The Washington Wrap is a weekly look at regulation, news and chatter from the Capitol. Send tips and ideas to email@example.com.
At the White House
President Donald Trump took the first few steps in constructing his promise of a protectionist America by signing several executive orders in his first week of office.
Within hours of being sworn into office Jan. 20, Trump's new @POTUS Twitter handle (he is still tweeting from his @realDonaldTrump account) revealed that he signed an executive order taking aim at former President Barack Obama's Affordable Care Act. The executive order allows federal agencies to "waive, defer, grant exemptions from or delay" rules embedded in the healthcare laws.
The same day, Trump's chief of staff, Reince Priebus, issued a memo to the nation's departments and agencies telling them to freeze all proposed regulation and delay any final regulation that has not been implemented yet. The regulatory moratorium, while not unusual at all for new presidents, is unclear on whether or not independent agencies — such as the Federal Reserve or the Consumer Financial Protection Bureau — have to comply.
On Jan. 23, Trump told a group of corporate executives — including CEOs from Dow Chemical and Ford Motor Co. — that he would encourage more manufacturing in the United States by breaking down regulatory walls while reforming existing corporate tax policy. Trump first promised to cut federal regulations by 75% or more, in addition to lowering the corporate tax rate from 35% to somewhere between 15% and 20%. To protect U.S. products, he also promised to enforce a "substantial border tax."
Later that day, The Washington Post reported that Trump had followed through on his highly touted campaign promise to renegotiate trade agreements by withdrawing from the Trans-Pacific Partnership trade agreement. Although the trade agreement was already a long shot at getting congressional approval, the withdrawal paves the way for the White House to pursue country-by-country trade negotiations.
While Trump cabinet members continue to go through the Senate confirmation process, the White House made moves to overhaul the National Credit Union Administration board by naming Republican J. Mark McWatters as the new chairman. McWatters replaces Democrat Rick Metsger, who was only appointed chairman in May 2016. Responding to the appointment, House Financial Services Chairman Jeb Hensarling, R-Texas, applauded McWatters as "highly capable and extremely well qualified." Trump still has one vacated seat on the NCUA board to fill.
At the CFPB
Only one week into a new Trump administration, the CFPB continues to face heat over its director, Richard Cordray.
In a conference call Jan. 25, Navient Corp. defended itself from a Jan. 18 CFPB lawsuit alleging that the company improperly serviced student loans. The company's president and CEO, Jack Remondi, spared no words in his criticism of the lawsuit, speculating that the CFPB has "disregarded the facts in order to make a political statement ... based on a false narrative about the practices and outcomes Navient delivers for borrowers."
On Jan. 27, the attorneys general of 17 states came to the defense of the CFPB by filing a motion to intervene in a key court case arguing the constitutionality of the bureau's structure. In the motion, the attorneys general warn that an appeals court ruling deeming the agency unconstitutional "will undermine the power of the State Attorneys General to effectively protect consumers against abuse in the consumer finance industry." The attorneys general added that the motion was spurred on by hints from the Trump administration that it hoped to roll back some of the CFPB's authority.
For its part, the CFPB continued to do business as usual, issuing a consent order and fines on Jan. 23 to CitiFinancial Servicing and CitiMortgage Inc. over how the companies handled foreclosures. The CFPB fined the two units a total of $28.8 million for failing to share options with borrowers that could have helped them avoid foreclosures. The fine and consent order also alleges that Citi had failed to cancel credit insurance at the time period promised in its terms, in addition to delaying borrower applications for foreclosure relief.
On the Hill
On Jan. 26, Politico reported that Labor secretary nominee Andrew Puzder's confirmation hearing was delayed for a third time, this time to Feb. 7. The hearing had most recently been scheduled for Feb. 2 by the Senate Health, Education, Labor and Pensions Committee. The delay could be related to the absence of conflicts of interest documents. Senate HELP Committee Ranking Member Patricia Murray, D-Wash., wrote a letter Jan. 26 calling on Puzder to complete paperwork disclosing his tax returns, investments and financial interests.
Trump is considering executives from Bank of the West and MainStreet Bancshares Inc. to fill a board seat at the Federal Reserve, Bloomberg reported Jan. 20. Citing "three people familiar with the matter," the report claimed Bank of the West's Cynthia Blankenship and MainStreet's Jeffrey Dick were both in consideration for a Federal Reserve Board seat assigned for a community banker. The report says Rep. French Hill, R-Ark., is also in the running.
In a statement Jan. 27, the Independent Community Bankers of America asked the Trump administration to roll back "overzealous" application of fair lending laws, alleging that community banks face "unwarranted" enforcement actions. "Community banks are experiencing enforcement overreach that diverts an abundance of resources from serving their local communities to complying with and responding to unwarranted fair lending allegations," ICBA President and CEO Camden Fine said in the statement. The ICBA adds that regulators have overstepped their authority by forcing institutions to alter their business models through fair lending requirements to expand into certain areas.
Trump's ascension to the White House could also threaten negotiations over final rules known as "Basel IV," which provides international rules over how banks calculate risk. The Basel Committee's governing body postponed a meeting to finalize the rules without rescheduling it, but European observers are saying the standards, which are expected to raise capital requirements, will continue to be in limbo as the industry watches for what Trump does to financial regulation.