP investigations also have become more aggressive in defending Biden family members, as Republicans try to link Hunter's business activities to Joe Biden's policy moves.
State of play: Hunter's team and allies have not made a final decision on whether to move forward with a legal defense fund, according to people familiar with the matter.
- But supporters of President Biden have been approached for potential roles with the fund, in communications and ethics oversight.
- They include Richard Painter, a former ethics lawyer under George W. Bush who has become an aggressive anti-Trump commentator.
Hunter Biden, a former investor and lobbyist, doesn't have a steady source of income and is reportedly millions of dollars in legal debt.
- Lowell said Monday that Hunter has paid $750,000 in child support to Lunden Roberts, an Arkansas woman with whom Hunter had a child.
- Many of Hunter's expenses in recent years have been covered by L.A. attorney Kevin Morris, a confidante and adviser to the president's son.
During a hearing in Arkansas this week on Hunter's paternity case, Lowell was in court with Hunter's local counsel. Lowell attended because he believes conservatives are weaponizing the case as part of a broader attack on the Biden family, according to a person with insight into his moves.
- Last week, Clark met with Justice Department lawyers, amid speculation that a decision on whether to charge Hunter could come soon.
2. Big banks get bigger
Illustration: Maura Losch/Axios
Banks will keep getting bigger, with the current stress amplifying long-term trends toward consolidation, Matt Phillips writes for Axios Markets.
What's happening: Shares of regional banks continued to drop yesterday.
- PacWest, the L.A.-based bank that has been in the markets' crosshairs, plunged 50%+ after reports it was considering a sale.
🧠 How it works: The basic business of a bank is to borrow money at a low interest rate — usually over a short time period — and lend it at a higher one.
- The difference between the two rates is the bank's profit.
- If it suddenly becomes a lot more expensive to borrow — but the rates at which the banks lend don't go up — banks make a lot less money.
State of play: Since Silicon Valley Bank imploded, the rate of interest that regional banks pay to borrow has gone up a lot.
- Meanwhile, the rate for the safest giant banks hasn't gone up that much.
Translation: Small regional banks are likely to lose more business to larger banks, where already-sizable advantages of scale just got larger.
Context: This isn't new. Banks have been consolidating since the '80s — especially since the U.S. government did away with regulations barring interstate banking in the 1990s.
3. 🦠 U.S. death rate falls as COVID slips to 4th


Death rates in the U.S. dropped an estimated 5% in 2022 from the previous year, as the overall number of COVID deaths fell, Axios' Tina Reed writes from provisional data released by the CDC yesterday.
🧮 By the numbers: COVID slipped from the top three causes of death. But cancer deaths and deaths from heart disease both rose last year.
- COVID was the underlying cause or contributing cause in about 7.5% of U.S. deaths in 2022.
4. 🇬🇧 1,000 words: Eve of coronation

Aerial view of London last night (Tower Bridge foreground), ahead of Saturday's coronation of King Charles III and Queen Consort Camilla.

Big Ben last night, with "GOD SAVE THE KING" in lights.
5. 🎖️ Tracking power: Next Joint Chiefs chair

President Biden is expected to nominate the chief of staff of the Air Force — Gen. Charles "CQ" Brown Jr., a seasoned officer and fighter pilot — as chairman of the Joint Chiefs of Staff, The Washington Post reports.
- Brown would succeed Gen. Mark Milley, whose term expires at the end of September.
Why it matters: The top two Pentagon leadership positions would be held by African American men — Brown and Defense Secretary Lloyd Austin — for the first time.
- Brown would be the second Black man to become chairman, after Colin Powell. —N.Y. Times
6. 🍎 Apple: The LeBron of tech


Apple, America's most valuable company, posted better-than-forecast earnings and sales numbers for the three months that ended April 1, which is Apple's Q2, Matt Phillips writes for Axios Markets.
- Why it matters: With a market value of more than $2.6 trillion, Apple is the most heavily weighted stock in S&P 500. So it influences the index more than any other stock.
"Apple delivered a strong LeBron-like March quarter," wrote analyst Dan Ives of brokerage firm Wedbush Securities. "[T]he company saw beats on the top and bottom lines."
- Go deeper: Apple CEO Tim Cook says AI is "huge," but care is needed (by chief tech correspondent Ina Fried).
7. 💰 Half of Americans worry about deposits

Nearly half of Americans say they're worried about the safety of the money they have in the bank — a level of anxiety last seen during the financial crisis in 2008, Axios' Emily Peck writes from a new Gallup survey.
- Why it matters: Though most people's deposits are in FDIC-protected accounts — where they're safe — the results are a sign of diminishing confidence in the finance system, magnified by weeks of relentlessly grim headlines.
8. 🦾 AI brings filmmaking to masses

Runway AI — the generative AI company whose video-editing tools were critical to making "Everything Everywhere All at Once" — has opened parts of its toolkit to the public, Jennifer A. Kingson writes for Axios What's Next.
- Why it matters: Now anyone can turn images, text or video clips into 15-second reels.
What's happening: Runway granted public access to its image-to-video model, Gen-1, and, in a limited release, to its text-to-video product, Gen-2.
- Gen-1 is available on a mobile app that lets users take or upload a picture or video and instantly generate a short video clip based on it — applying filters like "Claymation" or "Cloudscape."
How it works: The company's AI Magic Tools let users edit content in dozens of ways — by removing backgrounds from videos, erasing and replacing parts of a photo or blurring out faces or backgrounds, for example.
- Runway tools help produce "The Late Show with Stephen Colbert," design shoes for New Balance and make videos for Alicia Keys.
💭 Runway's technology is like "having your own Hollywood production studio in your browser," CEO Cristóbal (Cris) Valenzuela tells Axios.
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