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.
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— 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."
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From Trump this morning:
Our Steel and Aluminum industries (and many others) have been decimated by decades of unfair trade and bad policy with countries from around the world. We must not let our country, companies and workers be taken advantage of any longer. We want free, fair and SMART TRADE!— Donald J. Trump (@realDonaldTrump) March 1, 2018
From Axios's Jonathan Swan last night:
Lots of back and forth (mainly because senior White House officials were learning about it for the first time by reading the Washington Post.) https://t.co/NM0Hjk5Z8l— Jonathan Swan (@jonathanvswan) March 1, 2018
Total breakdown of process. And there’s no real paperwork to sign but DJT is his own man & likes what he hears from Navarro & Ross. Loss of Rob Porter made a difference here.. whatever happens tomorrow it probably wouldn’t have happened under previous trade group process. https://t.co/AGMkpl2ior— Jonathan Swan (@jonathanvswan) March 1, 2018
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