Morning Consult Finance: Treasury Rolls Back Obama-Era Rules on Corporate Inversion Deals


Top Stories

  • The Treasury Department is rolling back Obama-era regulations meant to curb tax-avoiding corporate inversion deals, saying that because “tax cuts made our business environment more competitive, we are now able to remove regulatory burdens that have been rendered obsolete,” according to Treasury Secretary Steven Mnuchin. The new rules removed a requirement that companies document certain internal loans, along with streamlining other regulations. (The Wall Street Journal
  • Institutional Shareholder Services has sued the Securities and Exchange Commission days before the agency is scheduled to propose new regulations for proxy advisers. The changes, which ISS says don’t allow opportunity for public comment, could raise legal costs for proxy advisers such as ISS and impact shareholder votes at company annual meetings. (Financial Times
  • The Trump administration and congressional Republicans have begun discussing a new tax cut package with urging from President Donald Trump, who wants to announce a new proposal before the 2020 presidential election. White House National Economic Council Director Larry Kudlow is playing a key role in the discussions, which so far are in the early stages, according to people briefed on the talks. (The Washington Post)

Chart Review

Events Calendar (All Times Local)

11/01/2019
The Fourteenth New York Fed / NYU Stern Conference on Financial Intermediation
11/06/2019
The New York Times DealBook conference
CFPB Symposium: Section 1071 of the Dodd-Frank Act 9:30 am
View full calendar
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General

Billionaire’s Letter to Elizabeth Warren Accuses Her of ‘Warping the Facts’ on the Wealthy
Kate Kelly and Shane Goldmacher, The New York Times

Escalating the war of words between Wall Street and Senator Elizabeth Warren, Leon Cooperman, a billionaire money manager, denounced her recent tweet encouraging him to “pitch in a bit more” because of his success in life, saying she sounded like “a parent chiding an ungrateful child.” “However much it resonates with your base, your vilification of the rich is misguided,” wrote Mr. Cooperman, the billionaire manager of the Omega Family Office, in an Oct. 30 letter made public on Thursday.

An unlikely hero could save the government agency designed to protect consumers
Ephrat Livni, Quartz

Once, sometimes twice a term, an orphaned case in need of a defender makes it to the US Supreme Court, and the justices appoint a lawyer to stand on behalf of a position the original litigant quit. That’s what happened on Oct. 23, when Elena Kagan invited attorney Paul Clement to defend the constitutional structure of the Consumer Financial Protection Bureau (CFPB) in a major matter that pits the government agency designed to defend Americans from predatory lenders against itself.

Dallas Fed Inflation Measure Exceeded Fed Target in September
Michael S. Derby, The Wall Street Journal

Underlying inflation pressures are starting to heat up. The Dallas Fed said Thursday a tool that it uses to measure inflation ticked higher in September, and was revised up in August too. 

Fed Adds $72.53 Billion to Markets
Michael S. Derby, The Wall Street Journal

The New York Fed added $72.53 billion to financial markets Thursday. The addition of liquidity came via overnight repurchase agreements. Eligible banks submitted $55.28 billion in Treasurys and $17.25 billion in mortgage-backed bonds, and the Fed took all that was offered.

S&P Futures Gain; Treasuries Drift Before Payrolls: Markets Wrap
Constantine Courcoulas, Bloomberg

U.S. index futures climbed with European stocks on Friday as investors weighed better-than-expected Chinese manufacturing data against uncertainty over an interim trade deal. Treasuries were steady ahead of American jobs numbers.

Banking

New Wells Fargo CEO says he wants to fix problems, isn’t a ‘wallflower’
Imani Moise, Reuters

Wells Fargo & Co’s (WFC.N) new chief executive, Charlie Scharf, told employees this week he is more hands-on in his early days than at his previous CEO roles in order to tackle the bank’s regulatory and operational problems as staff grilled him about everything from growth targets to his family dog. When he started as CEO jobs in that past, Scharf focused on learning about the companies but at Wells Fargo, the need to develop controls has brought a sense of urgency, he told employees on Tuesday at Wells Fargo’s campus in Charlotte, North Carolina.

Dimon Scores Win Over ‘Lazy’ Investors on Corporate Voting Rules
Benjamin Bain, Bloomberg

Wall Street’s main regulator is pursuing a crackdown on shareholder campaigns that corporate chieftains say are a nuisance. Few top executives would cheer the move louder than Jamie Dimon.

JPMorgan Tests Its Amazon-Berkshire Health Venture on Bank Employees
Michelle Davis and Cynthia Koons, Bloomberg

JPMorgan Chase & Co. will pilot a new health-care plan for some non-New York employees as part of its mysterious venture with Amazon.com Inc. and Warren Buffett’s Berkshire Hathaway Inc., according to people familiar with the matter. Under the new program, called Haven Healthcare, the bank’s workers in Ohio and Arizona are being offered two plans for 2020 run by Cigna Corp. and Aetna Inc., according to the people, who spoke on condition of anonymity. The bank employs about 30,000 people in the two states.

Financial Products and Investments

Grassley to take back Judiciary gavel if GOP keeps Senate in 2020
Jordain Carney, The Hill

Sen. Chuck Grassley (R-Iowa) is planning to take back the gavel of the influential Judiciary Committee if Republicans keep control of the Senate in the 2020 elections. Grassley chaired the Judiciary Committee from 2015 to 2019 but handed over the top spot to Sen. Lindsey Graham (R-S.C.) in January so that he could take over the Senate Finance Committee.

Capital One subpoenaed by N.Y., feds over taxi loans
Kevin Wack, American Banker

Capital One Financial has received subpoenas from federal and state prosecutors who are scrutinizing loans to taxi drivers, the company disclosed Thursday. The McLean, Va.-based firm said that it received a subpoena from the New York Attorney General’s office in August. In October, Capital One got a second subpoena from the civil division of the U.S. Attorney’s Office in Manhattan.

Credit Cards Betray Signs of Consumer Fatigue
Telis Demos, The Wall Street Journal

Banking’s great plastic wall is holding strong against the tide of falling rates. But there is a hairline fracture appearing in the barricade. Consumer banking was at the center of banks’ solid results in the third quarter, powered by credit cards. 

Housing and GSEs

GSEs need to shape up if they want to leave conservatorship: Calabria
Hannah Lang, American Banker

With the Federal Housing Finance Agency intensely focused on setting Fannie Mae and Freddie Mac on a path out of conservatorship, it is sometimes easy to forget that the agency still supervises the mortgage giants on a daily basis. And Mark Calabria, the agency’s director, is not giving them an easy pass. Calabria made that clear Thursday as he described certain practices at the government-sponsored enterprises that he stopped after joining the agency in April, noting that they were not in line with his expectations.

Taxes

GOP tax writer expects Trump to roll out tax plan next year
Aaron Lorenzo, Politico  

House Ways and Means ranking member Kevin Brady said Thursday that he doesn’t expect any new tax cut proposals from White House officials this year, though one is likely to come as the 2020 election season heats up. “I haven’t talked to them about any proposals this year but there will be a pro-growth agenda for the 2020 election that will include continued tax cuts,” the Texas Republican told reporters.

Treasury, IRS propose form to collect data about investments in opportunity zones
Naomi Jagoda, The Hill

The Treasury Department and IRS on Thursday released a draft form that is designed to collect information about investments made under the “opportunity zone” provision in President Trump’s tax-cut law. The release of the form comes amid concerns from lawmakers that the opportunity-zone program doesn’t have enough guardrails to ensure that it is actually meeting its intended goal of revitalizing economically distressed areas.

Financial Technology

China’s proposed digital currency more about policing than progress
Brenda Goh and Samuel Shen, Reuters

As China prepares to become the first country to launch a digitized domestic currency, market participants and experts say it is a testament to both financial innovation and Beijing’s desire to have fail-safe control over its cash economy. China’s central bank has revealed few specifics of its Digital Currency Electronic Payment (DCEP) project, one that’s been five years in the making, though more details have trickled out over the past few weeks in the bank’s presentations on the subject.

Opinions, Editorials and Perspectives

How central banks can tackle climate change
The Editorial Board, Financial Times

Policymakers must address the financial risks stemming from a warmer planet. 

Research Reports

City Dynamics When the Rich Get Richer
Victor Couture et al., The National Bureau of Economic Research

We explore the impact of rising incomes at the top of the distribution on spatial sorting patterns within large U.S. cities. We develop and quantify a spatial model of a city with heterogeneous agents and nonhomothetic preferences for locations with different amenities of endogenous quality.

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