Finance Brief: Treasury Official Departs After Criticizing Parts of New Tax Law

Top Stories

  • Dana Trier, a deputy assistant secretary of treasury for tax policy, left the department on Friday after making remarks earlier this month that criticized elements of the tax law that was enacted in December. Trier was a top official involved in implementation of the law. (The Wall Street Journal)
  • Peter Navarro, a White House trade adviser, is set to receive a promotion that would give him more influence in crafting the administration’s trade policies, according to three unnamed sources. Navarro has worked under National Economic Council Director Gary Cohn, with whom he has clashed on trade issues, since a staff reshuffling in September. (Politico)
  • The head of the Systemic Risk Council, a U.S.-based think tank, said Trump administration regulatory policies are focusing on the strength of banks and non-bank financial institutions while overlooking market activities that could cause a financial crisis. Paul Tucker, the group’s chair, said in a letter to Treasury Secretary Steven Mnuchin that the administration’s approach to regulation runs the risk of creating “significant gaps” that could lead to future market woes. (Financial Times)

Chart Review

Events Calendar (All Times Local)

NABE economic policy conference 8 a.m.
SFIG conference in Las Vegas 9 a.m.
SEC’s Jackson speaks at CECP CEO Investor Forum 12 p.m.
House Rules Committee hearing on capital requirements bill 5 p.m.
NAHREP Housing Policy & Hispanic Lending Conference 8 a.m.
U.S. Chamber of Commerce’s Invest in America summit 8 a.m.
NABE economic policy conference 8 a.m.
SFIG conference in Las Vegas 9 a.m.
American Enterprise Institute event on GSE reform 9 a.m.
House Financial Services Committee hearing with Fed’s Powell 10 a.m.
FDIC community bank webinar 1 p.m.
House Ways and Means Committee meeting on FY 2019 budget 1:15 p.m.
Brookings Institution discussion with Janet Yellen and Ben Bernanke 2 p.m.
House Small Business Committee hearing on community banks and credit unions 2 p.m.
NAHREP Housing Policy & Hispanic Lending Conference 8:30 a.m.
SFIG conference in Las Vegas 9:15 a.m.
Brookings Institution event on Trump’s trade policy in Asia 10 a.m.
Brookings Institution event on wage growth 1 p.m.
CSIS event on U.S.-India trade 3 p.m.
Senate Banking Committee hearing with Fed’s Powell 10 a.m.
WITA event on trade enforcement 9 a.m.


Promotion would give Navarro deeper influence over trade policy
Andrew Restuccia, Politico

White House trade adviser Peter Navarro, who was sidelined last year after repeatedly clashing with President Donald Trump’s more moderate advisers, could soon be granted a title change that would give him more direct influence over the administration’s trade agenda, according to three people familiar with the issue. White House chief of staff John Kelly in September folded Navarro’s Office of Trade and Manufacturing Policy into the National Economic Council, mandating that Navarro report to NEC Director Gary Cohn.

Australian prime minister delivers forceful defense of free trade
Dan Balz, The Washington Post

One day after meeting with President Trump, Australian Prime Minister Malcolm Turnbull delivered a forceful defense of the positive values of free-trade agreements and asserted that security and openness can coexist in free countries. Turnbull’s forum was the winter meeting of the National Governors Association (NGA), which has taken steps over the past year to strengthen relationships internationally as a counter to moves by the administration to renegotiate or pull out of trade agreements, and other administration decisions seen as withdrawing the United States from leadership in the world.

Watchdog warns of gaps in US financial regulation
Ben McLannahan, Financial Times

The US government’s focus on the resilience of banks and other financial groups rather than the markets in which they operate risks “significant gaps” in supervision that could cause another calamity, a financial watchdog has warned. In a letter to Steven Mnuchin this week, US-based think-tank the Systemic Risk Council said it welcomed two reports released by the Treasury secretary’s staff last October, on the regulatory regime for capital markets and the regulation of asset managers and insurers.

Stocks Climb as Yields Hold Steady; Dollar Falls: Markets Wrap
Natasha Doff, Bloomberg

European and Asian shares advanced while U.S. equity futures climbed as benchmark Treasury yields held steady below 2.9 percent and the dollar weakened. Futures on the S&P 500 Index increased 0.3 percent to the highest in more than three weeks.


Bank of America takes aim at gun-making clients
Ian Simpson, Reuters

Bank of America Corp on Saturday became the latest financial heavyweight to take aim at gunmakers, saying it would ask clients who make assault rifles how they can help end mass shootings like last week’s massacre at a Florida high school. Bank of America, the second-biggest U.S. bank by assets, said its request to makers of the military-style weapons was in line with those taken by other financial industry companies to help prevent deadly gun rampages.

New Fed Chairman Jerome Powell to Testify Before Congress on Capitol Hill
Nick Timiraos, The Wall Street Journal

Federal Reserve Chairman Jerome Powell heads to Capitol Hill this week for his first public appearance since being sworn in as the central bank’s new leader earlier this month. He starts Tuesday with the release of his prepared testimony at 8:30 a.m., EST followed by his appearance before the House Financial Services Committee starting at 10 a.m.

U.S. banks set for M&A wave as Trump cuts red tape
David French and Michelle Price, Reuters

An easing of financial rules will soon unleash pent-up mergers and acquisitions among mid-sized U.S. banks, according to deal bankers, analysts and bank executives. Deal activity in the sector has languished since the 2007-2009 financial crisis thanks to stricter rules on lenders with more than $50 billion in assets and aggressive enforcement of rules barring banks with compliance issues from expanding.

Royal Bank of Canada Boosts Earnings Through U.S. Capital Markets Push
Vipal Monga, The Wall Street Journal

Royal Bank of Canada has focused its U.S. ambitions on its capital markets unit. Its first-quarter results suggest the efforts may be starting to pay off.

Financial Products and Investments

SEC Chairman Jay Clayton outlines goals for a new fiduciary standard
Mark Schoeff Jr., InvestmentNews

An SEC fiduciary rule should provide investors clarity about the role of their adviser, enhanced protection and offer regulatory coordination, Chairman Jay Clayton said Friday. “I don’t think it’s any secret that we’re going to make a big effort to try to bring clarity and harmony to the investment adviser, broker-dealer standard of conduct regulation — something that’s important to me,” Mr. Clayton said at the Practising Law Institute’s SEC Speaks in Washington.

What’s in a Broker’s Name? SEC to Address Titles Used When Advising Investors
Dave Michaels, The Wall Street Journal

Wall Street’s chief regulator on Friday confirmed it plans to target potentially misleading titles that stockbrokers use when they advise retail investors. Speaking at a conference in Washington, Securities and Exchange Commission Chairman Jay Clayton said a regulation requiring brokers to act in the best interest of clients would address the ability of brokers to use titles such as “financial adviser.”

Trump’s SEC Makes Slow Progress on Trimming Rules
Tatyana Shumsky, The Wall Street Journal

Jay Clayton, President Donald Trump’s pick to lead the U.S. Securities and Exchange Commission, can point to a series of small, targeted actions aimed at easing the regulatory burden for companies nearly 10 months into his tenure. The SEC’s incremental progress stands in contrast to the early days of the Trump administration, which were punctuated by a swift succession of executive orders aimed squarely at deregulation.

SEC commissioner questions complex financial products amid VIX drama
Pete Schroeder and Michelle Price, Reuters

A Democratic commissioner at the U.S. Securities and Exchange Commission on Friday questioned the growing use of complex financial products by retail investors such as derivatives based on stock market volatility indicators that were linked to recent weeks of market turmoil. Commissioner Kara Stein questioned whether retail investors are taking risks with complicated financial products that they cannot even appreciate.

Student-Debt Firms Protected From State Probes Under Trump Plan
Shahien Nasiripour, Bloomberg

Student-loan debt collectors accused of misleading borrowers would get protection under a proposal from the Trump Administration. The Department of Education may issue a statement that federal law prohibits state governments from regulating companies that collect student debt on the department’s behalf, according to documents reviewed by Bloomberg.

Housing and GSEs

Mortgage payments get back on track after Harvey and Irma
Bonnie Sinnock, National Mortgage News

Hurricane-related delinquencies are subsiding somewhat, and pre-storm foreclosures that were put on hold are resuming. Serious delinquencies of 90 or more days were down by 19,000 compared to the previous month at 707,000, according to Black Knight’s First Look report.

Trump and Congress Are Making It Easier for Banks and Companies to Rip Off Black People
Hannah Levintova, Mother Jones

In the mid-2000s, Hudson City Savings Bank, a large savings bank in New Jersey, was doing well, earning accolades for its smart management, its “small town” feel, and its relative strength in the face of the brewing financial crisis. It was even expanding—opening more than 50 new branches in neighboring New York and Connecticut.


Treasury Official, Critical of Parts of Tax Law, Quits
Richard Rubin, The Wall Street Journal

A Treasury Department official deeply involved in implementing the new tax law left the government unexpectedly this week. Dana Trier, a retired New York attorney praised by fellow tax lawyers in both parties, was a deputy assistant secretary for tax policy, putting him near the center of administration decision-making about how to write the crucial and highly technical rules stemming from the new Tax Cuts and Jobs Act.

Businesses look to maximize tax breaks under GOP plan
Naomi Jagoda, The Hill

Businesses are starting to evaluate how to minimize their tax bills as the GOP tax-reform plan takes effect. The measure President Trump signed in December makes a number of significant tax-code changes that impact businesses.

Berkshire Hathaway Benefits From U.S. Tax Plan
Nicole Friedman, The Wall Street Journal

Warren Buffett has one man to thank for Berkshire Hathaway Inc.’s $29 billion windfall in 2017: President Donald Trump. The Omaha billionaire backed Mr. Trump’s opponent Hillary Clinton during the 2016 presidential campaign.

Financial Technology

Nearly Half of 2017’s Cryptocurrency ‘ICO’ Projects Have Already Died
David Z. Morris, Fortune

Last year was without a doubt the Year of Bitcoin, as exploding interest in cryptocurrency fueled a massive market runup. As if that wasn’t enough excitement, some speculators took the further leap to investing in cryptocurrency projects through a lightly regulated process called an “ICO,” or initial coin offering, in which a startup sells its own crypto token to raise money.

Women in Cryptocurrencies Push Back Against ‘Blockchain Bros’
Nellie Bowles, The New York Times

Virtual currencies and blockchain, the digital ledger that forms the basis of the cryptocurrencies, were intended to be democratizing and equalizing forces, buoyed by a utopian exuberance. But women who have been trying to participate in the gold rush are finding a lopsided gender divide.

A Message from the Electronic Payments Coalition: 

A majority of voters are concerned with data breaches, yet there are no national data security standards to protect consumers at checkout. It’s time retailers share responsibility for data security. Learn more from the Electronic Payments Coalition.

Opinions, Editorials and Perspectives

Confusion Is the Least Damaging Aspect of the Trump Administration’s Trade Policies
Steven Globerman, Morning Consult

The Trump administration’s attitude toward international trade is difficult to pin down. President Donald Trump was unwilling to continue negotiating the Trans-Pacific Partnership, and he withdrew the United States from the negotiations three days into his presidency. Yet he agreed to renegotiate the North American Free Trade Agreement, a trade pact that he characterized in his presidential campaign as the worst trade deal in the history of the United States.

Well-Heeled Investors Reap the Republican Tax Cut Bonanza
The Editorial Board, The New York Times

After President Trump signed the Republican tax cut into law, companies put out cheery announcements that they were giving workers bonuses because of their expected windfalls from the tax reductions. The president and Republican lawmakers quickly held up these news releases as vindication for their argument that cutting the top federal corporate tax rate to 21 percent, from 35 percent, would boost workers’ incomes even as it added $1.5 trillion to the debt that future generations would have to pay off.

Are corporate whistleblowers protected under federal law?
Leonard Samuels, The Hill

In the case of Digital Realty Trust v. Somers, the Supreme Court held that the anti-retaliation provision of the Dodd-Frank Act of 2010 does not extend to an individual who has failed to report the suspected securities law violations to the Securities and Exchange Commission (SEC). Divided panels of the U.S. Court of Appeals for the Ninth and Second Circuits had previously ruled that employees who made certain disclosures, such as those required under the Sarbanes-Oxley Act of 2002, either internally to their employers or to the SEC, should be eligible for protection from retaliation by their employers under Dodd-Frank.

Richard Cordray is looking after his campaign, not consumers
Jeff Joseph, Washington Examiner

After years atop the Consumer Financial Protection Bureau, Richard Cordray is busy courting liberal donors for his Ohio gubernatorial bid. New filings show Cordray has raised $2 million since August — the highest mark among Ohio Democrats running for the May primary election.

A Message from the Electronic Payments Coalition: 

A dynamic data security strategy can help businesses protect consumers like you from data breaches. A recent report from EPC underscores why innovation is a key component to fighting fraud. Read why from EPC.

Research Reports

Protectionism and the Business Cycle
Alessandro Barattieri et al., The National Bureau of Economic Research

We study the consequences of protectionism for macroeconomic fluctuations. First, using high-frequency trade policy data, we present fresh evidence on the dynamic effects of temporary trade barriers.