On The Money: Turkey in crisis as lira hits new low | Watchdog calls for Wilbur Ross stock probe | CBO downgrades growth projection for 2018

Happy Monday and welcome back to On The Money, where we’re returning after a brief break while both the House and Senate were out of town. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.

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THE BIG DEAL–Turkey in crisis as lira hits new low: The financial crisis in Turkey deepened Monday as the country’s currency fell to a new record low and western leaders pressed Ankara to make economic and governmental reforms.

The Turkish lira sunk 7 percent Monday after dropping roughly 20 percent Friday amid growing concerns over the country’s economy and souring ties with western allies. At one point the lira traded as low as $7.24 by Monday afternoon, half of its value from a year ago.

{mosads}

Turkish President Recep Tayyip Erdoğan has refused to accept interest rate hikes and other measures that could stabilize Turkey’s economy and has instead blamed the crisis on global “economic terrorists.”

German Chancellor Angela Merkel urged Turkey on Monday to ensure the independence of its central bank and allow it to make necessary changes to save its economy.

“Nobody has an interest in an economic destabilization in Turkey. But everything must be done to ensure an independent central bank,” Merkel said during a news conference in Berlin, according to Reuters.

“Germany would like to see an economically prosperous Turkey. This is in our interest,” Merkel said. I’ve got more on the latest news from Europe here.

What’s going on?

• Investors have become increasingly worried about Turkish President Recep Tayyip Erdoğan’s stewardship of the country’s economy. Erdoğan’s reluctance to accept higher interest rates amid rampant inflation and mounting foreign debt has spurred fears among analysts that Turkey’s once-vibrant economy could soon crash.
• Erdoğan also said that the U.S. stabbed Turkey in the back, three days after he sought to bolster ties with Russian President Vladimir Putin.
• Tensions between the U.S. and Turkey, both NATO allies, have reached new heights in the past week. The Trump administration doubled tariffs on Turkish steel and aluminum last week and targeted Erdoğan’s interior and justice ministers with financial sanctions two weeks ago over Ankara’s detainment of an American pastor.
• Stock prices for European banks with heavy investments in the country sunk on Monday. Emerging market currencies and equities have also fallen in value since Friday, while investments seen as safe havens, such as the U.S. dollar, Treasury bonds, gold and the Japanese yen have strengthened.

LEADING THE DAY

Watchdog accuses Wilbur Ross of violating conflict of interest laws: A nonpartisan watchdog group has filed a complaint against Commerce Secretary Wilbur Ross, accusing him of violating conflict of interest laws and calling for an extensive inquiry into his personal financial holdings.

The Campaign Legal Center filed a 115-page complaint against Ross on Monday. Besides the conflict of interest law violation, it also alleges that Ross made false statements.

The group asked the Commerce Department’s inspector general to open an investigation into its top official.

“We conducted a detailed review of public records and found reason to suspect Ross violated the criminal conflict-of-interest law,” Delaney Marsco, ethics counsel at the Campaign Legal Center, told the Center for Public Integrity. “It’s imperative that the inspector general get to the bottom of this. There’s a lot of smoke, and we need to know if there’s fire.” The Hill’s Morgan Gstalter has more here.

Trump signs defense policy bill with ZTE restrictions: President Trump signed into law Monday a $717 billion annual defense policy bill with key measures affecting foreign investment.

Trump signed the bill during a visit to Fort Drum, N.Y., where he was joined by Vice President Pence, Deputy Defense Secretary Patrick Shanahan and the Joint Chiefs of Staff.

The original Senate-passed version of the NDAA included a provision that would have blocked Trump’s plan to save ZTE, which had been slapped with penalties that prevented it from buying U.S. technology after admitting to violating sanctions on Iran and North Korea.

Instead, the final bill aligns with the initial House-passed version, banning the government from contracting with ZTE and Huawei, another Chinese telecommunications company, or companies that do business with them. 

The tougher ZTE language was dropped in negotiations between the Senate and House a part of a deal to add a bipartisan, bicameral bill to bolster the power and scope of the Committee on Foreign Investment in the U.S., which you can read more about here.

CBO downgrades economic growth projection for 2018: The U.S. economy will grow at 3.1 percent in 2018, according to updated projections by the Congressional Budget Office (CBO), down from its April estimate of 3.3 percent.

The updated estimate projects that the 4.1 percent second quarter spike in real GDP will come back down in the third and fourth quarters.

“Such moderation occurs because several factors that boosted second-quarter growth — including a rebound in the growth of consumer spending from a weak first quarter and a surge in agricultural exports — are expected to either fade or reverse,” the CBO report said.

As in April, the updated estimate sees the economy growing at 2.4 percent in 2019, below its 2017 levels of 2.6 percent.

“In 2019, the pace of GDP growth slows to 2.4 percent in the agency’s forecast as growth in business investment and government purchases slows,” the report said. The Hill’s Niv Elis tells us why here.

GOOD TO KNOW

• Embattled Rep. Chris Collins (R-N.Y.) said Saturday he is suspending his reelection campaign as he fights charges related to insider trading — a dramatic reversal from a few days ago when he insisted he would be on the November ballot and seek reelection. 
• The Trump administration is considering rolling back financial protections designed to protect military members from being targeted by predatory lending practices, according to an NPR report published on Monday.
• Alaska fishermen are worried President Trump’s tariffs will be “devastating” to the seafood industry, according to a new Reuters report.
• Russia’s finance minister said Sunday that the country would lower its investment in U.S. securities, calling new sanctions from the Trump administration “unpleasant but not fatal.”
• Sinclair Broadcast Group’s failed efforts to merge with Tribune Media and build a conservative media powerhouse may be just the start of the broadcasting giant’s problems.
• A growing number of banks and merchants are tracking visitors’ physical movements as they use websites and apps, ostensibly to fight fraud, according to The New York Times. 
• Private-equity firms are taking on a bigger role in the corporate lending market, according to The Wall Street Journal.
• Tariffs imposed by Trump are adding thousands of dollars to the cost of building homes, hitting the recent victims of California’s wildfires with even more financial hardship.

ODDS AND ENDS

• Rapper Azealia Banks claims she was at Elon Musk’s house over the weekend as he was ‘scrounging for investors’
• A ship carrying 70,000 tons of U.S. soybeans docked in a northern Chinese port after circling off the coast for over a month, according to Reuters.