WASHINGTON (AP) — President Joe Biden is set to meet with Federal Reserve Chairman Jerome Powell as soaring inflation takes a bite out of Americans’ pocketbooks and the president’s public approval.
Tuesday’s meeting is the first since Biden renominated Powell to lead the central bank and comes weeks after his confirmation for a second term by the Senate. It also represents something of a reversal by Biden as inflation has evolved as a threat. The president asserted in April 2021 that he was “very fastidious about not talking” with the independent Fed and wanted to avoid being seen as “telling them what they should and shouldn’t do.”
The White House initially portrayed the inflation surge as a temporary side effect caused by supply chain issues as the U.S. emerged from the pandemic. Republican lawmakers were fast to criticize Biden’s $1.9 trillion coronavirus relief package from last year as pumping too much money into the economy and causing more inflation. That narrative also has held some sway with leading economists who say the financial support was excessive even though it helped the job market roar back.
Biden now faces an increasingly global challenge as energy and food costs jumped after Russian President Vladimir Putin ordered the invasion of Ukraine in February. Simultaneously, China imposed lockdowns tied to coronavirus outbreaks that further strained supply chains. This has left the European Union nursing record inflation and the risks of a recession, while U.S. consumers are increasingly disgruntled by gasoline prices averaging a nominal record of $4.62 a gallon.
The White House said the president and Powell would discuss the state of the U.S. and global economies. Their shared goal is to move the U.S. from its robust rebound and high inflation to low inflation and steady growth.
“The most important thing we can do now to transition from rapid recovery to stable, steady growth is to bring inflation down,” Biden said in an op-ed posted Monday by The Wall Street Journal. “That is why I have made tackling inflation my top economic priority.”
Consumer prices are 8.3% higher than a year ago, about four times the Fed’s target. Powell has acknowledged the U.S. central bank has limited tools to respond to supply shocks, and one of the major uncertainties is whether the Fed can bring inflation down without causing a recession in the U.S.
The administration also has few means for curbing inflation, possibly putting Biden’s political fortunes at the mercy of global markets. The president has twice ordered the release of oil from the U.S. strategic reserve, only to see a short-term and muted impact on gas prices. He’s also launched efforts to help ports clear shipping containers faster.
The administration has also proposed greater enforcement of antitrust and other laws in hopes of reducing prices for consumers, while arguing that federal deficit reduction would also help. Yet Biden’s domestic agenda faces an unclear path in Congress.
Powell has pledged to keep ratcheting up the Fed’s key short-term interest rate to cool the economy until inflation is “coming down in a clear and convincing way.” Those rate hikes have spurred fears that the Fed, in its drive to slow borrowing and spending, may push the economy into recession. That concern has caused sharp drops in stock prices in the past two months, though markets rallied last week.
Powell has signaled that the Fed will likely raise its benchmark rate by a half-point in both June and July — twice the size of the usual rate increase.
Biden, in his op-ed, indicated that the record-setting pace of job creation in the aftermath of the pandemic would slow dramatically, suggesting more moderate levels of 150,000 jobs per month from 500,000. He said, “It will be a sign that we are successfully moving into the next phase of recovery—as this kind of job growth is consistent with a low unemployment rate and a healthy economy.”
Ahead of the meeting Biden pledged not to interfere in the Fed’s decision-making, but suggested that he and Powell are aligned on addressing inflation.
“My predecessor demeaned the Fed, and past presidents have sought to influence its decisions inappropriately during periods of elevated inflation,” Biden wrote. “I won’t do this. I have appointed highly qualified people from both parties to lead that institution. I agree with their assessment that fighting inflation is our top economic challenge right now.”
Secret Service Recovers $286M in Stolen Pandemic Loans
WASHINGTON (AP) — The U.S. Secret Service said Friday that it has recovered $286 million in fraudulently obtained pandemic loans and is returning the money to the Small Business Administration.
The Secret Service said an investigation initiated by its Orlando office found that alleged conspirators submitted Economic Injury Disaster Loan applications by using fake or stolen employment and personal information and used an online bank, Green Dot, to conceal and move their criminal proceeds.
The agency worked with Green Dot to identify roughly 15,000 accounts and seize $286 million connected to the accounts.
“This forfeiture effort and those to come are a direct and necessary response to the unprecedented size and scope of pandemic relief fraud,” said Kevin Chambers, director for COVID-19 fraud enforcement at the Justice Department.
Billions have been fraudulently claimed through various pandemic relief programs — including Paycheck Protection Program loans, unemployment insurance and others that were rolled out in the midst of the worldwide pandemic that shutdown global economies for months.
In March, the Government Accountability Office reported that while agencies were able to distribute COVID-19 relief funds quickly, “the tradeoff was that they did not have systems in place to prevent and identify payment errors and fraud” due in part to “financial management weaknesses.”
As a result, the GAO has recommended several measures for agencies to prevent pandemic program fraud in the future, including better reporting on their fraud risk management efforts.
Since 2020, the Secret Service initiated more than 3,850 pandemic related fraud investigations, seized over $1.4 billion in fraudulently obtained funds and helped to return $2.3 billion to state unemployment insurance programs.
The latest seizure included a collaboration of efforts between Secret Service, the SBA’s Inspector General, DOJ and other offices.
Hannibal “Mike” Ware, the Small Business Administration’s inspector general, said the joint investigations will continue “to ensure that taxpayer dollars obtained through fraudulent means will be returned to taxpayers and fraudsters involved face justice.”
Addition Financial, UCF Extend Naming Rights Agreement for Arena
ORLANDO, Fla. (FNN SPORTS) – UCF has extended its naming rights partnership with Addition Financial Credit Union for an additional dozen years—in the process continuing to identify Addition Financial Arena on the UCF campus as the Knights’ home for men’s and women’s basketball games and a variety of other events.
The new agreement is a 12-year, $20 million partnership that follows up the original naming rights pact signed by UCF and Additional Financial in 2013. The new deal takes effect Jan. 1, 2023.
The UCF Board of Trustees approved the name at its meeting this morning, and the full deal is expected to be approved Aug. 25 by the UCF Athletics Association.
“We’ve had a partnership with Addition Financial for nearly a decade, and we’re excited that Kevin Miller and the Addition Financial Board have agreed to extend our relationship for an additional 12 years,” says UCF vice president and athletics director Terry Mohajir. “This is a great new venture with outstanding community partners.
“Resources will be paramount as we transition into the Big 12 Conference a year from now, and Addition Financial will play a key role for us as we invest more resources to enhance our education and athletics missions!”
In 2013, Addition Financial was named the Official Financial Institution of the UCF Knights and is the exclusive credit union for UCF Athletics. Since that time, Addition Financial has partnered with UCF Athletics to provide scholarships, financial education workshops and other sponsorship support. Addition Financial is also the home of the official UCF Knights debit cards, with designs featuring the new Knight head and the Citronaut.
“Addition Financial is proud to continue our longstanding partnership with UCF Athletics and to align with Orlando’s hometown teams. Knight Nation has truly inspired us along their journey to the Big 12, and we look forward to embarking on that journey alongside them as we extend our partnership,” said Kevin Miller, Addition Financial president and CEO.
The 10,000-seat Addition Financial Arena has been home to the UCF men’s and women’s basketball programs since the start of their 2007-08 seasons. Located in the heart of Knights Plaza on the north side of campus, the state-of-the-art facility opened in the fall of 2007 and also hosts premiere concerts along with UCF commencement ceremonies.
JetBlue Agrees to Buy Spirit for $3.8 Billion
NEW YORK, N.Y. (AP) — JetBlue has agreed to buy Spirit Airlines for $3.8 billion in a deal that would create the nation’s fifth largest airline if approved by U.S. regulators.
The agreement Thursday comes a day after Spirit’s attempt to merge with Frontier Airlines fell apart. Spirit had recommended its shareholders approve a lower offer from Frontier, saying that antitrust regulators are more likely to reject the bid from JetBlue.
“This combination is an exciting opportunity to diversify and expand our network, add jobs and new possibilities for crewmembers, and expand our platform for profitable growth.” JetBlue CEO Robin Hayes said in a statement.
The combined airline, which will be based in New York and led by Hayes, would have a fleet of 458 aircraft. The airlines will continue to operate independently until after the transaction closes.
JetBlue said Thursday that it would pay $33.50 per share in cash for Spirit, including a prepayment of $2.50 per share in cash payable once Spirit stockholders approve the transaction. There’s also a ticking fee of 10 cents per month starting in January 2023 through closing.
If the transaction is completed before December 2023, the deal will be for $33.50 per share, increasing over time to up to $34.15 per share, in the event the transaction closes at the outside date in July 2024.
If the deal doesn’t close due to antitrust reasons, JetBlue will pay Spirit a reverse break-up fee of $70 million and stockholders of Spirit a reverse break-up fee of $400 million less any amounts paid to stockholders of Spirit prior to termination.
News of the JetBlue and Spirit combination comes after weeks of Frontier and JetBlue tussling over who would ultimately get to add the budget airline to its arsenal. While Spirit initially struck a deal with Frontier and had stood by that proposed agreement, its shareholders were not on board. The decision by Spirit and Frontier to terminate their deal was announced Wednesday while Spirit shareholders were still voting on the proposal. It was apparent that despite the support of Spirit’s board, shareholders were prepared to reject the deal and seek a richer one from JetBlue.
JetBlue anticipates $600 million to $700 million in annual savings once the transaction is complete. Annual revenue for the combined company is anticipated to be about $11.9 billion, based on 2019 revenues.
JetBlue and Spirit will continue to operate independently until after the transaction closes. Their respective loyalty programs remain unchanged and customer accounts will not be affected in any way.
The deal still needs the required regulatory approvals and approval from Spirit’s stockholders. The companies expect to conclude the regulatory process and close the transaction no later than the first half of 2024.
Spirit’s stock rose more than 4% before the market open, while shares of JetBlue were up slightly.