Finance Brief: 25 Republican Senators Urge Trump to Restart TPP Trade Talks

Top Stories

  • Twenty-five GOP senators called for President Donald Trump to reconsider his decision to withdraw the United States from the Trans-Pacific Partnership, arguing that rejoining the trade pact would help Trump achieve his goal of increased U.S. economic growth. Pulling out of TPP, which was negotiated under the Obama administration, was a notable campaign pledge of Trump’s, and he withdrew the United States from the trade deal during his first week in office. (The Washington Post)
  • A quarter of registered voters surveyed in a new nationwide poll said they have seen a boost in their paychecks as a result of the new tax law, while 51 percent said they have not. High-income earners were more likely to say they noticed an increase. (Politico)
  • Last week’s indictment of Russian nationals accused of interfering in the 2016 U.S. presidential election has raised the question of whether banks were diligent enough in following “know your customer” rules that are aimed at preventing illicit use of accounts. Rep. Carolyn Maloney (D-N.Y.), a member of the House Financial Services Committee, said she is concerned that the Russian operatives who tried to influence the election were able to use “false information to open accounts at U.S. financial institutions, and then use those accounts to carry out their illegal operations to interfere with the U.S. elections — all without being caught by the U.S. financial institutions.” (American Banker)

Chart Review

Events Calendar (All Times Local)

CSIS event on economic impact of cybercrime 8 a.m.
SEC open meeting 10 a.m.
CFR World Economic Update 12:30 p.m.
No events scheduled
Chicago Booth U.S. Monetary Policy Forum 10:15 a.m.
WITA event on North American Free Trade Agreement 10:30 a.m.
CFR event with World Bank’s Jim Yong Kim 1 p.m.

New Report: How Americans & Investors Are Reacting To Market Volatility

Recent tumult in the stock market has triggered a wave of concerns about investor confidence and the possibility of sustained downturn. To provide a better understanding of the real-time reaction to this volatility, Morning Consult conducted a comprehensive survey of both consumers and market investors. See the full report.


25 GOP senators urge Trump to restart TPP trade talks, a deal he called a ‘disaster’
Heather Long, The Washington Post

Twenty-five Republican senators, including Senate Majority Whip John Cornyn (R-Tex.), sent President Trump a letter Friday asking him to “re-engage with the Trans-Pacific Partnership.” It’s the latest attempt by Republican lawmakers to get Trump to take a softer stance on trade, even though his administration is gearing up to erect more trade barriers.

Bipartisan group of House lawmakers urge action on Export-Import Bank nominees
Vicki Needham, The Hill

A bipartisan group of 68 House lawmakers are urging Senate leaders to get the Export-Import Bank running at full speed again. Reps. Denny Heck (D-Wash.) and Chris Collins (R-N.Y.) on Tuesday sent a letter with 66 of their colleagues to Senate Majority Leader Mitch McConnell (R-Ky.) and Minority Leader Charles Schumer (D-N.Y.) urging the upper chamber to quickly confirm four nominees to the Ex-Im Bank’s board of directors.

Dollar Extends Gain; Europe Bonds Rise, Stocks Dip: Markets Wrap
Samuel Potter, Bloomberg

The dollar extended its rally and benchmark Treasuries were flat before another round of U.S. debt sales and the release of minutes from the latest Fed meeting. Futures on the S&P 500 Index fell 0.2 percent to the lowest in a week.


Did banks’ KYC controls fail in Russian efforts to swing election?
Rachel Witkowski and Ian McKendry, American Banker

The alleged use of fraudulent financial accounts by Russian internet trolls, who authorities say were trying to tip the 2016 election, reveals yet another fault line in banks’ efforts to truly “know” their customers. The indictments announced Friday in the Russia special counsel’s investigation illustrate how banks can be exploited by bad actors, but once again the key questions are: What did banks know, and how could they have stopped it?

US FDIC sues 16 banks alleging Libor manipulation in Doral collapse
Rama Venkat Raman, Reuters

A U.S. regulator on Tuesday filed a lawsuit against 16 U.S. and international banks alleging they had manipulated bbaLIBOR, which is a series of interest-rate benchmarks, leading to the collapse of Puerto Rico’s Doral Bank. The Federal Deposit Insurance Corp (FDIC), which brought the suit in its capacity as receiver for Doral Bank, alleged that the rate rigging harmed Doral by causing substantial losses with regard to its loan portfolio and derivative holdings.

Ex-JPMorgan FX Salesman Back in Court Over Unfair Dismissal
Suzi Ring, Bloomberg

A former JPMorgan Chase & Co. currency salesman is fighting his dismissal for a second time after the U.S. bank overturned a verdict in his favor last year, as the fallout from the global foreign-exchange manipulation scandal drags on. Patrice Ktorza, 45, a former executive director at the U.S. bank, began a retrial of his unfair dismissal suit at a London employment tribunal Tuesday.

Wall Street welcomes Trump’s shift on regulation
Ben McLannahan and Barney Jopson, Financial Times

It is just over a year since Donald Trump vowed to “do a big number” on Dodd-Frank, the 2010 law designed to rein in excesses on Wall Street. The new Republican administration would dismantle many of those restrictions, the president said, freeing banks to play their part in boosting growth in the world’s largest economy.

Financial Products and Investments

Galvin’s DOL fiduciary rule enforcement triggers industry plea for court decision
Mark Schoeff Jr., InvestmentNews

Industry opponents of the Labor Department’s fiduciary rule are using last week’s Massachusetts enforcement action to try to speed up an appeals court decision in their lawsuit. The plaintiffs warned the Fifth Circuit Court of Appeals that the move by Massachusetts Secretary of the Commonwealth William Galvin to cite the DOL regulation in charging Scottrade Inc. with violating the state’s securities laws was a sign that the partially implemented rule can raise regulatory and legal costs for financial firms.

Steven Cohen loses bid to seal lawsuit alleging sexism at Point72
Jonathan Stempel, Reuters

A U.S. judge on Tuesday rejected billionaire investor Steven A. Cohen’s request to temporarily seal a lawsuit accusing his hedge fund firm Point72 Asset Management LP of sexism toward women. U.S. District Judge Analisa Torres in Manhattan said Point72 failed to overcome the presumption under the U.S. Constitution’s First Amendment that the complaint by Lauren Bonner, its head of talent analytics, should be accessible to the public.

Housing and GSEs

Tax reform has housing market experts nervous about the future
Elina Tarkazikis, National Mortgage News

Recent tax cuts could negatively affect home prices over the long run, according to a survey of economists and other housing market experts. About 41% of those surveyed by Zillow said their five-year forecast on home prices is now less positive in the first quarter because of the new tax law, with 31% feeling more optimistic because of tax reform.


Poll: Few voters report seeing bigger paychecks after tax changes
Steven Shepard, Politico

Most voters aren’t noticing more money in their paychecks under the new tax law, according to a new POLITICO/Morning Consult poll. Just a quarter of registered voters, 25 percent, say they have noticed an increase in their paycheck, the poll shows.

Democrats Counter GOP Tax-Cut Pitch by Warning of Long-Term Pain
John McCormick, Bloomberg

As voters complete their tax returns this year, Kelly Mazeski and other Democratic candidates in high-income, high-tax congressional districts want them to be thinking about the possible pain ahead. Republicans are leaning hard on the tax cuts that are boosting take-home pay now as a central theme in their campaigns for the November congressional elections.

New Jersey leads blue-state defiance of Trump tax law SALT deduction
Ryan Hutchins, Politico

Democrats in New Jersey are moving at a lightning speed to institute one of the boldest workarounds of the new Republican tax law, potentially setting up the first tax showdown between high-cost states from coast to coast and the Trump administration. The Democrats, including freshman Gov. Phil Murphy, think they’ve found a giant loophole in the new tax code, H.R. 1 (115), and want to leverage it to allow homeowners across the state to keep deducting their property taxes by labeling the payments “charitable deductions.”

Financial Technology

Lending Club extends losses for fourth straight year
Ben McLannahan, Financial Times

Lending Club lost money for a fourth year in a row last year, as it wrote a big cheque to settle class-action lawsuits connected to its governance glitches of 2016. The San Francisco-based company, the biggest listed online lender in America, said on Tuesday that net losses for the fourth quarter almost tripled from a year earlier, to $92m, as it agreed a $125m settlement to resolve civil suits stemming from the loan-mis-selling scandal that blew up almost two years ago.

US, UK regulators join forces on regulating financial technology firms
Sylvan Lane, The Hill

Two top U.S. and British trading watchdogs have agreed to join forces on efforts to help financial technology companies navigate regulations. The U.S. Commodity Futures Trading Commission (CFTC) and the United Kingdom’s Financial Conduct Authority (FCA) on Monday released a cooperation agreement outlining how officials will share information, help businesses in one country operate in the other, and trade notes on best practices and changes in strategy.

Venezuela Launches Virtual Currency, Hoping to Resuscitate Economy
Kirk Semple and Nathaniel Popper, The New York Times

With Venezuela suffering one of the most severe economic collapses of modern times, the beleaguered administration of President Nicolás Maduro announced on Tuesday that it had begun a presale of virtual currency backed by the nation’s vast petroleum reserves. The government, which had announced plans for the new digital currency late last year, said the initiative was a response to a financial crisis marked by a profound devaluation of the national currency, the bolívar, and quadruple-digit inflation.

Jihadists See a Funding Boon in Bitcoin
Brett Forrest and Justin Scheck, The Wall Street Journal

When a group that says it provides financial assistance “relating to the jihad” sought to improve conditions for fighters in a squalid, sandbag-fortified trench in Syria late last year, it turned to a new funding conduit: bitcoin. “There is currently no shelter to protect the food and ammunition from the rain,” the group, called al Sadaqah (“charity” in Arabic), lamented in a post on the messaging app Telegram.

Opinions, Editorials and Perspectives

The Trump White House’s tariff ‘cures’ are much worse than any trade disease
Editorial Board, The Washington Post

The Trump administration has issued its long-awaited report on steel and aluminum imports, and, as expected, the document calls for new tariffs and quotas to protect domestic industry. Excess production capacity in both commodities is a global concern, exacerbated by the subsidies and other preferential treatment that China provides its producers.

Trump’s SEC may negate investors’ ability to fight securities fraud
F. Paul Bland, Jr., The Hill

Trump’s Securities and Exchange Commission (SEC) is threatening to fire the starting pistol in a new race to the bottom that could rob hard-working Americans of their retirement savings. For decades, when a corporation misled or deceived its investors after selling securities through an initial public offering (IPO), those investors could band together in a class-action lawsuit to seek accountability for this kind of fraud.

Those people who rely on small-dollar loans are real Americans
Robert Sherrill, Washington Examiner

Bureaucrats in Washington are often accused of being out of touch with the citizens who pay their salaries. Time after time, Washington elites make decisions about education, healthcare and taxes that show they’re out of step with the needs and wants of American voters.

Research Reports

Sound Practices: implications of fintech developments for banks and bank supervisors
Bank for International Settlements

The Sound Practices on the implications of fintech developments for banks and bank supervisors assesses how technology-driven innovation in financial services, or “fintech”, may affect the banking industry and the activities of supervisors in the near to medium term. Various future potential scenarios are considered, with their specific risks and opportunities.