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


Week in Review

Federal Reserve

  • The Federal Reserve cut the target for the federal funds rate to a range between 1.5 and 1.75 percent and suggested a higher bar for future rate moves. The Fed will now “continue to monitor the implications of incoming information for the economic outlook as it assesses the appropriate path” instead of promising to “act as appropriate” to maintain growth, according to a statement from officials.
  • President Donald Trump claimed that the Federal Reserve represents a larger threat to the economy than China because U.S. interest rates are higher than those of other countries. Trump tweeted that “people are VERY disappointed” in the central bank and its chairman, Jerome Powell.
  • Anne Pramaggiore, the chairwoman of the board of directors for the Chicago Fed, has resigned, following her abrupt retirement from her job as the chief executive of the utilities unit of Exelon Corp. Pramaggiore left Exelon shortly after the nuclear plant operator said it received a second grand-jury subpoena investigating lobbying activities in Illinois.

Taxes

  • The Internal Revenue Service withheld more than 100 pages of emails between agency officials and industry representatives in response to a Freedom of Information Act request filed as part of news coverage of a little-used IRS free tax filing program and Intuit Inc.’s TurboTax. The emails reportedly show how the IRS extended the program and incorporated the reforms that the tax prep industry requested with no pushback.
  • 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 Trump administration and congressional Republicans have begun discussing a new tax cut package with urging from 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. 

SEC

  • 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. 
  • A 2010 post-financial crisis plan from the SEC to encourage rating agencies to publish unsolicited ratings yielded little evidence of any such ratings being published, according to the ratings firms, a trade association, the SEC and a committee of board investors advising the agency. Rating agencies were given access to deal data to publish unsolicited ratings in an effort to ease the conflict of interest that made rating agencies “essential cogs in the wheel of financial destruction,” where the firms are paid by the entities whose bonds they rate. 
  • The SEC is investigating a unit of American International Group Inc.’s dealings with retirement plan participants at school districts and universities, people briefed on the matter said. The investigation focuses on whether compensation incentives for Valic, a unit of AIG, reward selling higher-cost products, and if the unit properly discloses the payments its sales reps receive on some product sales.

Trade

  • In private conversations, Chinese officials have warned they won’t compromise on some key issues affecting U.S.-China trade relations, and they are concerned with Trump’s impulsiveness, fearing that he won’t stick to any deal signed in the next few weeks, according to people familiar with the matter. 

Banks

  • Wells Fargo & Co. laid off more than 200 bankers in its U.S. lending divisions in recent months, according to sources familiar with the matter. The cuts impacted the team that provides loans to farmers and the bank’s energy lending group, traditionally strong areas for Wells Fargo.
  • Deutsche Bank AG executives decided to ignore internal objections in the United States over the sale of a $72 million office complex in California to a company that has ties to the son of a former top Kremlin official, according to three people briefed on the matter. Deutsche Bank recently contacted U.S. regulators and ones abroad to explain the transaction, the people said.

What’s Ahead

  • The House is in recess this week. The Senate is in session.
  • Georgetown is hosting its 2019 Financial Markets Quality Conference on Tuesday. 

Events Calendar (All Times Local)

11/05/2019
Georgetown Center for Financial Markets & Policy Conference
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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