Moving Markets: A Washington Update - CFA Institute Calendar... · Heidi Heitkamp (D-ND) ... Tampa...

Moving Markets: A Washington UpdateCFA Society of Nebraska

September 27, 2017

2squirepattonboggs.com

Overview

Federal Policies and Markets Where are the Votes? The Trump Effect A Resurgent Congress Personnel is Policy Debt and Taxes America First: NAFTA and DACA A Grab Bag: Other Pending Policy Issues


Federal Policies and Markets

A View from the C-Suite: “Regulatory risk is my greatest risk.”

Federal Policies and Markets–Some Examples: Housing

• FHA, VA, Rural Housing, Fannie Mae, Freddie Mac, mortgage interest deduction

Health care• Medicare, Medicaid, Obamacare

Banking• FDIC, Fed, OCC, CFPB


Where are the Votes: The U.S. House of Representatives

• 240 Republicans (31 in House Freedom Caucus)• 194 Democrats• 1 vacancy• Bills need at least 218 votes to pass (22 vote margin for Republicans)


Where are the Votes: The U.S. Senate

• 52 Republicans• 46 Democrats• 2 Independents (Caucus with Democrats)• No Filibuster-Proof Majority


Where are the Votes: Congressional Leadership

Speaker of the House: Paul Ryan (R-WI)

Minority Leader: Nancy Pelosi (D-CA)

Majority Leader:Kevin McCarthy (R-CA)

Minority Whip:Steny Hoyer (D-MD)

Leadership Senate

Leadership House


Where are the Votes: Committee Leadership

Senate Finance Committee

Senate Banking Committee

House Ways and Means Committee

Housing Financial Services Committee

Chairman:Orrin Hatch (R-UT)

Ranking Member:Ron Wyden (D-OR)

Chairman:Mike Crapo (R-ID)

Ranking Member:Sherrod Brown (D-OH)

Chairman:Kevin Brady (R-TX)

Ranking Member:Richard Neal (D-MA)

Chairman:Jeb Hensarling (R-TX)

Ranking Member:Maxine Waters (D-CA)


Where are the Votes: Senate Races to Watch in 2018

Dean Heller (R-NV) Low poll numbers

Jeff Flake (R- AZ) Trump supporting primary opponent

Claire McCaskill (D-MO) Trump carried Missouri by 19 point

Joe Donnelly (D-IN) Trump carried Indiana by 19 points

Heidi Heitkamp (D-ND) Trump carried North Dakota by 36 points

Joe Manchin (D-WV) Trump carried West Virginia by 42 points

Jon Tester (D-MT) Trump carried Montana by 20 points


The Trump Effect

Market Impact S&P 500 is up ~17% since Election Day

Twitter Boeing Lockheed Martin General Motors Amazon NFL

Key Players Gary Cohn, National Economic Council (NEC) Director Steven Mnuchin, Treasury Secretary Wilbur Ross, Commerce Secretary Robert Lighthizer, United States Trade Representative (USTR) Steve Bannon, White House Chief Strategist


A Resurgent Congress

Congressional Review Act 14 Obama-era rules disapproved (e.g., an SEC rule relating

to disclosure of payments by mining companies; an Interior Department rule known as the “steam protection rule”)

Senate action pending on CFPB arbitration rule

Russia Sanctions Bill Limits President’s authority to independently life sanctions


Personnel is Policy

Presidential Appointments Are Lagging 1,200 positions that require Senate approval As of Sept. 18, President Trump had submitted 347

nominations and only 141 have been approved In comparison, at the same point in President Obama’s

administration he had submitted 455 nominations and 324 had been approved


Personnel is Policy: The Federal Financial Regulatory Agencies

Federal Reserve Board Three current vacancies and Vice Chairman Fischer leaving in October Chairman Yellen’s term as Chair expires on February 3, 2018 Nomination of Randy Quarles to be Vice Chairman for Supervision

pending in Senate

CFPB Director Cordray’s term expires on July 16, 2018

FDIC One current vacancy Chairman Gruenberg’s term expires on November 15, 2017 Vice Chairman Hoenig’s term expires on April 16, 2018

OCC Acting Comptroller Noreika Joseph Otting nomination pending in Senate


Personnel is Policy: The Federal Financial Regulatory Agencies

SEC Chairman Jay Clayton confirmed Two vacancies Commissioner Stein’s term expired on June 5, 2017 (she can

serve 18 months after term expires, if not replaced) Commissioner Piwowar’s term expires in June 2018

CFTC Chairman Giancarlo confirmed One vacancy Commissioner Bowen’s term expires in 2019 Commissioners Quintenz confirmed through 2020 Commissioner Behnam confirmed through 2021


Debt and Taxes

Tax Reform The Politics

• A must pass bill for Republicans• President Trump will sign

The Process• Budget reconciliation would permit the Senate to approve

the bill with just 51 votes• 10 year deficit neutrality requirement • Plan B


Debt and Taxes

Tax Reform The Timing

• Framework this week• Budget resolution in October• Ways and Means and Senate Finance in November

The Substance• Cuts in corporate and individual rates• Deduction for state and local tax is on the table• Deductibility of interest expense?• Repatriation of foreign income


Debt and Taxes

Debt Ceiling Extraordinary measures push the limit into March 2018

Federal Budget Disaster relief bills and supplemental budget requests December 8th deadline Adjustments to sequester


America First: NAFTA and DACA

DACA March 5th deadline Immigration deal?

NAFTA Round three ends today

• Dispute settlement mechanics• Rules of origin• Sunset

Politics• Mexican election July 2018• US mid-term elections Nov. 2018


Other Policy Issues

Health Care September 30 budget deadline

• Graham/Cassidy bill• CHIP Reauthorization

GSE Reform A 2018/2019 legislative issue Recap and Release Receivership

Dodd-Frank Reform The CHOICE Act Community bank relief


Other Policy Issues

AML Reform A broken system House Republicans interested in reform

CECL Regional banks mounting effort to study Incorporating ALLL in Tier 1 capital

DOL Fiduciary Rule 18 month delay Litigation still pending Rewrite with SEC


Other Policy Issues

Flood Insurance Reauthorization Dec. 8 deadline Additional extension likely

Cybersecurity Equifax breach National data breach standard


Other Policy Issues

Treasury Studies Capital Markets Asset managers and insurance Fintech Nonbank designations OLA

The Fed’s Great Unwinding $4.2 trillion in mortgage and Treasury securities


James C. Sivon

James C. Sivon specializes in representing financial institutions before the U.S. Congress and federal regulatory agencies.He is a former senior vice president and general counsel for the Association of Bank Holding Companies (1983-1985), and he served as the staff director for the Republican members of the US House Committee on Banking, Finance and Urban Affairs from 1980 to 1983. James is a frequent speaker on the regulation of financial services firms, and is the author of various publications including The New CRA, published by the American Bankers Association, Insurance Activities: A Legal Guide for Banks, published by A.S. Pratt & Sons, and is a co-author of Understanding Fintech and Banking Law: A Practical Guide, published by Thomson Reuters. He also serves as the co-editor of the Fintech Law Report published by Thomson Reuters. James is a member of the Executive Council of the Federal Bar Association’s Banking Law Committee and the Exchequer Club.

James C. SivonOf Counsel

Squire Patton Boggs (US) [email protected]

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Moving Markets: A Washington Update - CFA Institute Calendar... · Heidi Heitkamp (D-ND) ... Tampa...

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