Overnight Finance

On The Money: Wall Street zeros in on Georgia runoffs | Seven states sue regulator over ‘true lender’ rule on interest rates | 2021 deficit on track to reach $2.3 trillion

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Happy Tuesday and welcome back to On The Money. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.

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Write us with tips, suggestions and news: slane@thehill.com, njagoda@thehill.com and nelis@thehill.com. Follow us on Twitter: @SylvanLane, @NJagoda and @NivElis.

THE BIG DEAL—Wall Street zeros in on Georgia runoffs: Wall Street traders are closely watching Tuesday’s runoff elections in Georgia, which will determine control of the Senate and the overall balance of power in Washington for the next two years.

  • Though the two Senate races are considered toss-ups, Republicans have an edge in the sense that they only need to win one of the two elections to keep control of the Senate. 
  • Those odds have led markets to price in a GOP majority in the Senate for the next two years.
  • But the prospects of a Democratic sweep in Georgia could have major implications for markets, affecting everything from corporate tax rates and regulations to more coronavirus relief.

“I would say that if the Republicans win one or more seats, nothing changes,” said Michael Cembalest, chairman of market and investment strategy at J.P. Morgan Asset & Wealth Management. “If the Democrats win, markets will be on edge until they see what kinds of policy choices it leads to.” The Hill’s Niv Elis tells us why here.

Slim majority would hinder Democrats: Even if Democrats win, their extraordinarily narrow margins mean that broad, sweeping changes that often rattle markets are unlikely over the next two years.

Certain tax and spending legislation can be passed through a process called budget reconciliation that only requires a simple majority, and Democratic control would clear the path for most Biden Cabinet nominees, but most major legislation needs 60 votes to pass the Senate.

Implications for COVID-19 relief: Narrow Democratic majorities would also pose challenges for economic priorities like another round of COVID-19 relief.

  • Biden has repeatedly called the $900 billion coronavirus relief bill signed in December a “down payment,” and Speaker Nancy Pelosi (D-Calif.) has made $160 billion in state and local aid a top priority.
  • If Senate Majority Leader Mitch McConnell (R-Ky.) remains in control of what legislation comes to the floor, he is unlikely to agree to any such aid without including liability protections for small businesses. 
  • A Democratic-run chamber might be able to more easily find a compromise with a handful of moderate Republicans and have the power to put the bill on the floor despite McConnell’s objections.

Read more: Stocks rise as Wall Street watches Georgia Senate races



Seven states sue regulator over ‘true lender’ rule on interest rates: Seven states sued the Office of the Comptroller of the Currency (OCC) on Tuesday to scrap a rule they claim oversteps the regulator’s authority and would allow lenders to evade state interest rate maximums.

In a complaint filed Tuesday, seven Democratic attorneys general asked the U.S. District Court for the Southern District of New York to deem the OCC’s “true lender” rule illegal, echoing concerns voiced by fair lending advocates and some state regulators. 

“This rule would be a mistake at any time, but the Trump Administration’s attempts to unleash predatory lenders on unsuspecting New Yorkers in the midst of a pandemic is cruel and heartless,” James said in a statement.

I break it down here.


2021 deficit on track to reach $2.3 trillion: watchdog: The deficit for 2021 is already on track to reach $2.3 trillion, or 10.4 percent of gross domestic product, higher than any year except 2020, according to estimates from the Committee for a Responsible Federal Budget, a budget watchdog group.

Last year’s deficit hit a record-shattering $3.1 trillion, more than twice the previous record of $1.4 trillion in the midst of the Great Recession.

“It would be higher than any other time in recorded history outside of World War II,” the group noted.

The main driver of the climbing deficit has been the pandemic, which required an enormous uptick in government spending just as the economy crashed. Niv walks us through the numbers here.



  • Manufacturing activity jumped in December to its highest level in more than two years, extending economic gains in the sector during the second half of 2020, a new report shows.
  • The New York Stock Exchange (NYSE) announced late Monday that it would not be moving forward with plans to delist three Chinese telecom companies with alleged ties to the nation’s military. 
  • Former Trump economic aide Gary Cohn on Tuesday announced that he has joined IBM as vice chairman.



  • Amazon on Tuesday announced the purchase of 11 jets that the online retail giant will add to its delivery fleet.
  • An appeals court in Milan on Tuesday ordered the tech giant Facebook to pay 3.8 million euros ($4.7 million) for copying an app made by an Italian company.
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