• The Trump administration is becoming more cautious about moving forward on its plans to free Fannie Mae and Freddie Mac from government control before the 2020 election, amid fears that moves to that end could make it more difficult for borrowers to get loans and impact the economy, according to people familiar with the matter. Among other obstacles, Craig Phillips, formerly the Treasury Department’s lead on Fannie and Freddie, left last month, and Treasury Secretary Steven Mnuchin has needed to prioritize trade issues over housing finance reform. (Bloomberg) 

• Trump criticized Facebook Inc.’s plan to create Libra, a digital currency, which would have “little standing or dependability,” while also weighing in on cryptocurrencies, saying they are “not money” and that their value is based on “thin air.”  Trump also said Facebook should seek a banking charter. (Politico) 

• House Republicans opposed legislation that would require the Securities and Exchange Commission to write rules that would make companies include more environmental, social and governance information in financial statements. The United Kingdom, following other European countries, has said it will explore a mandate to require disclosure of ESG risks. (Financial Times)

Financial Watchdog Shifts From Enforcer to Educator
Yuka Hayashi, The Wall Street Journal

A federal regulator set up after the financial crisis to be a watchdog over the financial industry is shifting its mission from enforcement to consumer education. Under the leadership of Kathy Kraninger, a Trump appointee who took over the agency seven months ago, the Consumer Financial Protection Bureau has increased its focus on financial literacy. 

Volcker Rule Revamp Coming by Fourth Quarter, Quarles Says
Jesse Hamilton, Bloomberg

The Federal Reserve plans to release a fresh revamp of the Volcker Rule by this year’s fourth quarter after Wall Street assailed an earlier proposal as not going far enough to ease burdens on banks and simplify the post-crisis trading limits. “I expect early in the fall we will have a proposal out that responds to a lot of the comments we’ve received,” Fed Vice Chairman for Supervision Randal Quarles said during a Thursday panel discussion at the Bipartisan Policy Center in Washington.

Jerome Powell Is Becoming Central Banker to the World
Rich Miller, Bloomberg

Federal Reserve Chairman Jerome Powell is starting to sound a bit like he’s the world’s central banker. In Congressional testimony this week, he repeatedly cited a slower global economic expansion in laying out the case for easier U.S. monetary policy.

President Trump’s Criticism of the Fed Hasn’t Shifted Perception of Its Independence, Economists Say
David Harrison, The Wall Street Journal

President Trump’s repeated attacks on the Federal Reserve haven’t significantly damaged perceptions of  the central bank’s independence, according to economists surveyed by The Wall Street Journal.

Takeaways From Fed Chief’s Two Days on Capitol Hill
Nick Timiraos, The Wall Street Journal

Federal Reserve Chairman Jerome Powell completed two days of testimony on Capitol Hill this week. Here are five things learned from his exchanges with lawmakers.

Fed’s Brainard Sees Case for Easing Monetary Policy
David Harrison, The Wall Street Journal

Federal Reserve governor Lael Brainard said Thursday that easier monetary policy was justified in light of growing risks to the economic outlook and weak inflation. She also said high levels of risky corporate debt should prompt the Fed to take more action to regulate financial institutions.

A Koch Executive’s Harassment in China Adds to Fears Among Visitors
Paul Mozur et al., The New York Times

A Koch Industries executive was told he could not leave China. An ex-diplomat who helped organize a technology forum in Beijing was hassled by authorities who wanted to question him.

Fed chairman warns of ‘unthinkable’ harm if debt ceiling isn’t raised
Sylvan Lane, The Hill

Federal Reserve Chairman Jerome Powell said Thursday that the global economy could suffer “unthinkable” damage if the White House and Congress fail to raise the federal debt limit. Testifying before the Senate Banking Committee, the Fed chairman said it was “essential” for Congress to raise the legal limit on the federal debt before the U.S. government defaults on its loans.

Pelosi says she is seeking to finalize deal to raise debt ceiling and resolve budget impasse before August recess
Erica Werner and Damian Paletta, The Washington Post

House Speaker Nancy Pelosi said Thursday she will attempt to finalize a deal that would raise the debt ceiling in the next few weeks instead of delaying until fall, heeding dire warnings from Treasury Secretary Steven Mnuchin that the government could fall behind on its bills by early September. Pelosi (D-Calif.) told reporters she wants to raise the debt ceiling as part of a deal that would set spending levels for the next two years. 

Trump economic adviser praises Ocasio-Cortez for exchange with Fed chairman
Brett Samuels, The Hill

President Trump’s top economic adviser on Thursday gave Rep. Alexandria Ocasio-Cortez (D-N.Y.) “high marks” for her line of questioning during a hearing a day earlier with Federal Reserve Chairman Jerome Powell. Larry Kudlow, director of the National Economic Council, praised the first-term congresswoman for pressing Powell on the relevance of the Phillips curve. 

U.S. Stock Futures Advance; Bonds Drop in Europe: Markets Wrap
Laura Curtis, Bloomberg

U.S. equity futures climbed alongside stocks in Europe as investors clung to their cautious optimism on prospects for easier monetary policy. Bonds fell across the euro zone.

For Big Banks, Lower Rates Could Mean the End of Profit Blowouts
Hannah Levitt and Elizabeth Rembert, Bloomberg

Will the pain from lower interest rates match all the angst about bank earnings? Investors will find out next week, when the biggest U.S. banks report second-quarter results. 

Deutsche Bank’s Unloved Assets to Cast Long Shadow in Overhaul
Nicholas Comfort, Bloomberg

A key pillar of Christian Sewing’s sweeping overhaul of Deutsche Bank AG is a plan to sell or wind down billions of euros in low-profit assets to help pay for the 7.4 billion-euro ($8.3 billion) revamp. While some of that will be offloaded quickly — via a special wind-down unit — and may fetch a decent price, other holdings will remain with the bank for years, tying up capital that could be spent on the restructuring.

Laid-Off Expat Bankers Struggle to Find Jobs in Hong Kong
Manuel Baigorri et al., Bloomberg

For years, Hong Kong was a hotspot with plum jobs for overseas bankers as global firms hired aggressively. But many recently laid-off bankers in the city are finding that cost-cutting and a demand for Mandarin speakers have diminished the opportunities for expats in Asia’s financial hub.

Fed official hints at changes to large-bank capital buffer
Hannah Lang, American Banker

The Federal Reserve Board’s top regulatory official on Thursday suggested the central bank is is reviewing the framework behind the countercyclical capital buffer. The Fed can use the buffer, often referred to as the CCyB, to require banks with more than $250 billion in assets or $10 billion in nonbank liabilities to hold additional capital while economic conditions are robust to offset potential losses from elevated risk.

Pot banking hearing is on Crapo’s radar
Neil Haggerty, American Banker

Senate Banking Committee Chairman Mike Crapo said he is open to holding a hearing soon on cannabis banking legislation, as industry advocates continue to view the Senate as a hurdle to allowing banks to serve pot businesses. “I am looking into that,” the Idaho Republican told American Banker. “Nothing is set, but I think it should be relatively soon.”

CFTC agrees to rein in rules for overseas clearing houses
Phillip Stafford and Joe Rennison, Financial Times

The main US derivatives markets regulator has agreed to rein in its rules for regulating overseas clearing houses, in a move Washington hopes will ease a stand-off with counterparts in Europe. A proposal was passed unanimously at a meeting of the Commodity Futures Trading Commission in Washington late on Thursday.

Bond Returns Have Been Spectacular. Don’t Count on a Sequel.
Carla Fried, The New York Times

Bond interest rates were supposed to rise in 2019. They have dropped instead, showing how dangerous it can be to make investing decisions based on assumptions about the direction of interest rates.

Japan’s Post Office Is an Unlikely Global Bond Powerhouse
Chris Anstey, Bloomberg Businessweek

The long era of superlow interest rates has reshaped the financial world in some surprising ways. For example, who comes to mind when you think of major players in the global fixed-income market? 

Fannie Mae, Freddie Mac are building non-LIBOR adjustable-rate mortgages
Kathleen Howley, HousingWire

Seven years after traders were caught boasting in emails and instant messages about cracking open bottles of champagne to celebrate their ability to manipulate the London Interbank Offer Rate, or LIBOR, a committee created by the Federal Reserve issued a report with the framework for issuing new adjustable-rate mortgages based on a U.S. index. While it was previously known that the Alternative Reference Rates Committee was focusing on a new index based on the Fed’s Secured Overnight Financing Rate, known as SOFR, Thursday’s report discusses how it could be used for home loans.

5 Lessons from Cities On Affordable Housing
Bill Duryea, Politico 

In America’s fast-growing cities, the need for new housing isn’t keeping up with the demand. A handful of cities have found some new policy ideas to address a problem that doesn’t have a silver-bullet solution. 

As Nations Look to Tax Tech Firms, U.S. Scrambles to Broker a Deal
Jim Tankersley and Alan Rappeport, The New York Times

For most of the 21st century, wealthy nations have engaged in a race to the bottom on corporate taxes, cutting rates in an effort to poach business activity across borders. Very quickly, that script has flipped.

22 States Considered Eliminating the ‘Tampon Tax’ This Year. Here’s What Happened.
Karen Zraick, The New York Times

Why are tampons taxed when Viagra isn’t? That’s the question at the heart of the push to repeal the so-called tampon tax, a catchy phrase that refers to state sales taxes applied to menstrual products, including pads and cups.

Democrats press IRS on guidance reducing donor disclosure requirements
Naomi Jagoda, The Hill

Sens. Bob Casey Jr. (D-Pa.) and Ron Wyden (D-Ore.) are pressing the IRS about guidance it issued last year that reduces donor-disclosure requirements for certain tax-exempt groups, expressing concerns that the guidelines could hinder criminal investigations. “Revoking the disclosure requirement to the IRS could make it much more difficult for authorities to discover fraudulent activity and track such activity across entities,” the senators wrote in a letter Thursday to IRS Commissioner Charles Rettig.

Fed’s Powell Says Facebook’s Libra Raises ‘Serious Concerns’
Paul Kiernan, The Wall Street Journal

Federal Reserve Chairman Jerome Powell and legislators in both parties expressed broad concern about Facebook Inc. ’s plan to create a cryptocurrency-based payment network, underscoring the intense legislative and regulatory scrutiny the project could face. Mr. Powell, speaking to the Senate Banking Committee on Thursday, expressed doubt about the feasibility of launching the digital coin, dubbed Libra, on the timeline Facebook has targeted.

Bitcoin slides after Fed chair says Facebook’s cryptocurrency raises ‘serious concerns’
Hamza Shaban, The Washington Post

The price of bitcoin fell by more than 10 percent after the chair of the Federal Reserve told Congress that Facebook’s planned cryptocurrency raises “many serious concerns.” Bitcoin, the world’s top cryptocurrency by market capitalization, sank following Chair Jerome H. Powell’s remarks, but the digital currency has surged this year, in part because of Facebook’s announcement of its own proposed virtual currency, Libra. 

The Fed Could Use a Golden Rule
James Grant, The Wall Street Journal

Though money can’t talk, people can’t stop talking about it. With the nomination of Judy Shelton to the Federal Reserve Board, the discussion has tilted to gold.

International Coordination of Economic Policies in the Global Financial Crisis: Successes, Failures, and Consequences
Edwin M. Truman, Peterson Institute for International Economics 

This paper evaluates international efforts to diagnose the global financial crisis and decide on appropriate responses, the treatments that were agreed and adopted, and the successes and failures as the crisis unfolded. International coordination of economic policies eventually contributed importantly to containing the crisis, but the authorities failed to agree on a diagnosis and the consequent need for joint action until the case was obvious.