Morning Consult Finance: SEC Approves Rules to Increase Thresholds for Proxy Advisers


Top Stories

  • The Securities and Exchange Commission approved new proxy rules that will raise the threshold for shareholders to submit proposals and require shareholder advisory firms to submit advanced copies of advice to companies before it’s released to investors. The SEC’s two Democratic commissioners opposed the proposal, which will now go to public comment after a 3-2 vote. (Financial Times)
  • The California Department of Insurance has seized California Insurance Co., which was previously owned by Warren Buffett’s Berkshire Hathaway Inc., after the company’s “established pattern of continually flouting California’s regulatory processes.” The insurer can’t cancel any existing policies and can only issue new policies with the regulator’s consent while under conservatorship. (The Wall Street Journal)
  • Bank of America Corp. and International Business Machines Corp. have partnered on IBM’s first financial services-specific cloud, designed to meet the high regulatory standards required of the financial industry. Bank of America will be the first to use the technology. (Reuters)

Chart Review

Events Calendar (All Times Local)

11/06/2019
The New York Times DealBook conference
CFPB Symposium: Section 1071 of the Dodd-Frank Act 9:30 am
11/07/2019
Meeting of CFTC’s Energy and Environmental Markets Advisory Committee 10:00 am
Senate Banking Committee hearing: “Examining Bipartisan Bills to Promote Affordable Housing Access and Safety” 10:00 am
11/08/2019
San Francisco Fed conference: The Economics of Climate Change
View full calendar

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General

After a summer of panic, fears of a U.S. recession ease a bit
Heather Long, The Washington Post

Somewhere around Halloween, the U.S. economy started to look a bit less scary. Top U.S. and Chinese officials are talking about a trade war truce. Many economic indicators, especially jobs and consumer spending, still look solid, if not strong.

Trump Tax Return Case Confronts Supreme Court With a Momentous Choice
Adam Liptak, The New York Times

 In a matter of days, President Trump will ask the Supreme Court to rule on his bold claim that he is absolutely immune from criminal investigation while he remains in office. If the court agrees to hear the case, its decision is likely to produce a major statement on the limits of presidential power — and to test the independence of the court itself.

Fed’s Barkin: High Uncertainty May Be Damping Effectiveness of Fed Policy
Michael S. Derby, The Wall Street Journal

Richmond Fed President Thomas Barkin said an uncertain economic and political environment may be making central bank monetary policy choices less effective right now. Uncertainty can “dampen the impact we might expect from any policy stance,” Mr. Barkin said in the text of a speech to be delivered in Baltimore on Tuesday.

Dimon Says Warren’s Rhetoric Vilifies Successful People
Gwen Everett and Bill Allison, Bloomberg

JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said presidential hopeful Elizabeth Warren’s rhetoric sounds like an attack on wealthier Americans. Warren “uses some pretty harsh words,” Dimon said Tuesday in an interview with CNBC. “Some would say vilifies successful people.”

US-China ‘phase one’ trade deal won’t lead to ‘economic nirvana,’ Larry Summers says
Yen Nee Lee, CNBC

The so-called phase one trade deal that the U.S. and China are expected to sign won’t solve all the problems the global economy faces right now, former U.S. Treasury Secretary Larry Summers said Wednesday. U.S. President Donald Trump said both countries were looking for a location to sign the partial deal — which according to Reuters, could take place this month.

Stocks Drift Amid Mixed Earnings; Treasuries Gain: Markets Wrap
Robert Brand, Bloomberg

U.S. equity-index futures struggled for traction alongside stocks in Europe and Asia as a raft of corporate earnings and economic data muddied the outlook somewhat for global growth. Treasuries rose after dropping for three days.

Banking

Former Goldman Sachs executive to stand trial in Malaysia next year
Rozanna Latiff, Reuters

Former Goldman Sachs banker Roger Ng will face trial in Malaysia in April for allegedly abetting the sale of $6.5 billion in bonds tied to troubled state fund 1Malaysia Development Berhad (1MDB), a judicial official said on Wednesday. Malaysia had temporarily surrendered Ng for 10 months to the United States, where he has been charged for conspiring to launder money and bribe government officials in Malaysia and Abu Dhabi through bond offerings that Goldman Sachs Group Inc (GS.N) had handled.

Financial Products and Investments

‘Achieving the American Dream’ With a Loan and a Smuggler
Emily Kaplan, The New York Times

The local government worker guided the bank representative around the parcel of land in this rural village in Guatemala, describing the dream home he envisioned rising from the dirt. He pointed out where the kitchen would be, and the bedrooms for his family. 

Insurance companies, groups urge quick Senate action on House-passed retirement bill
Naomi Jagoda, The Hill

About 90 executives of insurance companies and trade associations are urging Senate leaders to take “quick action” to pass a bipartisan retirement savings bill that the House passed earlier this year. “This important piece of legislation helps to ensure millions of Americans’ financial security,” the groups wrote in a letter to Senate Majority Leader Mitch McConnell (R-Ky.) and Senate Minority Leader Charles Schumer (D-N.Y.).

Washington flexes its muscles on small-business lending
Kevin Wack, American Banker

Federal banking regulators have waded in recent weeks into two separate controversies involving small-business lending, abandoning the caution they have long maintained on both issues. In one instance, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency angered borrower advocates by siding in court with a high-cost business lender.

Housing and GSEs

Tech Giants Pledge Billions for Housing, but Will It Matter?
Conor Dougherty, The New York Times

A mile from Apple’s headquarters in Cupertino lies the sun-faded carcass of the Vallco Shopping Mall. At the moment it consists of empty, buff-colored buildings, acres of black asphalt and a pile of rubble where the parking garage used to be.

Taxes

How Is a Wealth Tax Like a Cigarette Tax?
Neil Irwin, The New York Times

Most taxes exist as a necessary evil. The United States government taxes people’s income not because it wants them to earn less income, but because it is a way to raise a lot of money. 

Here’s how Warren’s plan would make it nearly impossible for U.S. businesses to stash profits overseas
Christopher Ingraham, The Washington Post

Sen. Elizabeth Warren (D-Mass.) recently released details of her plan to extend Medicare coverage to all Americans, sparking a robust debate among economists, politicians and the general public about the merits and drawbacks of shifting to a national health care system. One provision that’s received relatively little attention, however, is what the Democratic presidential hopeful calls “a country-by-country minimum tax on foreign earnings.” 

IRS Expected to Issue Multipart Carbon Capture Clarity This Year
Jacqueline Toth, Morning Consult

The Internal Revenue Service is expected to release documents in at least two stages by the end of the year related to a critical tax credit for carbon capture, providing long-awaited clarity to the industry on how they can also capture tax benefits for their work.  The releases would begin to close an almost two-year period since the Feb. 9, 2018, enactment of the enhanced and extended 45Q carbon sequestration tax credit — a critical incentive for the nascent domestic carbon capture, storage and utilization community, with implications for both business and the climate.

Financial Technology

Lawyer Made Millions Laundering Money in Crypto Scam, U.S. Says
Bob Van Voris, Bloomberg

Mark Scott got a nice bump when he left his partnership at a big law firm and took up money laundering for a multibillion-dollar international pyramid scheme based on the fake cryptocurrency OneCoin, federal prosecutors say. Scott, who has pleaded not guilty, is accused of using a network of shell companies, offshore bank accounts and phony investment funds to hide the origin of $400 million in illegal proceeds. 

Wirecard buys Chinese payments group for up to €109m
Olaf Storbeck, Financial Times

Analyst says ‘more questions than answers’ over deal to acquire AllScore.

Opinions, Editorials and Perspectives

The World Has Gone Mad and the System Is Broken
Ray Dalio, LinkedIn

I say these things because: Money is free for those who are creditworthy because the investors who are giving it to them are willing to get back less than they give. 

Research Reports

Student Loan System Presents Repayment Challenges
Sarah Sattelmeyer, Pew Trusts

As of March 2019, 43 million Americans held student loans provided through federal government programs, the largest segment of the education loan market. But this system is under pressure as more borrowers struggle to repay, a problem compounded by the complexity of the repayment process. 

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