OVERNIGHT FINANCE: Castro’s big day

TOMORROW STARTS TONIGHT: Big day tomorrow for San Antonio Mayor Julian Castro, who goes before Senate Banking for his Housing secretary confirmation hearing.

His twin-brother Rep. Joaquin Castro (D-Texas) is scheduled to appear for support.

-- WHAT CASTRO WILL SAY: Castro offered few clues in his two-page submitted testimony about how he’ll stake out partisan policy issues in the housing world.

Instead, it looks as if the potential Democratic 2016 vice presidential contender will use tomorrow’s hearing to avoid the political fray. How he’ll handle Banking GOPers remains to be seen. My story: http://bit.ly/1sjnQaz.

SIREN – EX-FED OFFICIAL: FED’S ‘BATTLE ROYALE’ TO HURT STOCKS. Just in time for Wednesday’s presser...

Former Fed vice chairman Alan Blinder to MarketWatch:

“[There] will be disagreements over sequencing... are you going to hit interest rates or shrink the balance sheet? But the bigger differences will be over when do we start and how fast do we go once we start. These are going to be loud and vociferous...

“It creates... uncertainty that most market participants will react by saying, ‘We didn’t need that there is enough uncertainty in the world, we don’t need some huge uncertainties cropping up by a Battle Royale at the Federal Reserve.’” http://on.mktw.net/1ju637b.

THIS IS OVERNIGHT FINANCE, where we’re always loud and vociferous. Happy Monday. Let’s go, USA! Tweet: @kevcirilli. And email: kcirilli@thehill.com.Please click here to sign up for our newsletter.

Thanks for reading. Back to work...

QUOTABLE: A report by the House Oversight Committee, led by Rep. Darrell Issa (R-Calif.), on the IRS’s improper targeting of Tea Party groups:

“With his bully pulpit, President Obama wields the power to singlehandedly shape the national dialogue. In this case, President Obama’s bully pulpit led to the Internal Revenue Service’s targeting of conservative tax-exempt applicants.”

Bernie Becker for the hometown paper: http://bit.ly/1oxGyd7. Read the 69-page report here: http://bit.ly/1juH5EF.

NOTABLE: FED BOARD SWORN-IN. Fed Chairwoman Janet Yellen swore-in her troops earlier today: Stanley Fischer was sworn-in to serve as the Fed's vice chairman; Lael Brainard was sworn-in as a governor; and Jerome Powell was sworn-in for his second term as a Fed gov. See the awkward photo here.

FIRST LOOK – THE NATION’S PLUTONOMY PROBLEM. A new report out tomorrow morning from the New America Foundation’s economic wonks dives headfirst into the country’s private debt problem.

OVERNIGHT FINANCE got a first look of the 45-page report penned by Joshua Freedman, an economic analyst at New America; and Sherle R. Schwenninger, director of New America's Economic Growth Program and the World Economic Roundtable.

Three takeaways:

1.) Private debt – not Federal debt – boomed before the financial crisis. Per the report:“The entirety of this debt increase was in the private household and business sectors. Federal government debt-to-GDP did not increase at all from 1990 to 2008.”

2.) Meanwhile, middle class wages have stagnated transforming America’s economy in a bad way. Per the report: “As a result of high debt burdens and weak wage growth for low and middle-income households, the economy is becoming a plutonomy, an economy dependent on high-end consumption...

--Fast fact: The consumption share of the top 5 percent increased from 26 percent in 1989 to 38 percent in 2012.

“Debt-burdened households in the bottom and middle of the income distribution are not in a position to increase consumption, which is the main driver of economic growth... An economy more dependent on high-end consumption means slower growth.”

3.) Wall Street is choosing share buybacks instead of investment. Per the report: “Corporate debt has been used increasingly for share buybacks and dividend payments rather than for new investment. As a result, the economic growth potential of the economy has declined – a worrying sign for the future.”

For all of that plus a deeper dive into housing and the student loan crisis, check out their full report here.

ON-TAP FOR TOMORROW: Sen. Carl Levin (D-Mich.) will host a Senate Homeland Security subcommittee hearing on high-frequency trading... Castro’s confirmation hearing is at 10 a.m.

RT @econJared, former economic adviser to Vice President Biden, Jared Bernstein: The reason Boeing’s stock tanked on Cantor’s loss is all about the political viability of the Export-Import Bank: http://bit.ly/1sidVSK 

REJECTED: RAJ RAJARATNAM. Brent Kendall for The Wall Street Journal: “The U.S. Supreme Court on Monday declined to consider a challenge by Galleon Group hedge-fund founder Raj Rajaratnam to his 2011 conviction for insider trading.” http://on.wsj.com/1kXWlyl.

CHICAGO TRIBUNE OP-ED: KEEP EX-IM. After last week’s damning WSJ op-ed condemning Ex-Im to death, Chi-town fired back:

“Despite all the conservative fulminations about ‘Bank of Boeing’ and such, Ex-Im is the kind of bureaucracy a conservative should love: It helps American business and is profitable, actually returning money to the Treasury.

“Not reauthorizing Ex-Im would hang U.S. companies, and jobs, out to dry. Locomotives and firetrucks and airplanes for export will still get made. They'll just be made in China or Europe instead of America.” http://trib.in/1lspMd5.


--IMF cuts expectations for U.S. economy in 2014: http://bit.ly/1uxTMUC.

--Lawmakers push to ban taxes on Internet service: http://bit.ly/T1ONQ3.

--Supreme Court rebuffs Argentina in debt case: http://bit.ly/1iC8lRI

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