THE TICKER

The road to rewriting banking law now runs through Montana, North Dakota, and Indiana. Each of those red states has one Democrat representing it in the Senate. Those Democrats all sit on the Senate Banking Committee. And they’re all facing tough reelection races in 2018. 

Sens. Joe Donnelly (Ind.), Heidi Heitkamp (N.D.) and Jon Tester (Mont.) would like to demonstrate anew they’re capable of working across the aisle to get stuff done. That presents an opportunity for banking interests. How rich an opportunity it proves for Wall Street-sized institutions remains to be seen. 

No politician wants to risk getting tagged as a handmaiden to big banks. Two of the three in-cycle Democrats on the banking committee in particular — Heitkamp and Tester — have thrived in unfriendly partisan territory by honing profiles as prairie populists. Trump carried Montana by more than 20 points and North Dakota by more than 36, yet both the Democratic senators enjoy strong approval ratings back home.

There isn’t a wealth of state-level polling revealing how Trump’s support has fared in the opening act of his presidency.

But in the run-up to last month’s special election for the at-large House seat in Montana, one Republican survey found the president’s approval numbers there had dropped considerably, with a slight plurality of voters now viewing him unfavorably, according to a report in National Journal.

Back in April, Tester voted with the majority of Senate Democrats in opposing confirmation of Trump’s pick for the Supreme Court, Neil Gorsuch. Donnelly and Heitkamp counted for two of the only three Democrats who crossed the aisle to support Gorsuch. 

When it comes to rewiring Dodd-Frank, all three have emphasized their priority for bringing regulatory relief to small and mid-sized banks. But then there isn’t a lawmaker on Capitol Hill who will fly a flag for easing JPMorgan’s burden. 

Six years ago, Tester led an unsuccessful charge to delay a reduction of debit card swipe fees mandated by Dodd-Frank. The delay was worth potentially billions of dollars to the big banks. Tester argued that without it, small banks would suffer, too, though institutions with less than $10 billion were exempt. The measure failed, and Tester has said privately he won’t launch another offensive on the provision, industry sources tell me. 

So there’s the question of what qualifies a bank as big. Donnelly wants to bump up the threshold — from $10 billion to $50 billion — for banks to come under Consumer Financial Protection Bureau supervision. Here he is at a Senate Banking Committee hearing on Thursday, making that point to a friendly witness, Robert Hill, CEO of a mid-sized South Carolina bank called South State:

The Treasury report earlier this week that called for dramatically shrinking Dodd-Frank recommended the same threshold bump— from $10 billion to $50 billion — but for determining which banks undergo annual stress testing. That’s one change among several that CompassPoint analyst Isaac Boltansky sees earning some bipartisan support in the Senate. In a Thursday note to clients, he said Donnelly, Heitkamp, and Tester — along with Sen. Mark Warner (D-Va.), another moderate on the banking panel, who doesn’t face reelection next year — will determine how much wiggle room lawmakers give back to the industry. 

But the buzzsaw of electoral politics can cut jaggedly through the otherwise bloodless task of regulating the banking sector. Incumbents turning to face angry voters sometimes find their best bet is to divert the pitchforks to Wall Street.

That played out in 2010, when then-Sen. Blanche Lincoln (D-Ark.) stepped into the fray over how to crack down on the industry in the wake of the financial crisis. Facing a nasty primary challenge from the left back home, Lincoln proposed forcing banks to spin off their rainmaking derivative trading units. The provision made it into law over the objections of the then-Fed chairman, the Obama White House and its Treasury secretary, who all believed it went too far. Lincoln won her primary but got routed in the general election. And lawmakers quietly scrubbed the provision, the so-called "swaps push out" rule, four years later. 

Robert Holifield, who helped craft the proposal as Lincoln's then-staff director on the Senate Agriculture Committee, tells me he now thinks it was a mistake. "We put it out there and moved it through in a matter of days. It couldn’t get watered down because people were terrified to touch it," he says. "It took on a life of its own during the debate."

Now that the law is in place, Holifield’s advice to the moderates is to keep it local: "Find solutions that allow their banking institutions to compete and then go home and tell that story. Get the narrative down and talk rationally."

SHOOTING UPDATE: 

--House Majority Whip Steve Scalise (R-La.) remains in critical condition as of Thursday evening but has improved since Wednesday, according to MedStar Washington Health Center. Lobbyist Matt Mika’s condition, previously critical, has improved to serious, according to George Washington University Hospital.

--Just more than 36 hours after the shooting that left Scalise and five others injured, Republican and Democratic lawmakers bowed their heads in prayer in the middle of the field at Nationals Park, at the Congressional Baseball Game that carried on in a show of unity and bipartisanship in front of a record crowd of 24,959. Special agent David Bailey, one of the Capitol Police officers injured in the shooting, threw out the first pitch. House

--Speaker Paul D. Ryan (R-Wisc.) and House Minority Leader Nancy Pelosi (D-Calif.) gave a joint interview to CNN from the game. “Tonight we’re all Team Scalise,” Pelosi said. Ryan called for unity and a for toning down heightened rhetoric in the wake of the shooting. “What we’re trying to do is tone down the rhetoric, lead by example and show people we can disagree with one another, we can have different ideas without being vitriolic, without going to such extremes,” he said.

--While the Democrats won the baseball game 11-2, they gave the trophy to Republicans to give to Scalise.

MARKET MOVERS: 

 

President Trump is not taking this "under investigation" thing well. The president lashed out publicly several times Thursday following a Post report that he is now facing scrutiny for potential obstruction of justice from Robert Mueller, the special counsel appointed to head up the probe of Russian election meddling. Trump used his preferred medium to express his frustration: 

— The tweets came as the bad news continued piling up. Vice President Pence has now hired a personal lawyer. And Mueller is now investigating the finances and business dealings of Jared Kushner, Trump's son-in-law. Investigators are also examining dealings by former national security adviser Michael Flynn, former campaign chairman Paul Manafort and Carter Page, who was listed as a foreign-policy adviser for the campaign.

A new poll shows more than 6 in 10 Americans already think Trump tried to obstruct the Russia investigation. The silver lining: 48% of Americans describe themselves as extremely or very concerned that Trump or others in his campaign had inappropriate contact with the Russian government — a significant percentage, but up only 4% over the last two months. 

The Senate voted 98-2 to ramp up sanctions on Iran and Russia, a very veto-proof rebuke of the Trump administration's foreign policy. That, as Trump travels to Miami today to deliver what Cuba-watchers expect will be a tough critique of the Obama team's Cuba policy that nevertheless leaves it largely intact. Trump two weeks ago declared in the Rose Garden that under his leadership, foreign leaders "won't be laughing at us anymore." They are

— Meanwhile, Senate Majority Leader Mitch McConnell (R-Ky.) is aiming to bring a health-care overhaul to the floor by the end of the month, even though some in his own ranks don’t know what’s in it and are increasingly frustrated that the process is unfolding among a small group behind closed doors. The fate of the original health-care overhaul’s Medicaid expansion remains a major bone of contention within the GOP. And Trump himself has remained a moving target on the issue, saying earlier this week that the House-passed version he once cheered is in fact “mean.”

A longtime health-care reporter offered a blistering assessment of the process, via Vox

POCKET CHANGE

Wells Fargo is back in the ringer. From my colleague Jonnelle Marte: "The bank forced borrowers in bankruptcy into loan modifications by reducing their monthly mortgage payments, even though homeowners had not requested the adjustments, according to lawsuits filed against Wells Fargo last week and last year. The loan modifications also typically extended consumers’ mortgages by decades, substantially increasing the amount of interest they would owe on their loans and putting them at greater risk of default."

It's a great time to be a rich American. That's probably always been true. But it's especially true now, as wealth accumulation accelerates around the world, it's gone into overdrive in the United States.

"Nothing runs without one person at the top,” said one management professor. “Nature abhors a power vacuum."
Jena McGregor
Jorge Luis Arzuaga pleaded guilty to money laundering conspiracy, the first banker publicly convicted in a case that has implicated dozens of soccer officials and marketing executives.
New York Times
MONEY ON THE HILL

The top Senate tax-writer is endorsing a plan to extend the budget window for a tax overhaul, Bloomberg reports. That would allow Republicans to secure deeper cuts over a longer time period without any support from Democrats. Other lawmakers who’ve endorsed the idea have talked about stretching the current, 10-year timeframe to 20 or even 30 years. 

— And the Blue Dog Coalition of House Democratic centrists want to get in on the tax-code overhauling action. They’re asking lobbyists for help formulating their principles for a tax-code rewrite as the group aims to work with Republicans on the issue. The group’s policy co-chair sent a letter Thursday to trade associations, corporate offices and labor unions seeking input, according to The Hill

The House Financial Services Committee approved part of a package to reauthorize the National Flood Insurance Program, though partisan tensions were running high throughout the markup. The panel will return to the work on Wednesday. (see my writeup yesterday).

— Meanwhile, the only fireworks at a Senate Banking Committee hearing Thursday focused on regional and mid-sized banks came toward the end, when Sen. Elizabeth Warren (D-Mass.) challenged the credibility of Harris Simmons, whose Zions Bancorporation took a $1.4 billion bailout during the financial crisis. Watch here: 

THE REGULATORS

The Trump administration is preparing an executive order aimed at bringing down prescription-drug costs. It’s not clear what will be in it. Top health and budget officials are meeting today, presumably to figure that out. Trump pledged to tackle high drug prices on the campaign trail and during the early rounds of the Republican health-care overhaul, but that’s yet to translate into policy. Drug stocks swooned on the news. 

The Education Department is delaying, and considering canceling altogether, Obama-era rules aimed at cracking down on predatory, for-profit colleges. Set to take effect July 1, the rules would've helped bail out students cheated by colleges that acted fraudelently and stuck with federal loan debt.

Trump has named his son Eric's wedding planner to run the office that oversees federal housing programs in New York. The job involves supervising the distribution of billions of dollars. 

“How can this group of really smart people who are dedicated public servants keep making the exact same mistake over, and over, and over, and over again?”
Bloomberg
CHART TOPPER

Tech start-ups with at least one female founder have more female employees than top companies with more female employees but no female founders, according to a survey by Funders Club. Read more about the survey from USA Today: 

DAYBOOK

Today

  • President Trump is scheduled to speak in Miami, and is expected to announce a rollback of Obama’s policies toward Cuba.

Coming Up

  • The Atlantic is holding a discussion on “The Rise of Populism and Nationalism” on June 19.
  • The Brookings Institution is holding an event on “why economic policy so often so often comes up short” on June 20.
  • The House Appropriations’ Subcommittee on Financial Services and General Government will hold a budget hearing with OMB Director Mick Mulvaney on June 21.
  • The House Financial Services Committee will hold a hearing on “Risks to Price Stability and the Economy” on June 21.
  • The Senate Appropriations Subcommittee on the Legislative Branch will hold a hearing on the budget requests for the Government Accountability Office and the Congressional Budget Office on June 21.
  • The Senate Committee on Banking, Housing and Urban Affairs will have a hearing on “Fostering Economic Growth: Regulator Perspective” on June 22. 
THE FUNNIES

The New Yorker's take on fellow senators interrupting Sen. Kamala D. Harris (D-Calif.) during her questioning in two separate Senate Intelligence Committee hearings:

A cartoon by @kimwarp. #TNYcartoons

A post shared by The New Yorker (@newyorkermag) on

BULL SESSION

President Trump signs an executive order to expand ApprenticeshipUSA, a grant program that was previously championed by the Obama administration:

Watch President Trump's full speech touting his executive order to expand apprenticeship programs: 

Following the shooting that wounded House Majority Whip Steve Scalise (R-La.) and four others, House Minority Leader Nancy Pelosi (D-Calif.) says lawmakers are considering more protection: 

Watch as Republicans and Democrats pray together at the Congressional Baseball Game: 

A look at whether President Trump has kept his campaign promises: 

And Stephen Colbert takes on the report from The Post that the special counsel is investigating Trump for possible obstruction of justice: