Biden transition

• President-elect Joe Biden revealed his $1.9 trillion emergency relief plan, including $400 billion for measures such as additional vaccines and testing; more than $1 trillion in economic relief via stimulus payments, enhanced unemployment insurance and other related benefits; and $440 billion in aid for communities and businesses. Sen. Chuck Schumer (D-N.Y.), incoming Senate Majority Leader, convinced Biden to consider a higher price tag on the package than he was originally thinking, a person familiar with the conversation said.

• Biden will name Gary Gensler as head of the Securities and Exchange Commission, according to two sources familiar with the matter, signaling tighter oversight of Wall Street in the new administration. Gensler previously served as chair of the Commodity Futures Trading Commission under President Barack Obama’s administration, imposing new swaps trading rules mandated by Congress in the aftermath of the 2008 financial crisis during his time with the agency, and more recently he has led Biden’s transition planning for financial policy. 

Banks

• On his last day as acting comptroller of the currency, Brian Brooks and the OCC finalized the “fair access” rule that has drawn the ire of banking and consumer groups alike, but it’s not likely to survive the Biden administration, according to industry watchers and experts. The fair access rule, effective April 1 and finalized just 10 days after the comment period closed, would prohibit banks from refusing to lend to entire categories of controversial businesses, including oil drillers, private prisons and firearms manufacturers. 

• Deutsche Bank AG, a longtime favored lender for President Donald Trump that holds $300 million in debt for the president, has decided to not conduct any further business with him and his company, according to two people with knowledge of the matter, following the deadly riot at the U.S. Capitol earlier this month. Signature Bank, which has also done business with the Trump family, is closing two personal Trump accounts that held about $5.3 million, according to a spokesperson for the firm, and called for the president’s resignation in a separate statement. 

Housing

• The Treasury Department announced changes to Fannie Mae and Freddie Mac that will allow the mortgage giants to retain more of their earnings, while effectively ending the Trump administration’s bid to end government conservatorship of Fannie and Freddie, leaving their fate up to the Biden administration. Advisers close to Biden said he wouldn’t be eager to privatize the mortgage giants, and would instead focus on using Fannie and Freddie to promote housing affordability and homeownership.  

• Biden’s team has held preliminary discussions on how to remove libertarian economist Mark Calabria from the helm of the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, according to people familiar with the matter, a move that would allow Biden to appoint his own overseer for the mortgage giants, although it’s unclear if the incoming president has that authority. To succeed Calabria, whose term runs into 2024, the Biden team is considering Susan Wachter, a professor at the University of Pennsylvania’s Wharton School of Business, according to the people familiar with the matter, and Mark Zandi, chief economist at Moody’s Analytics, according to a different person familiar with the matter.

Financial regulation

• Sen. Sherrod Brown (D-Ohio) said that as chairman of the Senate Banking Committee, he anticipates calling in top Wall Street chiefs for public hearings and will take a tougher tone toward the banking industry. Brown also said he would ramp up oversight of the private equity industry, and that legislation geared toward the industry is a possibility. 

• Barbara Novick, a BlackRock Inc. co-founder who built the firm’s lobbying operations that successfully helped the world’s largest asset manager avoid the same kind of regulations as banks, will retire, transitioning from her role as vice chairman to senior adviser on Feb. 1. About a year ago, Novick said she would leave the company by the summer, but delayed her departure after Chief Executive Larry Fink asked her to stay a few months longer following the pandemic-induced roiling of markets and BlackRock’s key role in the Federal Reserve’s response.

• The House and the Senate are in session.

• The Senate Finance Committee will hold a confirmation hearing for Janet Yellen for Treasury Secretary on Tuesday at 10 a.m.

• The Federal Reserve is in a quiet period leading up to its two-day policy-setting committee meeting on Jan. 26-27.

1) Biden’s Team Explores Ways to Oust Fannie-Freddie Regulator
Saleha Mohsin and Joe Light, Bloomberg

2) Wall Street CEOs Will Get Call to Face Senate Banking’s New Boss
Jesse Hamilton and Robert Schmidt, Bloomberg

3) Wall Street Visionaries Provide Chilling Views on Next Big Risk
Sonali Basak, Bloomberg

4) What’s behind the recent surge in the M1 money supply?
The FRED Blog

5) Biden Outlines $1.9 Trillion Spending Package to Combat Virus and Downturn
Jim Tankersley and Michael Crowley, The New York Times

6) Wall Street Fumes at 11th-Hour Rule From Trump Bank Watchdog
Robert Schmidt and Jesse Hamilton, Bloomberg

7) Biden team briefs Congress on emerging stimulus plan, aims for bipartisan deal
Erica Werner and Jeff Stein, The Washington Post

8) Capitol Riot Prompts Some Big Banks and Companies to Pause Political Funding
Emily Glazer et al., The Wall Street Journal

9) Small-Business Loan Program Will Restart Monday, but Not for All
Stacy Cowley, The New York Times

10) Walmart to create fintech start-up with investment firm behind Robinhood
Melissa Repko, CNBC