Receiving Wide Coverage ...
Mnuchin speaks: Steven Mnuchin discussed his views on regulatory and tax policies Wednesday after being named President-elect Trump's designated Treasury secretary. Speaking on CNBC, Mnuchin said he would focus on rolling back parts of the Dodd-Frank financial reform law. "The number one problem with Dodd-Frank is that it's way too complicated and cuts back lending," he said, adding, stripping back part of the law "will be the number one priority on the regulatory side." He used similar words to describe the Volcker rule (see below).
On taxes, Mnuchin said Americans should expect the "largest tax change since Reagan," including "a big tax cut for the middle class." Dismissing the old liberal mantra about "tax cuts for the rich," the former Goldman Sachs banker said "any reductions we have in upper income taxes will be offset by less deductions so that there will be no absolute tax cut for the upper class. Any tax cuts we have for the upper class will be offset by less deductions that pay for it."
Regarding the GSEs, he told Fox Business, "We gotta get Fannie and Freddie out of government ownership. It makes no sense that these are owned by the government and have been controlled by the government for as long as they have." Wall Street Journal, Financial Times, New York Times, American Banker
New York Times columnist Gina Chon provides a surprisingly positive (for the Times, that is) view of Trump's "illogically logical choice" for Treasury secretary. "Mr. Mnuchin's Wall Street past will rankle Democrats," she notes. "But unlike many people whom Mr. Trump has put on his team, he is neither an ideologue nor a populist. He is also well qualified for the job, bipartisan and relatively reserved. In a rare quality for Washington insiders, Mr. Mnuchin also does not seek the limelight, which could appeal to lawmakers who are eager to take credit for policy victories. It all bodes well for America's fiscal policy."
Contrast that with articles in the Wall Street Journal and Financial Times, which delve into his "Wall Street past," such as his financial-crisis-era purchase of the failed IndyMac Bank from the federal government, which made him a fortune. "The unusual deal, which led to protests from angry homeowners, eventually earned him hundreds of millions of dollars in personal profits," the Journal says. "Like other Trump cabinet picks, Mr. Mnuchin has a résumé that is at odds with much of the president-elect's populist rhetoric on the campaign trail."
But, while banks are seeing a boost, based on expectations of regulatory relief, The Financial Times warns, tehy may not pass the good fortune on. "Even if banks are making higher profits and returns as a result of the regulatory rollback that stock prices are anticipating, it is still not proven whether that will expand the volume of credit available to Main Street."
What to do?: If Goldman Sachs's No. 2 Gary Cohn doesn't land a job in the Trump administration – he's now rumored to be a contender to head the Office of Management and Budget – what then? Does he remain at the bank or move elsewhere? The Journal speculates that he may have "tired of life as an understudy" to CEO Lloyd Blankfein. That could open the door to other possible successors, or mean that Blankfein will be around for a long time to come.
Yellow flag: The Federal Reserve Bank of New York is waving a caution flag about rising auto loan delinquencies. On Wednesday the bank said the 90-day-plus delinquency rate on subprime auto loans rose to 2% in the third quarter, up from 1.6% two years earlier and dangerously close to the peak of 2.4% in the second quarter of 2009 during the depths of the recession. "The increased level of distress associated with subprime loan delinquencies is of significant concern," the bank said, noting that it's happening when unemployment is low. "That such serious trouble is emerging in a relatively good economy suggests that lenders have been loosening their standards and letting borrowers take on more debt than they can afford," the New York Times notes.
"The number one problem with the Volcker rule is it's way too complicated and people don't know how to interpret it. So we're going to look at what do with it, as we are with all of Dodd-Frank." – Treasury Secretary-designate Steven Mnuchin.