Finance Brief: Finra’s Lobbying Bill for 2016 Lowest in Four Years

Washington Brief

  • The Financial Industry Regulatory Authority spent $670,000 on lobbying efforts last year, a decrease of $150,000 compared with 2015 and its lowest amount in four years. (InvestmentNews)
  • Lloyd Blankfein, Goldman Sachs Group’s chief executive, pushed back on criticism that his firm receives preferential treatment from the U.S. government because Goldman alums serve in high-ranking administration posts. Blankfein said the opposite has been true because of officials’ desire to avoid the “perception of favoritism.” (The New York Times)
  • Rep. Bill Huizenga (R-Mich.) introduced legislation that would encourage the Trump administration to push the International Monetary Fund not to participate in another bailout of Greece. Huizenga is chairman of the House Financial Services Subcommittee on Capital Markets, Securities and Investment. (Financial Times)

Business Brief

  • Wells Fargo & Co. said its mortgage originations rose to $249 billion last year from $213 billion in 2015, suggesting that its mortgage business was mostly unaffected by last year’s consumer accounts scandal. (HousingWire)
  • The Federal Reserve rolled out a new policy allowing mergers that create banks with assets totaling less than $100 billion, an increase from the previous threshold of $25 billion. Mergers are “not likely” to be systemically risky under the new threshold, according to the Fed. (Reuters)
  • The inter-bank messaging platform SWIFT said it is planning to eliminate all North Korean banks from its system amid growing geopolitical concerns about Pyongyang’s nuclear program. (Reuters)

Chart Review

Events Calendar (All Times Local)

Friday
FIA International Futures Industry Conference 7:30 a.m.

 

General

Finra’s lobbying expenses down, but regulator still spends heavily to make sure its voice is heard on Capitol Hill
Mark Schoeff Jr., InvestmentNews

Finra’s lobbying bill fell to its lowest point in four years in 2016, but the broker-dealer regulator still spends a hefty amount to have its voice heard on Capitol Hill. The Financial Industry Regulatory Authority Inc., the brokerage industry’s self-regulatory organization, spent $670,000 on lobbying in 2016, according to reports filed with the Office of the House Clerk.

IMF under pressure in Washington over Greek bailout
Shawn Donnan, Financial Times

Conservatives in Congress are pushing Donald Trump to block the International Monetary Fund from participating in a European-led bailout of Greece, as his administration signalled it would take a tougher line with global institutions. In what was labelled an “America First” budget revealed on Thursday, the president proposed a $650m cut in US funding over the next three years for multilateral development banks including the World Bank.

U.S. Set to Signal Stance in Landmark CFPB Powers Case
Chris Bruce, Bloomberg BNA

The Trump administration will likely give a thumbs-down verdict on the constitutionality of the Consumer Financial Protection Bureau and the tenure of its Director Richard Cordray in soon-to-be-filed brief, legal observers said. The U.S. Court of Appeals for the District of Columbia Circuit’s full bench is reviewing an October decision by a three-judge panel in favor of PHH Corp., a Mount Laurel, N.J., mortgage company that appealed a 2015 enforcement order against it by Cordray.

Ex-Workers at S.E.C. Nominee’s Firm Urge Him to Denounce Travel Ban
Elizabeth Olson, The New York Times

Some members of the elite legal community are making an unusual appeal to one of their own, asking that he speak out against the White House’s attempt to restrict travel to the United States by people from several predominantly Muslim countries. A group of 27 former associates from the law firm Sullivan & Cromwell sent a letter on Thursday to Walter J. Clayton, who is known as Jay, a Sullivan & Cromwell partner and President Trump’s nominee to become chairman of the Securities and Exchange Commission.

Mnuchin Says U.S. Is Seeking to Avoid Trade Wars
Ian Talley and Andrea Thomas, The Wall Street Journal

U.S. Treasury Secretary Steven Mnuchin said Thursday the Trump administration wants to avoid trade wars as it seeks to renegotiate the U.S.’s economic relationships and ensure its firms can compete fairly across the world. Mr. Mnuchin, in his first international news conference, also said his office backs a “strong dollar” policy even though the dollar’s strength can be a drag on the economy.

G20 finance heads to repeat FX assurances, no deal yet on rejecting protectionism
Jan Strupczewski and Gernot Heller, Reuters

The world’s financial leaders will renounce competitive devaluations and warn against exchange rate volatility, but they have not yet found a common stance on trade and protectionism, a draft statement of their meeting in Germany showed on Friday. The finance ministers and central bank governors of the world’s 20 largest economies may struggle to present a united front on protectionism after the new administration of U.S. President Donald Trump began considering imposing a border tax that would make imports more expensive.

Emerging Stocks Shine Even as Global Rally Slows: Markets Wrap
Adam Haigh et al., Bloomberg News

European shares opened lower, while the S&P 500 Index retreated Thursday after climbing to within 0.5 percent of an all-time high. Futures on the S&P 500 slipped 0.1 percent, after the benchmark gauge fell 0.2 percent Thursday.

Banking

Edge or Liability? White House Ties May Cut Two Ways for Goldman
Kate Kelly, The New York Times

Already, Mr. Trump’s proposals to cut corporate taxes and reduce regulation — which would benefit Wall Street broadly — have lifted the stock prices of Goldman and other banks. Shares of Goldman are up more than 36 percent since the election.

Fed eases bank merger rules by lifting size threshold for review
Olivia Oran, Reuters

The U.S. Federal Reserve on Thursday made it easier for bigger lenders to merge, by quadrupling its threshold of combined size that would require an extensive regulatory review of a proposed deal. A merger that creates a bank with total assets of less than $100 billion is not a threat to the financial system, the central bank said in a statement on Thursday.

The Trump Job Banks Care About Most
Aaron Back, The Wall Street Journal

A looming appointment by President Donald Trump will signal just how much regulatory relief Wall Street can look forward to under his administration by forcing him to choose between competing factions in his administration. The position to be filled is the Federal Reserve’s vice chairman for supervision, a powerful post that oversees, among other things, how much capital banks are required to hold.

‘Anonymous’ Joins Hacker Army Targeting Central Banks for Cash
Chiara Albanese et al., Bloomberg News

In 2008, a group of thieves stole $700,000 from Russia’s central bank the old-fashioned way: they infiltrated a processing center, handcuffed a guard, and made off with the cash. These days, the criminal attacks on the Bank of Russia are far less labor-intensive — and far more lucrative.

Financial Products and Investments

SEC poised to shorten settlement cycle for securities trades
Sarah N. Lynch, Reuters

U.S. securities regulators are poised to shorten the amount of time it takes for a securities trade to settle, from three to two business days, in an effort to reduce credit and market risk exposure. The Securities and Exchange Commission announced it will hold a public meeting to vote to adopt a final rule next Wednesday.

Ovation for new CFTC chief reflects hopes, raises risks
Gregory Meyer and Philip Stafford, Financial Times

Forced applause usually follows a regulator’s remarks to the regulated. Not so inside the pink stucco walls of the Boca Raton Resort and Club in Florida this week. Chris Giancarlo of the Commodity Futures Trading Commission received a standing ovation when he spoke to hundreds of traders, brokers and exchange executives.

Currency Traders Race to Reform ‘Last Look’ After Bank Scandals
John Detrixhe, Bloomberg News

Currency traders may not be fast enough, at least when it comes to cleaning up their image. At issue is a controversial custom called “last look,” which allows market makers to back out of a trade.

Housing and GSEs

Wells Fargo’s fake account scandal didn’t dent 2016 mortgage business
Ben Lane, HousingWire

Wells Fargo spent much of the latter part of 2016 cleaning up the mess from its massive fake accounts scandal and trying to repair the damage to its reputation, but the bank’s mortgage business certainly didn’t suffer last year. According to Wells Fargo’s annual report, released Thursday, Wells Fargo’s total mortgage origination volume rose to $249 billion in 2016 from $213 billion in 2015 and $175 billion in 2014.

Goldman Sachs Goes on Buying Binge for Delinquent Mortgages
Liz Hoffman and Serena Ng, The Wall Street Journal

In a strange reverberation of the housing crisis, Goldman Sachs Group Inc. has become a voracious buyer of soured mortgages, trying to make money even as it looks to fulfill terms of a government settlement that calls for it to help struggling homeowners. Over the past year-and-a-half, the Wall Street giant has become the largest buyer of severely delinquent home loans from mortgage giant Fannie Mae.

Taxes

GOP senator asks IRS to review enforcement of limit on church political activity
Naomi Jagoda, The Hill

Senate Majority Whip John Cornyn (R-Texas) is asking the IRS and Department of Justice (DOJ) to conduct a review relating to the Johnson Amendment, which bars churches and other tax-exempt nonprofits from engaging in some political activities. “Please know I share the concerns expressed by my constituents that the IRS and other relevant agencies are intruding on the First Amendment rights of churches and other houses of worship across the State of Texas in enforcement of the Johnson Amendment,” Cornyn said this week in a letter to IRS Commissioner John Koskinen and Attorney General Jeff Sessions.

One Beneficiary of GOP’s Tax Bill: President Trump
Richard Rubin, The Wall Street Journal

The first big tax cut moving through Congress under President Donald Trump would likely benefit the president himself, potentially saving him millions of dollars in taxes on his rental income next year and even more money on other income if he wins a second term. Mr. Trump’s decision to continue owning his businesses as president without running them expands the tax’s effect on him and thus makes him benefit more from the proposed repeal, which would take effect in 2018, according to accountants and tax lawyers.

Financial Technology

SWIFT messaging system cuts off remaining North Korean banks
Tom Bergin, Reuters

SWIFT, the inter-bank messaging network which is the backbone of international finance, said it planned to cut off the remaining North Korean banks still connected to its system, as concerns about the country’s nuclear program and missile tests grow. SWIFT said the four remaining banks on the network would be disconnected for failing to meet its operating criteria.

Opinions, Editorials and Perspectives

What the Markets Are Teaching the Trump Administration
Komal Sri-Kumar, Bloomberg View

Donald Trump’s unexpected election produced a sharp reaction in equity and bond markets. The Dow Jones Industrial Average closed up 0.4 percent on Election Day as investors had anticipated Hillary Clinton’s victory.

Trump’s deep cut to HUD’s budget would hurt the poor and elderly, and destroy jobs
Josh Cohen, MarketWatch

When Bluebonnet Studios opened in Austin last month, all 107 apartments filled quickly. There’s already a waiting list of more than 900 low-income Austinites hoping for a spot in the rent-restricted development.

Research Reports

Fascination with Interest Rates Hides the Fed’s Policy Blunders
Norbert Michel, The Heritage Foundation

The Federal Reserve (Fed) has not changed its federal funds target rate since 2008. Such a policy is unsustainable in the face of market forces that change interest rates.