Treasury Expected to Warn White House that Crypto Needs Major Regulations​​​

The Treasury Department is expected to warn the White House this month that cryptocurrencies could pose significant financial risks that outweigh their benefits unless the government rolls out major new regulations, the Washington Post reported. Through four separate reports set to be released this month, Treasury is expected to make clear that the Biden administration’s top economic officials believe crypto needs strong oversight, as lawmakers weigh new rules for the digital assets. Treasury’s reports will highlight the economic dangers of cryptocurrencies in several key areas, including the fraud risks they pose for investors. Treasury’s assessments conclude that cryptocurrencies do not yet pose a stability risk to the broader financial system — but that the situation could change rapidly. One of the reports will focus in particular on the financial hazards posed by stablecoins, a form of cryptocurrency that is in theory pegged to the value of the U.S. dollar. Treasury last fall called on Congress to give banking regulators new authority to police those digital tokens, but lawmakers have yet to reach agreement on how to do so. Meanwhile, the collapse of a $60 billion stablecoin project called Terra this spring helped accelerate a broader cryptomarket downturn that’s ongoing. Lawmakers are considering forcing the government to write federal rules for the industry, as crypto interests have poured money into a lobbying campaign to shape the debate. The sector is pushing to establish the Commodity Futures Trading Commission as its primary regulator, believing it is friendlier than the Securities and Exchange Commission would be. So far, the industry appears to be winning: Three bipartisan bills introduced this year all codify a leading role for the CFTC. It was not immediately clear how Treasury would weigh in on that question — or others that are dividing crypto interests and consumer and investor advocates.
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In related news, Securities and Exchange Commission Chairman Gary Gensler signaled that he would support Congress handing more authority to the SEC’s sister markets regulator to oversee certain cryptocurrencies such as bitcoin, the Wall Street Journal reported. Gensler, speaking at an industry conference, said Thursday he looked forward to working with Congress to give the Commodity Futures Trading Commission added power, to the extent the agency needs greater authority to oversee and regulate “nonsecurity tokens … and the related intermediaries.” Gensler, who headed the CFTC from 2009-14, qualified his remarks by saying he welcomed working with lawmakers as long as it doesn’t take away power from the SEC. “Let’s ensure that we don’t inadvertently undermine securities laws,” he said. “We’ve got a $100 trillion capital market. Crypto is less than $1 trillion worldwide. But we don’t want that to somehow undermine what we do elsewhere.” (Subscription required.)
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U.S. Weekly Jobless Claims Fall to Three-Month Low​​​

The number of Americans filing new claims for unemployment benefits fell last week to a three-month low, underscoring the robustness of the labor market even as the Federal Reserve raises interest rates, Reuters reported. Initial claims for state unemployment benefits declined 6,000 to a seasonally adjusted 222,000 for the week ended Sept. 3, the Labor Department said on Thursday. Data for the previous week was revised to show 4,000 fewer applications filed than previously reported. The Federal Reserve has raised interest rates by 225 basis points since March in a bid to tame high inflation by dampening demand in the economy. Despite that, there is little indication yet of widespread layoffs, and there are still two vacancies for every unemployed person. Claims remained well below the 270,000-300,000 range that economists say would signal a material slowdown in the labor market. However, the number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 36,000 to a nearly five-month high of 1.473 million in the week ending Aug. 27.
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Challenges Related to Bankruptcy Confirmation, Committees, Ethical Considerations and More to Be Discussed at ABI's Views from the Bench Program on Sept. 23​​​

ABI’s popular Bankruptcy 2022: Views from the Bench program will take place on Sept. 23 in the Washington, D.C., offices of Hogan Lovells US LLP. The program features the views of 24 sitting and retired bankruptcy judges. This year’s program will examine challenges related to bankruptcy confirmation, committee formation, ethics and much more. G. Eric Brunstad of Dechert LLP (New Haven, Conn.) will be the featured luncheon speaker during a conversation on recent Supreme Court developments. Attendees have the chance to earn up to 6 hours of CLE credit and 1 hour of ethics. Click here to register! 

Fed Chair Powell Vows to Raise Rates to Fight Inflation ‘Until the Job Is Done’​​​

Federal Reserve Chair Jerome Powell in an appearance Thursday emphasized the importance of getting inflation down now before the public gets too used to higher prices and comes to expect them as the norm, CNBC.com reported. In his latest comments underlining his commitment to the inflation fight, Powell said that expectations play an important role and were a critical reason why inflation was so persistent in the 1970s and ’80s. “History cautions strongly against prematurely loosening policy,” the central bank leader said. “I can assure you that my colleagues and I are strongly committed to this project and we will keep at it until the job is done.” The Fed has raised benchmark interest rates four times this year, with the fed funds rate now set in a range between 2.25%-2.50%. Markets widely expect the rate-setting Federal Open Market Committee to enact a third consecutive 0.75 percentage point increase this month. One reason for acting aggressively is to make sure that inflation running at around its highest rate in more than 40 years doesn’t become ingrained in the public consciousness, Powell said. “The Fed has the responsibility for price stability, by which we mean 2% inflation over time,” he said. “The longer inflation remains well above target, the greater the risk the public does begin to see higher inflation as the norm, and that has the capacity to raise the costs of getting inflation down.”
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Conflicting Surveys Paint Mixed Picture of Services Providers​​​

The U.S. services sector either expanded or shrank faster in August than in July, according to two separate business surveys, adding to other mixed signals of the U.S. economy’s strength in recent months, the Wall Street Journal reported. The Institute for Supply Management on Tuesday said that the nation’s services sector grew faster in August than in July, according to its Services PMI — an index that tracks industries including health care, finance, agriculture and construction. Separately, data firm S&P Global said on Tuesday that the services sector shrank faster in August than in July due to weak demand, according to the Services PMI Business Activity Index. Both indexes are derived from surveys of companies. Readings above 50 indicate an overall expansion in activity, while those below 50 indicate a contraction. The ISM index reading came in at 56.9 in August, up from 56.7 in July. The S&P Global index registered 43.7 in August, indicating the sharpest pace of contraction since May 2020, down from 47.3 in July. Representatives for the two surveys said their results accurately portrayed current business conditions, though they differ in methodology and sometimes conclusions. For their services indexes, the ISM polls company purchasing managers, while S&P Global also surveys other executives. The ISM surveys a larger set of industries — including construction, mining, utilities and government — that the S&P survey excludes. (Subscription required.)
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The Supply Chain Broke. Robots Are Supposed to Help Fix It​​​

The people running companies that deliver all manner of products gathered in Philadelphia last week to sift through the lessons of the mayhem besieging the global supply chain. At the center of many proposed solutions: robots and other forms of automation, the New York Times reported. On the showroom floor, robot manufacturers demonstrated their latest models, offering them as efficiency-enhancing augments to warehouse workers. Driverless trucks and drones commanded display space, advertising an unfolding era in which machinery will occupy a central place in bringing products to our homes. The companies depicted their technology as a way to save money on workers and optimize scheduling, while breaking down resistance to a future centered on evolving forms of automation. More than two years into the pandemic, persistent economic shocks have intensified traditional conflicts between employers and employees around the globe. Higher prices for energy, food and other goods — in part the result of enduring supply chain tangles — have prompted workers to demand higher wages, along with the right to continue working from home. Employers cite elevated costs for parts, raw materials and transportation in holding the line on pay, yielding a wave of strikes in countries like Britain. The stakes are especially high for companies engaged in transporting goods. Their executives contend that the Great Supply Chain Disruption is largely the result of labor shortages. Ports are overwhelmed and retail shelves are short of goods because the supply chain has run out of people willing to drive trucks and move goods through warehouses, the argument goes. Some labor experts challenge such claims, while reframing worker shortages as an unwillingness by employers to pay enough to attract the needed numbers of people.
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International Committee Seeking Nominations for Its First Annual "Matter of the Year" by Sept. 15​​​

ABI's International Committee is proud to announce its First Annual International Committee Matter of the Year Award! The nominated matter needs to involve the U.S. and other jurisdictions and be of some international legal significance and/or impact to international insolvency, as well as international cooperation. Nominations are due September 15, 2022, by 5:00 PM EDT. For more information, visit the International Committee page.

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