Overnight Finance: House sends Dodd-Frank rollbacks to Trump | What’s in the bill | Trump says there is ‘no deal’ to help ZTE | Panel approves bill to toughen foreign investment reviews

Happy Tuesday and welcome back to Overnight Finance, where we’d also like to take a look at the next SpaceX rocket. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.

See something I missed? Let me know at slane@digital-staging.thehill.com or tweet me @SylvanLane. And if you like your newsletter, you can subscribe to it here: http://bit.ly/1NxxW2N.

 

Write us with tips, suggestions and news: slane@digital-staging.thehill.com, vneedham@digital-staging.thehill.com, njagoda@digital-staging.thehill.com and nelis@digital-staging.thehill.com. Follow us on Twitter: @SylvanLane,  @VickofTheHill, @NJagoda and @NivElis.

 

THE BIG DEAL: The House on Tuesday passed a bill to loosen federal regulations on the banking sector, securing an election-year legislative accomplishment that is likely to be touted by members of both parties.

The 258-159 House vote sends the bill to President Trump, who has pledged to sign it.

The bill was opposed by only one Republican, Rep. Walter Jones (R-N.C.), while 158 Democrats voted against it. Thirty-three Democrats broke ranks to loosen the Dodd-Frank Act of 2010, enacted by former President Obama and defended by his party for close to a decade.

“We’ve been losing a community bank or credit union every other day in America, and with it the hopes and dreams of millions,” said Rep. Jeb Hensarling (R-Texas), chairman of the House Financial Services Committee. “But today, that changes. Help is on the way.”

I’ll tell you what the bill does, doesn’t do, and how it all came together right here.

 

Why it matters: The measure will exempt dozens of regional banks from tighter regulation by raising the threshold for closer Fed oversight from $50 billion to $250 billion in assets. That frees several major regional banks, including M&T, Citizens, SunTrust, BB&T, Fifth Third and BMO Financial Corp., from some of Dodd-Frank’s strictest requirements.

Banks below the new $250 billion threshold will no longer be automatically subject to yearly Federal Reserve stress tests or higher capital requirements meant to ensure large firms are able to weather severe financial crises.

Those banks below the threshold will also be exempted from submitting a “living will” for Fed approval — a plan that outlines how a bank’s assets could be liquidated upon the firm’s failure without causing a widespread meltdown.

For smaller firms, the bill exempts banks that extend 500 or fewer mortgages a year from reporting some home loan data to federal regulators under anti-discrimination laws. The bill also broadens the definition of qualified mortgages.

Other aspects of the legislation meant to bolster community banks and credit unions include loosening appraisal requirements for certain mortgage loans and exempting firms with less than $10 billion in assets from the Volcker Rule. Named after former Fed Chairman Paul Volcker, the rule bans banks from making risky trades with their own assets.

 

Reactions:

• “We must not allow the GOP Congress to drag us back to the same lack of oversight that ignited the Great Recession.” — House Minority Leader Nancy Pelosi and House Financial Services Committee ranking Democrat Rep. Maxine Waters.

• “This is a moment years in the making.” — Senate Banking Chairman Mike Crapo (R-Idaho).

• “By unraveling some of the suffocating regulatory burdens community banks face, they are better able to unleash their full economic potential.” — Independent Community Bankers of America president and CEO Rebeca Romero Rainey.

• “Deregulating 26 of the largest 40 banks is dumb, unnecessary and poorly-timed.” — Better Markets president and CEO Dennis Kelleher.

• “While it contains some provisions that every House Democrat has supported, the roll backs to Dodd Frank cannot be justified.” — Rep. Carolyn Maloney (D-N.Y.)

• “When the extremes on both sides of the aisle tried to derail our efforts, we bucked partisan politics and instead found common ground.” — Sen. Jon Tester (D-Mont.)

• “It was time to tackle one of the greatest challenges facing the credit union industry – unnecessary, burdensome regulations.” — National Association of Federally-Insured Credit Unions (NAFCU) president and CEO Dan Berger.

• “It’s hard to watch Congress ignore the painful lessons of the Great Recession.” — Mike Litt, consumer campaign director at U.S Public Interest Research Groups

• “While this bill does not include everything Democrats wanted nor everything Republicans wanted, I’m proud of my colleagues for putting differences aside.” — Sen. Mark Warner (D-Va.).

 

What comes next: Trump will likely host a signing ceremony for the bill within the next few days, and a senior administration official told reporters Tuesday he’s aiming to get it done before Memorial Day. The official didn’t say if Trump would host Senate Democrats who supported the bill at the event, noting that invitations haven’t been sent yet.

The House and Senate will also continue talks over the undetermined package of House bills that Senate GOP leaders have pledge to put up for a vote.

It’s unclear which House bills will be taken up by the Senate, how they will appear on the floor and whether the measures have a chance of reaching Trump’s desk.

The House bills from Hensarling aren’t expected to pass the Senate on their own, but GOP leaders have privately floated attaching them to must-pass legislation.

 

ON TAP TOMORROW

• Heritage Foundation hosts an event on trade with Commerce Secretary Wilbur Ross, Sens. Ben Sasse (R-Neb.) and Joe Manchin (D-W.Va.), 7:30 a.m.
• Senate Banking Committee: Hearing entitled “Ten Years of Conservatorship: The Status of the Housing Finance System,” 10 a.m.
• House Financial Services Committee: Hearing entitled “Legislative Proposals to Help Fuel Capital and Growth on Main Street,” 10 a.m.
• House Ways and Means Committee: Hearing entitled “Tax Reform and Small Businesses: Growing Our Economy and Creating Jobs,” 10 a.m.
• House Education and the Workforce Committee: Hearing entitled “Regulatory Reform: Unleashing Economic Opportunity for Workers and Employers,” 10 a.m.
• Senate Budget Committee: Hearing on the Government Accountability Office’s annual report on opportunities to reduce fragmentation, overlap, and duplication in the federal government, 10:30 a.m.
• Federal Reserve releases minutes from the Federal Open Markets Committee’s May meeting, 2 p.m.
• House Foreign Affairs Committee: Hearing on Chinese investment and influence in Europe, 2 p.m.
• House Financial Services Committee: Hearing entitled “The Impact of Autonomous Vehicles on the Future of Insurance,” 2 p.m.

 

LEADING THE DAY

Senators demand answers on Trump moves on ZTE: A bipartisan group of Senators Tuesday demanded answers from Treasury Secretary Steven Mnuchin on the Trump administration’s moves to rescue Chinese telecoms firm ZTE.

“Given the clear findings ZTE is guilty of violating U.S. sanctions against Iran and North Korea, why is the administration backpedaling to make it easier for a Chinese company to operate and compete with U.S. companies?” Sen. Chris Coons (D-Del.) demanded of Mnuchin in an appropriations subcommittee hearing.

ZTE was thrust into the political spotlight earlier this month when President Trump tweeted support for helping the Chinese firm continue to operate following steep sanctions imposed on the company by the U.S. Commerce Department.

The Commerce Department had imposed the sanctions and banned the company from buying U.S. components after the company admitted to breaking U.S. sanctions by selling equipment to North Korea and Iran. The agency also cited security concerns that the firm could help China to infiltrate U.S. networks.

“If the U.S. were ever to go to war with China, which I hope never ever occurs and never even comes into the realm of talking about this, it’s not far-fetched to think that China could disable American cellphones or take control of American networks,” Sen. Joe Manchin (D-W.Va) warned at Tuesday’s hearing.

The Hill’s Niv Elis takes us there.

 

Trump: ‘There is no deal’ to help ZTE: Trump said Tuesday that there is no deal to save ZTE, and that he is doing Chinese President Xi Jinping a favor by looking into how to breathe life back into the company that the Commerce Department has effectively shut down.

“President Xi and I have a great relationship, but there is no deal,” Trump said at the White House. “We will see what happens. We are discussing deals. We’re discussing various deals.” 

Reuters reported Tuesday that the U.S. and China were closing in on a deal to lift a ban on U.S. companies selling components to ZTE. 

“As far as ZTE is concerned [Xi] asked me to look into it and I am doing that,” Trump said during a meeting with South Korean President Moon Jae-in.  “And don’t forget for the ones that say, ‘Oh gee, maybe Trump is getting a little bit easy. ZTE, we closed it. It wasn’t another administration, it was this administration that closed it.”

Senate panel overwhelmingly approves amendment blocking Trump on ZTE: The Senate Banking Committee approved an amendment in an overwhelming and bipartisan 23-2 vote that would block Trump from easing sanctions on ZTE without first certifying to Congress that the company is complying with U.S. law.

The amendment, offered by Sen. Chris Van Hollen (D-Md.), was attached to a bill that would give regulators more authority to block foreign investment in the U.S.

The Banking Committee approved the underlying bill unanimously, and I’ve got more on that markup here.

 

Bill to toughen reviews of foreign investments advances: The Senate Banking Committee on Tuesday approved a bill to give a secretive federal agency expanded powers to probe foreign acquisitions of American businesses that could pose threats to national security.

The panel voted unanimously to advance a bill to bolster the authority of the Committee on Foreign Investment in the U.S. (CFIUS), a panel housed by the Treasury Department that reviews attempts by foreign businesses to control U.S. firms.

The House Financial Services Committee had also been reviewing its version of the bill Tuesday and is expected to vote to clear the measure later this afternoon.

Why it’s important: The push to boost the powers of CFIUS comes as President Trump and Congress seek to foil attempts by China to dominate key technology industries essential to U.S. defense and infrastructure.

I’ve got the details on what the bill does here.

 

MARKET CHECK: CNBC: “Stocks dropped on Tuesday after President Donald Trump said he was not satisfied with U.S.-China trade talks. He also said a highly anticipated summit with North Korea may not happen after all.

“The Dow Jones industrial average fell 178.88 points to close at 24,834.41 as Boeing shares declined 2.5 percent. The S&P 500 declined 0.3 percent to 2,724.44 with energy lagging. The Nasdaq composite lost 0.2 percent to close at 7,378.46.”

 

GOOD TO KNOW

• The U.S. hit five Iranian nationals with sanctions on Tuesday for their roles in an alleged plan by Tehran to supply Houthi rebels in Yemen with ballistic missiles.
• Acting IRS Commissioner David Kautter said Tuesday that the agency is on schedule in its preparations for next year’s filing season, the first under the new tax law that President Trump signed late last year.
• A former top energy and environment adviser to President Trump is leading an industry-backed effort to crack down on corporate shareholders’ resolutions on hot-button controversies like climate change.
• U.S. banks notched a record quarterly profit to start 2018, reporting $56 billion in net income in the first quarter, up 27.5 percent from the prior year’s quarter.
• A longtime business associate of President Trump’s personal attorney Michael Cohen has reportedly agreed to cooperate with government prosecutors as part of a plea deal, according to The New York Times.
• Democratic lawmakers are proposing a pay raise for teachers, and they plan to pay for it by eliminating a tax cut for the top 1 percent of earners.

 

ODDS AND ENDS

• Environmental Protection Agency (EPA) head Scott Pruitt spent at least $9,600 to decorate his personal office with Smithsonian artwork, a refurbished desk and other framed items, according to an internal document obtained by The Hill on Tuesday.