THE TICKER

Orrin Hatch’s retirement may clear the way for a pretty painless path to the Senate for Trump rival Mitt Romney (should he decide to run). But it will set off a more chaotic jumble on Capitol Hill to replace the Senate Finance Committee chairman.

Hatch's influential panel just helped power the Republican rewrite of the tax code into law. His decision to step down at the end of this year frees up the coveted gavel for the tax-writing committee, which also oversees entitlement programs some in the party would like to target next. 

Next in line to grab it: Sen. Charles Grassley (R-Iowa), chairman of the equally coveted Senate Judiciary Committee. Grassley helmed the Finance panel from 2003 to 2006 and then, after Democrats took control of the Senate, served six more years as the ranking Republican.  

Senate Republicans limit their members to six years each in the chair and ranking Republican slots of any given committee. So once Grassley exhausted his time as the top Republican on Finance, he slid into the same job leading the minority on Judiciary. But the Iowa Republican still has two years left in the bank as Finance chair. 

As The Washington Post’s resident congressional sage Paul Kane explains, some Grassley loyalists wanted him to take back the Finance chairmanship when Republicans won control of the Senate in 2014. “He deferred to his fellow octogenarian,” Paul tells me, referring to Hatch. And Grassley deferred again after President Trump’s victory in 2016, despite the promise of chairing the committee under complete Republican control, in part because staying put at Judiciary offered the chance to oversee a Supreme Court confirmation and work on immigration issues. 

If the GOP maintains its grip on the chamber after the midterms, the post seems to be Grassley's to take. Not everyone is convinced he'll grab it.

One senior Senate aide tells me Grassley may decide he wants to forge ahead atop the Judiciary panel, which oversees the confirmation of federal judges. The confirmation of a record number of federal appeals court judges during Trump's first year is a bright spot for conservatives in the Trump first-year agenda.

If Grassley stayed put, the Finance gavel would probably fall to the next in line behind him: Sen. Mike Crapo (R-Idaho), who is currently chairman of the Senate Banking Committee. Crapo is starting only his second year in that gig, but he’s primed to manage a banking deregulation package he crafted with help from red-state Democrats on his panel last year. Senate Majority Leader Mitch McConnell (R-Ky.) has declared it a priority for floor consideration early in 2018. 

CapAlpha’s Charles Gabriel laid out the logic for Crapo to make the move in a Tuesday note, pointing to the likely success of his deregulation package: “The Senator’s interest in a change of scene is understandable. Meanwhile … from a health agenda perspective, Crapo is the preferred pick since Grassley often takes an adversarial position with the health industry, particularly around drug pricing issues. We would add as a postscript that, in our view, Crapo’s deep understanding of budget rules (as a long-time member of the Budget Committee) helped him rank … as a most valuable GOP player in helping to move the Tax Cuts and Jobs Act.”

A move by Crapo would probably leave the Banking gavel in the hands of Sen. Pat Toomey (R-Pa.), the second-ranking Republican on the committee. That would be welcome news for some business interests on Wall Street and beyond, and the possibility had K Street buzzing Tuesday.

Toomey, a onetime currency trader, played a critical part tilting the benefits of the GOP tax package toward corporations. As The Post’s Mike DeBonis recently reported: “Behind the scenes, according to aides, lobbyists and fellow lawmakers, Toomey played a major role in shaping the Republican tax overhaul — pushing not only for a cut in the top individual rate but also helping slash rates for corporations and repeal a key provision of the Affordable Care Act … Toomey’s influence represents the imprint of the supply-side doctrine on the bill — the notion that the benefit of lower taxes and fewer regulations on businesses and investors, in the words of its critics, ‘trickle down’ to other Americans.”

As the American Banker's Ian McKendry notes, it's not clear what Toomey would prioritize, but he's demonstrated his deregulatory bent: "Like Crapo, the Pennsylvania senator supports regulatory relief. Recently, Toomey has helped lead the charge in classifying Obama-era regulatory initiatives as eligible for congressional rollback through the Congressional Review Act. Toomey has supported rolling back parts of the Dodd-Frank Act in the past, including eliminating Title II, which established the “orderly liquidation authority” allowing regulators to unwind a failed megabank in a manner meant to avoid a systemic collapse."

For the committee jockeying to amount to anything in the near term, of course, Republicans will need to have some hope of advancing a policy agenda.

And if the party loses control of the House, Senate, or both in the midterms, the possibilities for advancing meaningful measures narrow to a vanishing point. In that case, Hatch’s retirement could be most consequential in rebalancing the fight over Trump’s pull on the party — especially if Hatch, a stalwart Trump ally, is replaced by Romney, an outspoken critic. “If elected, Romney would have instantaneous gravitas on a range of issues, including the Russia investigation,” Jennifer Rubin, a columnist for The Post, wrote Tuesday. “It’s no exaggeration to say that he would be the leader of the #NeverTrump Republicans in the Senate and maybe the country. Current GOP senators would, to their chagrin, likely be overshadowed by a new member.” 

If Romney runs, the broader results of the 2018 midterms will determine whether a new senator could wield that influence without the benefit of a gavel. 

MARKET MOVERS

Trump's latest nuke tweet. Trump sent a shudder around the world Tuesday night with a tweet comparing the size of his "nuclear button" with that of North Korean leader Kim Jon Un:

One question for today: Will investors care? If recent history is any indication, the answer is not really. Flashback to early August, when the president pledged to meet ongoing threats from the rogue regime with "fire and fury." The saber rattling prompted a brief sell-off, but the market recovered by the end of the day.

As Vincent Reinhart, the chief economist for Standish Mellon Asset Management, told us then, “If this was a speech read off a teleprompter, people would have been more worried. Fire and fury’ became ‘fire and forget.’ There's an existential threat, and then investors just get past it.”

Gold is starting the new year on the front foot. Bullion advanced for an eighth session to head for the longest stretch of gains since mid-2011, building on an annual surge.
Bloomberg
A record-breaking cold that’s threatening to spur heating-fuel shortages from the East Coast to Texas has driven up natural gas demand to unprecedented levels and put crops across the U.S. wheat belt at risk.
Bloomberg
MONEY ON THE HILL

Shutdown showdown. Trump is ramping up tension over DACA, The Post's Bob Costa, David Nakamura and Ashley Parker report: "President Trump escalated tensions with Democratic leaders Tuesday over the fate of young undocumented immigrants known as “dreamers,” claiming the lawmakers are “doing nothing” to protect them from deportation as a key deadline nears, even though last year he ended the Obama-era program that allowed those immigrants to stay in the country. But the Twitter salvo masked a murkier reality as lawmakers returned to Washington: Trump remains open to negotiations on a charged issue that has vexed him since his presidential campaign — and his brash partisanship was widely seen as a nod to his base rather than a sudden turn in the talks."

The Big Four congressional leaders are set to meet at 3 p.m today to discuss the path forward with White House budget director Mick Mulvaney and legislative affairs chief Marc Short in House Speaker Paul Ryan's office. 

Shuster retiring. Another powerful chairman is stepping down, but he wants an infrastructure bill before he goes. Washington Examiner's Salena Zito: "Rep. Bill Shuster, chairman of the House Transportation Committee, will not seek re-election in November, telling the Washington Examiner that he wants to focus exclusively on working with President Trump to pass a massive infrastructure bill before he retires. The western Pennsylvania Republican, who has held the seat since 2001, said he does not want campaigning or anything else to get in the way of helping Trump get this major piece of legislation passed by Congress in 2018... 'About a week or so ago I had a private meeting with the president at the White House. Now when I say private meeting, it was the president and I in the Oval Office with his senior advisers and some of my senior people, and we talked about the infrastructure bill. He's very excited... This is a president who really understands how to build things, how to finance things, and how to get them done on time and under budget.'"

Debt to rival GDP. Washington Examiner's Joseph Lawler: "The federal debt held by the public will grow to nearly the size of the U.S. economy within 10 years under the GOP tax cut legislation, Congress's official budget experts projected Tuesday. The Congressional Budget Office estimated that the federal debt will increase from about 75 percent of gross domestic product today to 97.5 percent in 2027, thanks to the tax cut signed last month by President Trump. Before the tax bill became law, the office only saw the debt rising to 91 percent of GDP. The group figures that the $1.5 trillion tax cut will also mean more than $300 billion in higher interest payments on the federal debt. So altogether, the bill will add $1.8 trillion to the debt over the next decade."

POCKET CHANGE

BITCOIN BITS:

Peter Thiel’s Founders Fund is making a huge bet on bitcoin, having amassed “hundreds of millions of dollars of the volatile cryptocurrency,” WSJ’s Rob Copeland writes: "Founders and Mr. Thiel, 50 years old, are well-known for early investments in companies like Facebook Inc. that sometimes take years to come to fruition. The bitcoin bet is quickly showing promise. Founders bought around $15 million to $20 million in bitcoin, and it has told investors the firm’s haul is now worth hundreds of millions of dollars after the digital currency’s ripping rise in the past year.” ...

Members of Congress and federal officials don’t have to disclose their cryptocurrency holdings, “a gap that is raising concerns from ethics watchdogs as governments globally grapple with how to regulate digital investments,” Bloomberg’s Erik Wasson writes. “Under a 2012 law, the Stock Act, members of Congress must file periodic transaction reports detailing trades in assets including stocks, bonds and derivatives. It supplemented previous disclosure requirements for lawmakers and their families to guard against insider trading.” … 

And in the latest bubble alert, a holding company that owns some burger restaurants and 9 Hooters locations saw its stock rise nearly 50 percent Tuesday after announcing it will use blockchain technology for its customer-rewards program, CNBC’s Tae Kim reports... Meanwhile, criminals are dropping bitcoin for another virtual currency that's tougher to track, Bloomberg reports

Banks announce bonuses. The American Banker's Kristin Broughton and Ian McKendry: "U.S. Bancorp, Zions Bancorp., Citizens Financial Group and Regions Financial Corp. on Tuesday became the latest large institutions to announce pay raises attributed to the tax reform bill signed by President Trump last month. U.S. Bancorp said it will give nearly 60,000 employees a $1,000 bonus and raise its hourly minimum wage to $15 as a result of the overhaul, which lowered the corporate tax rate from 35% to 21%. The $459 billion-asset company will also make unspecified “enhancements” to employee health plans in 2019."

The mystery of collapsing loan growth. WSJ's Rachel Louise Ensign: Business-loan growth fell to its lowest levels since the aftermath of the financial crisis in the final weeks of 2017, a puzzling development that could weigh on bank earnings later this month... The readings likely cement 2017 as the worst year for this type of lending in recent history. The average weekly rate of business-loan growth was 2.7% for 2017 through Dec. 20, compared with 9.3% in 2016 and double-digit growth in the two years before that. Bankers are scratching their heads at the sluggish expansion. After President Donald Trump’s election in November 2016, bankers and investors predicted that pro-business policies would lead to a surge in corporate borrowing. Instead, the rate of corporate-loan growth slowed markedly."

Factories across the globe warned they are finding it increasingly hard to keep up with demand, potentially forcing them to raise prices as the world economy looks set to enjoy its strongest year since 2011.
Bloomberg
Business
Your unwanted gifts are creating new challenges for retailers and shipping companies.
Abha Bhattarai
Business
A long-simmering feud between two health-industry players brought “a year of finger-pointing.”
Carolyn Y. Johnson
TRUMP TRACKER

RUSSIA WATCH: 

Fusion GPS founders speak out. Glenn Simpson and Peter Fritsch, the former journalists behind the firm that commissioned the Steele dossier offer their side of the story in a NYT op-ed: "Republicans have refused to release full transcripts of our firm’s testimony, even as they selectively leak details to media outlets on the far right," they write. "It’s time to share what our company told investigators. We don’t believe the Steele dossier was the trigger for the F.B.I.’s investigation into Russian meddling. As we told the Senate Judiciary Committee in August, our sources said the dossier was taken so seriously because it corroborated reports the bureau had received from other sources, including one inside the Trump camp.

The intelligence committees have known for months that credible allegations of collusion between the Trump camp and Russia were pouring in from independent sources during the campaign. Yet lawmakers in the thrall of the president continue to wage a cynical campaign to portray us as the unwitting victims of Kremlin disinformation.  We suggested investigators look into the bank records of Deutsche Bank and others that were funding Mr. Trump’s businesses. Congress appears uninterested in that tip: Reportedly, ours are the only bank records the House Intelligence Committee has subpoenaed.

We told Congress that from Manhattan to Sunny Isles Beach, Fla., and from Toronto to Panama, we found widespread evidence that Mr. Trump and his organization had worked with a wide array of dubious Russians in arrangements that often raised questions about money laundering. Likewise, those deals don’t seem to interest Congress."

Politics
Doonbeg course is the fifth Trump golf club to report losses or declining revenue.
David A. Fahrenthold
Foreign governments that provide gifts to the Trump Organization, even those that benefit other businesses, leave President Donald Trump in possible violation of the so-called emoluments clause of the U.S. Constitution or, at the very least, in the middle of a web of potential conflicts of interest in nations around the world.
McClatchy
THE REGULATORS

MiFId II cometh. Reuters's Huw Jones: "Bankers will work through the night to iron out last minute hitches before Wednesday’s launch of a major reform of European Union financial markets that aims to apply lessons from the financial crisis nearly a decade ago. The new rules are already a year late due to their complexity and regulators have had to issue eleventh-hour guidance to banks and financial firms to avoid trading freezes as well as calming nerves of those not yet fully compliant...

The new regime shines a spotlight on the innards of stock,bond, commodity and derivatives markets by forcing banks, asset managers and traders to report detailed information on trillions of euros in transactions. Banks and trading firms have spent millions of euros getting ready for the big day. A report from Expand, part of the BostonConsulting Group and IHS Markit, has estimated that top global banks and asset managers will have spent $2.1 billion last year to comply with the rules. Lawton expects the new regime to trigger consolidation as the competition it aims to promote proves too much for some."

Bloomberg has this beginner's guide to a law that's five times longer that Tolstoy's "War and Peace," and "vastly less readable." And the editors over at Bloomberg View argue that "once the bugs are ironed out, Europe will emerge with a system much better suited to modern investing -- arguably surpassing the U.S., long considered the global leader in sophistication and transparency."

MoneyGram's Chinese deal iced. NYT's Ana Swanson and Paul Mozur: "United States officials have effectively killed a Chinese company’s $1.2 billion plan to buy MoneyGram, the money transfer company, signaling the Trump administration’s growing skepticism of Chinese purchases of American companies and of broader business ties between the two economic powers. MoneyGram and Ant Financial, the Chinese electronic payments company, said Tuesday that they had canceled the deal after failing to win approval from a Washington panel that reviews foreign purchases of American companies. The move comes amid a shifting relationship between the two countries. The MoneyGram-Ant Financial deal collapsed as tensions have grown over who will control the technologies of the future. As the scotched deal shows, China and America are also increasingly at loggerheads over whether private data will be kept safe as money and corporate ownership cross borders."

If acting CFPB Director Mick Mulvaney ultimately prevails in the lawsuit challenging his position, he is expected to continue implementing the most significant changes to the agency in its six-year history.
American Banker
DAYBOOK

Coming Up

  • The Heritage Foundation holds a book discussion on "Crashback: The Power Clash Between the U.S. and China in the Pacific” on Thursday.
     
  • The American Enterprise Institute holds a discussion on "Reconnecting Health Care Policy with Economics: Finding and Fixing Distortive Incentives” on Thursday.
     
  • The National Economists Club holds a luncheon discussion on "The Return of Trillion Dollar Deficits” on Thursday.
     
  • Brookings Institution holds an event titled “Should the Fed stick with the 2 percent inflation target or rethink it?” on Jan. 8.
     
  • The American Enterprise Institute holds an event on “New thinking about poverty and economic mobility” on Jan. 18.
THE FUNNIES

From The Post's Tom Toles: "Trump’s infrastructure plan made simple:"

BULL SESSION

Here's what's on the GOP agenda this year: 

White House press secretary Sarah Huckabee Sanders wouldn't say whether President Trump is open to supporting Mitt Romney for the Utah Senate seat that will be vacated by Sen. Orrin Hatch:

Here's what you should know about Hoda Kotb, named co-anchor of NBC's "Today" show:

Watch Stephen Colbert's take on President Trump's global warming logic: