THE TICKER

The Republican push to roll back Dodd-Frank just hit a speed bump. 

The package aimed at paring post-financial-crisis rules mostly for small and community banks steamed through the upper chamber Wednesday. But House Financial Services Committee Chairman Jeb Hensarling (R-Tex.) insisted yesterday he will put his stamp on it, potentially threatening what its Senate backers describe as a fragile compromise. The retiring chairman told reporters that Speaker Paul Ryan (R-Wis.) has assured him the bill won’t move “unless and until the Senate negotiates with the House.”

At a minimum, Hensarling’s demand sets up a staring contest between the chambers over the only meaningful bipartisan measure likely to move this year. The clutch of moderate Senate Democrats who forged the bill with Senate Banking Committee Chairman Mike Crapo (R-Idaho) have made clear they have no appetite for big changes to a package that has already drawn fire from the Democratic base. 

“There are some out there that will say this bill is going to look completely different when it comes back from the House,” Sen. Jon Tester (D-Mont.), a Banking Committee member who supported the package and faces a tough reelection fight this year, told reporters last week. “It may. If it does, then I guess we’re done.”

Given the dynamic — and the interest by GOP leaders on the Hill and in the administration in notching another win — those close to the process expect House Republicans eventually will have to swallow the Senate version with few if any additions.

“Politically, this is really a too-big-to-fail achievement for Republicans, because their majority is challenged, and there is a premium to getting a bipartisan bill through, and the Senate is the long pole in that tent,” Capital Alpha President Charles Gabriel said. A former House Republican leadership aide agreed: "The Senate isn’t going to return to this issue, and every Member of the House could use a bipartisan, pro-jobs ‘win’ this year. Ultimately, the House will most likely pass the Senate bill and agree to deal with Chairman Hensarling’s concerns in a different venue.”

The House voted along party lines last summer to approve a far more sweeping rollback that Hensarling engineered. The Financial Choice Act would have significantly weakened the Consumer Financial Protection Bureau, removed regulators’ power to wind down huge, failing financial institutions, and revoked the Volcker Rule that bans banks from making risky bets for their own gain. 

Hensarling says he isn’t aiming to mesh his bill with the Senate one. Rather, the chairman wants the upper chamber to agree to accept additions from a roster of 30 bills the full House or his panel greenlit on a bipartisan basis. Some of those — a bill to exempt banks smaller than $50 billion from CFPB oversight, for example — would draw fierce Democratic resistance in the Senate. Most are less controversial. 

But Democratic backers of the Senate measure say their package already reflects plenty of House input. “We incorporated almost 40 House bills, many of which are bipartisan, into the Senate bill,” Sen. Heidi Heitkamp (D-N.D.), another Banking Committee member facing a difficult reelection, said in a statement. “I respect that some House Republicans want to amend our legislation, but doing so would unfortunately prevent Congress from achieving the shared goal of providing relief for community banks and credit unions so they can serve communities across rural America.”

Hensarling has starred in this movie before. The conservative Texan has staked out positions that he called principled and others Republicans called unreasonable on terrorism risk insurance, the National Flood Insurance Program and the Export-Import Bank.

When the Choice Act passed last summer, the chairman signaled to Politico he was in no hurry to see a watered-down version become law. “I hope most of Choice can get enacted in this Congress, but if not, we want to normalize the debate,” he said at the time. “Some ideas may take years or Congresses to gel.”

Now as Hensarling's retirement draws nearer, the Senate bill's champions hopethe lure of sealing a legacy achievement will compel him to come around. 

MARKET MOVERS

Economic global warming. Bloomberg's Enda Curran and Rich Miller: "The world economy risks growing too fast for its own good. Group of 20 finance ministers and central bankers meet next week in Argentina amid the broadest and strongest economic upswing since 2011, with... Trump’s tax cuts adding a dose of accelerant. They convene days after the Organisation for Economic Co-operation and Development raised its forecasts to show global growth of 3.9 percent this year and next. For policy makers and investors, the key questions are how much faster can the world grow -- and do they even want it to if overheating means an inflationary boom is followed by another bust."

JPMorgan: 72 percent chance of recession in next three years. Bloomberg's Joanna Ossinger: "Markets are in the 'twilight of the mid cycle' and investors should be prepared to act if the economy edges toward a recession, according to JPMorgan Chase & Co... With near-term indicators relatively positive, the bank’s model puts the odds of a recession in the next year at 18 percent, which is roughly in line with the possibility of it happening by random chance. But the likelihood grows to 52 percent over the next two years and 72 percent over the next three years."

A darker view: The end is nigh. So says Société Générale global strategist Albert Edwards. "It all starts with the trade war that could be brewing between the U.S. and China, but also between the U.S. and Germany," Barron's Ben Levisohn writes. "This goes beyond steel and aluminum tariffs, Edwards says. We know already that the U.S. is investigating whether China is stealing its intellectual property, but Edwards contends that Trump's wrath will turn to Germany as well due to its enormous trade surplus. 'Expect... Trump to soon turn his protectionist fire on both Germany and the EU,' Edwards writes. 'That will be messy.'"

The U.S. debt load could also menace the expansion. Fortune's Shawn Tully takes a deep dive: "Trump’s heady economic potion, however, is masking misguided policies that could leave those same businesses with a severe hangover from today’s celebration. The U.S. government’s huge and growing budget deficits have become gargantuan enough to threaten the great American growth machine. And Trump’s policies to date—a combination of deep tax cuts and sharp spending increases—are shortening the fuse on that fiscal time bomb, by dramatically widening the already unsustainable gap between revenues and outlays. On our current course, we’re headed for a morass of punitive taxes, puny growth, and stagnant incomes for workers—a future that’s the precise opposite of what Trump champions."

The S&P 500 ended slightly lower on Thursday after a report that U.S. Special Counsel Robert Mueller had issued a subpoena for documents related to U.S. President Donald Trump's businesses offset strong jobs and manufacturing data.
Reuters
The dollar held gains against a basket of peers on Friday, as recent concerns about the currency arising from trade tensions eased slightly and next week's Federal Reserve policy meeting came into focus.
Reuters
TRUMP TRACKER

W.H. defends Trump's trade barbs. The Post's Josh Dawsey and Damian Paletta: "The Trump administration came under fire Thursday after... Trump delivered a fundraising speech in which he railed against U.S. allies as untrustworthy and boasted that he had made up information about the U.S. trade deficit in a meeting with Canadian Prime Minister Justin Trudeau. In a 30-minute speech to donors in Missouri, Trump made a blistering attack against the European Union, China, Japan and South Korea, accusing them of ripping off the United States for decades and pillaging the U.S. workforce... Trump and White House officials on Thursday defended the off-the-cuff remarks, which come as the administration seeks to renegotiate major trade agreements, impose tariffs on steel and aluminum imports and engage in high-stakes negotiations with North Korean dictator Kim Jong Un.

'The president was accurate because there is a trade deficit and that was the point he was making,' said White House press secretary Sarah Huckabee Sanders, who later referred to a figure that includes only goods and not services. 'He didn’t have to look at the specific figures.'"

Trump and the White House are wrong. AP's Calvin Woodward: "Trump’s insistence on leaving out part of the equation means his portrayal of Canada-U.S. trade is skewed. The U.S. actually ran a trade surplus with Canada last year of $2.8 billion, according to the Census Bureau, the same agency that reported the deficit in goods cited by Sanders. The goods deficit was offset by a surplus in the multitude of services that produce cross-border transactions, like transportation, financial and travel services, software and other intellectual property."

From Glenn Kessler, The Post's Fact Checker: 

From CNBC's John Harwood: 

W.H. preparing China tariffs. NYT's Ana Swanson confirms reporting from earlier this week that the administration is ready to follow up its global steel and aluminum tariffs with a round aimed at China: "Trump and his top trade advisers are readying a raft of actions to penalize China’s theft of American intellectual property, including tariffs on at least $30 billion of annual Chinese imports, people familiar with the discussions said. The measures, which could be announced as early as next week, may also include investment restrictions, caps on visas for Chinese researchers and challenges to China’s trade practices at the World Trade Organization."

(Meanwhile, Levi's is suing two Chinese companies on its own for trademark infringement, Business Insider reports.)

Chamber warns on tariffs. U.S. Chamber of Commerce President Tom Donohue, in a statement: "Simply put, tariffs are damaging taxes on American consumers. Tariffs of $30 billion a year would wipe out over a third of the savings American families received from the doubling of the standard deduction in tax reform. If the tariffs reach $60 billion, which has been rumored, the impact would be even more devastating. As we’re starting to see, tariffs could lead to a destructive trade war with serious consequences for U.S. economic growth and job creation. The livelihood of America’s consumers, businesses, farmers, and ranchers are at risk if the administration proceeds with this plan."

So do the Kochs. Bloomberg: "The political network backed by billionaires Charles and David Koch isn’t happy about the steel and aluminum tariffs proposed by... Trump and is mobilizing grass-roots activists in 36 states against them. 'The tariffs are, in many ways, crony capitalism,' James Davis, the network’s top spokesman, told reporters... 'It’s supporting a few jobs, potentially, at the expense of many.'"

Saygeh in the mix? The Post's Ashley Parker, Josh Dawsey, Phil Rucker and Carol Leonnig report that H.R. McMaster is on his way out as national security adviser, "part of a broader potential shake-up under consideration by Trump that is likely to include senior officials at the White House, where staffers are gripped by fear and un­certainty as they await the next move from an impulsive president who enjoys stoking conflict... The mood inside the White House in recent days has verged on mania, as Trump increasingly keeps his own counsel and senior aides struggle to determine the gradations between rumor and truth... With Hope Hicks resigning her post as communications director, the internal jockeying to replace her has been especially intense between Mercedes Schlapp, who oversees the White House’s long-term communications planning, and Tony Sayegh, Treasury Secretary Steven Mnuchin’s top communications adviser."

Mnuchin's pricey flights. Politico's Victoria Guida: "Mnuchin’s use of military aircraft has cost taxpayers nearly $1 million for eight trips, newly released documents show. That includes a one-week trip to the Middle East in late October, which cost $183,646 for flights on military aircraft. That trip came on top of $811,797.81 in previously reported expenditures for government-funded military aircraft. Emails and other documents were obtained by watchdog group Citizens for Responsibility and Ethics in Washington through a Freedom of Information Act request. They corroborate information released in October by the Treasury Department’s inspector general about Mnuchin’s plane use... A Treasury spokesperson said Mnuchin has not used any military aircraft since the Middle East trip but is scheduled to use one next week to fly to Buenos Aires for the G20 Summit. The official also emphasized that the Treasury inspector general in its October report said Mnuchin had not violated any laws."

Politics
The White House paired its first action under new legislation with firmer statements blaming Russia for a nerve-agent attack.
Anne Gearan and Ellen Nakashima
Special Counsel Robert Mueller may have crossed a line President Donald Trump set out early in the investigation into possible Russian meddling with his latest move: a reported subpoena of the Trump Organization.
Bloomberg
MONEY ON THE HILL

— Crunch time for the spending bill. The Post's Mike DeBonis: "Here we are, once again: Federal spending is set to expire on March 23, leaving Congress a week to negotiate and pass a bill to keep the government open for business. As of Thursday, Republicans and Democrats had yet to agree on what is expected to be a massive $1.3 trillion piece of legislation, leaving Americans with more questions than answers about what Congress plans to do to avoid a third government shutdown this year... 

There are a lot of differences between Republicans and Democrats at this point, though they should be resolved in the coming days. The crucial flash points are border security, immigration policy and abortion rights, with a few other issues at play — including health care and one major infrastructure project. To move the bill through the House and Senate before the government shuts down at 12:01 a.m. next Saturday, a deal will have to be reached and a bill released by early next week. Otherwise Congress could be forced to pass another short-term extension of current funding levels."

CFIUS bill gets pro-business tweak. Axios: A new version of a foreign investment oversight bill championed by Sens. John Cornyn [R-Tex.] and Dianne Feinstein [D-Calif.] allows certain countries that are "strategic partners" of the U.S. to be exempt from review, according to a source familiar with the negotiations... The changes show effort to alleviate concerns of American companies that feared the original bill's reach was too broad and would hurt business."

POCKET CHANGE

Wells Fargo chief defends pay. Reuters's Steve Friess: "Wells Fargo & Co Chief Executive Tim Sloan on Thursday defended a 35 percent gain in his latest compensation package, while describing comments last year by Democratic U.S. Senator Elizabeth Warren, who had called for his ouster, as 'inappropriate.' The third-largest U.S. lender has been battling a sales practices scandal that erupted in September 2016 with the revelation employees had opened potentially millions of phony accounts in customers’ names. 'It’s not surprising I disagree with almost everything Elizabeth Warren says. Most of her comments are both ill-informed and inappropriate,' Sloan told reporters after speaking to the Detroit Economic Club."

Warren tweeted this response: 

Former Qualcomm chief to bid for company. FT's James Fontanella-Khan and co.: "Paul Jacobs, the recently demoted chairman of Qualcomm, has approached several global investors in an effort to acquire the $90bn chipmaker founded by his father, in what would be one of the largest buyout deals in history. The move comes days after... Trump blocked Broadcom’s hostile bid for the San Diego-based company, citing national security concerns. The longtime Qualcomm director has informed members of the board about his plan to launch a buyout, according to three people with direct knowledge about the matter."
 

Billionaire investor Peter Thiel praised Bitcoin and U.S. President Donald Trump while criticizing big, liberal-leaning cities and Democrats during a talk at the Economic Club of New York.
Bloomberg
Goldman Sachs Group Inc wants women to make up half of its global workforce, starting with new analysts by 2021, the Wall Street bank said on Thursday, as it stepped up efforts to address gender and racial imbalance across the board.
Reuters
Walmart Inc was sued on Thursday by a former executive who accused the world's largest retailer of issuing misleading e-commerce results, amid growing pressure from Amazon.com Inc , and firing him for complaining about it.
Reuters
THE REGULATORS

Court shoots down fiduciary rule. WSJ's Lisa Beilfuss: "A U.S. circuit court struck down the Labor Department’s fiduciary rule, dealing a blow to the retirement-savings regulation that has been in partial effect since June. In a split decision, the Fifth Circuit Court—which covers Texas, Louisiana and Mississippi—ruled that the Labor Department overreached by requiring brokers and others handling investors’ retirement savings to act in clients’ best interest. 'The Rule is unreasonable,' the decision read, with the court finding fault in the department’s broadening of what is deemed financial advice and who gives it, among other reasons.

The Labor Department didn’t immediately respond to a request for comment. The decision issued late Thursday follows several circuit court decisions that came to different conclusions, ruling in favor of the government. Because of this split in circuit court decisions, attorneys specializing in fiduciary matters said the U.S. Supreme Court may be more likely to take up the case."

CHART TOPPER

"Toys R Us’s baby problem is everybody’s baby problem," writes The Post's Andrew Van Dam: 

DAYBOOK

Today

  • The Brookings Institution holds an event about creating more efficient infrastructure.
  • The Heritage Foundation holds an event on the national security implications of a NAFTA withdrawal.
THE FUNNIES

From The Post's Tom Toles: 

BULL SESSION

President Trump admits to having "no idea" if the United States has trade deficit with Canada:

White House press secretary Sarah Huckabee Sanders said President Trump didn’t need “specific figures” to claim a trade imbalance with its neighbor:

A brief history of Trump’s relationship with Canadian Prime Minister Justin Trudeau: