Rewrite of Bank Rules Advances Slowly, Frustrating Republicans

Many efforts to retool postcrisis financial rules remain unfinished; Republicans want faster action

.. Daniel Tarullo, the Fed’s regulatory point-person during the Obama administration, in May said postcrisis rules “could be endangered by a kind of low-intensity deregulation consisting of an accumulation of non-headline-grabbing changes and an opaque relaxation of supervisory rigor.”Under the law passed a year ago, regulators face a fall deadline to simplify rules for midsize and small banks. They also want to make progress by year’s end to retool rules that limit speculative trading by large firms and test the ability of firms such as J.P. Morgan Chase & Co. or Goldman Sachs Group Inc. to continue lending during a severe recession.

Overall, regulators say they are moving as fast as they can on more than 30 changes affecting the financial sector. The proposed changes, they say, would better calibrate postcrisis rules under the 2010 Dodd-Frank financial law without undermining the financial system.

“We’ve been working on a regulatory restructuring that is aggressive in its scope but responsible in its substance,” Federal Reserve Vice Chairman Randal Quarles said.

The pending changes include simplifying annual stress tests and eliminating a system of giving pass-or-fail grades to the big banks that take them, both industry victories. Another change would ease a rule that requires big banks to plan annually for their own demise, allowing the largest U.S. firms to produce full so-called living-will plans every four years rather than annually. Regulators also are changing a rule adopted to curb excessive borrowing at eight of the largest U.S. banks.

..  In some cases, regulators’ attempts at changing rules have been derailed by lukewarm support from Wall Street. The effort by Commodity Futures Trading Commission to overhaul postcrisis derivatives rules has stalled largely because major banks and trading firms have become accustomed to current rules and aren’t eager to change their business models.

Similarly, banks objected to a plank in the rewrite to the Volcker rule, the prohibition on lenders making risky “proprietary” bets. The pushback has led regulators to consider proposing a revised version, according to people familiar with the process.

Trump-appointed officials are also spending some of their time finishing rules mandated by the Dodd-Frank law that weren’t completed during the Obama administration. That means advancing restrictions in a more industry-friendly way than if Democratic appointees still held the rule-writing pen.

The Securities and Exchange Commission last week finished work on a rule raising standards for investment advice by stockbrokers. A federal court had voided a tougher version by the Obama administration that applied to retirement-savings advice. Trump appointees at the Consumer Financial Protection Bureau also rewrote an Obama-era rule for payday loans, removing a requirement that would have made it difficult for companies to offer high-cost consumer loans.

Mitch McConnell is winning the long game

McConnell says:

The largest tax reduction in 31 years has contributed to the best economy in 18 years. Defense spending is up, many Dodd-Frank banking rules and the Obamacare individual mandate have been repealed. Drilling in the Arctic National Wildlife Refuge, blocked for 38 years, has been approved, as has a reconfigured National Labor Relations Board, a source of much Obama administration mischief. The Congressional Review Act, under which Congress can disapprove many regulations issued by federal agencies, has been used 19 times since it was enacted in 1996 — 18 of them during this Congress.

.. This, says McConnell, constitutes the best 18 months of center-right governance in his Senate career, which began when Ronald Reagan’s second term did. There also are the judges.

.. By preventing a vote on President Barack Obama’s nomination of Merrick Garland

.. McConnell ended the requirement of a supermajority to stop filibusters of Supreme Court nominees

.. To prevent Republicans from reciprocating with filibusters against Obama’s packing-by-enlargement of the nation’s second-most-important court, the U.S. Court of Appeals for the District of Columbia Circuit, Democrats changed Senate rules to bar filibusters of judicial nominees other than those for the Supreme Court. McConnell removed that pointless exemption to make possible the confirmation of Neil M. Gorsuch.

.. But without filibusters of legislation, he says, the nation might have socialized medicine, guaranteed government jobs, card-check workplace unionization, a ban on right-to-work laws, and other afflictions.

.. since popular election of senators began in 1914, Republicans have never had more than 60 senators.

.. Almost 30 years after the end of his presidency, Reagan still shapes events because of his nomination of Justice Anthony M. Kennedy, who often has been 20 percent of a court majority. Three decades from now, McConnell will be shaping the nation through judges who today are in their 40s, some of whom might be destined to be Gorsuch’s colleagues. This is the long game.

Elizabeth Warren’s Sad Sick Joke

It was no wonder the public tuned out the CFPB narrative that Democrats have repeated since they controlled Congress and the White House and passed the 2010 Dodd-Frank Act, which created the bureau. The plot never changes — before Cordray’s resignation, Republicans opposed the bureau because it kept the financial industry honest; now they restrain the CFPB so businesses can cheat consumers.

.. The Dodd-Frank Act forbids the Federal Trade Commission and the CFPB from conducting independent inquiries into the same matter. Cordray may have authorized an investigation of the Equifax data breach, but the FTC ended up conducting the full-scale probe.

.. Cordray and Warren, who helped draft the law, surely recognized Rucker’s sleight-of-hand. Nevertheless, the senator tweeted, “Another middle finger from @MickMulvaneyOMB to consumers: he’s killed the @CFPB’s probe into the #EquifaxBreach.”

.. Since 2010, Republicans have objected to the lack of legislative and executive checks on a regulator with so much impact on the economy.

.. Democrats, confident there would never be a Republican director, characterized the near-absolute power as independence from political influence.

.. Ironically, the once-secretive CFPB has been more transparent since Mulvaney throttled its External Affairs Division, the propaganda machine Warren created in 2010 while leading the agency’s yearlong start-up process as a presidential adviser.

.. The division’s copious press releases have been replaced by more-informative leaks from the bureau’s overwhelmingly Democratic employees. Contrary to the stale narrative that liberals craft from the leaks, the acting director does not hate consumer protection; he just hates the CFPB’s structure, which he once described as “a joke . . . in a sad, sick way.” Warren’s obstinacy has only allowed him to validate the now-famous comment and delight in the bully’s comeuppance.

.. Mulvaney invited a Daily Caller reporter to the CFPB headquarters Warren had procured in 2011. Cordray’s $124 million renovation of the Brutalist eyesore came to symbolize the bureau’s elitist liberal entitlement. The reporter was escorted through a 2,660-square-foot athletic facility with two huge locker rooms, offices with electric height-adjustable workstations, a library with a sofa and lounge chairs but few books, a roof deck with spectacular views and motorized cantilevered umbrellas, and a courtyard with lavish fountains. The images recalled the familiar spectacle of triumphant soldiers touring a deposed dictator’s opulent palace.

.. But exposing his predecessor’s sins is only Mulvaney’s jab. His knockout punch is demonstrating that the CFPB’s structure allows its director to behave like the Republican stereotype.

.. Unlike other Trump nominees who renounced previous calls to eliminate the agencies they were tapped to lead, Mulvaney told reporters he was not shutting the CFPB down because the law did not permit him to do so. In his introduction to the agency’s five-year strategic plan he declared that “we have committed to fulfill the Bureau’s statutory responsibilities, but go no further.”

.. He requested no funding from the Fed for the first three months of 2018 and instead financed the CFPB’s operations by draining its stockpiled reserves, a likely prelude to agency layoffs.

.. Rather than defend his policies, Mulvaney reminded his critics: “I am the judge, I am the jury, and I am the executioner in some of these investigations, and that is completely wrong. . . . If you don’t like it, talk to the person who wrote the statute.”

.. Her attempt to shame Republicans is laughable — Democrats remained silent for five years while Cordray proved that Congress is powerless to rein in the director.
.. Mulvaney is not, as Warren writes, “turning the CFPB into a politicized rogue agency.” He is showing Democrats that it will continue to be one unless they help restructure it.

Trump Couple, Now White House Employees, Can’t Escape Conflict Laws

Donald Trump can evade legal responsibility even if the conflicts of interest remain,” said Noah Bookbinder, executive director of Citizens for Responsibility and Ethics in Washington, a liberal nonprofit group. “His daughter and son-in-law don’t have that escape hatch.”

Mr. Kushner did resign from more than 200 positions in the partnerships and limited liability companies that make up the family-run multibillion-dollar real estate business. But the financial disclosure report shows that Mr. Kushner will remain a beneficiary of most of those same entities.

.. the Kushner Companies’ deals have become a magnet for opaque foreign money — often from parts of the world that present thorny policy questions, such as China, where Mr. Kushner’s company has actively sought investors, as well as the Middle East and Russia.

.. Mr. Kushner, by contrast, continues to hold multimillion-dollar lines of credit from institutions such as Citigroup and Deutsche Bank, while companies he is still a beneficiary of have billions of dollars in additional loans from heavily regulated institutions.

.. “The one thing Jared really ought to stay completely away from is anything having to do with Dodd-Frank,”

.. Even Mr. Bannon’s aide Julia Hahn, who is 25, reported investments worth between $1 million and $2.1 million

.. Kellyanne Conway, counselor to the president, had assets worth between $11 million and $44 million.