OVERNIGHT FINANCE: S&P hits new high

TOMORROW STARTS TONIGHT: Three things to know...

1.) The S&P 500 closed at a record high today, advancing 11.38 points to close at 1911.91.  Analysts pointed toward recent positive economic data, including a strong consumer confidence report released on Friday.

2.) The House Veterans Affairs Committees gears up for a prime-time hearing tomorrow at 7:30 p.m. into the Veterans Affairs scandal with three top VA officials, barring any last minute political theater that would cancel or postpone the hearing.

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3.) President Obama said the U.S. will finish its troop drawdown in Afghanistan by 2016.

THIS IS OVERNIGHT FINANCE, where we hope you had an awesome three-day weekend. As always, tweet: @kevcirilli. Email: kcirilli@thehill.com. The Senate is out of session. We’re not...

FIRST LOOK – JARED BERNSTEIN: INCOME INEQUALITY MAKES TAX CUTS LESS EFFECTIVE. In a new study, the former economic adviser to Vice President Joe Biden makes the case that rising economic inequality will severely benefit elites.

Some of the highlights:

“The model leads to the hypothesis that, over time, the system of taxes and government transfers will become less effective in reducing inequality... [The] system and safety net have grown less effective over time in reducing inequality... The model also predicts a Federal Reserve that worries more about inflation (which erodes real assets) than about unemployment.”

Bernstein says rising income inequality leads to more deregulation, regressive tax changes, less power for labor unions and “unbridled” campaign finance laws.

The study, published in this month’s “Working and Living: In The Shadow of Economic Fragility” (Oxford University Press), will be a featured point of discussion at forum hosted tomorrow in Washington at The New America Foundation with the book’s editors Washington University professors Marion G. Crain and Michael Sherranden. Excerpt: http://bit.ly/1jYETu8 RSVP: http://bit.ly/1pgiRVO.

Speaking of controversial economic reports...

QUOTABLE: “Data never has a virgin birth,” Nate Silver, editor of FiveThirtyEight.com, weighing-in on the Thomas Piketty controversy.

Silver weighed-in on the epic wonk war brewing between French economist Thomas Piketty and the FT’s Christopher Giles, who looked to discredit over the weekend Piketty’s claims in his book Capital in the Twenty-First Century that income inequality is surging.

—Silver’s take: “Giles (and some of the commentary surrounding his work) could do a better job of describing Piketty’s error rate relative to the overall volume of data that was examined.

“If Giles scrutinized all of Piketty’s data and found a handful of errors, that would be very different from taking a small subsample of that data and finding it rife with mistakes.” http://53eig.ht/1gx51eR

SCOOPLET — HOUSE JUMPS INTO BOTOX BIZ FIGHT. A bipartisan group of eight House members wrote to Federal Trade Commission Chairwoman Edith Ramirez, saying they're concerned about Valeant Pharmaceutical's bid to acquire botox maker Allergan Inc.

Allergan officials have come out against Valeant's $50 billion bid to acquire them. And tomorrow, Valeant is expected to release an updated bid — but Allergan has no desire to play ball. 

Now on their side they've got lawmakers, who told Ramirez they're "concerned that eliminating market competition by combining the product sets of the two companies may have a negative impact on consumers. The consolidating of market share in Valeant may allow it to drive up prices for consumers and patients while limiting product options."

WHO SIGNED: Reps. Joe Barton (R-Texas); Marsha Blackburn (R-Tenn.); Pete Olson (R-Texas); Leonard Lance (R-N.J.); John Barrow (D-Ga.); Lois Capps (D-Calif.); Jim Matheson (D-Utah); and Mike Pompeo (R-Kan.). Full letter: http://bit.ly/1mBcWHr

—THE BACKSTORY: Billionaire investor Bill Ackman's Pershing Square is pushing the deal for Valeant.

—MEANWHILE, House Financial Services Member Ed Royce (R-Calif.) sent a letter to Securities and Exchange Commission Chairwoman Mary Jo White expressing similar concerns. "Pershing Square has scheduled a shadow shareholder vote or referendum. Pershing Square controls the timing, wording, and rules, yet it is seeking an official seal of approval from the SEC for the vote." Full letter: http://1.usa.gov/1lPDvFP.

NOTABLE: U.S. CORPORATIONS UNDER FIRE FOR TAX HAVENS. Citizens for Tax Justice is out with a new study today showing that: “American corporations reported to the IRS that the profits their subsidiaries earned in 2010 in Bermuda, the Cayman Islands, the British Virgin Islands, the Bahamas and Luxembourg were greater than the entire gross domestic product (GDP) of those nations in that year.

“It is obviously impossible for American corporations to actually earn profits in a given country that exceed that country’s total output of goods and services. Clearly, American corporations are using various tax gimmicks,” the study says. Study: http://bit.ly/1lJ0QZA. Bernie Becker’s story: http://bit.ly/1hvFuhj

OUT – DOJ’s CREDIT SUISSE OFFICIAL: Kathryn Keneally, the assistant attorney general for the tax division, will leave the Justice Department on June 5 and return to her home in New York... Keneally played a key-role in going after Credit Suisse. The Hill’s finance team reports: http://bit.ly/1tLC69u.

MISSING: SENATE-CONFIRMED FED OFFICIAL. Obama has yet to nominate a vice chairman for supervision at the Federal Reserve, a Senate-confirmed position created under the 2010 Dodd-Frank Law, to oversee the Fed’s regulatory policies.

Victoria McGrane for The Wall Street Journal reports: “Regulatory oversight is being handled informally by Fed Governor Daniel Tarullo, who leads the Fed's internal committee on bank supervision...

“But it remains a mystery to many in Washington as to why there is no effort to officially nominate him or someone else to the post, particularly given Senate Democrats last November changed the chamber's rules to speed approval of most of the president's executive- and judicial-branch nominees.” http://on.wsj.com/SKO4my

ON-TAP FOR TOMORROW: The House Appropriations Committee will mark-up the Homeland Security Appropriations Act for FY2015 at 6 p.m... Meanwhile, the Veterans Affairs Committee is sure to grab national media attention when it hosts a full-committee hearing at 7:30 p.m. tomorrow on the VA scandal.

SEC TAKES ANOTHER STAB AT BIG OIL, and our Benjamin Goad reports: “The Securities and Exchange Commission is poised to take another stab at regulations requiring oil and mining companies to disclose payments to foreign governments.

“The requirement is part of the 2010 Dodd-Frank financial reform law, but a federal court tossed out the SEC’s first draft in July, saying the agency went too far in forcing companies to make detailed reports public.

“The proposal, championed by human rights groups (and George Soros and Bill Gates) and criticized by industry, was left off of the Obama administration’s subsequent formal regulatory agenda [last November.]

“But it’s again listed on the latest version, released Friday... The agency intends to issue a formal notice of public rule-making by March of next year, according to the agency’s agenda.” http://bit.ly/1pvLAmG

D'AMATO OPPOSES CAPITAL REQUIREMENTS FOR CREDIT UNIONS. The National Credit Union Administration's (NCUA) comment period ends tomorrow on its proposal to impose a risk-based requirement for determining whether a credit union is well-capitalized. 

Congress directed NCUA in 1998 to establish a risk-based net worth requirement to help determine whether a credit union is adequately capitalized.

Credit unions say the capital requirement rules were meant for banks — not credit unions. And former Senate Banking Committee Chairman Alfonse D'Amato (R-N.Y.) agrees with them. 

"If we had intended in 1998 that there should also be a separate risk-based requirement to be a well-capitalized credit union we would have said so," D'Amato tells OVERNIGHT FINANCE. "If NCUA believes that it needs this authority to ensure the safety and soundness of the credit union system, they need to ask Congress to change the law.”

OBAMA TO MODI: LET’S MEET IN D.C., via The Hill’s Julian Hattem: “[President Barack Obama] invited [recently elected Indian Prime Minister Narendra] Modi to Washington this month, despite a decade-long travel ban that had been in place over his role in anti-Muslim riots. Those 2002 riots led to an estimated 2,000 people dead in the Indian state of Gujarat while Modi was governor.

“Modi’s swearing-in ceremony was attended by Pakistani Prime Minister Nawaz Sharif, a move that some analysts hoped would signal a new spirit of friendship between the two nations, which have had an acrimonious relationship.” http://bit.ly/1lOVOuG

MORE FROM THE HILL’s TEAM:

—Offshore tax bill could raise $19.5 billion, by Bernie Becker: http://bit.ly/1oqL4Jj

—First lady says GOP school lunch nutrition cuts ‘unacceptable,’ by Erik Wasson: http://bit.ly/TRAbnt

—Treasury reshuffles after Gregg retirement, by Vicki Needham: http://bit.ly/1nRBRWL

—CEO paychecks top $10M mark, by Peter Schroeder: http://bit.ly/1klv0WH

CONNECT WITH THE HILL’s FINANCE TEAM – Write us with tips, suggestions and news: vneedham@thehill.com; pschroeder@thehill.com; ewasson@thehill.com; bbecker@thehill.com; kcirilli@thehill.com.

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