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    The Business Rules the Trump Administration Is Racing to Finish

    #masthead-section-label, #masthead-bar-one { display: none }The Jobs CrisisCurrent Unemployment RateThe First Six MonthsPermanent LayoffsWhen a $600 Lifeline EndedAdvertisementContinue reading the main storySupported byContinue reading the main storyThe Business Rules the Trump Administration Is Racing to FinishFrom tariffs and trade to the status of Uber drivers, regulators are trying to install new rules or reduce regulations before President-elect Joe Biden takes over.President Trump is rushing to put into effect new economic regulations and executive orders before his term comes to a close.Credit…Erin Schaff/The New York TimesJan. 11, 2021, 3:00 a.m. ETIn the remaining days of his administration, President Trump is rushing to put into effect a raft of new regulations and executive orders that are intended to put his stamp on business, trade and the economy.Previous presidents in their final term have used the period between the election and the inauguration to take last-minute actions to extend and seal their agendas. Some of the changes are clearly aimed at making it harder, at least for a time, for the next administration to pursue its goals.Of course, President-elect Joseph R. Biden Jr. could issue new executive orders to overturn Mr. Trump’s. And Democrats in Congress, who will control the House and the Senate, could use the Congressional Review Act to quickly reverse regulatory actions from as far back as late August.Here are some of the things that Mr. Trump and his appointees have done or are trying to do before Mr. Biden’s inauguration on Jan. 20. — Peter EavisProhibiting Chinese apps and other products. Mr. Trump signed an executive order on Tuesday banning transactions with eight Chinese software applications, including Alipay. It was the latest escalation of the president’s economic war with China. Details and the start of the ban will fall to Mr. Biden, who could decide not to follow through on the idea. Separately, the Trump administration has also banned the import of some cotton from the Xinjiang region, where China has detained vast numbers of people who are members of ethnic minorities and forced them to work in fields and factories. In another move, the administration prohibited several Chinese companies, including the chip maker SMIC and the drone maker DJI, from buying American products. The administration is weighing further restrictions on China in its final days, including adding Alibaba and Tencent to a list of companies with ties to the Chinese military, a designation that would prevent Americans from investing in those businesses. — Ana SwansonDefining gig workers as contractors. The Labor Department on Wednesday released the final version of a rule that could classify millions of workers in industries like construction, cleaning and the gig economy as contractors rather than employees, another step toward endorsing the business practices of companies like Uber and Lyft. — Noam ScheiberTrimming social media’s legal shield. The Trump administration recently filed a petition asking the Federal Communications Commission to narrow its interpretation of a powerful legal shield for social media platforms like Facebook and YouTube. If the commission doesn’t act before Inauguration Day, the matter will land in the desk of whomever Mr. Biden picks to lead the agency. — David McCabeTaking the tech giants to court. The Federal Trade Commission filed an antitrust suit against Facebook in December, two months after the Justice Department sued Google. Mr. Biden’s appointees will have to decide how best to move forward with the cases. — David McCabeAdding new cryptocurrency disclosure requirements. The Treasury Department late last month proposed new reporting requirements that it said were intended to prevent money laundering for certain cryptocurrency transactions. It gave only 15 days — over the holidays — for public comment. Lawmakers and digital currency enthusiasts wrote to the Treasury secretary, Steven Mnuchin, to protest and won a short extension. But opponents of the proposed rule say the process and substance are flawed, arguing that the requirement would hinder innovation, and are likely to challenge it in court. — Ephrat LivniLimiting banks on social and environmental issues. The Office of the Comptroller of the Currency is rushing a proposed rule that would ban banks from not lending to certain kinds of businesses, like those in the fossil fuel industry, on environmental or social grounds. The regulator unveiled the proposal on Nov. 20 and limited the time it would accept comments to six weeks despite the interruptions of the holidays. — Emily FlitterOverhauling rules on banks and underserved communities. The Office of the Comptroller of the Currency is also proposing new guidelines on how banks can measure their activities to get credit for fulfilling their obligations under the Community Reinvestment Act, an anti-redlining law that forces them to do business in poor and minority communities. The agency rewrote some of the rules in May, but other regulators — the Federal Reserve and the Federal Deposit Insurance Corporation — did not sign on. — Emily FlitterInsuring “hot money” deposits. On Dec. 15, the F.D.I.C. expanded the eligibility of brokered deposits for insurance coverage. These deposits are infusions of cash into a bank in exchange for a high interest rate, but are known as “hot money” because the clients can move the deposits from bank to bank for higher returns. Critics say the change could put the insurance fund at risk. F.D.I.C. officials said the new rule was needed to “modernize” the brokered deposits system. — Emily FlitterNarrowing regulatory authority over airlines. The Department of Transportation in December authorized a rule, sought by airlines and travel agents, that limits the department’s authority over the industry by defining what constitutes an unfair and deceptive practice. Consumer groups widely opposed the rule. Airlines argued that the rule would limit regulatory overreach. And the department said the definitions it used were in line with its past practice. — Niraj ChokshiRolling back a light bulb rule. The Department of Energy has moved to block a rule that would phase out incandescent light bulbs, which people and businesses have increasingly been replacing with much more efficient LED and compact fluorescent bulbs. The energy secretary, Dan Brouillette, a former auto industry lobbyist, said in December that the Trump administration did not want to limit consumer choice. The rule had been slated to go into effect on Jan. 1 and was required by a law passed in 2007. — Ivan PennAdvertisementContinue reading the main story More

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    What Is 13-3? Why a Debate Over the Fed Is Holding Up Stimulus Talks

    AdvertisementContinue reading the main storySupported byContinue reading the main storyWhat Is 13-3? Why a Debate Over the Fed Is Holding Up Stimulus TalksThe Fed’s emergency lending authorities are a key part of its job. Republicans want to curb them. Democrats are pushing back.Senate Republicans are trying to make sure that emergency programs backed by the Federal Reserve cannot be restarted after they expire on December 31.Credit…Anna Moneymaker for The New York TimesDec. 18, 2020Updated 7:49 p.m. ETAs markets melted down in March, the Federal Reserve unveiled novel programs meant to keep credit flowing to states, medium-sized businesses and big companies — and Congress handed Treasury Secretary Steven Mnuchin $454 billion to back up the effort.Nine months later, Senate Republicans are trying to make sure that those same programs cannot be restarted after Mr. Mnuchin lets them end on Dec. 31. Beyond preventing their reincarnation under the Biden administration, Republicans are seeking to insert language into a pandemic stimulus package that would limit the Fed’s powers going forward, potentially keeping it from lending to businesses and municipalities in future crises.The last-minute move has drawn Democratic ire, and it has imperiled the fate of relief legislation that economists say is sorely needed as households and businesses stare down a dark pandemic winter. Here is a rundown of how the Fed’s lending powers work and how Republicans are seeking to change them.The Fed can keep credit flowing when conditions are really bad.The Fed’s main and best-known job is setting interest rates to guide the economy. But the central bank was set up in 1913 in large part to stave off bank problems and financial panics — when people become nervous about the future and rush to withdraw their money from bank accounts and sell off stocks, bonds and other investments. Congress dramatically expanded the Fed’s powers to fight panics during the Great Depression, adding Section 13-3 to the Federal Reserve Act.The section allows the Fed to act as a lender of last resort during “unusual and exigent” circumstances — in short, when markets are not working normally because investors are exceptionally worried. The central bank used those powers extensively during the 2008 crisis, including to support politically unpopular bailouts of financial firms. Congress subsequently amended the Fed’s powers so that it would need Treasury’s blessing to roll out new emergency loan programs or to materially change existing ones.The programs provide confidence as much as credit.During the 2008 crisis, the Fed served primarily as a true lender of last resort — it mostly backed up the various financial markets by offering to step in if conditions got really bad. The 2020 emergency loan programs have been way more expansive. Last time, the Fed concentrated on parts of Wall Street most Americans know little about like the commercial paper market and primary dealers. This time, it reintroduced those measures, but it also unveiled new programs that have kept credit available in virtually every part of the economy. It has offered to buy municipal bonds, supported bank lending to small and medium-sized businesses, and bought up corporate debt.The sweeping package was a response to a real problem: Many markets were crashing in March. And the new programs generally worked. While the terms weren’t super generous and relatively few companies and state and local borrowers have taken advantage of these new programs, their existence gave investors confidence that the central bank would prevent a financial collapse.But things started getting messy in mid-November.Most lawmakers agreed that the Fed and Treasury had done a good job reopening credit markets and protecting the economy. But Senator Patrick J. Toomey, a Pennsylvania Republican, started to ask questions this summer about when the programs would end. He said he was worried that the Fed might overstep its boundaries and replace private lenders.After the election, other Republicans joined Mr. Toomey’s push to end the programs. Mr. Mnuchin announced on Nov. 19 that he believed Congress had intended for the five programs backed by the $454 billion Congress authorized to stop lending and buying bonds on Dec. 31. He closed them — while leaving a handful of mostly older programs open — and asked the Fed to return the money he had lent to the central bank.Business & EconomyLatest UpdatesUpdated Dec. 18, 2020, 12:25 p.m. ETLee Raymond, a former Exxon chief, will step down from JPMorgan Chase’s board.U.S. adds chip maker S.M.I.C. and drone maker DJI to its entity list.Volkswagen says semiconductor shortages will cause production delays.The Fed issued a statement saying it was dissatisfied with his choice, but agreed to give the money back.Democrats criticized the move as designed to limit the incoming Biden administration’s options. They began to discuss whether they could reclaim the funds and restart the programs once Mr. Biden took office and his Treasury secretary was confirmed, since Mr. Mnuchin’s decision to close them and claw back the funds rested on dubious legal ground.The new Republican move would cut off that option. Legislative language circulating early Friday suggested that it would prevent “any program or facility that is similar to any program or facility established” using the 2020 appropriation. While that would still allow the Fed to provide liquidity to Wall Street during a crisis, it could seriously limit the central bank’s freedom to lend to businesses, states and localities well into the future.In a statement, Senator Elizabeth Warren, Democrat of Massachusetts, called it an attempt to “to sabotage President Biden and our nation’s economy.”Mr. Toomey has defended his proposal as an effort to protect the Fed from politicization. For example, he said Democrats might try to make the Fed’s programs much more generous to states and local governments.The Treasury secretary would need to have the Fed’s approval to improve the terms to help favored borrowers. But the central bank might not readily agree, as it has generally approached its powers cautiously to avoid attracting political scrutiny and to maintain its status as a nonpartisan institution.Fed officials have avoided weighing in on the congressional showdown underway.“I won’t have anything to say on that beyond what we have already said — that Secretary Mnuchin, as Treasury secretary, would like for the programs to end as of Dec. 31” and that the Fed will give back the money as asked, Richard H. Clarida, the vice chairman of the Fed, said Friday on CNBC.More generally, he added that “we do believe that the 13-3 facilities” have been “very valuable.”Emily Cochrane More

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    Russian Hackers Broke Into Federal Agencies, U.S. Officials Suspect

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    State Certified Vote Totals

    Election Disinformation

    Full Results

    Biden Transition Updates

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    In Praise of Janet Yellen the Economist

    It’s hard to overstate the enthusiasm among economists over Joe Biden’s selection of Janet Yellen as the next secretary of the Treasury. Some of this enthusiasm reflects the groundbreaking nature of her appointment. She won’t just be the first woman to hold the job, she’ll be the first person to have held all three of the traditional top U.S. policy positions in economics — chair of the Council of Economic Advisers, chair of the Federal Reserve and now Treasury secretary.And yes, there’s a bit of payback for Donald Trump, who denied her a well-earned second term as Fed chair, reportedly in part because he thought she was too short.But the good news about Yellen goes beyond her ridiculously distinguished career in public service. Before she held office, she was a serious researcher. And she was, in particular, one of the leading figures in an intellectual movement that helped save macroeconomics as a useful discipline when that usefulness was under both external and internal assault.Before I get there, a word about Yellen’s time at the Federal Reserve, especially her time on the Fed’s board in the early 2010s, before she became chair.At the time, the U.S. economy was slowly clawing its way back from the Great Recession — a recovery impeded, not incidentally, by Republicans in Congress who pretended to care about national debt and imposed spending cuts that significantly hurt economic growth. But spending wasn’t the only issue of debate; there were also fierce arguments about monetary policy.Specifically, there were many people on the right condemning the Fed’s efforts to rescue the economy from the effects of the 2008 financial crisis. Among them, by the way, was Judy Shelton, the totally unqualified hack Trump is still trying to install on the Fed board, who warned in 2009 that the Fed’s actions would produce “ruinous inflation.” (Hint: They didn’t.)Even within the Fed, there was a division between “hawks” worried about inflation and “doves” who insisted that inflation wasn’t a threat in a depressed economy, and that fighting the depression should take priority. Yellen was one of the leading doves — and a 2013 analysis by The Wall Street Journal found that she had been the most accurate forecaster among Fed policymakers.Why did she get it right? Part of the answer, I’d argue, goes back to academic work she did in the 1980s.At the time, as I’ve suggested, useful macroeconomics was under attack. What I mean by “useful macroeconomics” was the understanding, shared by economists from John Maynard Keynes to Milton Friedman, that monetary and fiscal policy could be used to fight recessions and reduce their economic and human toll.This understanding didn’t fail the test of reality — on the contrary, the experience of the early 1980s strongly confirmed the predictions of basic macroeconomics.But useful economics was under threat.On one side, right-wing politicians turned away from reality-based economics in favor of crank doctrines, especially the claim that governments can conjure up miraculous growth by cutting taxes on the rich. On the other side, a significant number of economists themselves rejected any role for policy in fighting recessions, claiming that there would be no need for such a role if people were acting rationally in their own interests, and that economic analysis should always assume that people are rational.Which is where Yellen came in; she was a prominent figure in the rise of “new Keynesian” economics, which rested on one key insight: People aren’t stupid, but they aren’t perfectly rational and self-interested. And even a bit of realism about human behavior restores the case for aggressive policies to fight recessions. In later work Yellen would show that labor market outcomes depend a lot not just on pure dollars-and-cents calculations, but also on perceptions of fairness.All this may sound abstruse, but I can vouch from my own experience that this work had a huge impact on many young economists — basically giving them a license to be sensible.And it seems to me that there’s a direct line from the disciplined realism of Yellen’s academic research to her success as a policymaker. She was always someone who understood the value of data and models. Indeed, rigorous thinking becomes more, not less important in crazy times like these, when past experience offers little guidance about what we should be doing. But she also never forgot that economics is about people, who aren’t the emotionless, hyperrational calculating machines economists sometimes wish they were.Now, none of this means that things will necessarily go well. The race is not to the swift, neither yet bread to the wise, nor yet success to policymakers of understanding, but time and chance happen to them all. Trump’s cabinet was a clown show — possibly the worst cabinet in America’s history — but it wasn’t until 2020 that the consequences of the administration’s incompetence became fully apparent.Still, it’s immensely reassuring to know that economic policy will be made by someone who knows what she is doing.The Times is committed to publishing a diversity of letters to the editor. We’d like to hear what you think about this or any of our articles. Here are some tips. And here’s our email: letters@nytimes.com.Follow The New York Times Opinion section on Facebook, Twitter (@NYTopinion) and Instagram. More

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    Markets Throw a Welcome Party of Sorts for Biden

    A day after the Trump administration effectively acknowledged the election of Joseph R. Biden Jr., investors showed their relief by pushing the two major stock market indexes to all-time records on Tuesday.It was a welcome party of sorts for Mr. Biden, but what investors were really embracing was the end of uncertainty. President-elect Biden has vowed to push for more stimulus to bolster the economy. His selection for Treasury secretary, Janet L. Yellen, is well known from her days as Federal Reserve chair. And several new coronavirus vaccine candidates mean that the pandemic could be under control in the months ahead.President Trump, who on the campaign trail had warned that Mr. Biden’s election would lead to stock market armageddon, on Tuesday implied that the day’s highs were his own doing, making an unscheduled stop at a White House briefing to play up the latest gains in the Dow Jones industrial average.“The stock market’s just broken 30,000 — never been broken, that number,” said Mr. Trump, who has often used the markets as a barometer of his presidency. “That’s a sacred number, 30,000; nobody thought they’d ever see it.” He added: “I just want to congratulate all the people within the administration that worked so hard. And most importantly, I want to congratulate the people of our country, because there are no people like you.”Mr. Trump, who spoke for about 65 seconds, ignored questions from reporters about whether he would concede to Mr. Biden.On Wall Street, the S&P 500 stock index rose 1.6 percent to a new high of 3,635.41, while the Dow rose 1.5 percent, closing above 30,000 for the first time.“We have an enormous amount of certainty that we didn’t have just a few months ago,” said Kristina Hooper, chief global market strategist at Invesco, an investment management firm.The last few months have been a volatile stretch for investors. After hitting a peak on Sept. 2, the S&P 500 began to fall, and — except for a brief uptick the following month — remained roughly 9 percent below the peak until the end of October.One sign of investor anxiety was the volatility displayed in the VIX, an index widely known as Wall Street’s “fear gauge.” The VIX spiked by more than 50 percent in late October as the virus picked up again and the election approached. A meltdown of technology stocks added to the uncertainty. In the last week in October, stocks fell 5.6 percent, the biggest weekly drop since March. Still, stocks were up for the year at the end of last month.And in the weeks since the election stocks have climbed steadily, primarily because of encouraging vaccine news. Pfizer, Moderna and AstraZeneca have all announced that their vaccine candidates showed favorable results in trials. The S&P 500 has risen roughly 8 percent since the election. Some investors believe that with Mr. Biden in the White House, and Republicans likely to retain control of the Senate, they could count on political gridlock to block tax increases that could roil the markets.“You have a Biden administration likely governed by a split Congress and a conservative Supreme Court so it eliminates some of the most extreme policies either on the right or left,” said Michael Arone, chief investment strategist at State Street Global Advisors. “So markets are celebrating that.”The good news about vaccines has bolstered stocks that had been hit hard by the outbreak. Stocks of airlines and oil companies have soared this month. United Airlines, American Airlines and Delta Air Lines have all climbed by more than 30 percent. The oil giant Chevron is up nearly 38 percent. The Russell 2000 — an index of smaller capitalization companies heavily influenced by the shorter-term outlook for the U.S. economy — is up more than 20 percent this month alone.But many analysts believe that the market could have done even better without the political uncertainty about the outcome of the election. The president’s baseless claims that there was fraud in the election and that he would ultimately win a second term helped keep a lid on gains by injecting uncertainty into the markets.The decision on Monday by Emily W. Murphy, the administrator of the General Services Administration, to allow the presidential transition process to move forward made investors feel confident that the election was finally over, Ms. Hooper said. “I think that was creating a significant overhang and raised questions about how long this would drag on,” she said.Markets also appeared to welcome the return of politics as usual under a future Biden administration, and were reassured by the news that Ms. Yellen will be Mr. Biden’s nominee to head the Treasury Department. She is a known quantity on Wall Street, well respected for her steady leadership at the head of the central bank, from 2014 to 2018.“There had been some fear that Mr. Biden would pick a Treasury secretary with a strong anti-Wall Street bias,” wrote analysts with High Frequency Economics in a client note on Tuesday. “Janet Yellen isn’t that.”The markets performed well under Mr. Trump for the most part. Since his election in 2016, the S&P 500 has returned more than 80 percent — including dividend payments. Most analysts credit the administration’s tax cuts — signed into law in 2017 — for a significant part of the gains.But the last four years have also been a volatile period for markets, with multiple sharp, sudden downturns often linked to policies pushed by Mr. Trump, such as his trade war with China, which helped push stocks to a 6 percent loss in 2018.This year, the more than 11-year-old bull market collapsed in March, as the S&P 500 dove nearly 34 percent in a matter of weeks as the virus raged around the globe, before eventually climbing to new highs.Mr. Trump’s style was often at odds with Wall Street’s preferences.He broke with the tradition of virtually all other recent presidents in using the power of the bully pulpit to browbeat individual companies — including Boeing, Amazon, Ford and General Motors — for decisions he disliked, often sending their shares reeling in real time.Even those on Wall Street who might have supported some of the president’s policies often said they could do without his constant Twitter missives weighing in on the markets. (Since his election in 2016 the president has tweeted or retweeted roughly 200 messages on the markets.)“It always bothered me that the president tweeted about the markets,” said Paul Schatz, who manages roughly $90 million in assets for clients largely in New York, Connecticut and Florida. “As an investment adviser in charge of taking care of people’s money, I would rather the president would not wade into those waters.”Michael Crowley contributed reporting. More