with Paulina Firozi


Want to understand how Wall Street impacts Washington -- and tax reform? Get this.

Wall Street looks poised to score its first major legislative victory of the Trump era, and it could come as soon as today.

Senate Republicans are gearing up to overturn a rule from the Consumer Financial Protection Bureau that makes it easier for consumers to sue industry giants. They need a simple majority to do so, and a GOP leadership source confirms they will probably vote today. 

The regulation, issued in July, prohibits banks from slipping binding arbitration clauses into their customers' contracts for credit cards, bank accounts and other products. The financial services industry has made it a top priority to persuade Congress to scrap the rule, which, by a Treasury estimate, could cost firms $500 million in legal defense fees.

Democrats say the rule is especially urgent in light of abuses by financial giants including Equifax and Wells Fargo. And for months, a handful of fence-sitting Senate Republicans have kept GOP leaders in the chamber from gathering the support necessary to bring the issue to the floor. 

With a 52-vote majority, Republicans can afford to lose only two of their own. The word Monday among banking lobbyists was that leaders had managed to stanch the defections at two: Sen. Lindsey Graham (R-S.C.), who has long been opposed to reversing the rule, and one other, thought to be Sen. John Kennedy (R-La.), who has remained uncommitted, a position he publicly maintained Monday. If there are no more, and Senate Republicans are fully present, they can match the  action the House took in July to scotch the rule and send it to the president for his signature. 

Debate over the rule hasn’t just divided Congress along mostly partisan lines. It has also pitted Trump’s regime against the CFPBan island of Obama-era policymaking persevering in its midst. That fight within the executive branch spilled into public view Monday, as my colleague Renae Merle reports: The Treasury Department issued an 18-page report that blasted the rule for failing to “account for significant costs of class action litigation and benefits of arbitration in a meaningful way,” and upending “a century of federal policy favoring freedom of contract to provide for low-cost dispute resolution.”

The CFPB fired right back, dismissing the Treasury report as warmed-over talking points from the industry. 

Reuters’s Pete Schroeder:

Congressional Democrats joined in. Senate Minority Leader Chuck Schumer (D-N.Y.) said with the report, the Trump administration “has twisted itself into a pretzel to try to undermine a rule that protects consumers from unscrupulous actors like Equifax and Wells Fargo.” 

And Sen. Elizabeth Warren (D-Mass.), who came up with the idea for the CFPB, posted this alert-cum-explainer: 

For financial services interests that entered the year expecting sweeping deregulation — hopes that have so far gone unmet — a successful Senate vote would rate as a significant win. “The result would spell a big victory for Republicans and a welcomed relief for banks and specialty finance companies ranging from purveyors of mortgages, payday loans and student loans... and, yes, credit reports,” CapAlpha’s Charles Gabriel wrote in a note to clients Monday. 



— Clinging to stimulus. WSJ's David Harrison and Harriet Torry: "Leaders of the world’s largest central banks indicated that weak inflation in advanced economies could prolong the postcrisis era of easy money policies. Despite a broad-based improvement in the global economy, wages and consumer prices remain stubbornly low, making central bankers wary of removing their stimulus measures too quickly, they told a Group of 30 banking conference here on Sunday. Their concerns contrasted with the generally upbeat tone that prevailed during last week’s fall meetings of the International Monetary Fund and World Bank, and they suggest that there is still work to do to get the world’s economy on track nearly a decade after the onset of the global financial crisis."

— A Fed-proof bet. Bloomberg's Brian Chappatta: "Traders in the $14.2 trillion Treasuries market have found a way to avoid fighting the Federal Reserve, or at least its imminent leadership change. Whether President [Trump] nominates Fed Board Governor Jerome Powell, Stanford University economist John Taylor or even Chair Janet Yellen to lead the central bank, one trade is foolproof in the eyes of many on Wall Street: betting on a flatter U.S. yield curve. By most measures, the spread between short- and long-term Treasuries is already the slimmest in a decade as the Fed raises rates in the face of tame inflation."

YowchFrom Wonkblog's Matt O'Brien: "How to be wrong about almost everything and maybe be Fed chair anyway: the Kevin Warsh story:" "President Trump's shortlist for the next Federal Reserve chair includes the most qualified person for the job who's been on the right side of every economic argument the last 10 yearsand also Kevin Warsh. The first one, of course, is current Fed Chair [Yellen]... It's true that some of our best central bankers haven't had PhDs in economics, but that wasn't Warsh. His specialty was seeing inflation problems that didn't exist. He warned about inflation in 2006 when, excluding volatile food and energy prices, it was just 2.1 percent. Then he did in 2007 when it was 2 percent by the same measure. And again in 2008 when core prices were rising a relatively nonthreatening 2.3 percent, going so far as to say that he was “still not ready to relinquish my concerns on the inflation front” the day after Lehman Brothers failed."


Here are 10 tax reform promises Trump has made:

A look back at the promises President Trump has made on his tax reform plan. (Joyce Koh/The Washington Post)


House tax draft coming next week, Senate soon after. Bloomberg: "House Freedom Caucus Chairman Mark Meadows [D-N.C.] said Monday he’s been promised that the House Ways and Means Committee will release its plan about seven days after this Thursday’s scheduled vote on a budget resolution. That would mean a bill text would be published on or before Friday, Nov. 3. On Monday evening, Ways and Means Chairman Kevin Brady [R-Tex.] said only that the timing for a bill 'is very shortly.' ... And Senate Finance Committee Chairman Orrin Hatch [R-Utah] said his own panel needs to produce a plan in the next two to three weeks. 'I think we need to come up with it quite soon,' said Hatch."

Two steps forward, Trump steps back. Congressional Republicans are racing to finish draft tax legislation — and in desperate need of new revenue sources to pay for it — but the president on Monday took one off the table in a single tweet. If it becomes a habit, it could make the already-difficult challenge facing tax-writers even tougher. The Post's Damian Paletta and Mike DeBonis: Trump's "vow to protect 401(k) plans, made in a Twitter post, comes just days before House Republicans are planning to introduce a bill that would dramatically slash corporate tax rates, consolidate tax brackets for families and individuals, and eliminate the alternative minimum tax and estate tax."

Rep. Brady "is leading initial drafting of the tax legislation, is expected to release the bill as soon as next week and told reporters it remains on track. But he declined to make a firm commitment on timing and said Republicans had not yet made key decisions, such as whether to add an additional income tax bracket for high earners and on how to implement a planned estate tax repeal."

SALT breakthrough? Don't miss this: Damian and Mike report that GOP leaders believe they have forged a compromise with blue-state Republicans on state and local tax deductions: "The lawmakers had complained that taxes for people in their states might actually go up if the new plan prohibits people from deducting their state and local taxes from their taxable federal income. After a number of meetings with concerned lawmakers, GOP leaders think they have found a way to minimize the impact of middle-class residents in these states, though precise details of how this would work could not be learned."

Here's an interview with Sen. Bob Corker (R-Tenn.) on Trump from ABC News this morning: 

RSC leader: Maybe leave top rate alone. Bloomberg's Erik Wasson: "House tax writers got a boost Monday when Republican Study Committee Chairman Mark Walker (R-N.C.] said he is open to tentative plans for keeping the current top individual tax rate for the highest earners as part of a tax code overhaul set to be released as soon as next week. Walker said he could live with taxing the highest earners at the current top rate of 39.6 percent if that’s needed to get a tax bill enacted. Last week, House Speaker Paul Ryan [R-Wis.] said the draft plan would have such a bracket in order to funnel more benefits to the middle class. 'A key thing is making sure this benefits the middle- and lower-income individuals,' Walker said in an interview."

Farmers nervous. FT's Sam Fleming: "Republican tax reform plans risk falling foul of one of the most politically influential constituencies in the US as agriculture lobbyists warn that some in their sector could end up paying higher taxes because of the overhaul. In their drive to lower tax rates and simplify the system, the Trump administration and lawmakers are considering the elimination of a range of items businesses can deduct from their tax bills. Agriculture lobbyists are ramping up meetings on Capitol Hill to ensure their sector does not lose tax breaks that they say are critical to keeping the sector profitable."

The cavalry is coming. "Senior White House officials huddled on Monday evening with the leaders of an administration-backed political group to begin mapping out a multimillion-dollar campaign to sell tax reform," Politico's Alex Isenstadt writes. "Those involved in Monday’s gathering included Trump's son-in-law and senior adviser Jared Kushner and Vice President Mike Pence’s chief of staff, Nick Ayers. Also present were Brian Walsh, Brad Parscale, Katie Walsh, and Corey Lewandowski — all top strategists for the pro-Trump nonprofit America First Policies...

During the course of the hour-long meeting, top officials with America First Policies signaled plans to wage an aggressive effort to push tax reform, according to four people with knowledge of the discussion. The group told the White House it was planning to spend in the millions... The meeting comes at a sensitive time for the administration. Former White House chief strategist Steve Bannon has launched a nationwide campaign to oust Senate Republicans in next year’s midterms. While some conservative activists are cheering Bannon, some close to the White House worry that the anti-incumbent bid could undercut Trump’s efforts to win legislative support for the tax overhaul. 

Several people familiar with Monday’s meeting said the purpose was for America First Policies to reassert its standing as the main pro-Trump outside vehicle."

From The Post's Heather Long: 

President Trump's daughter and senior White House adviser Ivanka Trump spoke on Oct. 23 in Bucks County, Pa., about her father's tax reform plan. (The Washington Post)

Ivanka hits the road. The first daughter's salesmanship is neither going to move public opinion nor deliver wavering congressional Republicans, but she went on the road anyway. Via Politico: "Ivanka Trump characterized Republicans' tax reform plan as a positive step for working middle-class families on Monday as the White House pushes to get the plan through Congress. 'For me this tax plan really couples two things that are really core values as a country, which is work and supporting the American family,' the daughter of [Trump] and adviser to the president said during a town hall on tax reform in Bucks County, Pa."

Not so fast on Puerto Rico. "At least two Senate Republicans are delaying swift passage of a disaster aid package — demanding that Puerto Rico be made permanently exempt from a 1920 law that has complicated efforts to send supplies to the hurricane-ravaged territory," Politico's Seung Min Kim writes. "Sens. Jeff Flake of Arizona and Mike Lee of Utah are holding up the legislation, according to GOP sources, due to fiscal concerns but also to allow Puerto Rico to bow out from the Jones Act, which restricts shipments between U.S. ports to just those vessels built and operated by Americans... The Senate on Monday evening voted 79-16 to advance the $36.5 billion measure, which has already passed the House. Even with the objections, senators are expected to pass the bill later this week and send it to President Donald Trump for his signature."


Mr. Trump visits the Senate. Republican senators have a lot they'd like the president to cover when he stops by their weekly lunch in the Capitol today. The Post's Sean Sullivan: "One Republican senator wants [Trump] to light a fire under his colleagues. Another wants clarity on his policy priorities. A third is interested in hearing about tax reform and health care while a fourth would prefer that Trump sticks to just taxes... While GOP aides and senators predicted Monday that Trump’s visit would center mostly on the ongoing effort to rewrite the nation’s tax laws, the broad array of topics on their mind, coupled with the president’s penchant for suddenly veering from one subject to another, could open the door to an unpredictable afternoon."

The Senate's top Russia investigator will be there. Politico's Elana Schor: "Senate Intelligence Committee Chairman Richard Burr (R-N.C.), who is leading the chamber's investigation into [Trump's] ties to Russia, said he plans to attend the president's visit to the Senate GOP conference on Tuesday. Burr skipped a July trip to the White House because of his ongoing probe. But in a brief interview Monday, Burr drew a distinction between his decision not to join that trip by GOP senators and his expected attendance when Trump comes to the Capitol on Tuesday. The president is set to speak to Senate Republicans during their weekly policy lunch, his first such appearance at the upper chamber."


Tony Podesta now under investigation. Mueller is looking into the Democratic super lobbyist and his firm over a potential FARA violation. NBC's Tom Winter and Julia Ainsley scoop: "The probe of Podesta and his Democratic-leaning lobbying firm grew out of Mueller's inquiry into the finances of former Trump campaign chairman Paul Manafort, according to the sources. As special counsel, Mueller has been tasked with investigating possible collusion between the Trump campaign and Russia. Manafort had organized a public relations campaign for a non-profit called the European Centre for a Modern Ukraine (ECMU). Podesta's company was one of many firms that worked on the campaign, which promoted Ukraine's image in the West."

House intel to question Trump's digital director. WSJ's Julie Bykowicz: "President Donald Trump’s campaign digital director, Brad Parscale, will be interviewed Tuesday by the House Intelligence Committee, his first appearance before any of the panels examining the issue of Russian interference in the 2016 election. Mr. Parscale confirmed his scheduled appearance. The Senate committees also probing interference haven’t scheduled time with Mr. Parscale, he said, declining to comment further."



  • The Heritage Foundation holds an event on the “Business Perspective and Cost of Doing Nothing on Tax Reform.”

Coming Up

  • The Hill hosts an event on the future of housing with HUD Secretary Ben Carson on Wednesday.
  • Cato Institute holds an event on renegotiating NAFTA on Thursday.
  • Cato Institute holds an event featuring Grover Norquist titled, “Home Stretch for Major Tax Reform?” on Thursday.
  • The Senate Banking, Housing, & Urban Affairs Committee holds a nomination hearing Thursday for Brian D. Montgomery to be HUD’s assistant secretary for Housing – Federal Housing Commissioner, Robert Hunter Kurtz to be HUD’s assistant secretary for Public and Indian Housing, and Suzanne Israel Tufts to be HUD’s assistant secretary for Administration.
  • The Information Technology and Innovation Foundation holds a panel discussion about the policy debate around competition policy in innovation industries on Thursday.
  • Heritage Foundation holds an event on “The Role of Investor-State Dispute Settlement Provisions in NAFTA” on Friday.

'The 401K plan as it stands will not be touched' by tax plan, says official:

Treasurer Jovita Carranza said on Oct. 23 that 401(k) retirement plans are going to remain the same under President Trump's tax plan. (The Washington Post)

A brief history of President Trump's rivalry with Mark Cuban: 

A popular legend is that Mark Cuban and President Trump were friends that fell out during the 2016 race, but the two have been feuding more than a decade. (Thomas Johnson/The Washington Post)

Here are some pets already in the Halloween spirit: 

Halloween is just around the corner but these pets are already rocking their costumes. (Taylor Turner/The Washington Post)