CRUNCH TIME — The collapse of Silicon Valley Bank and Signature Bank did not — as widely feared last month — completely tank the U.S. economy or lead to widespread contagion in the financial sector.

But the crisis did help further tighten access to credit, especially for small businesses, leading some economists to fear that a lending “crunch” could help tip the U.S. toward recession later this year.

That would be especially unwelcome news for President Joe Biden and the White House, since they will also have to deal this summer with House Republicans, led by Speaker Kevin McCarthy, intent on winning spending cuts in return for any increase in the U.S. debt limit. Wall Street still thinks the White House and Hill Republicans will make a deal to avoid a potentially catastrophic default sometime this summer. But the path there is not at all obvious.

And the decline in credit — while not quite warranting panic yet — is very real.

In the final two weeks of March, bank lending dropped $105 billion, according to Federal Reserve numbers, the largest single plunge on record. Much of the damage in the final week of the month came from a decline in real estate and other commercial loans from small banks.

The National Federation of Independent Businesses said last week that the percentage of small business owners reporting difficulty in accessing credit hit the highest level since 2012.

Some of this contracting credit was already underway, courtesy of multiple rate hikes from the Fed aimed at attacking persistent inflation by slowing overall economic activity. To a degree, the Fed wants to see so-called “financial conditions” — such as bank lending — tighten. But the banking crisis accelerated the pace of lenders pulling back, sending at least a few tremors through financial circles and freaking out many Democrats.

Former Treasury Secretary Larry Summers, among the first to warn that post-pandemic inflation would be a long-running nightmare, recently upped his recession odds for the U.S. this year, in part because of credit tightening.

“The chance that a recession will have begun this year in the U.S. over the next 12 months is probably about 70 percent,” Summers said in an interview with Foreign Policy magazine. “As I put together the lags associated with monetary policy, the credit crunch risks, the need for continuing action around inflation, the risk of geo-political or other shocks affecting commodities, 70 percent would be the range that I would be in.”

That puts Summers on the gloomier side of most economic forecasters. And there are at least some signs that the credit decline will not become a true crunch of the kind that devastated the economy after the 2008 financial crisis.

In the first week of April, bank lending ticked back up a bit and bank deposits rose by $60.7 billion after five straight weeks of outflows totalling over $500 billion, according to figures from Yardeni Research, an economic research firm.

And at least for the moment, Wall Street investors continue to bet on the Fed bumping up rates perhaps just one more time this year then eventually slashing them again at the first sign of recession. For now, Wall Street views the credit contraction as mostly helping the Fed achieve its goals without multiple future rate hikes.

But it would not take much — a debt limit debacle or another banking sector meltdown perhaps — to restart the credit freeze and finally bring down an economy that has thus far proved remarkably resilient and defied all predictions of its imminent demise.

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— White House threatens to veto GOP bills reversing D.C. police reforms, restricting transgender athletes: Biden opposes two GOP-led measures that would roll back D.C. policing reforms and ban transgender women and girls from playing on sports teams — and he would veto both measures if they reach his desk, the White House said today. The policing reform rollback would violate D.C.’s right to improve public safety and deprive its police force of resources needed for “effective, accountable community policing,” according to a new statement of administration policy.

— GOP lawmakers put new pressure on colleagues to quit TikTok: There’s a new push from Republican lawmakers on Capitol Hill to get their colleagues off TikTok, with warnings that the security and privacy threats from the popular video app are closer than they appear. Sen. Thom Tillis (R-N.C.) and Rep. Dan Crenshaw (R-Texas) are focused on banning their own colleagues from using TikTok. The pair, joined by 15 other Republicans, wrote a letter calling on leaders of the Senate Rules Committee and the Committee on House Administration to rein in use of the app by their fellow lawmakers.

— McCarthy seeks to reassure Wall Street on stalled debt talks: Speaker Kevin McCarthy took to Wall Street today in his latest effort to rally the GOP around a single strategy to lift the debt limit. The speaker repeatedly blamed Biden and Democrats for driving higher inflation through excess spending, reiterating that any hike in the debt limit should be offset by significant spending cuts. He said Republicans would pass their own bill within weeks but offered no further details on which cuts his conference wants to see.

ON THE ATTACK — After sidestepping former President Donald Trump and his allies for weeks, a group of Florida GOP Gov. Ron DeSantis supporters have begun to push back amid a flurry of criticism from the former president. POLITICO’s Gary Fineout reports that Never Back Down, the super PAC supporting DeSantis, came out swinging with two new videos that take direct aim at Trump. One that came out the same day that Trump addressed the National Rifle Association said he sided with Democrats on some gun regulations. Never Back Down also has started spending on television ad buys in early states for an introductory positive ad about DeSantis as well.

BAD MATH — When Nikki Haley’s presidential campaign announced its first quarterly fundraising haul earlier this month, the figure sounded impressive, reports POLITICO’s Steven Shepard. The former U.N. ambassador’s campaign said it had raised $11 million between her mid-February launch and the end of the quarter on March 31. But after Haley filed her first-quarter report to the Federal Election Commission late Saturday, an altogether different story has emerged. Her campaign’s math didn’t add up. What Haley’s campaign and two affiliated groups actually raised was about $8.3 million. The discrepancy between the Haley campaign’s public statements and the numbers on the filings appear to be a case of double-counting.

COMPLETELY OPPOSED — The Kennedys have been through a lot. They don’t want to go through this. Even across branches of the family that have grown distant and divided since the first generation rose to power in the 1960s, they celebrate each cousin’s achievement – whether that’s a seat in the House or a new children’s book or an expansion of the Special Olympics. But Robert F. Kennedy Jr.’s campaign challenging Biden for the Democratic nomination — set to be announced Wednesday in Boston – is too much for a family that defined the modern Democratic Party. They’re frustrated, sad and completely opposed, writes CNN.

FAKE TREASON — A Russian court today slapped opposition activist Vladimir Kara-Murza with 25 years in prison for treason and other alleged offenses, write Eva Hartog and Wilhelmine Preussen.

Moscow City Court sentenced Kara-Murza to a penal colony for spreading “fake news” about the army and “cooperation with an undesirable organization,” as Russian President Vladimir Putin steps up his crackdown on dissent and Russian civil society. But the bulk of his sentence had to do with another, third charge: treason, which marks the first time anyone has been convicted on that count for making public statements containing publicly available information.

On the courthouse steps, British Ambassador Deborah Bronnert called the sentence for Kara-Murza, who holds both Russian and British citizenship, “shocking.” Her U.S. counterpart said the verdict was an attempt “to silence dissent in this country.”

The U.K. summoned the Russian ambassador after the conviction, with Foreign Secretary James Cleverly calling for Kara-Murza’s “immediate release.”

Upon traveling to Russia in April 2022, Kara-Murza was detained for disobeying police orders. From that moment the charges piled up: first for spreading “fake news” about the Russian armed forces, then for his participation in an “undesirable organization,” and last for treason, on account of three public speeches he gave in the U.S., Finland and Portugal. The charges, all of which Kara-Murza denies, were expanded to treason last October.

OUT TO SEA — Animals that have long lived close to shore are traveling farther out to sea on makeshift rafts — made of human garbage. For years, coastal animals including mollusks and various crustaceans have lived in the Great Pacific Garbage Patch, a stretch of ocean between Hawaii and California, mostly on plastic pollution. According to scientists, there are now 484 invertebrate species living on a stretch of debris that’s about twice the size of Texas. Becky Ferreira reports for VICE.