Morning Consult Finance: Week in Review & What’s Ahead


Week in Review

Libra

  • Visa Inc., Mastercard Inc. and others that originally signed on to the initial plans for Facebook Inc.’s Libra payments network are now rethinking their involvement after the tech giant has received pushback from U.S. and European regulators, said people familiar with the matter.
  • PayPal Holdings Inc. is nearly ready to quit Facebook Inc.’s cryptocurrency project, according to three people familiar with the situation. All 28 backers of Libra were meant to meet in Washington, though the meeting ended up including all members except PayPal, according to one attendee.

Trade

  • The Trump administration plans to impose tariffs on $7.5 billion in goods from the European Union beginning Oct. 18, including a 10 percent levy on aircraft from France, Germany, Spain and the United Kingdom and 25 percent duties on single-malt Irish and Scotch whiskies. The Office of the U.S. Trade Representative released the list of planned targeted products after the Trump administration notched a victory at the World Trade Organization, which ruled in favor of the administration’s ability to impose the tariffs.
  • The Trump administration said the White House isn’t considering blocking Chinese companies from listing shares on U.S. stock exchanges “at this time,” after reports that Larry Kudlow, President Donald Trump’s top economic adviser, was leading discussions inside the White House over a potential “financial decoupling” of the U.S. and Chinese economies. The statement from the Treasury Department didn’t address other reported potential actions, such as limiting investments in Chinese markets by U.S. government pension funds for capping the value of Chinese companies included in U.S.-managed stock indexes.
  • The U.S. manufacturing index fell to 47.8 in September from 49.1 in August, the worst reading in more than a decade as the industry continues its contraction and companies point to Trump’s escalating trade war with China. Trump on Twitter blamed the Federal Reserve, which recently lowered interest rates for the first time in more than a decade in part to try and offset some of the impact from Trump’s trade war, for the weakness in the manufacturing sector.

Housing

  • Fannie Mae, Freddie Mac and the Federal Housing Administration guarantee 33 percent more debt than before the housing crisis and more than any other point in U.S. history, according to company and government data. The increase, which also includes a lot of risky mortgages, comes after officials in the Trump and Obama administrations bowed to pressure from the lending industry, consumer groups and political appointees who paved the way for companies to issue loans to borrowers who might not be able to repay, according to interviews with 24 senior administration officials, former regulators, bankers and analysts.
  • Treasury Secretary Steven Mnuchin announced that the Trump administration has decided to allow Fannie Mae to keep $25 billion in capital and Freddie Mac to keep $20 billion, as the administration moves toward privatizing the mortgage lenders. The housing giants are currently allowed to keep $3 billion each.

IRS

  • An Internal Revenue Service ­official filed a whistleblower complaint in which he said he was told that at least one Treasury Department political appointee tried to illegally interfere with the audit of the tax returns of Trump or Vice President Mike Pence, according to multiple people familiar with the document. The whistleblower, who confirmed in an interview that he is a career IRS official, said he filed the complaint on July 29, and people briefed on the filing confirmed for the first time that the complaint was tied to allegations of auditing interference by at least one Treasury official.

What’s Ahead

  • The House and Senate are not in session this week.
  • Trade talks will begin in Washington between the United States and China after China’s National Day holiday, which ends Monday.
  • The Federal Reserve said it has set a vote for Thursday on a proposal that would ease liquidity and capital regulations for large U.S. banks that could lower regulatory costs for regional lenders with less than $700 billion in assets. The Fed also said it would move forward with plans to require the largest U.S. banks to provide so-called living will plans every four years rather than the current annual requirement.

Events Calendar (All Times Local)

10/07/2019
Brookings event: “Student loans: A look at the evidence” 10:00 am
CSIS event titled “More than a Wallet: The Role of the Private Sector in Development” 10:00 am
10/08/2019
PIIE event: “Global Economic Prospects: Fall 2019” 12:15 pm
10/09/2019
SEC’s National Veteran Small Business Coalition monthly meeting 7:15 pm
View full calendar

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