Finance Brief: Week in Review & What’s Ahead

Week in Review

Trump administration

  • January’s trade deficit marked a nearly five-year high, according to government data that Commerce Secretary Wilbur Ross said illustrates the challenges ahead for the Trump administration. The numbers came as National Trade Council Director Peter Navarro warned that large trade deficits jeopardize U.S. national security.
  • Separately, Ross said he hasn’t decided where he stands on the House GOP border adjustment tax plan, which would tax on importers while exempting exporters.
  • An early part of the Trump administration’s bank regulation rollbacks will target rules issued through guidance rather than formal rulemaking, according to Mark Calabria, Vice President Mike Pence’s chief economist.
  • Several of Treasury Secretary Steven Mnuchin’s picks for agency staff have stalled due to resistance from White House aides, in some cases related to questions over their loyalties to Trump and scrutiny of one candidate’s social media posts.

Congress

  • Sen. Jeff Flake (R-Ariz.) voiced opposition to the border adjustment tax proposal, saying it could drive up prices on essential consumer items. Flake joins a slate of Senate Republicans concerned about the provision.
  • Senate Majority Leader Mitch McConnell (R-Ky.) cast doubt on passing tax reform legislation before the August congressional recess.

Financial regulation

  • GE executive David Nason, considered a front-runner for the top regulatory post at the Federal Reserve, withdrew his name from consideration for the position. National Economic Council Director Gary Cohn had advocated for his candidacy.
  • Comptroller of the Currency Thomas Curry rebutted arguments against his agency’s plan to offer charters to financial technology firms, including the notion that the OCC lacks the authority to issue the charters.

Financial services industry

  • Trump promised regulatory relief from Dodd-Frank during a meeting with community bankers. He also talked about the uncertain job security of Consumer Financial Protection Bureau Director Richard Cordray.
  • The CFPB postponed implementation of its prepaid card rule by six months, to give companies more time to comply with the regulation.
  • American International Group Inc. Chief Executive Peter Hancock is set to resign after failures in his turnaround plan for the insurance giant.
  • The financial sector spent a record $2 billion on lobbying and campaign donations in the 2015-2016 election cycle, about a third higher than the total in the 2014 election cycle, according to a report from Americans for Financial Reform.
  • Banks could gain up to $218 billion in excess capital as a result of regulatory rollbacks under the Trump administration, according to a Goldman Sachs Group Inc. analysis.
  • Deutsche Bank AG is seeking to raise $8.5 billion in capital through a share sale, part of its efforts to reorganize its structure.
  • UBS AG is considering rejecting a Justice Department settlement offer related to mortgage bond misselling allegations.

What’s Ahead

  • Robert Lighthizer, Trump’s choice for U.S. trade representative, has his confirmation hearing scheduled for Tuesday with the Senate Finance Committee. Senators are expected to discuss the issue of whether Lighthizer will require a waiver to move his nomination forward due to foreign lobbying experience.
  • Jay Clayton, Trump’s pick to lead the Securities and Exchange Commission, will face questions at his Senate Banking Committee confirmation hearing on March 23, when Democrats are expected to scrutinize his ties to former Wall Street clients. Clayton has promised to recuse himself from any SEC matters involving recent clients.
  • Labor secretary nominee Alexander Acosta, who replaced previous nominee Andy Puzder after he withdrew his nomination over personal and professional controversies, has his confirmation hearing on Wednesday before the Senate Health, Education, Labor, and Pensions Committee. He’s expected to be asked about the department’s stalled fiduciary rule, his record as a former federal prosecutor and overtime and minimum wage protections.
  • Business groups are awaiting more clarity from the White House regarding the House GOP border adjustment tax proposal, which has divided retailers and exporters. The Trump administration has pegged August as its desired deadline for congressional passage of comprehensive tax reform legislation.

Events Calendar (All Times Local)

Monday
Institute of International Bankers annual conference 7:30 a.m.
American Enterprise Institute event on trade with Sen. Lee 5:15 p.m.
Tuesday
Institute of International Bankers annual conference 8 a.m.
FIA International Futures Industry Conference in Boca Raton, Fla. 8 a.m.
Senate Finance Committee hearing for USTR nominee Lighthizer 10 a.m.
Senate Banking Committee hearing on flood insurance 10 a.m.
Wednesday
FIA International Futures Industry Conference 7:30 a.m.
House Financial Services subcommittee hearing on JOBS Act 10 a.m.
Senate Banking Committee hearing on Russia sanctions 10 a.m.
D.C. Blockchain Summit 1:30 p.m.
Senate HELP Committee confirmation hearing for DOL nominee Acosta 1:30 p.m.
House Financial Services subcommittee hearing on de novo bank formation 2 p.m.
Thursday
FIA International Futures Industry Conference 7 a.m.
D.C. Blockchain Summit 8 a.m.
House Financial Services subcommittee hearing on monetary policy 10 a.m.
House Financial Services subcommittee hearing on flood insurance 2 p.m.
Friday
FIA International Futures Industry Conference 7:30 a.m.

 

Morning Consult Finance Top Reads

1) GE’s Nason Tells White House He’s Not Interested in Fed Job
Robert Schmidt and Jesse Hamilton, Bloomberg News

2) CFPB delays implementation of final prepaid rule, citing complaints
Kate Berry, American Banker

3) SEC Nominee Jay Clayton Set for Senate Panel Hearing
Andrew Ackerman, The Wall Street Journal

4) Trump’s choice for SEC chair clears ethics hurdle: source
Sarah N. Lynch, Reuters

5) Trump Adviser Peter Navarro: Trade Deficits Endanger U.S. National Security
Nick Timiraos, The Wall Street Journal

6) Questions About Loyalty to Trump Stall Mnuchin’s Treasury Picks
Robert Schmidt and Saleha Mohsin, Bloomberg News

7) Republicans eye strategy for repealing Wall Street reform
Alexander Bolton, The Hill

8) United States flips sides, supports PHH in case against CFPB
Brena Swanson, HousingWire

9) Trump Appointees Can Roll Back Bank Rules, Pence Economist Says
Jesse Hamilton and Jeanna Smialek, Bloomberg News

10) One Chart Showing What Goldman Expects Trump to Accomplish This Year
Julie Verhage, Bloomberg News

Briefings

Finance Brief: Week in Review & What’s Ahead

President Donald Trump signed three executive actions affecting the financial services industry. The actions included two presidential memorandums — one directing the Treasury Department to examine the Dodd-Frank process for winding down failing banks, and another directing the agency to review the Financial Stability Oversight Council’s authority to designate firms systemically important. The third item was an executive order directing the Treasury Department to analyze tax rules adopted in the last 18 months and identify any regulations deemed convoluted or onerous.

Finance Brief: Week in Review & What’s Ahead

President Donald Trump expressed support for the Export-Import Bank, a longtime target of fiscal conservatives who see it as a government interloper in private markets. The export credit agency has faced limited financing powers for more than a year due to board vacancies. To resolve that, the White House said Trump intends to nominate two Ex-Im candidates, both requiring Senate confirmation: former Rep. Scott Garrett (R-N.J.), who voted against renewing the bank’s charter while he was in Congress, would be head of the credit agency; and former Rep. Spencer Bachus (R-Ala.), who previously led the House Financial Services Committee, would serve on the agency’s board.

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