OVERNIGHT FINANCE: WH official blasts ‘Audit the Fed’

TOMORROW BEGINS TONIGHT: WHITE HOUSE OFFICIAL: PAUL’S FED BILL ‘DANGEROUS.’ Pete Schroeder reports: “One of President Obama’s top economic advisers said Tuesday he opposed ‘dangerous’ legislation that would give lawmakers closer scrutiny over Federal Reserve deliberations. Jason Furman, chairman of Obama’s Council of Economic Advisers, called pending legislation subjecting monetary policy deliberations to outside review ‘somewhere between superfluous and highly counterproductive.’

{mosads}”He added that he would encourage President Obama to oppose the bill if it reached his desk. That opposition could be noteworthy, as previous efforts have stalled in a Democrat-led Senate, which is now in GOP control. Furman argued that the bill, presented by its proponents as a needed check on the central bank, would effectively allow lawmakers critical of the Fed to second-guess its moves.

“‘What that bill is about is about Congress supplanting its judgment as to what monetary policy should be,’ he said in an interview with Bloomberg TV. ‘Congress shouldn’t be telling the Fed what to do with monetary policy.'” Pete’s story: http://bit.ly/196Cb2v Video of Furman on BloombergTV: http://bloom.bg/1Ces6HR

THIS IS OVERNIGHT FINANCE. Tweet: @kevcirilli; email: kcirilli@digital-staging.thehill.com; and subscribe: http://digital-staging.thehill.com/signup/48.

ADMINISTRATION REFUSES TO RELEASE IRS DOCUMENTS. Bob Cusack for The Hill: “The Obama administration is refusing to publicly release more than 500 documents on the IRS’s targeting of Tea Party groups. Twenty months after the IRS scandal broke, there are still many unanswered questions about who was spearheading the agency’s scrutiny of conservative-leaning organizations.”

— FOIA REQUESTS DENIED, Cusack reports: “The Hill sought access to government documents that might provide a glimpse of the decision-making through a Freedom of Information Act (FOIA) request. The Hill asked for 2013 emails and other correspondence between the IRS and the Treasury Inspector General for Tax Administration (TIGTA). The request specifically sought emails from former IRS official Lois Lerner and Treasury officials, including Secretary Jack Lew, while the inspector general was working on its explosive May 2013 report that the IRS used ‘inappropriate criteria’ to review the political activities of tax-exempt groups. TIGTA opted not to release any of the 512 documents covered by the request, citing various exemptions in the law. The Hill recently appealed the FOIA decision, but TIGTA denied the appeal. TIGTA also declined to comment for this article.” http://bit.ly/1CdbIaD

ARE FEMALE CEOs UNFAIR TARGETS? Andrew Ross Sorkin for The New York Times: “While women have made strides in cracking the glass ceiling, they still account for a small fraction of chief executives at public companies. Only 23 women lead companies in the Standard & Poor’s 500-stock index. Yet at least a quarter of them have fallen into the cross hairs of activist investors.” http://nyti.ms/1KJM5CD

ELIZABETH WARREN: BIG BANKS ‘USING’ SMALL BANKS. My recap from this morning’s Senate Banking hearing: Sen. Elizabeth Warren (D-Mass.) says big banks are using small banks to weaken financial regulations. The accusation came during a Senate Banking hearing on Tuesday that sought to examine ways to provide regulatory relief to community banks and credit unions. Warren said big Wall Street firms bent on beating back rules set forth in the Dodd-Frank financial reform law are behind the push.

— WHAT WARREN SAID: “The big banks are going to keep using the small banks as cover for their special rollbacks. That’s what they did before the [2008 economic] crisis and that’s what they’ve been doing after the crisis. We shouldn’t fall for that trick… “Rolling back important protections to help the bigger banks just puts community banks at a greater disadvantage.”

— HOW BIG IS A SMALL BANK? Most regulators define a community bank as having less than $10 billion in assets, among other criteria. Community bank officials are pushing to increase that limit to $50 billion so that they qualify for the same Dodd-Frank exemptions as big banks. By comparison, JPMorgan, the largest U.S. bank, reported $2.6 trillion in assets in 2014.

— THE POLICY BEHIND THE POLITICS: Community bankers argue that the 2010 law has unfairly burdened the community banking industry and that Dodd-Frank regulations written to rein in the biggest banks are crippling growth in their industry. Warren and progressives vehemently disagree, saying that such proposals would weaken Dodd-Frank. My story: http://bit.ly/1zTqXah.

TAX TALK: BRADLEY, PACKWOOD RETURN. Pete Schroeder was there for the hearing: “The last group of lawmakers to overhaul the tax code told current members eyeing reform that success only comes from an intensive effort by all major players, as well as a healthy dash of luck. The Senate Finance Committee welcomed back a pair of key players from the last time Congress was able to overhaul the tax code in 1986: former Senate Finance Chairman Bob Packwood (R-Ore.), and Sen. Bill Bradley (D-N.J.). Both offered an unflinching take on the heavy lift of redoing the tax code, a project both parties agree is needed but have made minimal progress in actually doing.”

— WHAT THEY SAID: Packwood: “The only way it can be done is bipartisan, quickly, and behind closed doors.” … Bradley: “You need a president who is going to put his prestige and clout on the line to drive things through when the inevitable obstacles appear,” he said. Schroeder’s story: http://bit.ly/1CRrFZd

JEB HENSARLING PREPS FOR JULIAN CASTRO. My latest for The Hill: “Jeb Hensarling (R-Texas) on Wednesday will announce his plans to hold a ‘series of hearings this year on housing and assistance and homeownership opportunity,’ according to prepared remarks first obtained by The Hill. ‘We will tackle what some have aptly called ‘the unfinished work of welfare reform,’ Hensarling will say at a hearing, according to the remarks.

“The announcement is just the latest sign that Hensarling intends to dive into the debate over housing finance and take on Democrats who say Republicans are ignoring the need for low-income housing. Housing and Urban Development (HUD) Secretary Julián Castro is slated to testify at the hearing on Wednesday, which will examine President Obama’s plan to cut fees on government-backed mortgages at the Federal Housing Administration.”

— THE BACKSTORY: You already know: Liberals say Obama’s policy will help low-income Americans gain access to housing, but Hensarling and conservatives argue it’s a reckless plan that will put taxpayers at risk… Republicans are concerned about the health of the housing administration, which HUD oversees. It’s required to keep a capital reserve ratio of at least 2 percent, but is currently at 0.41 percent, raising concerns about the agency’s financial health. Story: http://bit.ly/16Q4KQd

Will Castro be better prepared for Hensarling than he was for Jon Stewart last month? …

— FLASHBACK, HousingWire’s senior reporter Trey Garrison on Castro’s appearance last month on “The Daily Show:”  “The Daily Show seems like the right venue for Castro — light, breezy, not concerned with details, more about style than substance — but just, damn. Stewart seemed more informed about housing issues than Castro… But you watch Castro get accidentally embarrassed by a comedian, and you think — maybe behind that smile is a whole lot of nothing. Castro looked genuinely surprised when asked about the FHA’s capital reserves. Watching him cringingly repeat “strong trajectory” three times as a fallback was painful.” Column: http://bit.ly/1z5gdmB Castro on Stewart: http://on.cc.com/1z5glm2.

EX-IM WATCH: MAYORS URGE CONGRESS TO PASS REAUTH. My story for The Hill: “A group of mayors is urging Congress to reauthorize the Export-Import Bank, which will shut down June 30 unless Congress renews its charter. Sacramento Mayor Kevin Johnson (D), who is also the president of the United States Conference of Mayors circulated the letter to Senate and House leadership urging the bank’s reauthorization.

“‘Support from the Ex-Im Bank enables local American businesses to get the financing needed to stay competitive internationally,’ Johnson wrote in the letter. Baltimore Mayor Stephanie Rawlings-Blake (D); Oklahoma City Mayor Mick Cornett (R); Los Angeles Mayor Eric Garcetti (D); and Jacksonville Mayor Alvin Brown (D) signed the letter.”Story: http://bit.ly/1CRLVKdLetter: http://bit.ly/1z5u6Bh

— STEPHEN FINCHER’S OP-ED IN THE HILL. Rep. Stephen Fincher (R-Tenn.) has a bill that’d reauthorize the Export-Import Bank (or as Hensarling dismissingly calls it, “the Bank of Boeing”) and he promoted it in an op-ed for The Hill: “With the implementation of 31 significant reforms focused on minimized risk, enhanced accountability and job growth, Congress has the ability to fortify the bank and ensure Ex-Im is able to support American jobs for years to come. It would be foolish to let the opportunity for a long-term solution to pass us by yet again. The time is now.” http://bit.ly/1M9qjvH

QUOTABLE, Michael Dukakis, 1988 Democratic presidential nominee on Fox Business Network’s “Cavuto” last night: “I don’t think [Hillary Clinton] will be forced to vary her view dramatically. … She’s a very progressive Democrat and one who’s not soft on the kinds of financial fooling around that virtually sucked the country dry…  I don’t think these [liberal groups] have anything to worry about and frankly — I’d feel a lot better if they were out organizing 200,000 precincts in this country and getting ready for what is going to be a very tough contest in 2016.” My recap: http://bit.ly/17bjF8i.

SANDERS SERVES-UP LIBERAL DELIGHT, via Rebecca Shabad: “Sen. Bernie Sanders (I-Vt.) on Tuesday proposed raising Social Security taxes to extend the life of the entitlement program and increase benefits. In a 12-page report, Sanders, the ranking member on the Senate Budget Committee and possible presidential candidate in 2016, argued Social Security’s solvency problems could be solved if lawmakers simply lifted the cap on the tax that funds the program.” http://bit.ly/1CRp15Q

RICHMOND FED PREZ: SKILLS GAP ADDING TO INEQUALITY: Ben Leubsdorf for The Wall Street Journal: “The U.S. workforce isn’t keeping pace with the economy’s need for skilled workers, and the gap in acquiring skills is one cause of widening inequality and sluggish economic mobility, Federal Reserve Bank of Richmond President Jeffrey Lacker said on Tuesday. ‘Many factors contribute to inequality and the persistence of that inequality both within and across generations,’ Mr. Lacker said at the Emerging Issues Forum, a convention in Raleigh, N.C. ‘But the growing disparity in the acquisition of skills, often in the form of college education, appears to play a significant role.’

“Human capital, which Mr. Lacker defined as ‘the knowledge and skills that make people more productive,’ drives innovation, which itself drives economic growth, he said. But, he said, the large earnings gap between workers with a college degree and those with only a high-school education suggests that ‘we are failing to keep pace with our economy’s growing demand for skilled workers.'” http://on.wsj.com/1Fvmn3X

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