The White House Renews Its Attack on ‘Surprise Fees’

A movement to ‘end surprise charges’

With inflation still a powerful political issue, President Biden is ramping up his war on so-called junk fees.

At the White House on Thursday, he will host a panel of executives from several companies, including Airbnb and Live Nation, who sparked consumer outrage over the botched ticket sales for Taylor Swift’s tour last year.

The companies are expected to announce new efforts to “end surprise fees”, said the White House, including through price transparency commitments and other means of fully disclosing costs to consumers upfront. The administration hopes the changes will be adopted by businesses across a wide range of industries, including live events and travel.

Mr Biden has made a junk fee ban a priority. In his State of the Union address in February, he denounced the extra charges: “I know how unfair it feels when a company overcharges you and gets away with it.”

He has asked several federal regulators, including the Consumer Financial Protection Bureau and the Transportation Department, to step up their scrutiny of opaque fees charged by banks and airlines. Meanwhile, the Federal Trade Commission has called for more widespread use of “click to cancel” options to make it easier for consumers to cancel subscriptions.

It’s a popular issue. Most Americans support limits on bank charges, while economists increasingly accept the idea of ​​“greed”, where corporate price gouging drives up inflation.

Still, fees have powerful defenders. Republicans on the House Financial Services Committee on Wednesday criticized CFPB chief Rohit Chopra for the regulator’s strict measures on banking and credit card fees. “Nasty indiscriminately label fees as abusive is a blatant attempt to pander to Americans,” said Andy Barr of Kentucky.

Companies prefer a government mandate that limits or even eliminates such fees, a lobbyist told DealBook, because the greater transparency would lead to a healthier consumer market.

“Fans want to understand the full cost of their purchase, without any deceptions or surprises,” Jack Groetzinger, CEO of SeatGeek, told DealBook. But he added that “more needs to be done”.

Some progressives say focusing on junk costs misses the bigger picture. While against hidden fees, these proponents say the glitches and pricing issues behind the Taylor Swift tour debacle continue due to Live Nation’s dominance of live events.

The Justice Department continues its investigation into Live Nation’s market position. And the US Economic Liberties Project gave DealBook a first look on new data that says the company has a slot on the top 100 event venues in the US and 100 arenas worldwide. The group said it hoped the data would “accelerate efforts to break this monopoly.” Live Nation did not respond to a request for comment.

HERE’S WHAT HAPPENING

Prosecutors drop some charges against Sam Bankman-Fried. In a lawsuit, government lawyers said they were withdrawing five legal claims they filed against the founder of FTX after he was extradited from the Bahamas in December. While the move was considered a victory for Mr Bankman-Fried, prosecutors have asked the chairman to schedule a second trial for these charges.

Music publishers are suing Twitter for copyright infringement. A group of 17 publishers accused the company of violating copyright law by allowing users to post music to the platform without permission. Talks between the two sides broke down months ago; now the publishers are seeking a whopping $250 million.

Miami Mayor Francis Suarez is running for president. The Florida Republican, who rose to prominence courting the tech and crypto communities, will be the latest to run against Donald Trump for the GOP nomination. Mr. Suarez faces an uphill battle given Trump’s polling dominance and emerging allegations about his ties to a developer.

Cava’s IPO exceeds expectations. The fast-casual restaurant chain raised $318 million, values ​​it at $2.45 billion. The offering, the sixth largest in the United States this year, was closely watched by Wall Street as a sign of a possible thaw in the largely frozen IPO market.

The Fed’s Aggressive Pause

The S&P 500’s five-day winning streak is in jeopardy on Thursday.

Equity futures are falling and bond yields are rising as investors realize the Fed has more to do to bring inflation under control.

The central bank finally held its ground on Wednesday, after raising rates in 10 consecutive meetings. But that breather came with a more aggressive message than many market participants expected: Fed officials are anticipating two more rising this year.

The culprit is continued inflation. Over the past 15 months, the Fed has hiked rates at its fastest rate in decades. But core inflation remains well above the central bank’s 2 percent target, and the Fed’s latest forecast expects prices to remain high for the rest of the year.

“The process of reducing inflation will be gradual. It’s going to take a while,” Fed Chairman Jay Powell said Wednesday. He added that the Fed would “stretch out” the hikes, indicating that it has barely finished tightening, but has entered a more gradual phase.

Futures markets indicate that investors believe the next hike will come at the Fed’s meeting in July. And the first rate cut is not expected until the first half of next year.

The good news: Fed officials now expect economic growth of about 0.2 percent per quarter this year. That may not seem like a victory lap number, but it’s a far cry from the near-recession forecasts the FOMC released in March, Berenberg economists Mickey Levy and Mahmoud Abu Ghzalah wrote in an investor note Wednesday, citing the Fed’s rate-setting committee.

Europe’s turn. The European Central Bank is widely expected to raise interest rates by 0.25 percentage point on Thursday as the eurozone struggles with inflation far above US levels. The ECB is also expected to hint that it will raise rates at least one more time after Thursday’s decision.

Meanwhile, China is bucking the trend. On Thursday morning, the People’s Bank of China announced her second rate cut this week, lowering the borrowing rate on a type of one-year loan that banks usually issue. The move followed a new batch of Chinese data that showed economic activity slowing further.

WilmerHale taps a new managing partner

Anjan Sahni, a lawyer at WilmerHale who once prosecuted Wall Street figures, will become the firm’s next managing partner in January, writes Benjamin Weiser of The Times.

Mr. Sahni, 46, rejoined Wilmer as partner in 2015 after ten years serving in the Office of the U.S. Attorney for the Southern District of New York, where he headed the Securities and Commodity Fraud Task Force and previously co-headed the Terrorism and International Narcotics Unit.

mr. Sahni helped prosecute Viktor Bout, a former Soviet military officer who was convicted in 2011 on charges including conspiracy to kill Americans. (Mr. Bout was traded in December for Brittney Griner, the American basketball star who was detained by Russia for nearly 10 months.) He also oversaw investigations into accomplices of Bernie Madoff, the disgraced Ponzi investor.

In his private practice, he added Caroline Ellison, the former crypto executive and colleague of FTX’s Sam Bankman-Fried, as a client last year. She pleaded guilty and is assisting in the federal investigation of Mr. Bankman-Fried.

Wilmer is known as a lucrative go-getter inside and outside the government. Robert Mueller returned there after his stint as special counsel investigating Russia’s meddling in the 2016 election (he has since retired). The partners include Jamie Gorelick, a deputy attorney general in the Clinton administration, and Preet Bharara, the U.S. attorney for the Southern District under President Barack Obama. Former partners include Alejandro Mayorkas, the Biden administration’s Secretary of Homeland Security, and Brendan McGuire, chief adviser to New York City Mayor Eric Adams.

Mr. Sahni has emigrated from India with his family when he was 8 and graduated from Emory University and Yale Law School. He becomes Wilmer’s first sole leader; the company has had co-managing partners since the merger that created WilmerHale in 2004.

The company doesn’t disclose compensation figures, but partners there received an average of $2.8 million in 2022, according to The American Lawyer.

Mr. Sahni told DealBook about the move was “very meaningful, and I’m excited to do it.”

A legendary British hedge fund is about to close

Odey Asset Management, the prominent British hedge fund, said so on Thursday on the verge of closureafter its founder, Crispin Odey, was charged with multiple counts of sexual assault and harassment.

Odey said it was in advanced talks to transfer money and staff to other companies. (Such steps are subject to due diligence and regulatory approval.) The hedge fund said regulators were aware of the effort and supported it.

The company’s demise followed an investigation by The Financial Times, who spoke to at least 13 women who accused Crispin Odey of sexual misconduct for 25 years and said the company had not done enough to curb his behavior.

It marked the latest series of allegations against Crispin Odey, who had become one of London’s most famous hedge fund managers and a prominent supporter of both the ruling Conservative Party and Brexit. (He was acquitted of some assault charges in 2021.)

The company itself has had a volatile tenure, in part because of its willingness to take big bets. Having managed a whopping $13.3 billion over the years, it reported $4.9 billion in assets earlier this year.

Odey’s existence became more and more vague in recent days, as trading partners cut ties with the hedge fund, despite efforts by the firm’s other partners push Crispin Odey out. Ultimately, the company concluded with extreme understatement, it was clear “that some of the partnership’s investment management activities are affected by recent events.”

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