Overnight Finance: Lawmakers grill Equifax chief over hack | Wells Fargo CEO defends bank’s progress | Trump jokes Puerto Rico threw budget ‘out of whack’ | Mortgage tax fight tests industry clout

Trump: Puerto Rico has ‘thrown our budget a little out of whack’ President Trump on Tuesday noted the enormous cost associated with the hurricane relief and rescue mission in Puerto Rico, saying at a meeting with officials in San Juan on Tuesday that the efforts had “thrown our budget a little out of whack.”

The president appeared in good spirits as he went around the room praising officials in his administration and local leaders in Puerto Rico. When he arrived at Mick Mulvaney, the director of the Office of Management and Budget, Trump said in a jocular way that, “Mick is in charge of a thing called the budget.”

“I hate to tell you, Puerto Rico, but you’ve thrown our budget a little out of whack because we spent a lot of money on Puerto Rico, and that’s fine,” Trump said. “We saved a lot of lives.”

{mosads}

Trump singled out the governor of Puerto Rico, Ricardo Rosselló, for praising his administration’s response and allowed Puerto Rico’s Republican resident commissioner, Jenniffer González-Colón, to speak. But he didn’t mention the mayor of San Juan, with whom he has clashed. The Hill’s Jonathan Easley has more: http://bit.ly/2klOlz6.

 

Schumer to Trump: Stop blaming Puerto Rico for the storm: Senate Minority Leader Chuck Schumer (D-N.Y.) pounced on President Trump Tuesday after he appeared to joke that Puerto Rico recovery efforts had “thrown our budget a little out of whack.”

“Mr. President, enough. Stop blaming Puerto Rico for the storm that devastated their shores, and roll up your sleeves and get the recovery on track. That’s your job as president,” Schumer told reporters during a weekly leadership press conference. 

Schumer added he didn’t remember Trump complaining that Texas “threw our budget out of whack after Harvey. Or Florida after Irma.” 

Schumer said Trump’s remark, which come as Republicans are pushing tax reform, “boggles the mind.” http://bit.ly/2khIcDO.

 

Wells Fargo chief defends bank’s progress in tense Senate hearing: Wells Fargo CEO Timothy Sloan testified Tuesday that the embattled bank is on a positive track forward as lawmakers excoriated the bank for fraudulent sales practices involving up to 3.5 million unauthorized customer accounts.

Sloan told the Senate Banking Committee that after “great disappointment and transition” at Wells Fargo the bank has made significant progress toward cleaning up its consumer banking division.

“Wells Fargo is a better bank today than it was a year ago. And next year, Wells Fargo will be a better bank than it is today,” Sloan said.

The hearing Tuesday was Sloan’s first appearance on Capitol Hill as Wells Fargo’s chief, and comes after a year of deepening scandal for the San Francisco-based bank.

Lawmakers from both parties criticized Sloan on Tuesday for the various scandals that had gone on allegedly without his knowledge, but the 30-year Wells Fargo veteran faced the harshest criticism from Democrats.

“You enabled this fake account scam, you got rich off of it, and then you tried to cover it up,” said Sen. Elizabeth Warren (D-Mass.), a potential 2020 presidential candidate. “At best you were incompetent, at worst you were complicit. Either way, you should be fired.” I take you inside the testy hearing: http://bit.ly/2klLaan.

 

Outraged lawmakers demand answers at Equifax hearing: Lawmakers got their first crack at former Equifax CEO Richard Smith on Tuesday, bombarding him with criticism for the massive data breach that occurred at the credit reporting company on his watch.

The lawmakers could barely mask their anger as they pressed Smith on why the company’s data security practices were inadequate, given the mass amounts of personal data the company handles. 

Smith opened his testimony with a public apology. 

“The criminal hack happened on my watch and as CEO I’m ultimately responsible,” said Smith, who retired from the company last week. 

In one exchange with Rep. Ben Ray Luján (D-N.M.), Smith repeatedly dodged questions about whether Equifax’s response will make consumers whole.

“Do you think consumers should have to pay a penalty for your mistake, including potential identify theft, false credit accounts, fraudulent tax returns or medical identity theft?” Luján asked. The Hill’s Harper Neidig and Mallory Shelbourne report: http://bit.ly/2kjLW7X.

 

IRS awards Equifax $7.25 million contract to prevent fraud: The Internal Revenue Service (IRS) has agreed to give Equifax $7.25 million to verify taxpayers’ identities and help combat fraud, according to a recently issued contract.

The IRS is hiring the embattled credit reporting agency to “verify taxpayer identity and to assist in ongoing identity verification and validations needs of the Service,” according to its filing on the Federal Business Opportunities, a website that lists federal contracts.

The IRS labels Equifax as a “sole source order,” which means that the agency believes the credit reporting company is the only business capable of providing the service.

The contract comes as lawmakers and the public continue to hammer the company over its cybersecurity breach that compromised the information of 145.5 million Americans.

“This is considered a critical service that cannot lapse,” the filing Friday reads, saying that the Equifax contract will prevent a lapse in identity check as the IRS resolves another contract: http://bit.ly/2kkaUnM.

 

Happy Tuesday and welcome back to Overnight Finance. 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.

 

On tap tomorrow 

House Financial Services Committee: Hearing entitled “Examining the SEC’s Agenda, Operations, and Budget” with SEC Chairman Jay Clayton, 10 a.m. http://bit.ly/2yxxgEl. Expect more questions for Clayton on the hack of the agency’s EDGAR financial database.

House Ways and Means Subcommittee on Oversight: Hearing on the Internal Revenue Service’s information technology modernization efforts, 10 a.m. http://bit.ly/2yxwHKN.

Senate Banking Committee: Hearing entitled “An Examination of the Equifax Cybersecurity Breach” with former Equifax CEO Richard Smith, 10 a.m. http://bit.ly/2yxBhsJ.

Senate Judiciary Subcommittee on Privacy, Technology and the Law: Hearing entitled “Equifax: Continuing to Monitor Data-Broker Cybersecurity,” http://bit.ly/2yMcK42. 10 a.m.

 

SEC didn’t seek DHS cyber help after breach: The Securities and Exchange Commission (SEC) did not request help from the Department of Homeland Security (DHS) after its EDGAR financial database was breached last year, an official said Tuesday.

The SEC has come under scrutiny in Washington after disclosing the 2016 breach just last month, which it says may have allowed hackers to generate profits from stolen insider information.

A top Homeland Security official testified before lawmakers on the House Homeland Security Committee Tuesday that SEC notified the department of the breach on Nov. 4 of last year but that “at the time, the extent of the issue was not well understood.” 

“We have very limited involvement in SEC,” Jeanette Manfra, the assistant secretary for cybersecurity and communications at the National Protection and Programs Directorate, said when pressed about DHS’s involvement in the breach. “They did not request our follow-on assistance for response.” 

Homeland Security is designated as the lead civilian agency protecting federal systems from cyber threats. The Hill’s Morgan Chalfant reports: http://bit.ly/2kjdzhC.

 

Trudeau, Trump will talk trade next week: Canadian Prime Minister Justin Trudeau will meet with President Trump at the White House next week to discuss a wide range of issues, including ways to strengthen their long-standing trading relationship.

Trudeau will arrive in Washington, D.C., as the fourth round of the North American Free Trade Agreement (NAFTA) talks continue here, to discuss with Trump the importance of the economic relationship as well as international security issues. 

“The United States is Canada’s top economic partner, and it’s important that we continue to work together to strengthen trade, investment and economic opportunity for people on both sides of our border,” Trudeau said in a statement.

“I look forward to discussing with President Trump how to enhance our mutual prosperity and security,” he said. The Hill’s Vicki Needham has more: http://bit.ly/2kjJNZX.

 

Top Treasury aide flew to Palm Beach on private jet with hedge fund billionaire: A top aide to Treasury Secretary Steven Mnuchin flew on a hedge fund billionaire’s private jet earlier this year, The Washington Post reported Tuesday, the latest instance of a Trump administration official using private travel with potential work implications.

Eli Miller, Mnuchin’s chief of staff, flew to Palm Beach, Fla., several months ago with Nelson Peltz, a founding partner of investment group Trian Fund Management, on Peltz’s private jet, according to the Post. The exact date of the trip is unclear.

Palm Beach is home to President Trump’s Mar-a-Lago golf club, where Trump often spends weekends and huddles with top advisers. The Post noted that Peltz also has an estate in Palm Beach reportedly worth at least $100 million.

The Treasury Department confirmed Miller’s flight with Peltz to the newspaper, saying the senior aide and the New York hedge fund manager are longtime friends.

“The Treasury ethics office advised Mr. Miller that he was permitted to accept a seat on a plane from a friend with whom he has a preexisting relationship under federal ethics law,” a Treasury spokesman told the Post. http://bit.ly/2khISZS.

 

Google critic takes on tech giants: Barry Lynn has been pushing the government to crack down on corporate power for 16 years, but his ideas never received as much attention as when they cost him his job at a Google-sponsored think tank.

After parting ways with New America over the summer, Lynn has launched a new independent group to raise awareness about the threats posed by corporate giants.

Lawmakers are increasingly willing to confront tech leaders on a growing list of issues, and Lynn’s transition comes as authorities are investigating whether Russians used Google, Facebook and Twitter to sow division during last year’s election.

“I think people are understanding just how poorly structured these institutions are, how sloppily they were built,” Lynn tells The Hill. “It’s not just a matter of the fact that these people have too much power, it’s also that they are sloppy in the use of their power.” Harper Neidig has more from his conversation with Lynn: http://bit.ly/2kkRHCm.

 

White House official calls for ending Social Security numbers as means of identification: The White House’s cybersecurity coordinator, Rob Joyce, is calling  for the end of Social Security numbers as a national identification code.  

“I believe the Social Security number has outlived its usefulness,” he said Tuesday The Washington Post’s Cybersecurity Summit.

Joyce on Tuesday listed a number of problems with the reliance on Social Security numbers to verify Americans’ identities, including the inability to change the numbers after they’ve been stolen.

“It’s a flawed system that we can’t roll back after a breach,” he said, pointing to a lack of secrecy in the way the numbers are stored as well: http://bit.ly/2kkM9rH.

 

Mortgage tax fight tests clout of home industry: The power of the real estate and home building industries is being put to the test in a fight with Republicans over a key tax break for homebuyers — the mortgage interest deduction.

The National Association of Realtors and the National Association of Home Builders (NAHB) worry the new tax-reform plan from President Trump and congressional GOP leaders will undercut the deduction, and the groups are vowing to use their considerable political muscle to save the benefit.

“Since 1913, [Congress has] provided an incentive in the tax code to buy a house. We as a society and as a country decided long ago that homeownership stabilized communities and increased involvement,” said Jamie Gregory, the deputy chief lobbyist at the National Association of Realtors. 

The mortgage deduction allows homeowners who itemize their returns to deduct interest paid on their mortgage from their taxable income, and is one of the most popular benefits in the tax code. The Hill’s Megan R. Wilson reports on the groups’ efforts to protect the tax break: http://bit.ly/2kkp7B9.

 

Lawmakers try again on miners’ pension bill: Coal-country lawmakers launched a new effort Tuesday to pass legislation to shore up pensions for thousands of coal miners and their families.

The bipartisan group led by Sen. Joe Manchin (D-W.Va.) introduced a new bill that would use excess funds meant for mine cleanups and borrow some general Treasury money to pay for pension checks.

The effort revives the heated debate over whether and how to bail out the United Mine Workers of America’s (UMWA) pension fund, which is in danger of going insolvent due to a rash of coal mining company bankruptcies that have reduced the money going into it, putting more than 100,000 beneficiaries at risk.

Since the pension program originated from a federal government effort, coal-state lawmakers see it as a federal responsibility to keep it solvent.

“It’s time that we keep our promise, that’s all we’re asking for,” Manchin, who is running next year in one of the Senate’s toughest reelection battles, said at a Capitol Hill news conference with retired miners and allied lawmakers. The Hill’s Timothy Cama takes us there: http://bit.ly/2kk1rwK

 

Report: EU to order Amazon to pay millions in back taxes: The European Union will order Amazon to pay several hundred million euros in back taxes on Wednesday, The Financial Times reported on Tuesday.

The EU’s enforcement arm, the European Commission, opened up an investigation three years ago into a partnership between Amazon and Luxembourg that allowed the

commerce giant to shield some of its assets from taxation.

The Financial Times report did not say how much Amazon will be ordered to pay.

The fine would be the latest action Europe has taken to try to rein in American tech giants: http://bit.ly/2kk3alI.

 

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