Finance Brief: Week in Review & What’s Ahead

By Ryan Rainey and Tara Jeffries

Week in Review

Trump administration

  • President Donald Trump promised to introduce a comprehensive tax overhaul plan within the next two to three weeks. It’s unclear how closely his proposal will align with the House GOP’s on issues like border adjustment, which would tax imports while exempting exports.
  • The White House is considering Brian Brooks, Fannie Mae’s general counsel, to replace Richard Cordray as director of the Consumer Financial Protection Bureau. Brooks previously served as vice chairman of OneWest, a bank once led by Treasury Secretary nominee Steven Mnuchin.
  • Trump’s Cabinet will not include the chairman of the Council of Economic Advisers, a position still unfilled by the president.
  • Mark Calabria, former director of financial regulation studies at the Cato Institute, will serve as Vice President Mike Pence’s chief economist.

Congress

  • House Financial Services Committee Chairman Jeb Hensarling (R-Texas) has revamped his forthcoming Dodd-Frank overhaul legislation to relieve banks from annual Federal Reserve stress tests. Hensarling, a critic of the CFPB, also called on Trump to immediately fire Cordray.
  • Board members of the Consumer Bankers Association met with a dozen Senate Democrats to pitch the idea of a five-member bipartisan commission at the consumer agency, a proposal backed by congressional Republicans.

Financial regulation

  • Trump is expected to nominate Christopher Giancarlo, the sole Republican member of the Commodity Futures Trading Commission and its acting chairman, to lead the the derivatives regulator.
  • The Securities and Exchange Commission is re-examining a rule on chief executive pay disclosures, a product of the 2010 Dodd-Frank law. Acting Chairman Michael Piwowar, a Republican, said he wants companies to submit an outline of potential challenges they face complying with the measure.
  • The Natural Resources Defense Council, Public Citizen and the Communications Workers of America filed a lawsuit aiming to block Trump’s executive action that requires agencies to scrap two regulations for each one they introduce.

Financial industry

  • A federal judge in Texas upheld the Labor Department’s fiduciary rule, which is designed to prevent conflicts of interest among retirement advisers. The court decision marks a setback for industry groups hoping to block the rule that’s slated to take effect in April. However, the ruling follows a presidential memo ordering the Labor Department to review the Obama-era rule.
  • The American Bankers Association filed a lawsuit against the U.S. government over a 2015 highway funding law that diverts banks’ dividend payments from the Federal Reserve.
  • Wells Fargo & Co. will likely withhold bonuses from top executives in the wake of its consumer fraud scandal. The cross-selling controversy is projected to cost the San Francisco-based lender as much as $60 million per quarter in legal expenses for the next several quarters.

What’s Ahead

  • Mnuchin is expected to be confirmed by the Senate on Monday.
  • Federal Reserve Chair Janet Yellen will testify before the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday.
  • Trump’s labor secretary pick, Andy Puzder, will face questions from senators on the Health, Education, Labor and Pensions on Thursday during his confirmation hearing. Democrats will likely target Puzder’s record as chief executive of CKE Restaurants Holdings Inc.
  • The confirmation hearing for Wall Street lawyer Jay Clayton, Trump’s pick to lead the Securities and Exchange Commission, has not been scheduled.
  • Trump’s choice for U.S. trade representative, Robert Lighthizer, will need a waiver before being senators proceed with efforts to confirm him due to his lobbying record.
  • Hensarling this week may unveil the reworked version of his Financial CHOICE Act, which aims to overhaul the 2010 Dodd-Frank Act.

Events Calendar (All Times Local)

Monday
No events scheduled
Tuesday
Fed Chair Yellen testifies before Senate Banking Committee 10 a.m.
Wednesday
SEC Advisory Committee on Small and Emerging Companies meeting 9:30 a.m.
Fed Chair Yellen testifies before House Financial Services Committee 10 a.m.
House Ways and Means Committee hearing on geography of poverty 10 a.m.
Tax Foundation event on taxes and startups 11 a.m.
Thursday
Crain’s New York Business event with NYC regulators 8 a.m.
Brookings Institution event on regulation 9 a.m.
Andy Puzder confirmation hearing before Senate HELP Committee 10 a.m.
House Financial Services Committee hearing on covered agreements 10 a.m.
Friday
SEC Miami office director speaks at panel discussion 1:45 p.m.

 

Morning Consult Finance Top Reads

1) Republicans Get Ready to Roll Back Dodd-Frank Law
Rachel Witkowski and Ryan Tracy, The Wall Street Journal

2) New GOP Memo Targets Stress Tests, CFPB in Dodd-Frank Changes
Jesse Hamilton et al., Bloomberg News

3) SEC to reconsider CEO pay ratio disclosure rules
Joseph Lawler, The Washington Examiner

4) Trump Preparing to Nominate Commodity Futures Trading Commission’s Giancarlo as Chair
Andrew Ackerman, The Wall Street Journal

5) Key House Republican calls on Trump to fire head of the Consumer Financial Protection Bureau
Jim Puzzanghera, The Los Angeles Times

6) Fannie Mae exec with ties to Mnuchin is among candidates for consumer protection boss
Ylan Mui, CNBC

7) Labor Dept. looks into delaying fiduciary rule after Trump’s order
Lisa Lambert, Reuters

8) White House memo confuses Wall Street on fate of fiduciary rule
Sarah N. Lynch and Elizabeth Dilts, Reuters

9) U.S. court upholds Obama-era retirement advice rule
Sarah N. Lynch, Reuters

10) Sen. Sasse: Fire Richard Cordray
Ben Sasse, USA Today

Briefings

Finance Brief: Week in Review & What’s Ahead

Senate Majority Leader Mitch McConnell (R-Ky.) said it is unlikely that Congress will pass a tax reform bill before the August recess. Senate GOP taxwriters are considering a tax proposal of their own that does not include the controversial border-adjustable tax on imports found in the House GOP’s blueprint.

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