Australian leader to raise China, Trans-Pacific trade deal in Trump talks
Colin Packham, Reuters
China’s rising power and a resurgent trans-Pacific trade pact will be at the top of the agenda when Australian Prime Minister Malcolm Turnbull and U.S. President Donald Trump meet in Washington this week, an Australian official said on Thursday. The meeting comes as both seek to repair a relationship damaged last year by a row over asylum seekers in which Trump lambasted Turnbull over a resettlement arrangement that he labelled a “dumb” deal.
CFPB wants firms to sound off, but openness carries hidden risks
Kate Berry, American Banker
Companies that have been investigated for wrongdoing by the Consumer Financial Protection Bureau are giving acting Director Mick Mulvaney an earful about how he should roll back enforcement practices. The big question is: Are they seizing on a golden opportunity to reshape the regulatory landscape, or are they shooting themselves in the foot?
As Washington retreats, what’s next for consumer finance regulation?
Andrea Riquier, MarketWatch
What has the change of leadership in Washington meant for regulation of consumer financial products – and what will it mean in the future? The federal government is stepping back, and the states are stepping up, according to a new report.
Stocks Struggle as Bond Yields Drop; Dollar Steady: Markets Wrap
Robert Brand, Bloomberg
Stocks in Europe struggled for traction despite a positive Asia session as investors continue to debate the outlook for global central bank policies. Futures on the S&P 500 Index advanced 0.2 percent.
Mueller adds new tax, bank fraud charges against Manafort, Gates
Josh Gerstein, Politico
Special counsel Robert Mueller turned up the pressure on former Trump campaign chairman Paul Manafort and aide Rick Gates, as a federal grand jury returned a new indictment Thursday charging the two men with tax and bank fraud. The new 32-count indictment returned by a grand jury in Alexandria, Virginia comes after Mueller separately charged the pair in Washington last year with money laundering and failing to register as foreign agents for their work related to Ukraine.
First National Bank of Omaha won’t renew NRA contract for Visa card
Suzanne Barlyn, Reuters
First National Bank of Omaha will not renew a contract with the National Rifle Association (NRA) to issue an NRA-branded Visa card, the bank said on Thursday. “Customer feedback has caused us to review our relationship with the NRA,” said First National Bank of Omaha spokesman Kevin Langin.
Dina Powell, Former Trump Adviser, Weighs Return to Goldman Sachs
Liz Hoffman, The Wall Street Jouranl
Dina Powell, who until recently served as a top national-security adviser in the White House, is talking to Goldman Sachs Group Inc. about returning to the firm, according to people familiar with the matter. Ms. Powell spent a decade at Goldman before joining the Trump administration last year, and in recent weeks has discussed coming back, the people said.
Latvian Bank Facing U.S. Sanctions Threat Wants Government Bailout
Drew Hinshaw, The Wall Street Journal
A Latvian bank threatened with U.S. sanctions for allegedly conducting a global money-laundering scheme, including for companies connected to North Korea’s missile program, is seeking more than a half billion dollars in government bailout money in an effort to stay afloat. The accusations against ABLV Bank by the U.S. Treasury Department have ignited one of Europe’s biggest money-laundering scandals in years and shined a spotlight on Washington’s efforts to go after Eastern European banks it says have ties to Russian money laundering.
Financial Products and Investments
Regulators to Pull Back on Obama-Era Mutual-Fund Rules
Dave Michaels, The Wall Street Journal
Securities regulators plan to pare back Obama-era requirements that would require mutual funds to tell shareholders about large holdings of hard-to-sell assets, in what would be a significant concession to the industry. The Securities and Exchange Commission had planned to propose rolling back the disclosures, set to go into effect in 2019, on Wednesday.
VIX Funds Face Fresh Scrutiny From U.S. Regulators
Benjamin Bain and Matt Robinson, Bloomberg
U.S. regulators are scrutinizing this month’s implosion of investments that track stock-market turmoil, including whether wrongdoing contributed to steep losses for VIX exchange-traded products offered by Credit Suisse Group AG and other firms, several people familiar with the matter said. The Securities and Exchange Commission and the Commodity Futures Trading Commission have been conducting a broad review of trading since Feb. 5, when volatility spiked and investors lost billions of dollars, the people said.
White House adviser says stock market volatility is ‘not unusual’
Makini Brice, Reuters
The head of the White House Council of the Economic Advisers on Thursday downplayed concerns over recent volatility in the U.S. stock market, saying it was “not unusual.” “It’s a regular thing in the stock market,” CEA Chairman Kevin Hassett told reporters at a regular White House briefing.
BlackRock to talk to gun makers over response to school shootings
Jeff Cox, CNBC
The world’s largest asset manager says it plans to speak with gunmakers following a wave of public outcry sparked by the Florida school shootings last week. BlackRock officials said they want to reach out to the companies “to understand their response” to the shootings.
IRI seeks Republican support for bill to expand auto-401(k) plans
Mark Schoeff Jr., InvestmentNews
Congressional efforts to expand workplace saving programs have been missing a key element for a Republican-majority Capitol Hill — backing from the GOP. The Insured Retirement Institute, a trade association representing the annuity industry, is trying to change that equation this year.
ECB minutes reveal fears over Trump currency wars
Claire Jones, Financial Times
Eurozone concerns over the weakness of the dollar were laid bare in a set of European Central Bank minutes that highlighted fears the Trump administration was deliberately trying to engage in currency wars. The account of the ECB’s January monetary policy meeting also reveals that its hawkish members pushed for a change in the bank’s communications, arguing economic conditions were now strong enough to drop a commitment to boost the quantitative easing programme in the event of a slowdown.
Housing and GSEs
Rising drumbeat for Trump to deal with Fannie and Freddie himself
Joseph Lawler, Washington Examiner
Key interest groups are hoping that the Trump administration will overhaul bailed-out government-sponsored enterprises Fannie Mae and Freddie Mac itself and that the current congressional effort to find a compromise on bipartisan legislation will fail. This week, managers at the giant investment firm PIMCO wrote that the current system of housing finance “has been and continues to be immensely successful, not to mention wildly profitable, and the current system works.”
IRS: Interest paid on home equity loans is still deductible under new tax plan
Ben Lane, HousingWire
Citing the “many” questions it’s received from taxpayers and tax professionals, the Internal Revenue Service issued a bulletin this week that sheds some light on how home equity loans, HELOCs, and second mortgages will be treated under the new tax plan. The headline news: The interest paid by borrowers on home equity loans, HELOCs, and second mortgages will still be deductible moving forward, but not in every case.
NY Fed finds fintech mortgages quicker, less risky than bank loans
Sylvan Lane, The Hill
Mortgage lenders that exclusively use online applications approve loans quicker, experience fewer defaults, encourage more refinancing and respond to demand shifts better than brick-and-mortar rivals, according to a New York Federal Reserve report released Thursday. The Federal Reserve’s New York branch studied how mortgages from financial technology companies (fintechs) compared to those extended from banks in key categories.
State treasurers call for restoring tax exemption to help fund infrastructure
Naomi Jagoda, The Hill
The National Association of State Treasurers (NAST) is urging Congress to reinstate a tax preference that was eliminated in the GOP tax-cut law, arguing that doing so would help state and local governments finance infrastructure projects. The group wants Congress to restore the tax exemption for advance refunding bonds, which state and local governments issue to refinance their debt.
Pass-Through Businesses Are Rethinking Their Status in Wake of Tax Law
Ruth Simon, The Wall Street Journal
As business owners pore through the new tax law, many are asking themselves a fundamental question: Will changing how their company is structured cut their tax bills? For many entrepreneurs, the big question is whether to operate as a C corporation, which pays its own taxes to the Internal Revenue Service, or as a pass-through company, which pays tax through individual rather than corporate returns.
Fed’s Dudley says there’s a ‘speculative mania’ in the cryptocurrency market
Aaron Hankin, MarketWatch
William Dudley, New York Federal Reserve President, on Thursday offered the latest critique of cryptocurrencies. Speaking at a media briefing in Manhattan to discuss the economic outlook for Puerto Rico in the wake of a spate of catastrophic hurricanes, Dudley said there’s a “speculative mania” around cryptocurrencies, which he described as dangerous.
Bank of America cautions on potential cryptocurrency threat
Alistair Gray, Financial Times
Bank of America has warned it could face “substantial” costs as it deals with cryptocurrencies, a sign of the potential threat to the world’s largest financial institutions posed by the rise of bitcoin and its alternatives. In its annual filing with the Securities and Exchange Commission, the second-biggest US bank by assets included for the first time warnings about the technology among the “risk factors” for investors.
A $232 Million Cryptocurrency Fight Comes to a Close
Paul Vigna, The Wall Street Journal
A monthslong battle for control of $232 million raised in an initial coin offering came to an abrupt end on Thursday. For months, the husband-and-wife team behind a cryptocurrency project known as Tezos has been locked in a fierce battle for control of the funds with the head of the board of a nonprofit foundation that sold the digital coins.
Opinions, Editorials and Perspectives
The Mortgage Market Is Moving Into the Shadows
Richard Koss, Bloomberg
The last financial crisis occurred in part because unregulated lending in the mortgage market got out of hand. Believe it or not, it’s starting to happen again, and could ultimately precipitate another disaster unless regulators get their act together.
A Force for Market Stability
Martin Small and Samara Cohen, The New York Times
As markets gyrated recently, investors directly exchanged about $1 trillion of United States-listed, exchange-traded funds. Yet all equity E.T.F.s experienced less than $30 billion in outflows; bond E.T.F.s had withdrawals of roughly $468 million.
The GOP tax law used to be extremely unpopular. Not anymore.
Marc A. Thiessen, The Washington Post
Now, more Americans are starting to discover that they are winners. Millions are starting to receive their Trump tax cuts as employers lower their tax withholdings, leaving more money in their paychecks.
The Story Behind the IRS’s Exemption From Oversight
Susan E. Dudley and Sally Katzen, The Wall Street Journal
Americans may differ on whether we have too much or too little regulation, but we should all agree that regulations should be transparent, accountable and based on a reasoned analysis that they are necessary and appropriate. The Treasury Department, especially the Internal Revenue Service, appears to have fallen short of these expectations, by expanding a narrow exemption to evade the good-government requirements that generally apply to federal regulators.
No Strings Attached: The Behavioral Effects of U.S. Unconditional Cash Transfer Programs
Ioana Marinescu, The National Bureau of Economic Research
The universal basic income has become a widely discussed measure in policy circles around the world. In this review, we cover the evidence relevant to its potential impact in the US, and in developed countries more generally.