SEC in the spotlight: Rolling back financial regulation as it pertains to the Securities and Exchange Commission will take more than just a simple presidential order, the Wall Street Journal reports. While the SEC can offer relief to companies by amending its rules or granting exemptions, that process is open to judicial review. "Companies, investors and others who can demonstrate a change sufficiently injures them can lodge a lawsuit," it noted, and "any legal objections could slow the SEC's already lengthy amendment process, hindering the agency's ability to execute the president's executive order."
Michael Piwowar, nominee to be a member of the Securities and Exchange Commission (SEC), speaks during a Senate Banking Committee nominations hearing in Washington, D.C., U.S., on Thursday, June 27, 2013. U.S. Representative Mel Watt faced lawmakers skeptical of his knowledge of housing-finance issues today at a Senate Banking Committee hearing on his nomination to oversee mortgage giants Fannie Mae and Freddie Mac. Photographer: Andrew Harrer/Bloomberg *** Local Caption *** Michael Piwowar
Andrew Harrer/Bloomberg
Michael Piwowar, the acting head of the SEC, is directing the agency's staff to "reconsider" implementation of a Dodd-Frank rule that requires companies to disclose their median worker pay and compare it with the CEO's compensation. The rule "could put pressure on corporate boards to slow pay increases for chief executives at companies with significant or widening gaps," the Journal notes. But Piwowar, a Republican who took over shortly after the inauguration, said Monday that some companies "have begun to encounter unanticipated compliance difficulties" and that he had "directed the staff to reconsider the implementation of the rule."
"The move shows the extent to which officials under the Trump administration could press at the agency level to ease Obama-era initiatives they oppose without waiting on Congress to act," the Journal said. "The move by Piwowar is just the latest sign that many of the rules put in place by financial regulators under the Obama administration may now be in danger," adds the Washington Post.
President Trump has named Walter "Jay" Clayton, whom the Financial Times describes as "a low-key attorney with a gold-plated roster of clients and an impressive golf game," to head the SEC. "That raises the question of how Clayton will use his behind the scenes knowledge: as a friend of Wall Street or investor advocate," the paper says. According to the FT, Clayton "had a front-row seat" during the global financial crisis, first advising Bear Stearns on its fire sale to JPMorgan Chase, then trying to help Lehman Brothers avoid bankruptcy.
Less stress: The Heard on the Street column says big banks "will suffer less stress and give more cash back to shareholders this year, even without any deregulatory action by the Trump administration." The reason? The Federal Reserve's new bank stress test, released last week, "will in some ways be easier and in some ways tougher" than last year's test. While the new version of the test assumes a deeper recession in the U.S. and a bigger decline in commercial real estate prices, it doesn't include negative interest rates. "That means the tests should be more stressful for many midsize regional lenders, but less tough for the biggest Wall Street banks," according to one bank analyst.
Fintech, crimestopper: An initiative backed by Citigroup is seeking to use "financial technologies to combat fraud and bribery in government services," the paper reports. "The aim is to help programmers at tech firms to develop new applications using Citigroup's and the partners' software for governments to do things like detect and block illicit payments, protect financial data, or help deliver aid to poor or crisis-hit regions."
Uncertain: How will the Trump administration's plans to roll back Dodd-Frank affect the U.S. role in coordinating international financial regulation? It's simply too early to tell, according to the general manager of the Bank for International Settlements. "You can imagine different scenarios — we don't know with these new uncertainties how these will evolve," Jaime Caruana said Monday. "This will probably take some time, but we need to wait for the position of the Americans — and we don't know yet."
The bull slows: The eight-year-old bull market in U.S. commercial property may be coming to a close, as several large real-estate investors reduce their holdings and get more selective about new deals, the paper reports Tuesday. "We definitely have a risk-off mentality," said one portfolio manager.
Quotable ...
"This is not going to be simple, fast or cheap." — Joseph Grundfest, a Stanford professor of law and former Democrat SEC commissioner, on the roll-back of Dodd-Frank at the SEC
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