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The Education Department and consumer advocates warned this week how devastating the House Republican debt ceiling plan would be for student borrowers and those seeking higher education, YahooFinance.com reported. The plan would reverse the president’s student loan forgiveness up to $20,000 even if the Supreme Court rules in favor of its legality in the next months. It would also cancel the creation of a more affordable student loan payment plan. Overall, the Education Department would see a 22% reduction in funding, the department said Tuesday, which would shrink the Pell Grant program that helps lower-income students afford college. The proposal, which House Speaker Kevin McCarthy tweaked Tuesday evening in an effort to wrangle enough votes among the GOP to pass the House, comes as the Treasury continues to move money around to keep the federal government from defaulting on its debt. Those maneuvers could stop working sooner than expected — as early as mid-June — if capital gains revenue continues to come in weaker than expected, Yahoo Finance previously reported. A default could shake the markets and send ripple effects through the economy. President Joe Biden has already promised a veto, with the White House pointing to a recent Moody’s Analytics report that found the bill would cut into near-term economic growth if enacted.

Rep. Maxine Waters (D-Calif.), the top Democrat on the House Financial Services Committee, suggested during a subcommittee hearing examining stablecoin regulation on Wednesday that lawmakers may need to start stablecoin legislation from scratch, YahooFinance.com reported. Waters, who was previously chair of the full committee and led negotiations with Republicans on stablecoin legislation last year, said the bill doesn't account for issues tied to crypto exchange FTX's failure as well as separate bills Republicans led by now Committee chair Patrick McHenry (R-N.C.) and Democrats came up with last year. "The posted bill in no way, represents the final work on stablecoins by negotiations between the two of us," said Waters during a House Financial Services Subcommittee on Digital Assets hearing. "It does not represent any final product of any kind, and so I think we're starting from scratch to deal with stablecoins. We must get a stablecoin bill. I think we can do that, but disregard the bill that has been posted altogether."

House Republicans demanding spending cuts in exchange for raising the nation’s debt limit have rallied around a seemingly straightforward proposal: recalling billions of dollars in coronavirus relief funds that Congress approved but have not been spent, the New York Times reported. Top Republicans regard the idea of rescinding unspent pandemic emergency money — an amount estimated to be between $50 billion and $70 billion — as an easy way to save money while avoiding more politically perilous options like cutting funding for popular federal programs. On Wednesday, Speaker Kevin McCarthy highlighted the measure when he finally unveiled House Republicans’ proposal to raise the debt limit for one year in exchange for a series of spending cuts and policy changes. The party plans to vote on the legislation next week. But going after the leftover money scattered across the patchwork of government programs used to dole out the relief funding — dozens of different accounts — is easier said than done. And even if House Republicans can find a way to identify and get their hands on the comparatively small sums of leftover money, it would do little to shrink the nation’s $1.4 trillion deficit. Additionally, the federal budget analysts who calculate the deficit have already accounted for the fact that some of the money Congress allocated for pandemic relief programs will likely never be spent.

Sen. Elizabeth Warren (D-Mass.) and Rep. Alexandria Ocasio-Cortez (D-N.Y.) sent letters on Sunday to 14 of the largest depositors with Silicon Valley Bank that raised concerns over the failed bank’s relationship with some of the venture capitalists and tech founders who made up much of its customer base, Bloomberg News reported. In letters reviewed by Bloomberg that were sent to companies including Circle Internet Financial, BILL Holdings Inc., BlockFi Inc. and Eiger BioPharmaceuticals Inc., Warren and Ocasio-Cortez asked questions about the nature of their connections with SVB. Those included the length of their relationship and the amount of money they had deposited with the bank, which collapsed in March after investors and depositors tried to pull out $42 billion in a single day. The two Democrats, who have been vocal critics of SVB and its executives, also want to know whether board members, executives or investors had received special benefits, such as lines of credits, from SVB. In particular, the lawmakers are interested in reports that said SVB coddled some of its largest venture capitalists and showered them with special perks, and in return the VC firms gave the bank access to huge unsecured sources of short-term funding, the letters said. The lawmakers asked for the answers to these questions to be provided by April 24.

The White House is planning as soon as this week to recommend tougher rules for midsize banks, according to people familiar with the matter, after the collapse of two lenders earlier this month sent tremors through the banking system, the Wall Street Journal reported. The recommendations are expected to call for new rules from the Federal Reserve and other agencies, including for banks with $100 billion to $250 billion in assets. The Fed is already rethinking a number of its rules related to those banks after Silicon Valley Bank and Signature Bank failed. Options include tougher capital and liquidity requirements, as well as steps to strengthen annual “stress tests” that assess banks’ ability to weather a hypothetical severe downturn. The recent worries about U.S. banks have centered on regional lenders that are perceived to be at risk of customers pulling deposits. Both SVB and Signature had large amounts of uninsured deposits — or customers with more than the standard deposit-insurance cap of $250,000 per depositor. President Biden has called for Congress to toughen penalties on bank executives deemed responsible for financial institutions failing. The White House hasn’t coalesced around additional recommendations for congressional action, the people said. The Washington Post earlier reported some of the details of the administration’s planned recommendations.Read more. (Subscription required.)

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A bipartisan group of senators introduced legislation yesterday to claw back some or all of the top executives’ compensation from the five years leading up to bank failures, following the high-profile collapse of Silicon Valley Bank and Signature Bank earlier this month, The Hill reported. The bill — proposed by Sens. Elizabeth Warren (D-Mass.), Catherine Cortez Masto (D-Nev.), Josh Hawley (R-Mo.) and Mike Braun (R-Ind.) — would allow the Federal Deposit Insurance Corporation (FDIC) to recoup up to five years’ worth of compensation from executives at any bank that requires a federal takeover. “Americans are sick and tired of fat cat bankers paying themselves handsomely while risking other people’s hard earned money,” Warren, who has been an outspoken voice in the push for stronger banking regulations, said in a statement.