Events Calendar (All Times Local)
Yellen Says Economy Is Robust but Fed Will Stay Flexible
Janet L. Yellen, the Federal Reserve chairwoman, delivered an upbeat message to Congress on Wednesday on the state of the American economy, highlighting the strength of job growth and indicating that the Fed remains on course to begin reducing its bond holdings in the fall. She added, however, that the Fed was paying close attention to the recent weakness in inflation.
New data suggest debt ceiling crunch to hit in first half of October
That so-called X date — which BPC expects to come in early to mid-October — is the point when Treasury won’t have enough cash and revenue on hand to pay all bills in full and on time. Previously, BPC had predicted the X date could occur sometime in October or November.
Global Equities Soar to Record High; Dollar Slides: Markets Wrap
European bonds gained while the dollar fell against most major peers. S&P 500 futures added 0.2 percent.
Trump’s FDIC nominee Clinger withdraws from consideration
Jim Clinger asked the White House to withdraw his nomination to become chairman of the Federal Deposit Insurance Corp., the latest setback in the administration’s efforts to fill key financial posts. Clinger cited family issues.
Trump’s Fed nominee has history of benefitting from bailouts
President Donald Trump’s pick to lead bank supervision at the Federal Reserve benefited from the government bailing out or rescuing two banks during the 2008 financial crisis, but that may not prevent his confirmation by a U.S. Senate controlled by a business-friendly Republican party, policy analysts told Reuters in recent days.
Bank Earnings Are Coming: Five Things to Watch
Bank earnings season gets under way on Friday with four of the biggest U.S. lenders— Citigroup Inc., J.P. Morgan Chase & Co., Wells Fargo & Co. and PNC Financial Services Inc. — due to report that morning. Next week, Bank of America Corp., Goldman Sachs Group Inc. and Morgan Stanley will release their results.
Financial Products and Investments
SEC’s Jay Clayton makes fiduciary duty a priority, acknowledges issue is ‘complex’
In his first major address since taking office in May, SEC chairman Jay Clayton said a fiduciary rule is one of his priorities and that he would like to work with the Labor Department on an advice standard. “With the Department of Labor’s fiduciary rule now partially in effect, it is important that the commission make all reasonable efforts to bring clarity and consistency in this area,” Mr. Clayton said in a speech at the Economic Club of New York.
ETFs and Mutual Funds Square Off in the Post-Fiduciary-Rule World
Exchange-traded funds and actively managed mutual funds are competing to see which can gain the most business as the result of the recently passed fiduciary rule. The U.S. Labor Department rule, which went into effect in June, requires advisers overseeing trillions of dollars of tax-advantaged retirement savings to act in clients’ best interest.
Latest Wave of of 401(k) Suits Yields Big Wins, and Big Losses, for Plaintiffs
As 401(k) fee lawsuits have proliferated over the past year, a wider array of retirement industry practices have come under fire. Now the results are starting to come in—with some big settlements and some big losses for plaintiffs.
Housing and GSEs
RBS finally settles multibillion-dollar lawsuit with FHFA over mortgage-backed securities
The Royal Bank of Scotland Group finally shut the door on its settlement with the Federal Housing Finance Agency, as conservator of Fannie Mae and Freddie Mac, which was delayed after the election due to changes in the government. The FHFA announced a $5.5 billion settlement to resolves all claims in the lawsuit FHFA v. The Royal Bank of Scotland Group plc et al., in the United States District Court for the District of Connecticut.
Pimco sues Wells Fargo over crisis-era mortgage bonds
Wells Fargo has been sued by Pimco for withholding money allegedly owed to bond investors, in a dispute that could have implications for billions of dollars still locked up in US mortgage securities created before the financial crisis. The new action is the latest twist in a legal saga that has pitted investors, including Pimco, against banks over their actions as the administrators, or “trustees”, appointed to manage residential mortgage-backed securities.
Ad Campaign Targets Brady, Roskam on Border Adjustment Tax
The conservative group Freedom Partners is for the first time targeting individual lawmakers involved in the tax-reform debate, with digital advertisements calling for them to support a proposal that does not include a border adjustable tax on imports. The border tax ad campaign focuses on two Republicans — House Ways and Means Committee Chairman Kevin Brady (R-Texas) and Ways and Means tax policy subcommittee Chairman Peter Roskam (R-Ill.).
House Conservatives Hold Budget Hostage Over Tax Plan Details
Conservative House Republicans are threatening to vote against a budget deal unless it lays out details of a plan to overhaul the U.S. tax code — including the specific tax rate that would be set for corporations. Representative Mark Meadows, head of the right-wing Freedom Caucus, said the House should cancel or delay the planned August recess until there is agreement on “a set of principles” for the tax plan that President Donald Trump and congressional leaders have promised since shortly after his election.
Dems on tax reform outreach: Talk is cheap
Democrats say they have little reason to believe that Republicans are serious about doing tax reform on a bipartisan basis, saying they have yet to put meaningful action behind their words. While Republicans have expressed an interest in bipartisanship on the issue and held a few meetings with Democratic lawmakers, they are also planning to pass tax-reform legislation through a process known as reconciliation, which would allow a bill to pass the Senate with only GOP support.
Trump Tax Cuts Cost $7.8 Trillion, Aid Top Earners, Study Finds
President Donald Trump’s proposed tax cuts would lower federal revenue by $7.8 trillion over a decade and mostly benefit the highest earners, according to a new study released Wednesday by the nonpartisan Tax Policy Center. About 40 percent of the tax cut would go to the top 1 percent of earners, who’d see an average after-tax gain of 17.8 percent.
Banks’ struggles in mortgage business linked to outdated technology
U.S. banks are paying a sizable price for failing to modernize their mortgage application processes in the internet age, according to a study from researchers at some of the nation’s top business schools. The recently published paper found that deposit-taking banks have fallen behind certain nonbank competitors that let their customers apply for home loans online.
Bitcoin Acceptance Among Retailers is Low and Getting Lower
Retailers were already skeptical about letting customers pay with bitcoin before the cryptocurrency’s price underwent an astronomical rally this year. That rapid surge hasn’t made them any more accepting.
Opinions, Editorials and Perspectives
Lower tax rates and faster cost recovery are two levers that will reduce the cost of capital and thereby help ignite economic growth. And since 70% of business income goes to wages, the benefits flow to workers as well.
The Caution Light Blinking in Yellen’s Testimony
The retreat of inflation and lack of meaningful wage growth are becoming increasingly dominant in the Federal Reserve’s deliberations. Near the center, literally, of Fed Chair Janet Yellen’s five-and-a-bit pages of written testimony to Congress was an acknowledgment that officials just don’t know when the current very low levels of unemployment will translate into a spurt in pay.
Seeking to protect client assets, SEC may have hurt the client
For many people, the term “inadvertent custody” might describe the feeling a parent has upon finding someone else’s child in the family room a half hour after the birthday party has ended. In the world of investments, the term “inadvertent custody” may raise a feeling of unease as well.
Richard Cordray’s Financial Damage
President Trump still hasn’t dismissed Consumer Financial Protection Bureau director Richard Cordray despite several removable offenses. But Mr. Cordray is all but begging to be fired with his mandatory arbitration ban that brazenly flouts the law.
No one should have to rely on payday loans in retirement
California has passed a disconcerting milestone in payday lending. In 2016, residents 62 and older took out more payday loans than any other age group, according to industry data compiled in a new report from the Department of Business Oversight.
Populism and the Economics of Globalization
Populism may seem like it has come out of nowhere, but it has been on the rise for a while. I argue that economic history and economic theory both provide ample grounds for anticipating that advanced stages of economic globalization would produce a political backlash.