The Washington Wrap is a weekly look at regulation, news and chatter from the Capitol. Send tips and ideas to firstname.lastname@example.org.
Next stop: Tax reform
After Republicans struck out on repealing and replacing the Affordable Care Act, the White House appears to be targeting tax reform as its new top priority.
In his first press briefing since President Donald Trump ordered the withdrawal of House Republicans' American Health Care Act, Press Secretary Sean Spicer said March 27 that the White House is "driving the train" on tax reform, adding that Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn will play large roles.
On March 30, Trump met with Mnuchin, the National Economic Council and a number of other policy experts on evaluating different policy options for reform.
The U.S. House, meanwhile, is charging forward with a tax reform proposal from House Ways and Means Committee Chair Kevin Brady, R-Texas.
"I think the message is we are focused on tax reform — pro-growth, once-in-a-generation," Brady said in an interview March 29. "So is the president. And it's going to take a unified effort from the House, Senate and the White House to get this done."
Sen. Orrin Hatch, R-Utah, spoke highly of the prospect of tax reform in a Senate floor speech March 31.
"Overall, I'd say that Republicans in the Senate, the House and the White House agree on about 80 percent of the major tax reform issues, and a number of key and fundamental questions are answered in that 80 percent," Hatch said.
But Hatch said the border adjustment tax, which is a key part of the House proposal, presents some issues that would make it unrealistic for the Senate to "simply take up and pass a House bill."
The failure of the healthcare bill in the House, where the Republicans control a larger majority than they do in the Senate, casts some doubt on whether or not tax reform can make it through either chamber.
In a press conference announcing the healthcare bill's retraction, House Majority Speaker Paul Ryan, R-Wis., admitted that gridlock "does make tax reform more difficult."
The Treasury Department said it will look at Financial Stability Oversight Council designations in its broader regulatory review, as chatter continues about how systemically important financial institutions should be regulated.
In a speech March 30, Sen. Pat Toomey, R-Pa., said he was "disappointed and frustrated" at the FSOC and the Trump administration for a lack of action on addressing SIFI designations. Clarifying that he does not "agree with the idea" of SIFI regulation in general, Toomey said he was "surprised" that the administration has not advised the Justice Department to drop its appeal of a court decision to toss a SIFI label for MetLife Inc. He also said that new members on the FSOC itself should be able to get a voting bloc large enough to vote to drop the appeal.
As earlier rumors suggested, the Office of the Comptroller of the Currency handed Wells Fargo Bank NA a "needs to improve" rating on its Community Reinvestment Act status. Although the regulator said the bank's overall performance on the exam was "outstanding," the OCC ultimately knocked the company's status down by two grades due to previously issued regulatory consent orders.
John Taylor, head of the National Community Reinvestment Coalition told Politico that the OCC's move might send the wrong "message" by acknowledging the bank's fair lending practices but ultimately downgrading it because of "something wrong in another area."
Although CRA is not a target for Trump's regulatory rollback, a number of regulators championed the benefits of community reinvestment at an NCRC conference this week. One banker said that proposals to cut funding to other "CRA-family" programs like the Community Development Financial Institutions Fund articulates an administration "perspective" on community development initiatives.
President Trump announced a new White House office for innovation on March 27, which will be led by his son-in-law, Jared Kushner. The office is designed to handle the creation of an infrastructure plan and the modernization of federal departments and agencies. Kushner has reportedly consulted with tech leaders at companies like Apple Inc. and Microsoft Corp. to brainstorm ideas for the new office.
The president's daughter and Kushner's wife, Ivanka Trump, will also work with the new office although not in an official role.
At the Fed
A number of policymakers made comments on the future trajectory of monetary policy, just two weeks after the Federal Reserve decided to raise interest rates to a target range of 0.75% to 1.00%.
While Dallas Fed President Kaplan saw a "good base case" for the Federal Open Market Committee's projected three total rate hikes in 2017, Chicago Fed President Charles Evans said market conditions support maybe one or two more interest rate hikes for the rest of the year. Both Kaplan and Evans are voting members of the FOMC.
As the Fed continues its effort to normalize economic conditions, the central bank is also trying to reason through a strategy for unwinding its roughly $4.5 trillion balance sheet. Minneapolis Fed President Neel Kashkari argued that the Fed should publicly disclose its plan to unwind the balance sheet before continuing further rate hikes, while New York Fed President William Dudley said that he would support gradual tapering in reinvestment to avoid a rapid tightening in financial conditions.