THE TICKER

Former president Barack Obama, it turns out, has wasted no time hopping on the Wall Street gravy train.

As Max Abelson of Bloomberg News reported Monday, Obama earned $400,000 last month for a speech to New York clients of Northern Trust Corp., an undisclosed sum for a speech last week to the private equity firm Carlyle Group, and will pull down about $400,000 next week for a keynote speech at investment bank Cantor Fitzgerald’s health-care conference. 

The speeches come, Abelson notes, as Democrats engage in a fresh round of soul-searching touched off by the publication of Hillary Clinton’s post-election apologia. In it, Clinton expresses remorse for the political damage she inflicted on herself by accepting millions in Wall Street speaking fees

“I didn’t think many Americans would believe that I’d sell a lifetime of principle and advocacy for any price. When you know why you’re doing something and you know there’s nothing more to it and certainly nothing sinister, it’s easy to assume that others will see it the same way. That was a mistake. Just because many former government officials have been paid large fees to give speeches, I shouldn’t have assumed it would be okay for me to do it. Especially after the financial crisis of 2008-2009, I should have realized it would be bad ‘optics’ and stayed away from anything having to do with Wall Street. I didn’t. That’s on me.”

Obama, as far as we can tell, is racked by no such doubt. A spokesman said he gives speeches “true to his values,” and the earnings help support his charitable giving. One big difference, of course, is that he won’t be running for office again. But unlike Clinton, he directly coordinated the federal response to the financial crisis, including the release of the second tranche of Wall Street bailout money, the stress tests of the big banks, the imposition of a sweeping new regulatory regime that followed and the decisions not to prosecute individual malefactors from the industry. 

The response from some liberals to the revelation of his paydays was harsh: 

Open Market Institute's Matt Stoller:

Former banker and author Nomi Prins: 

The Atlantic's Siddhartha Mahanta: 

Journalist Dan Froomkin:

Former reporter Curtis Skinner: 

But overall, the reaction was muted. No prominent elected officials weighed in — including Sens. Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.), the most outspoken critics of the industry on the left — a reflection of the broader shrug that has characterized the party’s attitude toward the financial sector this year. 

When House Republicans advanced a measure in June that would have gutted the Dodd-Frank law, House Democrats declined to offer amendments to put GOP members on the spot — a strategy aimed in part at shielding their own business-friendly moderates from taking sides against the industry. In July, congressional Democrats unveiled their “Better Deal” agenda, the first draft of a refreshed economic program. It focused on the concentration of corporate power, but not Wall Street per se, and the party has no plans yet to follow up with a proposal more narrowly aimed at curbing the sector's perceived excesses. Meanwhile, as Republicans in the administration and on the Hill explore their options for loosening the screws that Obama’s team applied to the industry, some moderate Senate Democrats have demonstrated a willingness to play ball and help.

That’s not to say that after last year’s Democratic presidential primary, in which Clinton and Sanders debated tough new regulations for the industry, the party has capitulated. Warren, for example, has highlighted the cascading Wells Fargo scandals and the firestorm over the Equifax data breach to argue against rolling back post-crisis controls. Publicity has compelled industry analysts to downgrade prospects for a legislative package easing the sector’s regulatory burden. And Senate Democrats are rallying to hold the line against an attempt by the GOP majority to overturn a Consumer Financial Protection Bureau rule allowing consumers to sue their credit card companies. 

But the election arguably taught Democrats an uncomfortable fact about demagogic politicking. Clinton ran against Donald Trump on a platform that called for ramping up scrutiny of the financial world — extending new regulations to big insurance companies and hedge funds, imposing a “risk fee” on the biggest banks, tightening the Volcker Rule, raising taxes on high-frequency traders, bringing executive pay to heel on Wall Street, and handing regulators new tools to use against individual wrongdoers. None of it mattered in the face of Trump’s gale-force accusations about her cronyism.

Then, after his victory, Trump immediately stocked his economic brain trust with the same figures he said Clinton would coddle. “When I read the news he filled his team with Wall Street bankers after relentlessly accusing me of being their stooge, I nearly threw the remote control at the wall,” Clinton writes in "What Happened.

So maybe it's no surprise that Democrats aren't rushing back into the breach — or marshaling outrage at Obama's moonlighting. As one senior Democratic aide puts it, “Trump is keeping us busy enough.”
 

MARKET MOVERS

The Fed prepares for "the great unwinding." The Wall Street Journal's Nick Timiraos: "The Federal Reserve resorted to a series of shock-and-awe stimulus campaigns to stabilize the economy after the financial crisis. Now the Fed is preparing the final move to unwind its support—and it wants to be as boring as possible.The central bank is likely to announce Wednesday it will start slowly shrinking its $4.2 trillion portfolio of mortgage and Treasury bonds purchased during and after the financial crisis. It will do so passively by allowing some bonds to mature without replacing them next month. The markets haven’t blinked at Fed signals for many months that this moment was nearing. But plenty could still go wrong."

Goldman Sachs expects two types of companies to benefit: banks and those with relatively low debt.  CNBC's Jeff Cox: "David Kostin, Goldman's chief equity strategist, thinks the market effect overall likely won't be dramatic, but the balance sheet operation will put upward pressure on rates, which in turn could take the shine off a stellar bull market rally this year. 'Given the well-choreographed and gradual adjustment, we expect that asset markets will avoid another 'taper tantrum,' the sharp and disruptive rise in yields that occurred in 2013,' Kostin wrote in a note to clients."

Meanwhile, economists expect the Fed will leave interests rates untouched this week while remaining on track to raise them a quarter-point in Decemberper Bloomberg

Trump deserves credit for market highs, CFOs say. CNBC's David Spiegel: "More than three quarters of respondents to this quarter's CNBC Global CFO Council poll say President Donald Trump deserves at least some of the credit for the stock market's record run in 2017, with 17.1 percent saying he deserves 'most of the credit.' The CNBC Global CFO Council represents some of the largest public and private companies in the world, collectively managing more than $4 trillion in market capitalization across a wide variety of sectors. The quarterly poll was conducted from Sept.5–13."

But is it too hot? Stocks would have to drop as much as 40 percent to be fairly valued, says Brad McMillan, chief investment officer at Massachusetts-based Commonwealth Financial Network. Financial and industrial stocks pushed the S&P 500 higher on Monday. 

TAX FLY-AROUND:

—Senate GOP eyes budget for $1.5 trillion in cuts. The Wall Street Journal's Richard Rubin and  Siobhan Hughes: "A budget that creates fiscal room for a $1.5 trillion tax cut, if adopted, would then be followed by a tax bill that would specify rate cuts and other policy changes that don’t exceed that figure. Calling for a tax cut in the budget would let Republicans lower tax rates while making fewer tough decisions on what tax breaks to eliminate to help pay for the cuts.

Republicans contend that some expiring tax cuts would have been extended anyway and that their plan would boost economic growth and generate revenue, reducing the actual impact on the deficit below whatever overall number they agree on. Still, they may need to make some of the tax cuts expire after 10 years, leaving decisions to a future Congress they may not control.

With this latest turn in budget talks, Republicans are gradually shifting away from an earlier stance some took in favor of a tax plan that fully paid for itself in the first decade. Budget Committee member Mike Crapo (R., Idaho) said on Monday that the tax cut should be 'as big as we can get.'"

American Action Network spends another $500,000 on digital ads. The latest round from the conservative group, which has now spent $8 million promoting a tax code overhaul, will focus on the House Freedom Caucus, leadership, key committees, and those in swing districts, with a concentration in California, New York and Illinois, per a release. 

Inversions will cost U.S. $12 billion. The Post’s Carolyn Y. Johnson: “American companies that merged with foreign companies to avoid taxes paid $45 million less in taxes on average in the first year after the move, according to a new analysis by the Congressional Budget Office. If current policy does not change, the agency projects future tax-avoiding deals will reduce tax receipts from corporations by 2.5 percent in 2027 — or $12 billion… CBO is optimistic that the trend is slowing.”

TRUMP TRACKER

Lighthizer: NAFTA push may fall short. The New York Times's Ana Swanson: "The top United States trade negotiator said Monday that it was unclear whether Canada, Mexico and the United States could reach a deal to overhaul the North American Free Trade Agreement within the ambitious timetable set by the Trump administration. In remarks ahead of a third round of talks beginning on Saturday in Ottawa, Robert Lighthizer, the United States trade representative, said negotiators were 'moving at warp speed, but we don’t know whether we’re going to get to a conclusion, that’s the problem.'... But reaching an accord looks increasingly difficult as the administration continues to push for ambitious changes that rankle Mexican and Canadian counterparts."

Lighthizer also called China "an unprecedented threat." The full quote, from a Monday speech, per Bloomberg's Andrew Mayeda: “The sheer scale of their coordinated effort to develop their economy, to subsidize, to create national champions, to force technology transfers and to distort markets in China and throughout the world is a threat to the world trading system that is unprecedented.”

The sale of former White House communications director Anthony Scaramucci’s SkyBridge Capital LLC hedge fund investment firm to a consortium that includes a Chinese buyer is still on track, with the closing date expected in late September, the firm’s chief investment officer said on Monday.
Reuters
Kushner Cos., the real estate firm owned by Jared Kushner’s family, repurchased an apartment complex in Central New Jersey that it sold 11 years ago.
Bloomberg

RUSSIA WATCH: 

Feds wiretapped Manafort. The government surveilled the former Trump campaign manager both before and after the election. CNN’s Evan Perez, Shimon Prokupecz and Pamela Brown scoop: “The government snooping continued into early this year, including a period when Manafort was known to talk to President Donald Trump. Some of the intelligence collected includes communications that sparked concerns among investigators that Manafort had encouraged the Russians to help with the campaign, according to three sources familiar with the investigation. Two of these sources, however, cautioned that the evidence is not conclusive."

It started in 2014, stopped last year due to lack of evidence, and then resumed under a new FISA warrant: “Sources say the second warrant was part of the FBI's efforts to investigate ties between Trump campaign associates and suspected Russian operatives. Such warrants require the approval of top Justice Department and FBI officials, and the FBI must provide the court with information showing suspicion that the subject of the warrant may be acting as an agent of a foreign power.”

Mueller team told Manafort they planned to indict him. The Trump hand “was in bed early one morning in July when federal agents bearing a search warrant picked the lock on his front door and raided his Virginia home,” the New York Times’ Sharon LaFraniere, Matt Apuzzo and Adam Goldman write in Monday’s second Manafort-focused bombshell. “They took binders stuffed with documents and copied his computer files, looking for evidence that Mr. Manafort... set up secret offshore bank accounts. They even photographed the expensive suits in his closet. The special counsel, Robert S. Mueller III, then followed the house search with a warning: His prosecutors told Mr. Manafort they planned to indict him

Dispensing with the plodding pace typical of many white-collar investigations, Mr. Mueller’s team has used what some describe as shock-and-awe tactics to intimidate witnesses and potential targets of the inquiry… ‘They are setting a tone. It’s important early on to strike terror in the hearts of people in Washington, or else you will be rolled,’ said Solomon L. Wisenberg, who was deputy independent counsel in the investigation that led to the impeachment trial of President Bill Clinton in 1999.”
 

Two Trump lawyers were talking about the Russia investigation within earshot of a New York Times reporter. This is part of a loose-lipped pattern.
Aaron Blake
The social media giant owes it to its users to let them know if they interacted with what amounts to a digital spy. And that’s just the start.
New York Times
MONEY ON THE HILL

Senate passes nearly $700 billion defense bill. But it left some critical problems unsolved. The Post’s Karoun Demirjian: “By sheer size, the bill is the most comprehensive piece of legislation Congress grapples with in any given year, apart from dealing with the budget. This year, it has enjoyed unique bipartisan support in the Senate. But part of that harmony is due to the fact that this year’s Senate bill was unfettered by several of the policy fights senators had hoped to wage against the Trump administration, on matters including transgender troops and North Korea.”

POCKET CHANGE

THE EQUIFAX BREACH:

DOJ opens criminal probe of Equifax stock sales. The investigation is looking into whether executives violated trading laws by dumping shares before the public announcement of the data breach. Bloomberg's Tom Schoenberg, Anders Melin, and Matt Robinson: "U.S. prosecutors in Atlanta, who the people said are looking into the share sales, said in a statement they are examining the breach and theft of people’s personal information in conjunction with the Federal Bureau of Investigation. The Securities and Exchange Commission is working with prosecutors on the investigation into stock sales... Investigators are looking at the stock sales by Equifax’s chief financial officer, John Gamble; its president of U.S. information solutions, Joseph Loughran; and its president of workforce solutions, Rodolfo Ploder."

The company learned about the breach in March. That's almost five months before it publicly disclosed what happened. Bloomberg's Michael Riley, Anita Sharpe, and Jordan Robertson: "In a statement, the company said the March breach was not related to the hack that exposed the personal and financial data on 143 million U.S. consumers, but one of the people said the breaches involve the same intruders. Either way, the revelation that the 118-year-old credit-reporting agency suffered two major incidents in the span of a few months adds to a mounting crisis at the company, which is the subject of multiple investigations and announced the retirement of two of its top security executives on Friday."

Terrific: The company also supplies services to Social Security, Medicare and Medicaid. The Wall Street Journal's Michael Rapoport and AnnaMaria Andriotis: "The government work, which generates more than $20 million in revenue for Equifax annually according to federal procurement data, highlights how deeply rooted Equifax is in the financial life of the country—helping establish the very basic credentials of identity for U.S. citizens. That broad reach is now cause for concern given the company’s announcement earlier this month of a breach that disclosed vital personal information of potentially 143 million Americans. That information included Social Security numbers, along with names, addresses and dates of birth."

Rep. Jim Langevin (D-R.I.) reintroduced a bill to establish a national breach notification law... And New York Gov. Andrew M. Cuomo said he wants credit-reporting firms to comply with the state’s cybersecurity regulations.

JPMorgan Chase & Co (JPM.N) has been routing customer orders for bitcoin-related instruments, a spokesman said on Monday, despite the bank's chief executive's calling the crypto currency "a fraud."
Reuters
The Foxconn deal could set a record for tax breaks given to a foreign company.
Danielle Paquette
The 60-year-old retailer is no longer the icon it once was.
https://www.facebook.com/abhabhattarai
THE REGULATORS

CFTC's "major" E.U. concernReuters' Michelle Price: "The United States is worried that European regulators may seek direct oversight of U.S.-based clearing houses as part of regulatory changes sparked by Britain’s decision to leave the European Union, a top U.S. regulator said on Monday. The comments by Christopher Giancarlo, chairman of the Commodity Futures Trading Commission, signal Europe and the United States may be heading for another major stand-off over cross-border regulation of clearing houses, having reached a hard-fought agreement on the matter just last year. Clearing houses guarantee financial trades in case either party defaults."

Lobbyists and Republican lawmakers are gearing up for battle over a new U.S. regulation that is likely to dent profits in the $6 billion short-term, high-interest "payday" loan industry.
Reuters
Under a federal settlement, the National Collegiate Student Loan Trusts will refund millions to borrowers and temporarily suspend debt collections.
New York Times
DAYBOOK

Today

  • The Senate Finance Committee holds a hearing on tax reform.

Coming Up

  • The Federalist Society holds an event on funding the government on Friday.

THE FUNNIES

From The Post's Tom Toles: "The environmental assault reaches a monumental scale." 

BULL SESSION

These are the lawyers defending President Trump: 

Who Spun it Best: Former White House staffers fight for influence:

Hillary Clinton jokes that she ran against Trump and Russian President Vladimir Putin:

From Jimmy Kimmel Live, the "Love Language of Donald & Melania Trump":