How the U.S.-China trade war could play out

President Donald Trump‘s announcement of tariffs on Chinese goods escalates tensions between the world’s two largest economies. The move has stoked business fears of a sustained trade war that could raise prices on American consumers, while heartening some lawmakers who have long called for a tougher stance against Beijing.

Here’s what you need to know about the president’s latest trade move:

What’s new about today?

Trump has made a number of tariff-related threats. He has previously put tariffs on washing machines, solar products, steel and aluminum — at imports from much of the world. Friday‘s actions are only aimed at China.

Which products are covered by the new tariffs?

A lot, but not a lot. The 25 percent tariffs will be placed on roughly $50 billion in imports from China. The tariffs will cover more than 1,000 types of items, but many of those are very similar manufacturing components. In Continue reading “How the U.S.-China trade war could play out”

Top bank regulator ‘not aware’ of ‘old boys’ club’ in industry

Joseph Otting, a former bank CEO who now regulates the industry, said on Thursday he’s not aware of an “old boys’ club” in banking that holds women and minorities back, a day after sparking criticism for saying he has never observed discrimination.

Otting, appearing before the Senate Banking Committee, faced sharp questions from Democrats about his views on discrimination. Sen. Sherrod Brown, the panel’s top Democrat, pressed him on whether minorities are disadvantaged in the banking industry because an "old boys’ club" is making the hiring decisions.

“If there was a network like that, I wouldn’t support that,” said Otting, the comptroller of the currency, whose agency is responsible for enforcing fair lending laws. But he said he was "not aware" of it.

Otting on Wednesday repeatedly refused to tell the House Financial Services Committee directly that discrimination exists. Instead, he said, “People have told me it exists, so I Continue reading “Top bank regulator ‘not aware’ of ‘old boys’ club’ in industry”

Fed raises rates, signals 2 more hikes coming in 2018

The Federal Reserve on Wednesday raised interest rates for the second time this year and nudged up its projections for GDP growth in 2018, in a further endorsement of the U.S. economy’s strength.

The balance on the Fed’s interest-rate-setting committee has tipped in favor of two more rate hikes in 2018, rather than only one, bolstered by an uptick in the central bank’s projections for inflation this year and next.

Following Wednesday’s rate hike, the Fed’s main borrowing rate — which influences interest rates on everything from mortgages to savings accounts — is set between 1.75 percent and 2 percent.

Fed officials now predict the economy will grow 2.8 percent this year, up from their 2.7 percent projection in March, though their estimates for 2019 growth remain unchanged at 2.4 percent.

The central bank is still signaling three rate hikes for 2019, but Fed officials Continue reading “Fed raises rates, signals 2 more hikes coming in 2018”

Trump’s trade war could mess up the Fed’s plans

The Federal Reserve is widely expected to raise interest rates on Wednesday for the second time this year. But its plans going forward have been thrown into confusion thanks to President Donald Trump.

Trump is waging a trade war on multiple fronts, which could raise prices for American companies and consumers and slow economic growth. It has already put a dent in business confidence in the economy, according to a survey of the nation’s top CEOs. And if that becomes a drag on growth, the Fed could put the brakes on its interest rate hikes.

But Trump’s pro-growth policies also present risks: New tax cuts and government spending could kick the healthy economy into overdrive, requiring the Fed to raise rates more quickly, potentially choking the near-record-long expansion.

Both dangers complicate the central bank’s efforts to maintain a Goldilocks economy — not too hot or cold, but growing at a Continue reading “Trump’s trade war could mess up the Fed’s plans”

Trump’s regulators set to deliver new victory for banks

President Donald Trump’s team of regulators is set to hand banks another big win by increasing their freedom to take short-term risks, just a week after Trump signed the first major deregulation bill since the 2008 Wall Street crash.

Five independent agencies, starting with the Federal Reserve on Wednesday, will propose simplifying one of the key regulations designed to avert another crisis: a rule that prevents banks from making trades to profit off short-term price changes in the markets.

The so-called Volcker rule — a 2013 regulation named after the former Fed chairman who came up with the concept — has long been criticized by the industry as convoluted, costing big banks millions of dollars to comply with and perhaps billions more in revenue.

But even the bureaucrats, who have sought to encourage trades that are good for the financial system while banning those that are merely profit-driven gambles, have Continue reading “Trump’s regulators set to deliver new victory for banks”

In veiled message to Trump, Powell warns against meddling on Fed rates

Federal Reserve Chairman Jerome Powell on Friday issued his sternest warning yet that politicians should not interfere with interest-rate policy, in what appeared to be a precautionary message to President Donald Trump.

In a speech in Sweden, Powell indirectly referred to a previous Fed chairman, Arthur Burns, who was pressured by President Richard Nixon in the lead-up to the 1972 presidential election to keep interest rates low.

That episode eventually contributed to a rapid rise in prices, requiring one of Burns’ successors, Paul Volcker, to raise interest rates as high as 20 percent to combat inflation.

“For a quarter century, inflation has been low and inflation expectations anchored,” said Powell, a Trump appointee. “We must not forget the lessons of the past, when a lack of central bank independence led to episodes of runaway inflation and subsequent economic contractions.”

The Fed chairman’s remarks come as the central bank continues Continue reading “In veiled message to Trump, Powell warns against meddling on Fed rates”

Metals firm sidelines Russian oligarch in bid to escape U.S. sanctions

Russian oligarch Oleg Deripaska is losing control of his energy company, En+ Group, paving the way for aluminum giant Rusal to be freed from tough sanctions by the U.S. Treasury Department.

Rusal, one of the world’s largest aluminum producers, was sanctioned in April by Treasury’s Office of Foreign Assets Control because of Deripaska’s stake in the company. The Russian billionaire is alleged to have conducted a range of illegal activities, including money laundering, extortion and ordering the murder of a businessman, according to Treasury.

He is also reportedly part of special counsel Robert Mueller’s investigation into Russian meddling in the 2016 presidential election.

The board of En+ Group, which owns a controlling interest in Rusal, on Friday voted unanimously to sever Deripaska’s control of the parent company and shrink his share below 50 percent. The board’s plan also seeks “to end his influence over the Board through the appointment Continue reading “Metals firm sidelines Russian oligarch in bid to escape U.S. sanctions”

Vatican condemns financial industry abuses

The Catholic Church on Thursday issued a blistering critique of the global financial industry, arguing that not enough has been done in the wake of the 2008 housing market crash to stop unethical, risky and reckless behavior.

In a 10,000-word document approved by Pope Francis, the Vatican attacked everything from CEO compensation to the rise of the payday lending industry. It said derivatives, the complex securities contracts that fueled the market meltdown, were still “a ticking time bomb."

The document said the crisis presented an opportunity to move toward a world economy that is “more attentive to ethical principles, and a new regulation of financial activities that would neutralise predatory and speculative tendencies and acknowledge the value of the actual economy.”

But that didn’t happen, despite “many positive efforts at various levels which should be recognized and appreciated,” it said.

“On the contrary, the response seems at times Continue reading “Vatican condemns financial industry abuses”

Trump Treasury nominee withdraws amid concern over finances

Adam Lerrick has withdrawn as President Donald Trump’s nominee for assistant Treasury secretary for international finance, after languishing for more than a year without Senate confirmation.

Lerrick, a visiting scholar at the American Enterprise Institute and a former investment banker, has extensive experience in dealing with sovereign debt crises in countries like Greece, Iceland and Argentina.

No reason was given for Lerrick’s withdrawal, but a person familiar with the matter said Senate Finance Committee members had raised concerns about his ties to the Argentine Bond Restructuring Agency, the largest group of foreign investors in Argentina’s debt when the country defaulted.

Lerrick served as ABRA’s lead negotiator in the South American nation’s restructuring.

According to an article by the Irish Times, ABRA had set up a special purpose vehicle in Dublin to hold the bonds before the restructuring, with three charitable trusts listed as its shareholders, including an Irish children’s charity.

Continue reading “Trump Treasury nominee withdraws amid concern over finances”

Treasury watchdog probes possible leak of Trump lawyer’s bank transactions

The Treasury Department’s Inspector General is investigating whether confidential financial information related to President Donald Trump’s longtime personal attorney Michael Cohen might have been leaked, IG spokesman Rich Delmar confirmed Wednesday.

The probe was launched after Michael Avenatti, lawyer to adult film star Stormy Daniels, distributed a document claiming that AT&T, a Russian oligarch and others had contributed to a Cohen bank account for Essential Consultants, the shell company Avenatti said paid money to his client.

Delmar said the inspector general is "inquiring into allegations" that certain suspicious activity reports, which are filed with Treasury’s Financial Crimes Enforcement Network, might have been "improperly disseminated." Delmar said he could not predict how long the investigation would take.

Banks file hundreds of thousands of suspicious activity reports every year, which are meant to alert authorities about transactions that could be related to fraud, money laundering, terrorist financing and other illegal activities.

Continue reading “Treasury watchdog probes possible leak of Trump lawyer’s bank transactions”

Schiff: Giuliani has been ‘deeply hurtful’ to Trump’s defense

Rep. Adam Schiff (D-Calif.) on Sunday said Rudy Giuliani’s recent statements as President Donald Trump’s new lawyer have been unhelpful to his client.

The former prosecutor and ranking member on the House intelligence committee said on CNN’s “State of the Union” that he was “taken aback” by Giuliani’s legal strategy in defending the president against allegations that a payment from his longtime personal lawyer, Michael Cohen, to adult film star Stormy Daniels violated campaign finance laws.

Trump told reporters in April that he was unaware of the payment, which was made as part of a non-disclosure agreement. That statement was called into question after Giuliani said a few days ago that Trump had reimbursed Cohen for the payment.

“His legal defense for the president seems to be a bit orthodox [sic], to start out by saying, ‘You can’t believe the president of the United States. That’s our defense. So Continue reading “Schiff: Giuliani has been ‘deeply hurtful’ to Trump’s defense”

Conway: Trump didn’t know about Daniels payment when it was made

Counselor to the president Kellyanne Conway said Sunday that President Donald Trump did not know about his lawyer’s $130,000 payment to adult film star Stephanie Clifford at the time it was made.

Trump told reporters in April that he was unaware of the payment from his longtime personal lawyer, Michael Cohen, to Clifford as part of a non-disclosure agreement. That statement was called into question after his new lawyer, Rudy Giuliani, said a few days ago that Trump had reimbursed Cohen for the payment.

Trump had also told reporters that he didn’t know where Cohen had gotten the money.

“I asked the president what he meant, and he said, ‘I didn’t know about the payment when it occurred,‘” Conway said on CNN’s “State of the Union.”

She pointed to multiple tweets from Trump on Thursday, in which he acknowledged the payment but called the allegations of an affair by Continue reading “Conway: Trump didn’t know about Daniels payment when it was made”

Giuliani: Trump doesn’t have to comply with potential Mueller subpoena

Rudy Giuliani said Sunday that President Donald Trump wouldn’t have to comply with a potential subpoena from special counsel Robert Mueller.

“We don’t have to,” the former New York City mayor now working as Trump’s attorney said when asked on ABC’s “This Week” whether the president would comply if Mueller tries to compel him to appear for an interview about Russia’s meddling in the 2016 presidential election.

“He’s the president of the United States,” Giuliani said. “We can assert the same privilege that other presidents have,” he said, noting former President Bill Clinton’s resistance to a subpoena as part of an investigation into his relationship with Monica Lewinsky. Clinton ultimately appeared before a grand jury for two-and-a-half hours.

Giuliani said the president wants to testify but that his legal team has concerns he would be treated fairly.

“It’s only prosecutable if they have some built up, manipulated evidence,” he said.

Continue reading “Giuliani: Trump doesn’t have to comply with potential Mueller subpoena”

New York Fed taps Williams for top post, ignoring Democrats on diversity

The New York Federal Reserve announced that San Francisco Fed President John Williams will become its next president and CEO, spurning calls from progressive Democrats for a choice who would bring gender or racial diversity to the role.

Williams, a white Ph.D economist, was approved by the Fed board in Washington on Tuesday. He becomes the second leader of the San Francisco Fed in recent years to ascend to a more prominent role within the central bank; his predecessor, Janet Yellen, went on to become Fed vice chair and then Fed chair.

Outgoing New York Fed President Bill Dudley’s last day will be June 17, and Williams will take over the following day.

“After a thorough process, my fellow search committee members and I felt that John best fulfilled the criteria we’d identified as well as the feedback we’d received through our public outreach efforts,” said Sara Horowitz, who Continue reading “New York Fed taps Williams for top post, ignoring Democrats on diversity”

Fed raises rates, signals quicker pace for future hikes

The Federal Reserve on Wednesday raised interest rates for the first time this year and signaled it will act more aggressively to head off inflation, potentially threatening President Donald Trump’s hopes for faster economic growth.

Fed officials are now essentially split on the question of whether to hike interest rates a total of three times or four this year — a response, in part, to recent tax cuts and increased spending by Congress, which the central bank fears could lead prices to spike.

The Fed’s interest rate-setting body, the Federal Open Market Committee, said in a statement that it expects inflation to reach its 2 percent target “in the coming months.” The committee unanimously agreed to raise its main borrowing rate to between 1.5 percent and 1.75 percent, the first action taken under new Chairman Jerome Powell.

There is some good news for Trump. Fed officials upgraded Continue reading “Fed raises rates, signals quicker pace for future hikes”

Mnuchin’s plane travel cost taxpayers $1 million, documents show

Treasury Secretary Steven 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.

Officials in President Donald Trump’s administration are facing scrutiny for their use of government-funded flights. EPA chief Scott Pruitt has drawn criticism for flying first class. And former Health and Human Services Secretary Tom Price was forced to resign last year after facing intense fire over his extensive use of taxpayer-funded charter flights.

“Secretary Continue reading “Mnuchin’s plane travel cost taxpayers $1 million, documents show”

Congress rides to the rescue of thriving bankers

President Donald Trump and other supporters of the major banking bill that cleared the Senate on Wednesday say they want to rescue the nation’s lenders from a crush of regulations.

But far from being crushed, the industry looks more like it’s booming.

Banks have hauled in record profits for the last three years and will be among the biggest winners under the new tax-reform law. Their loans are growing by 4 to 5 percent a year, well within historical norms. And even community banks, which the bill’s backers say they’re most concerned about, are making money.

Despite these signs of flourishing health, the deregulation bill passed the Senate in a 67-31 vote that included 16 Democrats and an independent, Angus King of Maine. The House will now take up the legislation. But critics of the bill say the facts undermine the case for rolling back key parts of the Dodd-Frank Continue reading “Congress rides to the rescue of thriving bankers”

Highlights of the Senate banking bill

The Senate delivered a striking victory Wednesday to the nation’s banks by voting to scale back key regulations imposed under the Obama administration.

The bipartisan legislation would soften the Dodd-Frank Act, the law enacted to prevent another market meltdown after the 2008 financial crisis.

The bill, which faces an uncertain fate in the House, has been mainly sold as an effort to benefit small banks, especially those that serve rural America. Yet it would also aid many larger lenders on the premise that they face more regulation than their risks require. Critics like Sen. Elizabeth Warren (D-Mass.) say the legislation would expose consumers to unsafe financial products and increase the risk of bank failures.

“There was effectively a moat put around the Dodd-Frank Act during the Obama administration,” Compass Point analyst Isaac Boltansky said. “In many ways this bill is the first time the drawbridge is coming down. It’s Continue reading “Highlights of the Senate banking bill”

Flake calls for review of security clearance backlog

Sen. Jeff Flake (R-Ariz.) on Sunday raised concerns about the security clearance backlog in the government.

“There are signs it does need to be reviewed,” Flake said on NBC’s “Meet the Press.” “I think we’re going to have to talk about that with the Judiciary Committee, certainly in the Senate.”

Flake is a member of that committee.

More than 700,000 people are waiting to have their government clearances processed, according to a report from U.S. Comptroller Gene Dodaro. The Government Accountability Office late last month added the clearance process to its high-risk list of “federal areas in need of either broad-based transformation or specific reforms to prevent waste, fraud, abuse, and mismanagement.”

Senate Democrats wrote a letter last week asking for an investigation of security clearance procedures under President Donald Trump. The president’s son-in-law, Jared Kushner, is reportedly still working with an interim clearance.

“To Continue reading “Flake calls for review of security clearance backlog”

Mulvaney: Trump’s 2018 budget plan will reflect new spending levels

Budget director Mick Mulvaney on Sunday said President Donald Trump’s budget proposal, scheduled for release Monday, will provide guidance to Congress on how to spend hundreds of billions of dollars in new spending authorized by the budget deal signed into law this past week.

The Office of Management and Budget has been working since September on an update to its budget wish lists for 2018 and 2019, based on previous caps on spending. The budget office has had to scramble to adapt to the new spending levels, Mulvaney told Chris Wallace on “Fox News Sunday.”

“It’s been a very busy week at OMB,” he said.

“These are spending caps. They are not spending floors," Mulvaney said. "We’re going to show how you can run the government without spending all of it. That will be our 2019 budget.”

“But if you are going to spend it — which is Continue reading “Mulvaney: Trump’s 2018 budget plan will reflect new spending levels”