Finance Brief: Trump to Nominate Former House Republican Aide to CFTC

Washington Brief

  • The White House said President Donald Trump intends to nominate Brian Quintenz, a former House GOP aide and investment manager, to a seat on the Commodity Futures Trading Commission. Quintenz was nominated for the post last year but never received a confirmation vote in the Senate. (The Wall Street Journal)
  • A federal appeals court granted a 60-day pause in a case weighing the government’s designation of MetLife Inc. as a systemically important financial institution. The delay comes as the Trump administration evaluates the SIFI designation process. (Reuters)
  • House Speaker Paul Ryan (R-Wis.) reiterated his assertion that tax overhaul legislation can be finished this year. The House Ways and Means Committee is scheduled to hold its first major hearing on tax reform this week. (The Hill)

Business Brief

  • Lawyers representing Wells Fargo & Co. customers say the bank may have opened as many as 3.5 million fake accounts — 1.4 million more than the amount reported by the bank and federal regulators. The San Francisco-based lender said the new estimate put forth by the attorneys is “based on a hypothetical scenario.” (Los Angeles Times)
  • Treasury Secretary Steven Mnuchin said “we do not want to be protectionist” in navigating international trade, while adding that the administration reserves the right to advocate for U.S. interests. (The Washington Examiner)
  • JPMorgan Chase & Co. agreed to pay about $137 million for office space under construction in Dublin as it expands its foothold in Ireland after the U.K.’s Brexit vote. The building, which is set to be finished in the third quarter of 2018, will accommodate more than 1,000 workers. (Bloomberg News)

Chart Review

Events Calendar (All Times Local)

Monday
Intuit, Tax Foundation event on tax code and entrepreneurship 12 p.m.
Cato Institute event on tax reform 12 p.m.
Tuesday
Senate Banking Committee hearing for Treasury and Commerce nominees 10 a.m.
Peterson Institute event on exchange rates and trade 5:30 p.m.
Wednesday
CFPB academic research council meeting 9 a.m.
FDIC ‘Money Smart’ webinar 1 p.m.
Heritage Foundation event on Volcker rule 2 p.m.
Politico discussion on tax reform 5:30 p.m.
Atlantic Council event on infrastructure with Rep. Delaney 6 p.m.
Thursday
American Council for Capital Formation conference with Rep. Roskam 8 a.m.
Senate Banking Committee hearing with Treasury’s Mnuchin 10 a.m.
House Ways and Means Committee hearing on tax reform 10 a.m.
House Financial Services subcommittee hearing on Greek bailout 10 a.m.
Friday
U.S. Chamber of Commerce investment summit 8:30 a.m.
House Judiciary Committee hearing on antitrust enforcement 9 a.m.

 

General

Steven Mnuchin: ‘We do not want to be protectionist’ on trade
Kimberly Leonard, The Washington Examiner 

Treasury Secretary Steven Mnuchin said Saturday that he doesn’t want to be protectionist on trade but will seek out balanced agreements. “We do not want to be protectionist but we reserve our right to be protectionist to the extent that we believe trade is not free and fair,” Mnuchin said at a press conference held at the end of a meeting of finance ministers from the Group of Seven industrial democracies.

Trump’s allies see a ‘civil war’ on trade within his administration, and which side wins is anyone’s guess
Allan Smith, Business Insider 

President Donald Trump’s ambitious trade agenda has been caught up by what one reformer compared to something out of a movie, complete with a “civil war” type scene between competing factions of his nascent administration. The early acts of this film proved disappointing to some of his trade allies, even as his administration crossed the 100-day mark by pointing to a withdrawal from the Trans-Pacific Partnership, an increased emphasis on enforcement of trade laws already on the books, and a series of executive orders aimed fulfilling at his campaign promises.

U.S. fails to reassure Europe, Japan over ‘Trumponomics’
David Lawder and William Schomberg, Reuters 

The United States said on Saturday the world’s other rich economies were getting used to the policy plans of President Donald Trump, but Europe and Japan showed they remained worried about Washington’s shift. Officials from the Group of Seven nations met in southern Italy hoping to hear more about Trump’s plans which they fear will revive protectionism and set back the global approach to issues such as banking reform and climate change.

Republican Threat to CFPB Rules May Mean Enforcement Boost
Gregory Roberts, Bloomberg BNA 

The Consumer Financial Protection Bureau likely will focus more on enforcement and less on rulemaking as the agency navigates an uncertain future and awaits the fate of its first-ever director, holdover Democrat Richard Cordray, several former CFPB officials told Bloomberg BNA. Republicans’ willingness to deploy a regulation-busting tool known as the Congressional Review Act against rules issued by federal agencies will probably make the CFPB think twice about aggressive rulemakings going forward.

Consumer advocates made a last-ditch effort with Congress to keep the CFPB intact
Maria LaMagna, MarketWatch 

A group of consumers and advocates met with members of Congress on this week to oppose laws that would weaken the Consumer Financial Protection Bureau. More than 100 members of organizations including the Consumer Federation of America, an association of nonprofit consumer organizations, Consumers Union, the public policy arm of the news organization Consumer Reports and the nonprofit Americans for Financial Reform, met with government officials of both parties and their staffs to lobby against several laws proposed recently.

Financial-Crimes Monitor to Share Records in Trump-Russia Probe
Shane Harris and Carol E. Lee, The Wall Street Journal 

A Treasury Department unit that specializes in combating money-laundering will share financial records with an expanding Senate probe into possible ties between Russia and President Donald Trump and his associates, according to people familiar with the matter. The Senate Intelligence Committee requested the records from Treasury’s Financial Crimes Enforcement Network, or FinCEN, late last month, these people said.

Oil Jumps With Commodity Currencies on Output Deal: Markets Wrap
Samuel Potter, Bloomberg News

Futures on the S&P 500 Index erased a gain to trade little changed after the underlying gauge ended last week down 0.4 percent, its first weekly loss since mid-April.

Banking

Wells Fargo may have created 1.4 million more unauthorized accounts than we thought, attorneys say
James Rufus Koren, Los Angeles Times

Wells Fargo & Co. may have opened as many as 3.5 million unauthorized checking, savings and credit card accounts over the last 15 years — far more than originally reported by the bank and federal regulators, according to a new estimate from attorneys representing bank customers. For months, the number of unauthorized accounts that bank employees may have created stood at 2.1 million.

JPMorgan Said Buying $137 Million Dublin Office for 1,000 Staff
Jack Sidders, Bloomberg News

JPMorgan Chase & Co. agreed to pay about 125 million euros ($137 million) for an office building under construction in Dublin, according to a person with knowledge of the plan. The person asked not to be identified because the price hasn’t been been announced publicly.

Financial Products and Investments

White House Nominates Former House Aide for Republican CFTC Vacancy
Andrew Ackerman, The Wall Street Journal 

The White House on Friday tapped Brian Quintenz, a former House aide and investment manager, to fill a Republican vacancy on the Commodity Futures Trading Commission, the second time Mr. Quintenz has been nominated for the slot. Mr. Quintenz, who formerly headed a Washington, D.C., investment firm, was proposed for the CFTC post about a year ago, and his nomination sailed easily through the Senate Agriculture Committee, which oversees the agency.

U.S. court puts on hold ‘too big to fail’ case involving MetLife
Lisa Lambert, Reuters 

A U.S. appeals court on Friday granted a 60-day pause in the long-running case in which the country’s largest life insurer, MetLife Inc, has challenged the federal government’s labeling of it as “too big to fail,” as the Trump administration wrestles with reforms arising from the financial crisis. More than a year ago, U.S. District Judge Rosemary Collyer struck down the government’s designation of MetLife as “systemically important,” which signifies it could devastate the financial system if it failed and triggers stricter oversight, saying the label was “arbitrary and capricious.”

How Big Are Mutual Funds’ Puerto Rico Losses? $5.4 Billion
Heather Gillers and Tom McGinty, The Wall Street Journal 

The losses from soured investments in Puerto Rico bonds are coming into focus for some of the world’s biggest mutual funds, and it is a brutal reckoning. The total red ink for mutual funds that invested in debt issued by the troubled island commonwealth is as much as $5.4 billion over the past five years, according to a Wall Street Journal analysis of mutual-fund holdings and municipal-bond trades.

Reckless stock trading leaves Congress rife with conflicts
Maggie Severns, Politico 

Even a looming scandal wouldn’t deter some of Congress’ most eager stock traders. Rep. Tom Price (R-Ga.), President Donald Trump’s nominee to be Health and Human Services secretary, was under siege, the harsh lights of a Senate hearing upon him.

Housing and GSEs

CFPB deepens probe into Zillow for RESPA compliance
Brena Swanson, HousingWire

The Consumer Financial Protection Bureau is conducting a further investigation into Zillow’s compliance with the Real Estate Settlement Procedures Act, or RESPA, as it has for the past two years. Under RESPA, lenders, mortgage brokers, or servicers of home loans are required to provide borrowers with pertinent and timely disclosures regarding the nature and costs of the real estate settlement process.

Taxes

Ryan: ‘Planets are aligned’ on tax reform
Max Greenwood, The Hill 

House Speaker Paul Ryan (R-Wis.) on Sunday said Congress is likely to pass a major overhaul of the tax code by the end of the year, but cautioned that Republicans “don’t want to put an artificial deadline” on reform. “We don’t want to put an artificial deadline on tax reform because we want to get it right,” Ryan told radio host John Catsimatidis.

U.S. companies push hard for lower tax rate on offshore profits
Ginger Gibson, Reuters 

Major U.S. multinationals are pushing the Trump administration to deepen the tax break it has already tentatively proposed on $2.6 trillion in corporate profits being held offshore, a key piece in Washington’s intricate tax reform puzzle. As President Donald Trump tries to deliver on his campaign promise to overhaul the tax code, lobbyists for technology, drug and other manufacturers are working with officials behind closed doors, six lobbyists working with various industries told Reuters.

How would Texans fare if Trump and House Republicans end state and local tax deduction?
Tom Benning, The Dallas Morning News

Lone Star State lawmakers fought for years to give their constituents a fair shot at a wallet-fattening break on state and local taxes, eventually securing Texans the right to deduct sales tax from their federal returns just like other states’ residents do for income tax. But now some of those same politicians want to eliminate the perk, which also covers property tax, for taxpayers in Texas and everywhere else.

Trump’s lawyers say his tax returns show few Russian dealings
Jeanne Sahadi, CNN

Lawyers for President Trump have released a letter asserting that the past 10 years of Trump’s federal tax returns “with a few exceptions” don’t show any income from Russian sources. The letter also asserts that the returns show no debt owed to or interest paid to Russian lenders by Trump or his business entities.

Financial Technology

Bitcoin Faces More Scrutiny After Global Hack
Paul Vigna and Peter Rudegeair, The Wall Street Journal 

In the wake of a global wave of cyberattacks that demanded payment in bitcoin, new attention is being focused once again on the digital currency’s role in hacking and illegal money movements. More than 200,000 victims in at least 150 countries were hit by a global cyberattack that crippled commerce, hospitals and government agencies over the weekend.

Bitcoin’s surge fuels fears of asset bubble
Izabella Kaminska and Paul Murphy, Financial Times

Sky-high valuations for bitcoin have helped the value of crypto currencies burst through $50bn, raising fears of an asset bubble in the unregulated market. A growing number of alternative digital currencies — or “alt-coins” — is feeding the speculative frenzy with values in some rocketing as much as 500 per cent in the past week.

Even with trade pact, U.S. payment networks uncertain on China operations
Sumeet Chatterjee, Reuters 

The prospects for global payment network operators including Visa Inc and MasterCard Inc at last entering the Chinese market remain uncertain, even after the United States and China moved toward starting a licensing process for them. As part of a plan to reduce a massive U.S. trade deficit with China, the world’s two largest economies have agreed to expand trade in some sectors and increase access to China for financial firms.

A Message from SIFMA:

The Department of Labor must delay its harmful fiduciary rule until the review directed by President Trump is completed. Up to 14.7 million consumers could face significant changes to their retirement and financial advice, and lose up to $109 billion over 10 years. American investors deserve better. DOL needs to take the time to get this right and review the entire rule. Protect the retirement savers. Delay the DOL rule.

Opinions, Editorials and Perspectives

Trump’s Pretty Good China Deal
Editorial Board, The Wall Street Journal 

Wilbur Ross made some startling claims after Thursday’s announcement of a 10-point agreement with China on trade. The U.S. Commerce Secretary boasted that the “herculean accomplishment” was “more than has been done in the whole history of U.S.-China relations on trade,” putting the relationship on “a new high.”

To Spur Small Business, First Free the Banks
Hal S. Scott, The New York Times 

Somewhere in the United States right now, an entrepreneur is having trouble getting a small-business loan for expansion. The reason? The bank is committed to keeping a large portion of its money in government debt instead.

Is the proposed ‘border adjustment tax’ unconstitutional?
Jonathan H. Adler, The Washington Post 

This month, conservative superlawyer Theodore Olson took to the pages of The Post to argue that the “border adjustment” tax proposed by the House Republican leadership is not merely bad policy, but unconstitutional as well. Olson’s constitutional arguments were interesting, but I did not find them wholly persuasive.

SEC’s power to revive IPO market limited without radical measures
Tom Braithwaite, Financial Times

Dan Killian, a former broker, confronted officials from the Securities and Exchange Commission this week: “You have killed the small broker-dealer,” he said. “Call off the dogs.” In his view, small companies find it too hard to go public because the infrastructure of brokers and analysts that used to support their equity sales has been crushed by regulation.

A Message from SIFMA:

The Department of Labor’s fiduciary rule is harming retirement savers and it must be delayed for a minimum of 180-days. Recently, the DOL provided a 60-day delay of the rule, which temporarily helped prevent further service changes, customer confusion and market disruptions. However, this is not enough time to fully review the consequential impact of the entire rule, as requested by the president. Further delay to conduct the review and protect retirement savers from additional harm and turmoil.

Research Reports

A Small Win for MetLife; Mnuchin’s Volcker Bid; Personnel = Policy
Ian Katz, Capital Alpha Partners 

A federal appeals court on Friday agreed to delay action on the FSOC-MetLife case for 60 days, giving the insurer an incremental but not insignificant win in its battle to beat back a SIFI designation.

Briefings

Finance Brief: Icahn Resigns as Special Adviser to Trump

Billionaire investor Carl Icahn resigned from his role as President Donald Trump’s unpaid adviser on regulatory reform issues just before The New Yorker published a profile that detailed potential conflicts of interests related to Icahn’s stake in a Texas-based petroleum refining company. Icahn cited “partisan bickering” in his resignation letter and denied he had profited from his advisory position.

Finance Brief: Week in Review & What’s Ahead

Members of President Donald Trump’s Strategic and Policy Forum, an advisory group of business leaders, decided to disband after Trump blamed the violence in Charlottesville, Va., on both white nationalists and the protesters who opposed them. Later, Trump announced the dissolution of that group and of an advisory panel on manufacturing. JPMorgan Chase & Co. Chief Executive Jamie Dimon, a Strategic and Policy Forum member, said in a memo to employees that he “strongly” disagreed with Trump’s comments.

Finance Brief: Week in Review & What’s Ahead

California Insurance Commissioner Dave Jones said the state will investigate whether or not Wells Fargo harmed hundreds of thousands of customers by selling them car insurance they didn’t need. The probe follows subpoenas issued by New York state’s banking and insurance regulator to two Wells Fargo units last week.

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