US Business

Higher interest rates and grinding inflation are likely to begin taking a higher toll on US consumers who have so far mostly managed to remain in healthy financial shape, bank CEOs told a congressional panel Wednesday.

The heads of the largest US banks warned in particular that low-income households face duress, as they appeared at a lengthy hearing before the House Financial Services Committee ahead of the Federal Reserve’s announcement of an interest rate hike of three-quarters of a point.

“It’s early days still in terms of seeing the impact of high interest rates on the consumer in the States,” said Citigroup Chief Executive Jane Fraser. “Fortunately, they entered this period with pretty strong balance sheets.”

Fraser warned of “greater stress” for consumers with low credit ratings, predicting a drop in savings rates and “tougher times ahead” in general.

Remarks on the economy were interspersed as bankers navigated politically charged questions on climate change, President Joe Biden’s regulatory policies, executive leadership diversity and other topics.

Andy Cecere, chief executive of US Bancorp, said that while savings rates remain above pre-pandemic levels, they have “stabilized” the last three months after growing consistently for the prior 18 months.

“The things that people are spending money on have changed substantially from discretionary to non-discretionary items like food and gas,” Cecere told the panel.

“It’s appropriate that we’re very focused on inflation, because again, it is most harmful for those who afford it the least.”

JPMorgan Chase Chief Executive Jamie Dimon said American consumers are in “rather good shape” with low debt levels in a strong jobs market.

But Dimon said the economy faces an uncertain course, with only a “small chance” of a soft landing to the Fed’s monetary tightening policy.

Dimon said there was also a chance of a “mild recession” as well as a “harder recession, noting that in light of the war in Ukraine and the drag on food and energy supply, “there’s a chance it could be worse.”

“And I think policy makers should be prepared for the worst,” Dimon added.

New York state’s attorney general Letitia James filed a civil suit on Wednesday against Donald Trump and three of his children, accusing them of business fraud.

It was the latest development in multiple civil, criminal and congressional probes into the former US president.

The 76-year-old Trump is also being investigated for his role in last year’s US Capitol attack, his efforts to overturn the 2020 presidential election, and the stashing of classified documents at his Mar-a-Lago residence.

Here are some of the key investigations weighing on the one-term president as he eyes a third run for the White House in 2024:

– Capitol assault –

A series of explosive hearings by the House of Representatives panel probing the attack on the US Capitol by Trump supporters on January 6, 2021 offered a roadmap for potentially charging the ex-president with a crime.

The lawmakers leading the hearings presented their case that Trump knew he lost the 2020 presidential election to Joe Biden, yet pressed his claims of fraud and ultimately brought his supporters to Washington for a rally that ended with a violent assault on Congress.

The House select committee also uncovered evidence of alleged misconduct by Trump leading up to the insurrection, including his attempt to co-opt government departments into his bid to overturn the election.

The lawmakers’ work is separate from a criminal probe that the Justice Department has launched into the unrest and the events leading up to it.

Besides the legal ramifications, an unprecedented prosecution of a former chief executive would likely cause a political earthquake in a country already starkly divided along partisan Democratic and Republican lines.

– ‘Find’ the votes –

Trump is being investigated for pressuring officials in the southern swing state of Georgia to overturn Democrat Joe Biden’s 2020 victory — including a now-infamous taped phone call in which he asked the secretary of state to “find” enough votes to reverse the result.

Fulton County’s top prosecutor Fani Willis has assembled a special grand jury that could see Trump facing conspiracy charges connected to election fraud and interference.

Willis has already amassed significant testimony from members of Trump’s inner circle, including his former personal lawyer, ex-New York mayor Rudy Giuliani.

– The Trump Organization –

The civil suit filed by James, the New York state attorney general, against Trump and three of his children — Donald Trump Jr, Ivanka Trump and Eric Trump — accuses them of overvaluing multiple assets to secure loans and then undervaluing them to minimize taxes.

James is seeking $250 million in penalties as well as banning Trump and his children from serving as executives at companies in New York.

The attorney general is also seeking to bar Trump and his company, The Trump Organization, from purchasing property in the state for five years.

She also said her office was making a criminal referral to the US Justice Department and the Internal Revenue Service.

Trump denounced the suit as “another Witch Hunt by a racist Attorney General.”

– Raid on Florida residence –

An FBI search of Trump’s palatial Mar-a-Lago home in Florida in August turned up classified documents taken to his estate when he left office in January 2021.

The raid, which was personally approved by US Attorney General Merrick Garland, was triggered by a review of classified records that Trump finally surrendered to authorities in January this year — after months of back and forth with the National Archives.

The Justice Department began investigating after the 15 boxes were found to contain national defense information, including 184 documents marked as confidential, secret or top secret.

The FBI, in the affidavit used to justify the raid, said it was conducting a criminal investigation into “improper removal and storage of classified information” and “unlawful concealment of government records.”

The search warrant said the probe was also related to “willful retention of national defense information,” an offense that falls under the Espionage Act, and potential “obstruction of a federal investigation.”

A “special master,” a retired New York judge, has been appointed to screen the seized files for privileged materials.

US President Joe Biden on Wednesday accused Russia of “shamelessly” violating the international order by invading Ukraine, as he pledged billions in food aid and backed an expansion of UN Security Council seats for the developing world.

Biden sought to woo the world in an address to the United Nations hours after Russian President Vladimir Putin called up reservists to fight in Ukraine, a step Western powers portrayed as desperation.

“Russia has shamelessly violated the core tenets of the United Nations Charter,” Biden told the General Assembly.

“Let us speak plainly. A permanent member of the United Nations Security Council invaded its neighbor — attempted to erase the sovereign state from the map.”

After a frontal denunciation of Russia, Biden focused much of his address on the interests of the developing world, where resentment has built in some quarters over the West’s massive spending on weapons for Ukraine.

Biden announced another $2.9 billion for a fund aimed at addressing global food insecurity, which has worsened markedly since the invasion of Ukraine, a major grain exporter.

He also threw his support behind an expansion of the Security Council, an idea mulled for decades but which has previously seen low US enthusiasm.

Biden said the United States would back permanent seats for Africa and Latin America in addition to its previous support to include Japan and India.

He also promised the United States would “refrain from the use of the veto, except in rare, extraordinary situations, to ensure the council remains credible and effective.”

Russia in recent years has been the most frequent user of its veto power. The United States, China, France and Britain also enjoy vetoes, a legacy of the power dynamics at the end of World War II.

Russia has previously scoffed at US high-mindedness on the Security Council, pointing to how former president George W. Bush circumvented it to invade Iraq.

– Calls to pressure Russia –

The General Assembly is meeting in person after two years of disruptions due to the pandemic. Only one leader was granted an exception to speak via video — Ukrainian President Volodymyr Zelensky, who addresses the world body later Wednesday.

Just as world leaders were meeting, Russian allies announced they would hold referendums in occupied territory on annexation and Putin announced the mobilization of reservists, showing he is in no hurry to end the war.

French President Emmanuel Macron, speaking on the sidelines of the General Assembly, said that the world must put “maximum pressure” on Putin whose decisions “will serve to isolate Russia further.”

Standing at the UN rostrum late Tuesday, German Chancellor Olaf Scholz said the world was “facing a new fragmentation” after years of hope following the end of the Cold War and his own nation’s reunification.

“Major global crises are piling up before us and are combining and reinforcing one another. Some have even seen this as a harbinger of a world without rules,” he said.

Scholz said that Putin will “only give up his war and his imperialist ambitions if he realizes he cannot win.”

“We stand firmly at the side of those under attack — for the protection of the lives and the freedom of the Ukrainians, and for the protection of our international order,” he said.

– No ‘Cold War’ with China –

Amid warnings of rising global division, Biden also sought to calm tensions with China, days after he again promised US support if Beijing invades Taiwan.

“Let me be direct about the competition between the United States and China,” Biden said. “As we manage shifting geopolitical trends, the United States will conduct itself as a reasonable leader. We do not seek conflict, we do not seek a Cold War.”

The Biden administration has been encouraged by Putin’s acknowledgement of Chinese concerns when he met President Xi Jinping last week.

On Wednesday, China called for a “ceasefire through dialogue” in Ukraine. It has previously offered moral support to Russia but US officials say Beijing has not accepted requests for material help.

Among other leaders addressing the United Nations was Iranian President Ebrahim Raisi, who traveled to New York just as protests spread in his country over the death of a woman arrested by morality police.

Biden said that Americans “stand with the brave women of Iran” after the death of Mahsa Amini, a 22-year-old who allegedly was beaten to death after not wearing her headscarf in compliance with the clerical state’s guidelines.

Raisi accused the West of “double standards” as he mentioned the killings of Indigenous women in Canada.

Raisi was trailed by protesters in New York with dissidents filing human rights lawsuits against the hardline cleric over his role as a judge during mass executions in the 1980s.

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Hurricane Fiona churned toward Bermuda as a powerful Category 4 storm on Wednesday as Puerto Rico struggled to restore power and water after receving a crushing blow.

The US National Hurricane Center (NHC) said Fiona was expected to approach Bermuda, a British territory of some 64,000 people, late on Thursday.

In Washington, the State Department advised Americans to reconsider travel to Bermuda and authorized family members of US government personnel to leave.

“US citizens in Bermuda wishing to depart the island should depart now, ahead of Hurricane Fiona’s arrival,” it said in a travel advisory.

Fiona was upgraded overnight to a Category 4 hurricane, the second highest level on the Saffir-Simpson scale.

The NHC said the storm was packing maximum winds of 130 miles per hour (210 kilometers per hour) as it headed north toward Bermuda at around eight miles per hour.

“On the forecast track, the center of Fiona will continue to move away from the Turks and Caicos today, approach Bermuda late on Thursday and approach Atlantic Canada late Friday,” the NHC said.

“A storm surge will cause elevated water levels along the coast of Bermuda,” it said. “Near the coast, the surge will be accompanied by large and destructive waves.”

Fiona has left a trail of destruction across the Caribbean and killed four people in Puerto Rico, according to a US Federal Emergency Management Agency (FEMA) official quoted by The Washington Post.

One death was reported in the French overseas department of Guadeloupe and another in the Dominican Republic.

FEMA administrator Deanne Criswell is in Puerto Rico and toured flood damaged areas with the governor of the US territory, Pedro Pierluisi.

– ‘Will not stop’ –

FEMA said it was sending hundreds of additional personnel to Puerto Rico to help with relief efforts on the island, which suffered widespread power outages.

Pierluisi said the storm had caused catastrophic damage on the island of three million people, with some areas receiving more than 30 inches (76 centimeters) of rain.

US President Joe Biden has declared a state of emergency in Puerto Rico, which is still struggling to recover from Hurricane Maria five years ago.

LUMA, the Puerto Rico power company, said more than 2,000 utility workers were assessing damage and working to restore electricity to hundreds of thousands of customers.

“LUMA and all our partners will not stop until every customer is restored and the entire grid is reenergized,” its public safety manager Abner Gomez said in a statement.

The storm also left around hundreds of thousands of people in Puerto Rico without drinking water as a result of power outages and flooded rivers, officials said.

In the Dominican Republic, President Luis Abinader declared three eastern provinces to be disaster zones: La Altagracia — home to the popular resort of Punta Cana — El Seibo and Hato Mayor.

After years of financial woes and recession, Puerto Rico in 2017 declared the largest bankruptcy ever by a local US administration. 

Later that year, the double hit from hurricanes Irma and Maria added to the misery, devastating the electrical grid on the island — which has suffered from major infrastructure problems for years.

The grid was privatized in June 2021 in an effort to resolve the problem of blackouts, but the issue has persisted, and the entire island lost power earlier this year.

US President Joe Biden tore into Vladimir Putin Wednesday as he addressed the United Nations just hours after the Russian leader dramatically escalated his seven-month war in Ukraine by calling up his country’s military reservists.

Biden accused Putin of “shamelessly” violating the UN Charter and castigated him over a veiled threat to use nuclear weapons — after Putin said his promise to use all military means in Ukraine was “no bluff.”

“Russia has shamelessly violated the core tenets of the United Nations Charter,” Biden said as he addressed the UN General Assembly, warning that “a nuclear war cannot be won and must never be fought.”

Russian forces have attacked Ukrainian schools, railway stations and hospitals during a war that Biden said was aimed at “extinguishing Ukraine’s right to exist as a state.”

John Kirby, spokesman for the White House’s National Security Council, had said ahead of Biden’s address that Washington was taking Putin’s “irresponsible” apparent threat to use nuclear weapons “seriously” and warned it could alter its “strategic posture” if need be.

Putin’s mobilization call came as Moscow-held regions of Ukraine prepare to hold annexation referendums this week, ramping up the stakes in the conflict by allowing Moscow to accuse Ukraine of attacking Russian territory.

Four Russian-occupied regions of Ukraine — Donetsk and Lugansk in the east and Kherson and Zaporizhzhia in the south — said on Tuesday that they would hold the votes over five days beginning Friday.

In a pre-recorded address to the nation early on Wednesday, Putin accused the West of trying to “destroy” his country through its backing of Kyiv. Russia needed to support those in Ukraine who wanted to “determine their own future”, he said.

The Russian leader announced a partial military mobilization, with Defense Minister Sergei Shoigu telling state television that some 300,000 reservists would be called up.

– ‘Not a bluff’ –

“When the territorial integrity of our country is threatened, we will certainly use all the means at our disposal to protect Russia and our people. This is not a bluff,” Putin said.

“Those who are trying to blackmail us with nuclear weapons should know that the wind can also turn in their direction,” Putin added.

But Ukrainian President Volodymyr Zelensky said in an interview with Germany’s Bild media group released Wednesday that he did not think Putin would resort to nuclear weapons.

“Tomorrow, Putin can say — as well as Ukraine, we want part of Poland, otherwise we will use atomic weapons. We cannot make these compromises,” he said. 

Separately, Zelensky’s foreign minister Dmytro Kuleba called Western allies to increase military aid to Kyiv and further isolate Moscow.

On the sidelines of the UN gathering, French President Emmanuel Macron urged the world to “put maximum pressure” on Putin, whose decisions “will serve to isolate Russia further.”

German Chancellor Olaf Scholz denounced the call-up as “an act of desperation” in a “criminal war” he said Russia could not win.

In the wake of the reservist announcement flights out of Russia to neighboring ex-Soviet countries were booked up for days to come, airline data showed, in what appeared to be a rush to quit the country. Prices for remaining seats skyrocketed.

The sudden flurry of moves by Moscow this week came with Russian forces in Ukraine facing their biggest challenge since the start of the conflict.

In a sweeping Ukrainian counter-offensive in recent weeks, Kyiv’s forces have retaken hundreds of towns and villages that had been controlled by Russia for months.

In a rare admission of military losses from Moscow, Shoigu said on Wednesday 5,937 Russian soldiers had died in Ukraine since the launch of the military intervention in February.

– World peace ‘in jeopardy’ –

As Putin made his announcement, residents were clearing rubble and broken glass from a nine-story apartment block hit by an overnight missile strike in the eastern Ukrainian city of Kharkiv.

“They want to liberate us from what? From our homes? From our relatives? From friends? What else?” she told AFP. “They want to free us from being alive?” said a 50-year-old resident, who gave her name as Galina.

The referendums follow a pattern established in 2014, when Russia annexed the Crimea peninsula from Ukraine after a similar vote.

Like in 2014, Washington, Berlin and Paris denounced the latest ballots, saying the international community would never recognize the results.

Beijing, which so far has tacitly backed Moscow’s intervention called on Wednesday for a “ceasefire through dialogue” after Putin’s address and in likely reference to the referendums said the “territorial integrity of all countries should be respected”.

NATO Secretary General Jens Stoltenberg meanwhile denounced Putin’s “dangerous and reckless nuclear rhetoric.”

And EU foreign policy chief Josep Borrell on Wednesday accused Putin of putting world peace “in jeopardy”.

“Putin’s announcement of sham referenda, partial military mobilization and nuclear blackmail are a grave escalation,” Borrell wrote on Twitter.

“Threatening with nuclear weapons is unacceptable and a real danger to all,” he said. 

Kyiv said the referendums were meaningless and vowed to “eliminate” threats posed by Russia, saying its forces would keep retaking territory regardless of what Moscow or its proxies announced.