Thousands of unionised dockworkers at 14 major ports from Maine to Texas went on strike after midnight on Tuesday after failing to reach agreement on a new contract.

The International Longshoremen’s Association (ILA), which organised the first East Coast port strike since 1977, said in a statement on Facebook early Tuesday that it ‘shut down’ the ports at 12:01 a.m. Tuesday as workers ‘began forming picket lines at waterfront facilities on the Atlantic and Gulf coasts’.

The union said the United States Maritime Alliance (USMX) rejected its final offer on Monday, ‘setting the stage for the first coast-wide ILA strike in nearly 50 years’.

The USMX initiated this strike when it decided not to give up its belief that foreign-owned ocean carriers can make billions of dollars in profits in U.S. ports and not compensate American ILA dockworkers who performed the work that made them a fortune,’ said union president Harold Daggett.

Daggett added that ILA members were prepared to ‘fight as long as it takes, stay on strike as long as it takes’ to win the wages and protection from automation they deserve.

USMX said in an online statement on Monday night that it had ‘discussed counter-proposals on wages’ ahead of the strike.

Our proposal would increase wages by about 50 per cent, triple employer contributions to employee pension plans, strengthen our healthcare options and maintain existing language on automation and semi-automation,’ the statement said.

The strike appears to have put President Joe Biden in a difficult position. Under the 1947 Taft-Hartley Act, the president has the power to intervene to prevent or end a strike and impose an 80-day cooling-off period.

But this is not the kind of move that Biden, who claims to be the ‘most pro-worker’ president in history, can make without serious backlash from unions and their supporters.

On Monday afternoon, the US Chamber of Commerce called on the president to intervene to stop the strike.

A White House official said late Monday that administration officials, including chief of staff Jeff Zients, labour secretary Julie Su and economic adviser Lael Brainard, have been in regular contact with both sides to keep negotiations moving forward.

In the case of the rail workers, the White House has previously blocked workers from striking ahead of the holiday and faced a backlash from the labour community.

JPMorgan estimates that the daily cost to the economy of a strike would be $3.8-4.5 billion. The Conference Board, on the other hand, takes a more conservative approach and puts the cost to the economy of a week-long strike at $3.7 billion.

The strike will affect around 45,000 workers, but will also have a knock-on effect on other jobs, including warehousing and transport.

Oxford Economics estimates that up to 105,000 more workers could be temporarily unemployed.

German software developer SAP, product vendor Carahsoft Technology and other companies are being investigated by US authorities for a decade-long ‘conspiracy to overcharge government agencies’.

Since at least 2022, Justice Department lawyers have been investigating whether SAP, the giant maker of accounting, human resources, supply chain and other business software used worldwide, illegally conspired with Carahsoft to fix prices on sales to the US military and other parts of the government, Bloomberg reported, citing federal court records in Baltimore.

The investigation, which has not been made public, poses a legal risk to the leading technology supplier to the US government and Germany’s most valuable company.

The investigation also extends to powerful software vendor Carahsoft, whose offices in Virginia were raided by FBI agents and military investigators on Tuesday.

Company spokeswoman Mary Lange described the raid as ‘an investigation into a company with which Carahsoft has done business in the past’. It is not clear whether the search is related to the SAP investigation. Lange and other Carahsoft representatives declined to answer detailed questions.

According to court records, the long-running investigation focuses on companies that may have rigged the market for more than $2 billion in SAP technology purchased by the US government since 2014.

Records show that prosecutors are also investigating the role of other software vendors and a unit of Accenture, a giant management and technology consulting firm. Many investigations have ended without formal charges.

Accenture spokesman Peter Soh said the subsidiary, Accenture Federal Services LLC, ‘has responded to an administrative subpoena and is cooperating with the Department of Justice’.

The Justice Department classifies bid-rigging as a form of fraud that involves an agreement between competitors on who will be the winning bidder.

It is unclear exactly when prosecutors began investigating the relationship between Walldorf, Germany-based SAP and Reston, Virginia-based Carahsoft.

But in June 2022, prosecutors sent Carahsoft a request to turn over documents and provide information about possible violations of the False Claims Act.

An analysis of official data by the Financial Times (FT) has revealed that US banks have benefited to the tune of $1 trillion from the Fed’s two and a half years of high interest rates.

An analysis of data from the Federal Deposit Insurance Corporation (FDIC) showed that lenders earned higher returns on their deposits with the Fed, but kept interest rates lower for many savers.

The support provided to more than 4,000 US banks helped boost profit margins. While rates on some savings accounts were raised in line with the Fed’s target of more than 5%, the vast majority of depositors, especially those at the largest banks such as JPMorgan Chase and Bank of America, received much less.

At the end of the second quarter, the average US bank was paying depositors just 2.2 per cent a year, according to regulatory data, which includes accounts that pay no interest at all. That is higher than the 0.2 per cent they paid two years ago, but much lower than the 5.5 per cent Fed overnight rate that banks can charge.

According to the data, the annual cost of holding deposits at JPMorgan and Bank of America is 1.5 per cent and 1.7 per cent respectively. The FT calculates that these lower payments to depositors have meant $1.1 trillion in excess interest income for the banks.

Banks cut deposit rates before Fed

When the Federal Reserve cut its key interest rate by half a percentage point this week, some US banks rushed to pass the cuts on to depositors to boost profits.

Hours before the Fed’s rate cut last Wednesday, Citi told employees at its bank, which typically offers preferential rates to wealthy clients, that if the US central bank cut rates by half a percentage point, the bank would also cut its rate on accounts paying 5 per cent or more, according to a person familiar with the matter.

JPMorgan also said savings rates for clients with $10 million or more in cash would be cut by 50 basis points and that future cuts would be in line with the Fed’s actions.

Chris McGratty, head of US bank research at KBW, said banks would ‘absolutely’ be able to cut deposit costs as a result of the Fed’s rate cut, adding: ‘I think the level of aggressiveness will vary from bank to bank.

JPMorgan said it aims to ‘offer a fair and competitive rate’. Citi and Bank of America declined to comment.

Flight from small and medium-sized banks favours the big ones

Banks seem to be slow to raise the interest rates they offer on deposits and savings accounts, and fast to cut them.

When the Fed began tightening monetary policy in March 2022, many analysts predicted that competition from new financial technology companies and the increasing ease with which consumers carry cash would force banks to give depositors a greater share of higher rates.

But the FT’s calculations show that banks have been able to retain most of the gains, albeit slightly less than in previous Fed tightening cycles.

The collapse of some banks, including Silicon Valley Bank in early 2023, forced many mid-sized and smaller banks to raise rates to prevent depositors from fleeing. Larger banks saw an increase in cash flow during the flight of depositors from these small and mid-sized banks, allowing them to postpone the need to adjust to higher interest rates.

According to FT calculations based on the latest available data, US banks received about two-thirds of the revenue from the Fed’s higher rates from March 2022 to the middle of this year.

Banks paid out about $600bn in interest to depositors. In the period from early 2016 to early 2019, when the Fed last raised rates, US banks earned 77 percent of the revenue.