On The Money: New director takes helm at troubled consumer agency | Trump’s economy teetering on trade tensions, volatile markets | Brexit crisis deepens | House report scolds Equifax over breach

Happy Monday and welcome back to On The Money. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.

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THE BIG DEAL–Consumer agency gets new chief at crucial moment: Kathy Kraninger is taking control of the Consumer Financial Protection Bureau (CFPB) at a pivotal moment for the powerful financial watchdog.

The agency is mired in controversy and Kraninger is facing mounting questions from both supporters and critics of the CFPB over how she will wield her immense powers as director.

{mosads}Kraninger, a former White House budget official, was sworn in to serve a five-year term as director on Monday by Vice President Mike Pence, inheriting an agency that has been the center of a long fight between Republicans and Democrats over its mission.

The CFPB’s unique structure and independence make its leader one of the most influential federal regulators. Created after the 2008 crisis to regulate and police the financial services industry, the agency holds enormous power over banks, mortgage lenders, and credit card companies.

Kraninger will have unilateral control over the CFPB’s enforcement and rulemaking actions, along with its budget and staffing, making her a crucial player in President Trump’s deregulatory agenda.

But to many Kraninger is a mystery. She has more than a decade of federal budget and management experience, but no apparent background in financial rules and has offered little insight into her policy positions. Read more at TheHill.com or in our print edition tomorrow morning.

 

ON TAP TOMORROW

• Securities and Exchange Commission chairman testifies before the Senate Banking Committee for an SEC oversight hearing, 10 a.m.
• House Financial Services Committee hosts a hearing entitled “The National Debt: Washington, We Have a Spending Problem,” 10 a.m.
• House Financial Services Committee hosts a hearing entitled “Assessing the Impact of FASB’s [Financial Accounting Standards Board’s] Current Expected Credit Loss Accounting Standard on Financial Institutions and the Economy,” 2 p.m.

 

LEADING THE DAY

Trump’s economy teetering on trade tensions, volatile markets: Rising trade tensions with China, a fading economic outlook and questions about rising interest rates are posing new challenges to President Trump as he prepares for his reelection campaign.

Sputtering negotiations between Washington and Beijing over tariffs and other trade barriers rattled financial markets this past week, frightening traders who were already bracing for a possible recession in 2019.

Even though the world’s two economic superpowers have agreed to work out a deal by the end of February, the ongoing feud is now accompanied by broader concerns about the long-term strength of the U.S. economy.

I explain here why the contrast poses severe messaging problems for Trump, who could contend with several economic storm clouds as he seeks reelection.

 

What’s going on:

• Despite consistently low unemployment, currently at a 49-year low of 3.7 percent, economists say they see growing signs that the Trump economy is trending downward.
• Grant Thornton chief economist Diane Swonk is forecasting that a recession will start in the first half of 2020, six months earlier than she had initially predicted. If she’s right, Trump will face the herculean task of securing reelection while the economy is contracting.
• Analysts are keeping close watch on a slew of economic risks as 2018 comes to a close, with Trump’s trade policies topping the list. The president has threatened to withdraw the U.S. from the North American Free Trade Agreement if Congress doesn’t approve a revised trade deal with Canada and Mexico, and he has sent mixed signals about a potential agreement with China.

 

EU lawmaker responds to delayed Brexit vote: ‘There will be no other deal’ A key member of the European Parliament’s Brexit team said Monday that British Prime Minister Theresa May’s decision to delay a vote on leaving the European Union will not lead to a renegotiation of a new deal.

Green MEP Philippe Lamberts told The Associated Press that May’s Brexit strategy, which recently involved delaying a vote in the House of Commons, has turned into “a game of hide and seek.”

“We are fully behind negotiator Michel Barnier but he has been very clear: If you want Brexit, the deal is on the table and there will be no other deal,” Lamberts said.

Barnier is the European Union’s chief negotiator on the Brexit matter.

 

Why you should care: Beyond the geopolitical ramifications of the messy Brexit process, the negotiations and upheaval have spooked investors around the world amid fears of a global economic slowdown.

 

House report finds Equifax breach ‘entirely preventable’: The Equifax data breach, one of the largest in U.S. history, was “entirely preventable,” according to a new House committee investigation.

The House Oversight and Government Reform Committee, following a 14-month probe, released a scathing report Monday saying the consumer credit reporting agency aggressively collected data on millions of consumers and businesses while failing to take key steps to secure such information.

The breach is estimated to have harmed 148 million consumers.

“In 2005, former Equifax Chief Executive Officer (CEO) Richard Smith embarked on an aggressive growth strategy, leading to the acquisition of multiple companies, information technology (IT) systems, and data,” according to the 96-page report authored by Republicans. “Equifax, however, failed to implement an adequate security program to protect this sensitive data. As a result, Equifax allowed one of the largest data breaches in U.S. history. Such a breach was entirely preventable.”

The Hill’s Olivia Beavers has more here on the series of failures documented in the report.

 

US sanctions three North Korean officials: The U.S. Treasury Department on Monday targeted three senior North Korean officials with financial sanctions for alleged human rights abuses.

The Office of Foreign Assets Control designated North Korean state security minister Jong Kyong Thaek, ideological watchdog Choe Ryong Hae and propaganda director Pak Kwang Ho under 2016 financial sanctions penalizing Kim Jong Un’s regime.

The three officials are now banned from the U.S. financial system and can no longer access assets under U.S. jurisdiction. American citizens and residents are prohibited from any transactions with them.

Treasury Secretary Steven Mnuchin said in a statement that the North Korean officials “direct departments that perpetrate the regime’s brutal state-sponsored censorship activities, human rights violations and abuses, and other abuses in order to suppress and control the population.”

 

GOOD TO KNOW

• Federal Reserve Chairman Jerome Powell said Wells Fargo will be subject to a growth cap until the bank improves its risk management policies, according to Reuters.
• House Ways and Means Committee Chairman Kevin Brady (R-Texas) on Monday released a revised version of his year-end tax package, a move aimed at securing enough House GOP votes for passage.
• The White House is preparing to pick an aide to Vice President Mike Pence and critic of Fannie Mae and Freddie Mac to oversee the housing-finance companies according to the Wall Street Journal.
• The Dow Jones Industrial Average lost as much as 507 points in early trading Monday before ending with a gain of 34.

• The country’s budget deficit in the first two months of the 2019 fiscal year, which began October 1, was 50 percent higher than in the same period the previous year, according to the Congressional Budget Office, though the figure was inflated by timing.
• The Government Accountability Office on Monday issued a legal opinion that limits when the President can put a hold on federal spending.

 

ODDS AND ENDS

• Verizon on Monday announced that it had approved voluntary buyouts for roughly 10,400 employees, or about 7 percent of its total workforce.
• Some Chinese companies are banning iPhones and requiring that their employees use Huawei products following the arrest of Huawei’s chief financial officer, according to a new Yahoo News report.
• Australia’s antitrust regulator called for Facebook and Google’s influence to be curbed by government regulation in order to prevent abuses of power.