THE TICKER

Jared Kushner’s headaches probably won't give banking interests a migraine. But as the industry stands on the verge of a breakthrough with a deregulatory package in the Senate, the first son-in-law’s mounting woes can’t help those aiming to secure the win, either.

The short version: The first son-in-law and his family -- which operate a wide-array of real-estate holdings globally -- have gotten loans from two financial institutions that would benefit from the Senate GOP's push to water down Dodd-Frank. That fact undercuts the idea that Republicans are aiming to help small, community banks which, the argument goes, have had their hands unnecessarily tied by burdensome regulation.

Here's what's going on.

Senate Banking Committee Chairman Mike Crapo (R-Idaho) says he’s poised in the coming days to advance his measure providing relief from Dodd-Frank requirements to mostly smaller and midsize banks. He has the support he needs to do just that: Republicans have rallied behind the package, and 13 Democrats have signed on, too. 

Outgunned liberal critics aim to extract maximum pain for those advancing a bill they say betrays its mom-and-pop packaging. This week, Sen. Sherrod Brown (D-Ohio), the top Democrat on the banking panel, circulated letters from ex-top Wall Street watchdogs — including Fed chair Paul Volcker, FDIC chair Sheila Bair and Fed governor Sarah Bloom Raskin — arguing the measure would undercut financial stability and hurt consumers. A new poll commissioned by Americans for Financial Reform, a leading outside critic of the bill, found two-thirds of voters oppose a central provision: loosening regulations on banks that have between $50 billion and $250 billion in assets. 

Those critics can rip their case straight from some of the latest headlines concerning Kushner. The White House senior adviser’s history of complex financial ties has been a subject of intensifying interest to federal investigators probing the Trump campaign’s alleged Russia ties — and his business debt contributed to him losing his security clearance last week. On Wednesday, Bloomberg News reported the New York banking regulator is piling on, seeking information from Deutsche Bank, Signature Bank and another New York lender about their relationships with Kushner and his family’s business. 

Here, senators react to Kushner's loss of his interim security clearance: 

The head of the state’s Department of Financial Services has asked for “copies of emails and other communications between the Kushners and the banks related to financing requests that have been denied or are pending,” Greg Farrell and David Kocieniewski write. “She also asked whether the banks have conducted any internal reviews of the Kushners and their companies and asked what such inquiries revealed, said the person familiar with the request.”

More: “The most detailed information about the Kushners’ finances can be found in their government disclosures. The couple had unsecured lines of credit of $5 million to $25 million each from Deutsche Bank, Signature Bank and New York Community Bank, according to a late December filing. Deutsche Bank’s line of credit was extended to Kushner and his mother; lines from the other two banks were extended to Kushner and his father. Signature Bank also extended a secured line of credit to the couple of $1 million to $5 million, according to the disclosure.” Federal prosecutors at the end of last year requested records related to a $285 million loan Deutsche Bank made to Kushner's family a month before the election; and as of 2016, Trump himself owed the bank some $364 million, making it his largest lender.

(The Bloomberg story — later matched by CNN, the Wall Street Journal, and others — came on a day when Kushner's finances remained front and center. On Wednesday night, the New York Times reported that his family's real estate company secured more than a half-billion dollars in loans from Citigroup and private equity firm Apollo shortly after Kushner held White House meetings with their leadership.)

Both Deutsche and Signature stand to gain from the Crapo bill. “More than two dozen midsize U.S. banks would be shielded from some Federal Reserve oversight,” CNN Money's Donna Borak wrote last month. “They would no longer have to hold as much capital to cover losses on their balance sheets. They would not be required to have plans in place to be safely dismantled if they failed. And they would have to take the Fed's bank health test only periodically, not once a year. The American operations of big foreign banks, like Deutsche Bank, BNP Paribas and Banco Santander, would also be exempt.”

The FT's Ben McLannahan and Barney Jopson zeroed in on Signature's interest in the measure last week: “The bill has attracted support from banks approaching the $50bn mark, which have most to gain from the deregulation and have blanched at the cost of complying with tougher requirements on capital and liquidity, as well as stress tests and so-called living wills,” they wrote. “Individuals connected to one lender just beneath the threshold, Signature Bank, have donated $112,000 to Democratic senators so far in the 2017-2018 election cycle, according to Federal Election Commission data tallied by the Center for Responsive Politics. That is about eight times as much as people affiliated with the New York-based bank gave to Democrats in the entire 2015-2016 cycle.”

No one would suggest Kushner’s reliance on financing from those institutions has in any way shaped the Senate Republican push to provide relief to a much broader class of banks. But the fact that Kushner-aligned outfits now under scrutiny would benefit presents a juicy target for critics arguing the bill unwinds restrictions on shadier corners of the industry. 

A major asterisk is due here: If even a tidal wave of bad press could derail a key industry priority, Wall Street wouldn’t have succeeded last fall in squashing a federal rule that made it easier for consumers to sue credit card companies and other financial institutions (and we should state there is no evidence that Kushner has done anything wrong.)

At the time, Democratic defenders of the arbitration rule — issued over the summer by the Consumer Financial Protection Bureau — argued for its necessity by pointing to Wells Fargo’s multitude of misdeeds. The bank was in the headlines seemingly daily for revelations of alleged abuse toward its customers, touched off by reports that its employees opened millions of fake accounts to pocket commissions. 

In a floor speech blasting the Republican push to scotch the rule, Brown said the damage could have been averted if the rule had been in place. “Because Wells Fargo had the power of a forced arbitration clause, they were able to sweep [a] 2013 lawsuit under the rug, allowing the scandal to continue for years,” he said. The pitch fell short, though the measure's support stood on a knife's edge. The Senate split 50-50, largely on party lines, with Vice President Pence breaking the tie and sinking the rule.

By all accounts, the Crapo bill as it stands has more than enough support to pass. Its critics are still bent on extracting a price from those who carry it across the line. 

TRUMP TRACKER

SCOOP: White House poised to announce steel and aluminum tariffs. "The details of the announcement were closely held and the situation remained very fluid, the people warned. A decision could still be postponed," my colleagues Damian Paletta and David Lynch report. "The announcement is connected to a review of steel and aluminum imports that the Commerce Department conducted at Trump’s behest. Commerce Secretary Wilbur Ross has found that large amounts of steel and aluminum imports pose a threat to the U.S.’s national security, a declaration that gives the White House powers to limit imports through tariffs or other means."

Signs point to a hard line: "Several GOP congressional aides late Wednesday did not know the detail of the White House’s announcement but were bracing themselves for stiff trade restrictions that they have spent months trying to prevent. Word of the announcement came as the Trump administration on Wednesday warned that it would vigorously defend U.S. national interests against 'hostile' powers such as China and Russia, vowing to use 'all available tools' to combat unfair practices — a sign that the president may be preparing to erect new trade barriers."

From Trump this morning: 

From Axios's Jonathan Swan last night: 

Industry warned. "Administration officials have begun reaching out to steel industry officials in advance of the possible announcement, which is expected to have large repercussions on global trade," Politico's Andrew Restuccia and Adam Behsudi report. "Trump has told people in recent days that he's interested in imposing a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports, according to one person briefed on the issue. But it remained unclear Wednesday night exactly what levels he will announce. Industry sources said company executives from both the steel and aluminum sectors were being summoned to the White House."

Trump vs. senior advisers. More from Politico: "National Economic Council Director Gary Cohn has been arguing vociferously behind the scenes against the tariffs. Secretary of State Rex Tillerson, national security adviser H.R. McMaster and Defense Secretary Jim Mattis have all also raised concerns about the actions, arguing that they could damage the United States' relationship with crucial allies. But Trump has long been dead-set on imposing tariffs, and he has the support of the trade hawks in his administration, including White House trade adviser Peter Navarro, U.S. Trade Representative Robert Lighthizer and Commerce Secretary Wilbur Ross."

RUSSIA WATCH: 

Mueller probes Trump's Sessions animus. The Post's Devlin Barrett and co.: "Mueller has been investigating a period of time last summer when... Trump seemed determined to drive Attorney General Jeff Sessions from his job, according to people familiar with the matter who said that a key area of interest for the inquiry is whether those efforts were part of a months-long pattern of attempted obstruction of justice.

In recent months, Mueller’s team has questioned witnesses in detail about Trump’s private comments and state of mind in late July and early August of last year, around the time he issued a series of tweets belittling his “beleaguered” attorney general, these people said. The thrust of the questions was to determine whether the president’s goal was to oust Sessions in order to pick a replacement who would exercise control over the investigation into possible coordination between Russia and Trump associates during the 2016 election, these people said."

And Mueller's asking what Trump knew about hacked Democratic emails, "and whether he was involved in their strategic release," per NBC's Katy Tur and Carol Lee: "Mueller's investigators have asked witnesses whether Trump was aware of plans for WikiLeaks to publish the emails. They have also asked about the relationship between GOP operative Roger Stone and WikiLeaks founder Julian Assange, and why Trump took policy positions favorable to Russia. The line of questioning suggests the special counsel, who is tasked with examining whether there was collusion between the Trump campaign and Russia during the 2016 election, is looking into possible coordination between WikiLeaks and Trump associates in disseminating the emails, which U.S. intelligence officials say were stolen by Russia."

Manafort faces long bid. Bloomberg: "Paul Manafort could be sentenced to almost 20 years in prison under federal sentencing guidelines based solely on the charges he faces in a Washington federal court, Special Counsel Robert Mueller said. A final sentence would be determined by a judge, if Manafort were convicted, and the judge can impose a harsher, or a more lenient, sentence than recommended by the guidelines."

Treasury Secretary Steven Mnuchin asked the University of California, Los Angeles not to post a video of his recent public appearance at which he was heckled by students.
WSJ
None of the officials have been asked to leave the administration and their portfolios on top secret matters will be distributed to other staff members.
Bloomberg
MARKET MOVERS

Powell, Round 2. WSJ's Nick Timiraos: "Federal Reserve Chairman Jerome Powell returns to Capitol Hill on Thursday for a second day of testimony, with investors eager for more on whether his bullish view of the U.S. economy might translate into a more aggressive approach to raising interest rates this year and beyond. Stocks and bonds sold off Tuesday after he told the House Financial Services Committee the Fed remains on track to gradually lift rates this year and hinted it might pick up the pace as the economy gains momentum."

Markets don't love Powell's plain-talk. A good point from the FT's John Authers: "The past three Fed governors all looked like academics and spoke like academics, albeit with often very different intonations. Mr Powell is in that sense different. He speaks rather more firmly and clearly than any of his three predecessors, and tended in his Q&A to be rather more declarative, avoiding the qualifiers that come naturally to an academic. At a subliminal level, this may have been uncomfortable for market-watchers; his rhetoric was not in any essential way any more hawkish than Ms Yellen’s had been for the past year, but he said it in a way that was uncomfortably business-like. This made an impression."

Rough couple days for stocks. Bloomberg's Sarah Ponczek and Elena Popina: "It’s testament to how rough stocks had it in February that the last two days, a stretch that would’ve qualified as the worst selloff in all of 2017, barely shows up in a monthly graph. Not that it wasn’t painful. The S&P 500 Index slid 2.4 percent over Tuesday and Wednesday to cap the biggest monthly retreat since January 2016, as concerns about Federal Reserve policy brought out sellers and briefly pushed the Cboe Volatility Index back above 20."

It capped a roller-coaster month. CNN Money's Matt Egan: "February was easily one of Wall Street's wildest months since 2008.The Dow plummeted more than 3,200 points, or 12%, in just two weeks. Then stocks raced back to life, at one point recovering about three-quarters of those losses. Fittingly, February ended with more drama. The Dow tumbled 680 points during the month's final two days, leaving it down about 1,600 points from the record high in late January."

GDP revised down. AP's Martin Crutsinger: "U.S. economic growth was revised down slightly to a still-solid 2.5 percent annual rate in the final three months of last year, as business spent less on investment and restocking shelves than the government had previously estimated. The fourth quarter advance in the gross domestic product, the economy’s total output of goods and services, followed even faster increases of 3.1 percent at a seasonally adjusted annual rate in the second quarter and 3.2 percent in the third quarter, the Commerce Department reported Wednesday."

Inflation is going to head up this year—on that there isn’t much debate. The real debate is over whether it will be a nonevent or something more ominous, writes Greg Ip.
WSJ
It’s an uncertainty that has huge economic consequences.
NYT
MONEY ON THE HILL

Bank dwarfs wage hikes with buybacks. The Post's Jeff Stein: "When an Ohio bank announced raises and bonuses for low-wage workers because of the Republican tax cuts, President Trump touted it as evidence the tax law would be a boon to workers — and not, as Democrats charge, a giveaway whose primary beneficiaries are among the wealthy. On Tuesday, that bank, Fifth Third, said it would buy back as many as 100 million corporate shares, a move that is projected to cost nearly $3 billion... The $2.8 billion corporate share buyback dwarfs the estimated $48 million cost of the bank's wage hikes and one-time bonuses this year."

IRS releases tax calculator. Also from Jeff: "The Internal Revenue Service released a tool [find it here] Wednesday designed to help millions of Americans ensure they are not dramatically underpaying or overpaying their taxes under the new Republican tax law. The online calculator allows taxpayers to compare how much their employer is withholding on their pay stubs to a government projection of how much should be withheld. The tool makes that calculation based on income, household size and other variables."

POCKET CHANGE

Walmart will limit gun purchases. The Post's Eli Rosenberg: "The world’s largest retailer, Walmart, announced a change to its policies Wednesday, saying it would raise the minimum age required to buy a firearm and ammunition and remove any items that resemble assault rifles from its shelves. In a statement, the company said it would raise its age requirement to 21 from 18, a decision it made “in light of recent events” — most notable the national discussion about gun control since the Feb. 14 shooting at a high school in Florida that left 17 people dead. 'We take seriously our obligation to be a responsible seller of firearms and go beyond Federal law by requiring customers to pass a background check before purchasing any firearm,' the company said."

Ackman gives up. NYT's Matthew Goldstein: "William A. Ackman has officially hoisted the white flag in his boisterous and costly five-year campaign against Herbalife, the nutritional food supplement company, which he claimed was an outright fraud. Mr. Ackman, one of Wall Street’s most outspoken hedge fund managers, disclosed on CNBC on Wednesday that he had quietly unloaded his remaining positions in Herbalife — a bet that at one time had been valued at $1 billion by his Pershing Square Capital Management. In the annals of Wall Street, investors have lost more on trades. But Mr. Ackman’s bearish bet on Herbalife was a signature event given how much time, effort and money he devoted to making his case — all in the hopes that the federal authorities would take action against Herbalife."

BofA fires two amid sexual misconduct probe. WSJ's Rob Copeland and Rachel Louise Ensign: "Bank of America Corp. BAC -0.71% fired two employees in its hedge-fund-focused prime-brokerage unit as it expands an investigation into potential sexual misconduct in the division, people familiar with the matter said. The bank fired the employees after determining they interfered with the probe of alleged inappropriate behavior by Omeed Malik, until recently one of the top executives in the unit, the people said. The fired employees, Valerie Ludorf and Joe Voboril, were earlier placed on leave, they said. Mr. Malik was fired in January in the wake of complaints from female employees about unwanted advances, The Wall Street Journal earlier reported."

Krawcheck calls out Morgan Stanley. Barron's: "Only three women are among the 46 advisors who just made managing director at Morgan Stanley—and Sallie Krawcheck, one of the most prominent women on the Street, isn’t pleased. Posting the 46 names on LinkedIn, Krawcheck added the comment: 'Feels like something is missing from this list of new Managing Directors ... what could it be?' Krawcheck once ran Bank of America’s wealth management business, and now heads Ellevest, an investing platform aimed at women."

A lawsuit by a former employee claims that when customers complained of fraudulent activity in their accounts, the bank closed the accounts instead of investigating them.
NYT
THE REGULATORS

SEC probes cryptocurrency. WSJ's Jean Eaglesham and Paul Vigna: "The Securities and Exchange Commission has issued dozens of subpoenas and information requests to technology companies and advisers involved in the red-hot market for cryptocurrencies, according to people familiar with the matter. The sweeping probe significantly ratchets up the regulatory pressure on the multibillion-dollar U.S. market for raising funds in cryptocurrencies. It follows a series of warning shots from the top U.S. securities regulator suggesting that many token sales, or initial coin offerings, may be violating securities laws. 

The wave of subpoenas includes demands for information about the structure for sales and pre-sales of the ICOs, which aren’t bound by the same rigorous rules that govern public offerings, according to the people familiar with the matter. Companies use coin offerings to raise money for everything from file-sharing technology to pet passports."

Volcker revisited. Reuters's Pete Schroeder: "U.S. regulators are considering changes to the 'Volcker rule”'Wall Street has sought for years that would make it easier and cheaper for banks to comply and allow them more leeway in trading and investing, according to several regulatory and industry sources... While the changes being considered by regulators would not bring back the heady pre-crisis trading activity, they would help address some of these problems, people familiar with the discussions said. Modifications being considered include: scrapping the presumption that short-term trades are proprietary unless banks prove otherwise, making it clearer which types of funds banks are banned from investing in, permanently exempting some foreign funds from the ban, and anointing a lead regulator to oversee the rule’s enforcement."

“Why we think we know better or how to protect consumers in your state surprises me,” acting CFPB Director Mick Mulvaney told a group of state attorneys general. “I don’t think we’ll being do much of that anymore.”
American Banker
The Senate Commerce Committee voted on Wednesday to approve President Donald Trump's four nominees to the Federal Trade Commission, a spokeswoman for the committee said.
Reuters
OPINIONS
Wonkblog
The Trump administration's first Council of Economic Advisers report just doesn't hold up.
Lawrence H. Summers
Mr. Kushner and Ivanka have to decide if they’d serve themselves and the President better by walking away from their formal White House roles.
WSJ ed board
How culture war became a tool of corporate self-interest.
NYT's Ross Douthat
CHART TOPPER

A study shows food stamp benefits are already too low in 99 percent of U.S. counties, The Post's Caitlin Dewey reports: 

DAYBOOK

Today

  • The Senate, Health, Education, Labor and Pensions committee holds a hearing on the nomination of John F. Ring to be a member of the National Labor Relations Board.
  • Federal Reserve Chairman Jerome Powell testifies before the Senate Banking, Housing and Urban Affairs committee. 

THE FUNNIES

From The Post's Tom Toles: 

BULL SESSION

Watch a summary of President Trump's meeting with lawmakers about mass shootings, in three minutes: 

Here's what each side of the gun debate wants: 

Office chairs and affordable housing: Here’s what Housing and Urban Development secretary Ben Carson has been up to:

On the Late Show with Stephen Colbert, Omarosa talks about her "troubling" year in the White House: