Finance Brief: Week in Review & What’s Ahead

Week in Review

Trump administration 

  • President Donald Trump said he’s not concerned about going forward with a tax reform plan that increases deficits. Running a short-term deficit to help bring about an economic stimulus from cutting taxes is “OK,” he said.
  • Trump nominated David Kautter, a tax expert at the consulting firm RSM, to be assistant secretary of Treasury for tax policy. If confirmed, he will likely be instrumental in the administration’s efforts to rewrite the tax code.
  • Treasury Secretary Steven Mnuchin requested that a handful of federal agencies review the current status of the Volcker rule, which limits banks’ ability to use their own capital for trading.
  • Administration officials are planning to complete a review of financial regulations on a piecemeal basis, in contrast to what Trump initially planned when he signed a February executive order mandating a Treasury Department review of rules from the 2010 Dodd-Frank Act.

Congress

  • The Senate voted 82-14 to confirm Robert Lighthizer to be the next U.S. trade representative. Sens. John McCain (Ariz.), Ben Sasse (Neb.) and Cory Gardner (Colo.) were the only Republicans to vote against him.
  • Three federal agencies agreed to House Financial Services Committee Chairman Jeb Hensarling’s request last month to omit correspondence between the agencies and his panel when responding to Freedom of Information Act requests.

Housing finance 

  • Federal Housing Finance Agency Director Mel Watt warned the Senate Banking Committee that he’s worried about the market risks posed by capital buffers for Fannie Mae and Freddie Mac. The looming possibility of a draw of funds from the U.S. Treasury to help the government-sponsored enterprises is a concern that should give lawmakers a greater sense of urgency to reform the government’s relationship with Fannie and Freddie, according to Banking Committee Chairman Mike Crapo (R-Idaho).
  • The FHFA’s inspector general recommended that the agency consider firing Fannie Mae Chief Executive Timothy J. Mayopoulos because of the conflicts of interest that could have arisen from his romantic relationship with a high-ranking employee of Fifth Third Bank. Watt said he has “complete confidence” in Mayopoulos.

Litigation

  • A federal appeals court dealt a blow to a lawsuit challenging the government’s bailout of American International Group Inc. in the wake of the 2008 financial crisis. The court vacated a previous ruling that said the federal bailout violated the law.

What’s Ahead

  • Consumer Financial Protection Bureau Director Richard Cordray is expected to meet with House Democrats on Wednesday. The meeting comes as House Republicans prepare to tackle the Financial CHOICE Act, legislation that would strip the CFPB of some enforcement authority and overhaul financial regulations from the 2010 Dodd-Frank Act.
  • Treasury Secretary Steven Mnuchin is scheduled to make his first appearance before the Senate Banking Committee since his confirmation this week. At Thursday’s hearing, Mnuchin is likely to be asked about how efforts to reform the tax code might affect financial issues within the committee’s jurisdiction.
  • The House Ways and Means Committee on Thursday is slated to hold its first hearing on tax overhaul legislation.
  • Lawmakers are awaiting a Congressional Budget Office score of the Financial CHOICE Act. A congressional aide said the cost estimate is expected before the House votes on the measure. A floor vote has not been scheduled.

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.

 

Morning Consult Finance Top Reads

1) Transcript: Interview with Donald Trump
The Economist

2) Trump review of Wall Street rules to be done in stages: sources
Olivia Oran and Peter Schroeder, Reuters

3) Fannie Mae to Send $2.8 Billion Dividend to Treasury
Austen Hufford, The Wall Street Journal

4) House panel to kick off tax reform hearings next week
Naomi Jagoda, The Hill

5) McCain, citing ‘unanswered questions,’ objecting to unanimous consent request on Lighthizer
Inside U.S. Trade

6) Trump Didn’t Disclose His Preferred Tax Brackets. Here’s Why It Matters
Howard Gleckman, Tax Policy Center

7) These Federal Agencies Agreed To Conceal Some Of Their Communications From The Public
Mary Ann Georgantopoulos, BuzzFeed News

8) GOP Chairman Warns Agencies About Requests for Records
The Associated Press

9) Banks Want Mnuchin to Intervene in Fight Over New Loan Rule
Michael Rapoport, The Wall Street Journal

10) New contender emerges to become Wall Street’s top cop: sources
Nathan Layne and Karen Freifeld, Reuters

Briefings

Finance Brief: Pence’s Tax Lobbying on Hill Rankles Republican Study Committee Members

Vice President Mike Pence urged House Republican Study Committee Chairman Mark Walker (N.C.) to poll the group’s members on whether they’d support the White House tax outline over the House GOP blueprint, a move that spurred criticism from members. Some RSC members oppose the idea of breaking from the House leadership’s tax plan, which differs in key ways from President Donald Trump’s proposal.

Finance Brief: Intra-Party Debate Over Swipe Fees Intensifies

An intra-party dispute over a proposed repeal of debit card swipe-fee limits may delay a House vote on the the Dodd-Frank replacement bill sponsored by Financial Services Committee Chairman Jeb Hensarling (R-Texas), who urged colleagues to support the measure during a conference meeting Tuesday. GOP Reps. David Young (Iowa) and Dennis Ross (Fla.) want the repeal language removed from the bill.

Finance Brief: Week in Review & What’s Ahead

Treasury Secretary Steven Mnuchin told lawmakers that the Trump administration does not support reinstating the firewall between investment and commercial banking required under the Depression-era Glass-Steagall Act, clarifying previous remarks from White House officials that indicated a preference for reinstating the law that was repealed in 1999.

Finance Brief: Wells Fargo Sued by Philadelphia Over Alleged Predatory Lending

The City of Philadelphia sued Wells Fargo & Co., alleging that the country’s largest mortgage lender engaged in predatory lending. The lawsuit, which comes after a recent Supreme Court decision allowing cities to sue banks for alleged discrimination that leads to widespread defaults and lower property tax revenue, compounds Wells Fargo’s legal woes in the wake of its consumer fraud scandal.

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