Finance Brief: Core Principle of Fiduciary Rule Takes Effect Today

Washington Brief

  • The core principle of the Labor Department’s fiduciary rule takes effect today; operational components are slated for implementation in January (The Wall Street Journal). House Republicans on Thursday introduced legislation that would undo the Obama-era regulation. (The Washington Examiner)
  • Securities and Exchange Commission Chairman Jay Clayton named Steven Peikin and Stephanie Avakian as co-directors of the agency’s enforcement division. Avakian had been the SEC’s acting enforcement director, and Peikin most recently worked at the law firm Sullivan & Cromwell LLP, where he represented banks such as Barclays Plc and Goldman Sachs Group Inc. (Bloomberg News)
  • House Financial Services Committee Chairman Jeb Hensarling (R-Texas) held open the possibility that House Republicans will hold Consumer Financial Protection Bureau Director Richard Cordray in contempt of Congress for his lack of a response to documents related to the sales practices at Wells Fargo & Co. Hensarling said the panel will use “whatever legal means necessary” to obtain subpoenaed CFPB documents that the committee hasn’t received. (The Hill)

Business Brief

  • The CFPB sent credit card companies a letter warning them that marketing for “deferred interest” card products risks not giving consumers enough information about the nature of interest charges they will face after obtaining cards through the promotion. (MarketWatch)
  • Lawyers for Deutsche Bank AG said they cannot provide House Democrats with information they requested about President Donald Trump’s financial dealings because of U.S. financial privacy laws. Democrats requested that the Frankfurt-based lender send them details on whether Trump has financial ties to Russia. (Reuters)
  • Matt Zames, JPMorgan Chase & Co.’s chief operating officer, said he’s leaving the company. Chief Executive Jamie Dimon said Zames’ responsibilities will be divided among four senior executives. (Financial Times)

Chart Review

Events Calendar (All Times Local)

Friday
Heritage Foundation discussion on tax reform with House Freedom Caucus members 9:30 a.m.

 

General

GOP chairman floats contempt charges for consumer bureau chief
Sylvan Lane, The Hill

House Financial Services Committee Chairman Jeb Hensarling (R-Texas) said Thursday he’s considering seeking contempt of Congress charges against the director of the Consumer Financial Protection Bureau (CFPB). Hensarling said CFPB Director Richard Cordray has refused to turn over documents his panel requested for its investigation into Wells Fargo’s sales practices.

Senate appears long way off from reg relief
Kate Berry, American Banker

As the House moved Thursday to pass a sweeping regulatory reform bill, senators on both sides of the aisle paid lip service to offering relief to community banks and credit unions without offering many specifics over what might be included in their version. Several moderate Democrats, including Heidi Heitkamp of North Dakota and Joe Donnelly of Indiana, emphasized that reform is necessary.

Trump’s financial deregulation follows coherent plan
John Dizard, Financial Times

Amid the Washington chaos of tweets, leaks, investigations and hearings, it would seem the Trump administration is running into the ditch rather quickly. The Congressional calendar is short of time to pass necessary housekeeping legislation and confirm executive-branch appointments, let alone dramatic changes in health coverage or taxation.

Trump Picks Scaramucci to Be Ambassador to OECD, Sources Say
Jennifer Jacobs, Bloomberg News

President Donald Trump will appoint SkyBridge Capital founder Anthony Scaramucci ambassador to the Paris-based Organisation for Economic Co-operation and Development, said two people familiar with the plan. Scaramucci, 53, was a campaign fundraiser for Trump and regular adviser during the presidential transition, appearing almost every day at Trump Tower and regularly defending the president on television.

The Bounty Hunter of Wall Street
Jesse Barron, The New York Times

A month after the 2016 election, the stock trader Andrew Left went out to the Madison Club in La Quinta, Calif., to lick his wounds and play golf. The way Left invests, he can make a killing in a bear market while everyone else on Wall Street suffers.

Pound Drops as U.K. Exit Poll Unnerves Investors: Markets Wrap
Jeremy Herron and Adam Haigh, Bloomberg News

The pound tumbled the most since October and the yen advanced as a note of caution spread across financial markets after an exit poll showing the U.K. faces a hung parliament rekindled political uncertainty in Europe.  The yen strengthened slightly, while S&P 500 futures fell 0.2 percent.

Banking

Deutsche Bank says privacy laws prevent Trump financial disclosures
Karen Freifeld and Patrick Rucker, Reuters

Deutsche Bank AG is not allowed to share information it may have about President Donald Trump’s finances and his possible ties to Russia despite a request from U.S. lawmakers, the German lender told Congress on Thursday. In a letter to five House Democrats, Germany’s largest bank said it was barred from sharing information about Trump’s finances due to U.S. privacy laws.

Matt Zames departure shines spotlight on JPMorgan succession
Ben McLannahan, Financial Times

Matt Zames, chief operating officer at JPMorgan Chase, has announced his resignation, in a move that shines a light on questions of succession at the biggest US bank by assets. Mr Zames, 46, had served as sole COO of the bank since 2013, after rising through the ranks of the fixed-income trading department.

Wells Fargo’s New Mission: Growth, Not Scandal
Emily Glazer, The Wall Street Journal

Wells Fargo & Co. has spent roughly nine months working to reform the sales culture that led to a $185 million fine, public humiliation and the departure of its chief executive. Now, the bank is confronting a new challenge: growing again.

Financial Products and Investments

Fiduciary Rule Is Now (Partially) in Effect
Yuka Hayashi, The Wall Street Journal

When President Donald Trump took office, many in the financial industry were confident that a looming retirement-savings rule they had opposed for years would soon be dead. To their dismay, the core principle of the rule was implemented Friday.

House Republicans move to undo Obama financial advisers rule
Joseph Lawler, The Washington Examiner

With the Trump administration having failed to stop former President Barack Obama’s conflict-of-interest rule for investment advisers from going into effect, House Republicans are looking to legislation to undo the rule. Two Republicans on committees with oversight of the Labor Department introduced legislation Thursday to undo the agency’s fiduciary rule, a major regulation that is supposed to begin going into effect Friday and would reshape the rules for retirement advice.

Watch out for this surprise credit-card charge, the CFPB warns
Maria Lamagna, MarketWatch

Consumers, beware of confusing retail credit cards. That’s the message from the Consumer Financial Protection Bureau on Thursday.

SEC’s Clayton Names Law Firm Colleague as Co-Enforcement Chief
Benjamin Bain, Bloomberg News

U.S. Securities and Exchange Commission Chairman Jay Clayton on Thursday named Steven Peikin and Stephanie Avakian co-directors of the agency’s enforcement division, filling the most prominent staff opening at the Wall Street regulator. Peikin, a former federal prosecutor, worked with Clayton at Sullivan & Cromwell LLP, where he represented clients including Goldman Sachs Group Inc. and Barclays Plc as managing director of the law firm’s criminal defense and investigations group.

SEC takes more time to mull Chicago Stock Exchange’s China deal
John McCrank, Reuters

The U.S. Securities and Exchange Commission will take up to another 60 days to decide whether to allow the sale of the Chicago Stock Exchange to a group of investors led by China-based Chongqing Casin Enterprise Group. The SEC, which reviews proposed mergers involving exchanges to ensure they comply with federal regulations and appropriately self-police their brokerage members, said it needed more time to make the decision in a regulatory filing dated June 6.

GOP Lawmakers Signal CFTC Budget to Stay Flat
Gabriel T. Rubin, The Wall Street Journal

Congressional Republicans expressed misgivings about increased funding for the Commodity Futures Trading Commission at a Thursday hearing, signaling they favor the Trump administration’s request to hold its budget steady at $250 million. CFTC Acting Chairman J. Christopher Giancarlo, a Republican, submitted a budget request of $281.5 million to the House Appropriations Committee.

Housing and GSEs

Freddie Mac: Increasing uncertainty pushes mortgage rates lower
Kelsey Ramírez, HousingWire

Mortgage rates fell once again this week to the lowest level in almost seven months, but remained higher than last year’s rates. “Mixed economic data and increasing uncertainty are continuing to push rates to the lowest levels in nearly seven months,” Freddie Mac Chief Economist Sean Becketti said.

Taxes

CEOs: Tax reform should be ‘highest priority’
Naomi Jagoda, The Hill

A group of CEOs is urging President Trump and congressional leaders to “shift from listening to action” on tax reform. “We urge you to undertake this effort with the highest priority and move forward with pro-growth legislation that will put America on a path of accelerated economic growth with higher wages and greater employment opportunities for all Americans,” the CEOs, who are members of Business Roundtable, wrote in a letter Wednesday.

Financial Technology

Libertarian Party Blasts Government Case Against Bitcoin Trader
Stan Higgins, CoinDesk 

The US Libertarian Party sharply criticized the sentencing of a bitcoin trader on an unlawful money transmission charge this week. In a statement, Nicholas Sarwark, who serves as chairman of the Libertarian National Committee, blasted the government’s case against Randall Lord, who, along with his son Michael, was sentenced to a prison term late last month following an investigation into their alleged exchange activities.

Opinions, Editorials and Perspectives

Thank You, Congress, for Siding With Consumers and Small Businesses
Wogan S. Badcock III, Morning Consult

As a retailer and a consumer, I commend Congress for agreeing to preserve competition in the business of processing debit-card purchases. House leaders recently dropped part of a bill that would have repealed debit swipe fee reform and cost consumers and small business billions of dollars.

A Choice for Wall Street
Editorial Board, The Wall Street Journal

While everyone else in Washington watched the Jim Comey show, the House delivered Thursday on a campaign promise: Voting 233 to 186 to repeal parts of the 2010 Dodd-Frank financial law, which has hampered economic growth and helped the large banks the bill intended to punish after the financial panic of 2008.

While No One Was Looking, Congress Took A Huge Step Toward Fixing The Economy
Editorial Board, Investor’s Business Daily

Deregulation: Former FBI director James Comey’s testimony before the Senate Intelligence Committee was the fixation of Washington on Thursday. But the big story was on the House side of Congress, which passed a bill to repeal the ruinous Dodd-Frank banking law.

Europe (Finally) Shows How to Deal With a Failing Bank
Editorial Board, Bloomberg View

Credit where credit’s due: The sale for 1 euro of Banco Popular Espanol SA, a failing Spanish bank, to rival lender Banco Santander SA shows how the euro zone should handle such cases. The regulators acted swiftly and fairly.

Research Reports

A couple lesser-known bits of mayhem in the Financial CHOICE Act
Josh Bivens and Heidi Shierholz, Economic Policy Institute

Today the U.S. House of Representatives begins consideration of the Financial CHOICE Act of 2017, a sweeping bill that would make a number of extensive changes to the institutions that oversee the American monetary and financial system. The CHOICE Act is frequently (and accurately) described as an effort to undo much of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which is the critical banking regulation passed under President Obama after the financial crisis of 2008/2009 to help avert future crises.

Time to Move Past the Proposed Border Adjustment Tax
Adam Michel, The Heritage Foundation

The BAT is a significant economic gamble, as it could change economic behavior in ways that may undermine other parts of broader tax reform. Without the BAT, the House tax reform blueprint outlines a very good tax plan that would encourage investment, job creation, and economic growth.