Finance Brief: Administration’s Dodd-Frank Review Will Be Done in Stages, Extend Beyond June Deadline

Washington Brief

  • The Treasury Department’s review of the 2010 Dodd-Frank law will not be finished by early June as President Donald Trump initially ordered. Instead, administration officials will take a piecemeal approach, focusing first on banking regulations. (Reuters)
  • White House advisers called Canadian Prime Minister Justin Trudeau’s office last month, urging him to persuade Trump not to abandon the North American Free Trade Agreement. Trump later said, citing discussions with Trudeau and Mexican President Enrique Pena Nieto, that he would hold off on scrapping the deal. (The National Post)
  • Three federal agencies — the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency and the National Credit Union Administration — agreed to not disclose communications with the House Financial Services Committee in Freedom of Information Act responses. (BuzzFeed News)

Business Brief

  • London’s largest global banks plan to move about 9,000 jobs in the next two years to the European continent as Britain exits the European Union. Thirteen big banks, including JPMorgan Chase & Co., Citigroup Inc. and Goldman Sachs, indicated they’ll beef up European operations as the U.K. transitions out of the European Union. (Reuters)
  • Big banks fearing regulatory backlash have whittled down their bilateral banking ties with foreign lenders. The number of those relationships has dropped by more than 25 percent over the past seven years, according to a new report. (Financial Times)
  • Regional banks want Treasury Secretary Steven Mnuchin to analyze the potential effects of an accounting rule that would require them to book losses more quickly on soured loans. The Securities and Exchange Commission rule is set to go into effect in 2019. (The Wall Street Journal)

Chart Review

Events Calendar (All Times Local)

Atlanta Fed Financial Markets Conference 7 a.m.
Financial Services Roundtable blockchain event 11:30 a.m.
North American Securities Administrators Association conference 12 p.m.
SEC event on IPO market 8:30 a.m.
SEC Advisory Committee on Small and Emerging Companies meeting 9:30 a.m.
Senate Banking Committee hearing on secondary sanctions against Chinese institutions 10 a.m.
CFPB small business lending field hearing in Los Angeles 11 a.m.
SEC administrative hearing 12 p.m.
Brookings Institution event on trade backlash 2 p.m.
Bloomberg Government tax reform event 2 p.m.
Senate Banking Committee hearing on housing finance 10 a.m.
Center for Strategic and International Studies trade event 11 a.m.
National Economists Club event with Mercatus Center’s Robert Graboyes 12 p.m.
American Bar Association Section of Taxation meeting 1 p.m.
FDIC community banking event in Kansas City, Mo. 8:30 a.m.
Drexel University urban economic policy conference 12 p.m.
American Bar Association Section of Taxation meeting 12 p.m.



Trump review of Wall Street rules to be done in stages: sources
Olivia Oran and Pete Schroeder, Reuters 

The U.S. government’s review of a landmark 2010 financial reform law will not be complete by early June as originally targeted, and officials will now report findings piece-by-piece, with priority given to banking regulations, sources familiar with the matter said on Monday. President Donald Trump has pledged to do a “big number” on the Dodd-Frank financial overhaul law, which raised banks’ capital requirements, restricted their ability to make speculative bets with customers’ money and created consumer protections in the wake of the financial crisis.

White House advisors called Ottawa to urge Trudeau to help talk Trump down from scrapping NAFTA
John Ivison, The National Post 

White House staff called the Prime Minister’s Office last month to urge Justin Trudeau to persuade President Donald Trump not to tear up the North American Free Trade Agreement, according to multiple Canadian government sources. The unconventional diplomatic manoeuvre — approaching the head of a foreign government to influence your own boss — proved decisive, as Trump thereafter abandoned his threat to pull out of NAFTA unilaterally, citing the arguments made by Trudeau and Mexican President Enrique Pena Nieto as pivotal.

Canada’s Morneau, U.S.’ Mnuchin to talk trade at G7 meet in Italy: source
Andrea Hopkins, Reuters 

Canadian Finance Minister Bill Morneau will discuss trade and infrastructure financing during a bilateral meeting with U.S. Treasury Secretary Steven Mnuchin at the G7 meeting in Bari, Italy later this week, a senior Canadian finance official said on Monday.

These Federal Agencies Agreed to Conceal Some of Their Communications From the Public
Mary Ann Georgantopoulos, BuzzFeed News

At least three federal government agencies have agreed to seemingly conceal official communications with a congressional committee from public information requests, following letters sent last month by the chairman of the House Committee on Financial Services. Congressman Jeb Hensarling, a Republican from Texas, sent letters in April to the heads of several federal agencies his committee oversees, declaring that communications and documents produced between the two offices will remain in the committee’s control and will not be considered “agency records” — therefore exempt from Freedom of Information Act requests.

He Wanted to Close the Export-Import Bank. Now He May Run It.
Alan Rappeport, The New York Times 

Less than two years ago, Scott Garrett, then a Republican congressman from New Jersey, took to the floor of the House of Representatives and laced into his colleagues for resurrecting an institution that “embodies the corruption of the free enterprise system.” The institution he derided was the Export-Import Bank.

Dollar Advance Saps Commodity Gain; Stocks Rise: Markets Wrap
Samuel Potter, Bloomberg News

Futures on the S&P 500 were little changed after the underlying gauge rose less than one point to a record Monday.


Banks planning to move 9,000 jobs from Britain because of Brexit
Anjuli Davies and Andrew MacAskill, Reuters 

The largest global banks in London plan to move about 9,000 jobs to the continent in the next two years, public statements and information from sources shows, as the exodus of finance jobs starts to take shape. Last week Standard Chartered (STAN.L) and JPMorgan (JPM.N) were the latest global banks to outline plans for their European operations after Brexit.

Homes and small businesses shut out of global financial system
Ben McLannahan, Financial Times 

Households and small businesses all over the world are being shut out of the global financial system, according to a new report, as banks cut ties that could expose them to sanctions from regulators. Big banks such as HSBC, BNP Paribas and JPMorgan Chase have paid billions of dollars in fines in recent years for failing to keep tabs on criminal activity, as governments have cracked down on terrorists, money-launderers and tax dodgers.

Banks Want Treasury Secretary Mnuchin to Intervene in Fight Over New Loan Rule
Michael Rapoport, The Wall Street Journal 

Banks are trying to enlist the Trump administration in a rear-guard action against a new accounting rule requiring them to book losses on soured loans more quickly, potentially setting the stage for a clash between the Treasury Department and the Securities and Exchange Commission. Finance chiefs at 18 U.S. regional banks have asked Treasury Secretary Steven Mnuchin to conduct an analysis of the long-term economic effects of the rule, which accounting-rule makers issued last year and which banks will start adopting as early as 2019.

U.S. regulators look at Volcker Rule, a sign they hear Wall Street
Lisa Lambert, Reuters 

U.S. financial regulators on Monday discussed the Volcker rule governing banks’ speculative trading, tackling one of Wall Street’s biggest concerns and a sign President Donald Trump’s administration is listening to banks’ wishes about reforms resulting from the financial crisis. The Financial Stability Oversight Council, chaired by Trump’s Treasury Secretary Steven Mnuchin, held a closed-door meeting and then posted a brief statement saying in part it had “discussed efforts to assess the efficacy of the Volcker Rule.”

Financial Products and Investments

Wells Fargo Said to Explore Sale of Insurance Brokerage Unit
Matthew Monks, Bloomberg News

Wells Fargo & Co. is weighing a sale of its insurance brokerage business, which could fetch about $2 billion, people familiar with the matter said. The San Francisco-based lender has begun reaching out to private equity firms to gauge interest in Wells Fargo Insurance Services USA Inc., said the people, who asked not to be identified because the matter isn’t public.

California looks past Wells Fargo suspension in awarding bank $500 million deal
Jeff Daniels, CNBC 

The state of California just awarded a $500 million deal to Wells Fargo Bank, perhaps a sign the state is ready to move past the sanctions it slapped on the bank last year. The bank is providing the state with short-term funds to cover repairs at Oroville Dam, which was damaged earlier this year after major erosion to its emergency and primary spillways.

BankAtlantic, chairman Alan B. Levan cleared of fraud charges
Jane Wooldridge, The Miami Herald 

A jury Monday dismissed all charges against long-time Bank Atlantic chairman and CEO Alan Levan and his company, now called BBX Capital. In a long-running civil complaint, the Securities and Exchange Commission charged that Levan and his Fort Lauderdale-based company had misled investors in public statements.

Mercer Sued by Hedge Fund Worker Fired After Blasting Trump
Erik Larson, Bloomberg News

Hedge fund mogul Robert Mercer, one of the biggest financial backers of Donald Trump’s presidential campaign, was sued by a former employee who claims he was fired for calling Mercer racist and publicly criticizing his support of Trump. The complaint by David Magerman, a research scientist who worked at Renaissance Technologies LLC for two decades, alleges he was wrongfully fired April 29 after his relationship with Mercer and his family became toxic.

Opponents of DOL fiduciary rule want SEC to modify suitability standard
Mark Schoeff Jr., InvestmentNews

Some suspense surrounds the fate of the Department of Labor fiduciary rule. Among the cliffhangers: Will new Labor Secretary Alexander Acosta extend the delay of the regulation’s implementation date beyond June 9?

States Press On With Retirement Programs, Despite Losing Regulatory Cover
Anne Tergesen, The Wall Street Journal 

Several U.S. states are pressing ahead with efforts to bring retirement-savings plans to millions of private-sector employees, wagering they can defeat legal challenges that are expected after the Senate voted to repeal regulations encouraging such initiatives. At least 20 states introduced legislation in 2017 to consider such plans for residents without access to a workplace retirement plan, according to Angela Antonelli, executive director of Georgetown University’s Center for Retirement Initiatives.

Housing and GSEs

Former Ginnie Mae president says Fannie and Freddie reform takes “real work”
Brena Swanson, HousingWire

Joseph Murin, former president of Ginnie Mae from 2007 to 2008 under former President George W. Bush, is pretty confident that the 115th Congress can finally tackle GSE reform, he told the Mortgage Bankers Association in this MBA Insights piece.

Fannie, Freddie detail plans to help mobile home market
Kate Berry, National Mortgage News

Fannie Mae and Freddie Mac issued proposals Monday to create pilot programs for loans on mobile homes, part of an ambitious federal effort to find creative solutions for underserved and rural housing markets.

Texas regulator orders mortgage service company to cease and desist
Kristen Mosbrucker, The San Antonio Business Journal 

The second-largest residential mortgage servicer in Texas that isn’t a bank was ordered to cease and desist by the Texas Department of Banking. It’s the latest in a string of regulatory agencies looking to crack down on alleged shortcuts that bungled residential mortgages serviced by Ocwen Loan Servicing LLC, a subsidiary of Ocwen Financial Corp. based in West Palm Beach, Florida.


Business coalition: Trump tax plan ‘will spark an economic boom’
Naomi Jagoda, The Hill 

A coalition of businesses is praising President Trump’s tax plan, arguing that it would boost the economy and stop companies from moving overseas. Trump’s plan, released last month, proposes lowering the corporate tax rate from 35 percent to 15 percent.

Financial Technology

Treasury Lawyer Nominee May Help Banking Cybersecurity
Daniel R. Stoller, Bloomberg BNA 

President Donald Trump’s pick for Treasury Department general counsel likely will draw on his cybersecurity and financial services experience to help U.S. banks fight digital threats, privacy and finance attorneys told Bloomberg BNA. If Sullivan & Cromwell LLP partner Brent McIntosh is confirmed as expected, he would bring to the post a wealth of cybersecurity and financial services knowledge that will be helpful for banks and other financial institutions which face persistent cyberthreats, the attorneys said.

Northern Trust Moves to Scale Up Live Equities Blockchain
Michael del Castillo, CoinDesk 

Northern Trust is preparing for more advanced applications of its blockchain platform. After launching possibly the first fully functioning blockchain for trading private equities in February, the Chicago-based bank with $6.7tn assets under custody is now in the process of scaling up its work.

Fintechs fight plan to bar screen scraping and protect European banks
Neil Ainger, CNBC

A coalition of 62 financial technology (fintech) firms including Klarna and Trustly and lobbying organizations such as the European Fintech Alliance (EFA) are fighting plans by the European Banking Authority (EBA) to ban screen scraping of customer data from online banking interfaces. The screen scraping ban would come into force as part of the draft regulatory technical standards (RTS) rule under the European Union’s (EU) revised Payment Services Directive (PSD2) regulation.

Opinions, Editorials and Perspectives

Maryscott Greenwood, Morning Consult 

President Donald Trump has been talking tough about the North American Free Trade Agreement, threatening recently to withdraw the United States from the pact outright, then walking back that threat after phone calls from the leaders of Mexico and Canada, who were undoubtedly alarmed. But even with the expected confirmation this month of Robert Lighthizer, an expert on international trade law and the president’s pick for U.S. trade representative, it’s far too soon to assume NAFTA’s out of the woods.

Washington Shouldn’t Control Your Wallet
James Setterlund and Albert Downs, U.S. News & World Report

Consumers received temporary relief recently from the overzealous Consumer Financial Protection Bureau. A six-month delay of Obama-era regulations on prepaid debit cards and other money transfer accounts was finalized – but a lasting solution is still needed to keep Washington from reaching into the wallets of everyday Americans.

Interim OCC chief should put fintech charter on ice
Brian Knight, American Banker 

One thing that Keith Noreika, the new acting head of the Office of the Comptroller of the Currency, could tick off of his to-do list is to pause the OCC’s efforts to develop a fintech charter. Noreika should then take some time to assess whether the charter is developing in a way that best serves the public.

Apple’s Case for Tax Reform
Editorial Board, The Wall Street Journal 

Apple reported last week that it has amassed $256 billion in cash on its balance sheet with more than 90% parked overseas—that is, outside the grasp of U.S. tax authorities. While our friends on the left howl about corporate tax avoidance, Apple offers a case study for tax reform.

Research Reports

International Standard Setting
American Bankers Association 

The United States has long been a leader in the promotion of international cooperation and coordination of bank supervision. These efforts have traditionally promoted U.S. and global economic growth and facilitated the ability of American banks to serve the international financial interests of American businesses and individuals.