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Events Calendar (All Times Local)
Senate Panel Advances Nomination of Kevin Hassett as Economic Adviser
The Senate Banking Committee voted Wednesday to advance the nomination of Kevin Hassett, President Donald Trump’s pick to be chairman of the Council of Economic Advisers. Mr. Hassett’s final hurdle before taking office will be a vote of the full Senate.
GOP moderate urges bipartisan budget resolution, debt ceiling hike
Rep. Charlie Dent (R-Pa.) wants his party to team up with Democrats to pass a budget resolution and increase the debt limit before the summer recess. The GOP centrist asked Treasury Secretary Steven Mnuchin, who has urged a speedy, clean debt ceiling hike, to take the message back to the administration.
Why consumer groups are ready to fight Trump rollback of financial safeguards
Now, new Trump administration plans to weaken that agency and change or eliminate many other financial-industry regulations and safeguards enacted after the financial crisis represent the opening shot in what consumer groups predict will be a long Washington siege. On Tuesday, the day after the Department of the Treasury issued the most detailed blueprint yet of proposed changes to the Dodd-Frank Wall Street Reform and Consumer Protection Act, banking and other financial groups celebrated Trump’s backing of changes they’ve sought for years.
Commodity Drop Saps Stocks; Dollar Gains After Fed: Markets Wrap
A broad decline in commodities dragged European equities lower, while U.S. stock futures also dropped on a report the probe into Russian meddling in the 2016 election may also examine President Donald Trump’s conduct. S&P 500 futures dropped 0.5 percent as of 10 a.m. in London.
Fed raises interest rates and sets plan to shrink $4.5 trillion balance sheet ‘this year’
The Federal Reserve lifted a key U.S. interest rate and laid out a plan to shrink its massive $4.5 trillion balance sheet starting “this year,” a pair of moves reflecting its view that an economic expansion now entering its ninth year no longer needs so much propping up. The Fed as expected on Wednesday raised its benchmark federal-funds rate by a quarter percentage point to between 1% and 1.25% — the third increase in a year and a half.
‘Notable’ swap spread moves point to bets on looser US bank regulation
Market measures of bank balance sheet constraints have moved markedly since the release of the Treasury’s report on financial regulation on Monday, suggesting some investors may be beginning to price in an easier regulatory environment for banks. Banks have complained in recent years of constraints stemming from burdensome capital rules that have inhibited their ability to hold assets on their balance sheets.
Bank of America to lay off more workers
Bank of America Corp has begun laying off employees in its operations and technology division, part of the second-largest U.S. bank’s plan to cut costs. On Wednesday the bank cut jobs across that division, many of which came from its Charlotte, N.C., headquarters, a spokesman said. He would not specify the number of jobs lost.
House Dems object to reported Fed vice chair pick
Thirty-eight House Democrats sent a letter to President Trump on Wednesday voicing their concern that Wall Street insiders will be appointed to top spots at the Federal Reserve Board. Most important among the positions is the Federal Reserve vice chairman for supervision, a post created by the Dodd-Frank Act and nominally filled by former Fed Gov. Dan Tarullo, although he was never officially tapped for the job.
If Trump Unlocks $2 Trillion at Banks, Here’s Who May Get It
If Donald Trump gets his way in overhauling banking regulation, it would free up some of the billions of dollars in capital that banks were forced to amass after the financial crisis. Less clear is what they’ll do with it. After the administration released a highly anticipated 150-page report this week, Wall Street analysts spent two days churning out notes digesting its proposals.
Two court decisions, one big blow for cities’ lawsuits against megabanks
Two recent court decisions may be complicating cities’ efforts to sue banks for predatory lending. While the courts have affirmed cities’ right to file such suits, they are also holding them to a higher standard in proving that banks knowingly steered minority borrowers into high-cost home loans.
Financial Products and Investments
Ex-Visium fund manager sentenced to 18 months after fraud conviction
A former portfolio manager at Visium Asset Management LP was sentenced to 18 months in prison on Wednesday following his conviction on securities fraud charges stemming from an investigation that led the New York-based hedge fund to close last year. Stefan Lumiere, 46, was sentenced by U.S. District Judge Jed Rakoff in Manhattan federal court, according to federal prosecutors.
Housing and GSEs
Wells Fargo Is Accused of Making Improper Changes to Mortgages
Even as Wells Fargo was reeling from a major scandal in its consumer bank last year, officials in the company’s mortgage business were putting through unauthorized changes to home loans held by customers in bankruptcy, a new class action and other lawsuits contend. The changes, which surprised the customers, typically lowered their monthly loan payments, which would seem to benefit borrowers, particularly those in bankruptcy.
Senate Banking Committee advances HUD Deputy Secretary nominee Pam Patenaude
Pam Patenaude is one step closer to being Housing and Urban Development Deputy Secretary, the right-hand position to HUD Secretary Ben Carson. The Senate Banking Committee advanced President Donald Trump’s nomination of Patenaude late Wednesday, passing it on to the full Senate for approval.
Economist: Fed rate increase doesn’t matter to housing market
The Federal Reserve will determine if it will raise the federal funds rate in its June meeting, which will be announced Wednesday afternoon. The majority of experts believe this will be the second of three or even four rate hikes in 2017, although some experts disagree.
Auto industry leaders raise concerns about border tax in White House meeting
Representatives of the automobile industry raised concerns about House Republicans’ border-adjustment tax proposal during a meeting Wednesday with White House National Economic Council Director Gary Cohn. “America’s international nameplate dealers fully support federal tax reform but remain deeply opposed to the [border-adjustment tax] provision, which would drive up the cost of every vehicle on their lots by an average of $2,000 per vehicle,” said Cody Lusk, president of the American International Automobile Dealers Association.
Marco Rubio and Ivanka Trump Team Up on Tax Reform
The White House has gained a surprising new ally on issues related to tax reform: Senator Marco Rubio. In an e-mail circulating through congressional offices, members of Congress have been invited to join Senator Rubio and First Daughter Ivanka Trump on Capitol Hill in the coming weeks for a discussion of “pro-family tax reform initiatives.”
IBM is letting Watson loose on Wall Street regulations
IBM is unleashing Watson, the tech company’s artificial intelligence platform, on financial regulations. On Wednesday, the New York-based technology firm rolled out a suite of software solutions that will help financial institutions manage their regulatory responsibilities.
AIG teams with IBM to use blockchain for ‘smart’ insurance policy
Insurer American International Group Inc has partnered with International Business Machines Corp to develop a “smart” insurance policy that uses blockchain to manage complex international coverage, the companies said on Wednesday. AIG and IBM completed a pilot of a so-called “smart contract” multi-national policy for Standard Chartered Bank PLC which the companies said is the first of its kind using blockchain’s digital ledger technology.
Why people are going crazy over bitcoin and other digital currencies
Bitcoin and other virtual currencies are on a tear this year, surpassing the returns seen in stocks, bonds and most other investments. The price of bitcoin has tripled since the beginning of the year, surging above $3,000 for the first time Sunday before dropping by more than 10 percent the next day.
A Message from the Electronic Payments Coalition:
An overwhelming majority of consumers say big-box retailers are looking out for their own bottom lines, not main street interests as they may claim. The Durbin amendment has only benefited large retailers’ bottom lines, while harming consumers, small merchants, and community financial institutions. Isn’t it time we repeal this policy? Get the facts from the Electronic Payments Coalition.
Opinions, Editorials and Perspectives
Trump’s Plan for Financial Reform Is Half-Right
The Trump administration’s latest plan to reform financial regulation starts in a very good place: It attacks the ridiculous complexity of the current system. But it fails to follow through with new rules that promote safety as well as simplicity. Put into practice, it could be a big step backwards. The Treasury Department’s new report is right to complain that the U.S. regulatory structure is far too unwieldy.
Regulatory ‘Reform’ That Is Anything But
After decades of failed efforts to enact “regulatory reform” bills, Congress appears to be within a few votes of approving reform legislation that would strip Americans of important legal protections, induce regulatory sclerosis and subject agencies that enforce the nation’s laws and regulations to potentially endless litigation. This is not reform.
Tax Cuts That Last—With 51 Votes
Americans know what kind of tax reform they want: a bill that cuts rates across the board, kills the death tax and the alternative minimum tax, expands the personal and family exemptions, and eliminates politically directed loopholes. If lawmakers passed such a plan, it would supercharge the economy and create millions of jobs.
Donald Trump’s NAFTA Trade Imbalance Delusion
The Trump administration is determined to renegotiate the North American Free Trade Agreement (NAFTA) — which created a single market from Mexico’s southern border to the Yukon — but the main political appeal of this policy rests on a popular myth: that “fair” trade requires the United States to have a surplus or balanced trade with both Mexico and Canada. We are supposed to feel especially aggrieved that Mexico regularly has a sizable surplus with us, $63.2 billion in goods in 2016, according to Commerce Department figures.
A Message from the Electronic Payments Coalition:
Voters agree: if merchants aren’t passing along savings, the Durbin amendment should be repealed. Evidence shows big-box stores have pocketed $42 BILLION at their customers’ expense-Congress must take action to end this failed policy. Learn more from EPC.
Opportunities for Improvement in FHFA’s Evaluation of Internal Control over Financial Reporting
During its audit of the Federal Housing Finance Agency’s (FHFA) fiscal years 2016 and 2015 financial statements, GAO identified deficiencies in FHFA’s evaluation of internal control over financial reporting. This includes the FHFA Office of the Inspector General’s (FHFA-OIG) evaluation of its own internal control over financial reporting as FHFA-OIG’s reported amounts constitute a material portion of the consolidated FHFA financial statements.