Overnight Finance: Cohn resigns from White House | Senate moves forward on Dodd-Frank rollback | House eyes vote on funding bill next week

Overnight Finance: Cohn resigns from White House | Senate moves forward on Dodd-Frank rollback | House eyes vote on funding bill next week
© Greg Nash

Happy Tuesday and welcome back to Overnight Finance, a systemically important financial newsletter. I'm Sylvan Lane, and here's your nightly guide to everything affecting your bills, bank account and bottom line.

See something I missed? Let me know at slane@thehill.com or tweet me @SylvanLane. And if you like your newsletter, you can subscribe to it here: http://bit.ly/1NxxW2N.

 

THE BIG DEAL: The Senate on Tuesday took its first step toward passing a major bipartisan rollback of the tough banking rules enacted by former President Obama after the 2008 financial crisis.

Senators voted 67 to 32 to take up a motion to start debating a bipartisan bill to exempt dozens of banks from parts of the Dodd-Frank Act, passed in 2010 to make the financial system safer and stronger.

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Republicans and a coalition of moderate Democrats voted to move ahead with the bill they call an overdue fix to Dodd-Frank that would help smaller firms boost rural and struggling economies.

The bill has stoked deep divisions among Democrats. Moderates backing the measure say it's a major bipartisan achievement that can help restore the American people's faith in Congress. Liberals have panned any talk of bipartisanship, pledging to make the process as painful as they can for supporters.

 

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Where Senate Republicans are: Sitting pretty for now. They get to watch Democrats bloody themselves over a huge issue within their party while passing the biggest changes to Dodd-Frank since its 2010 passage. The bill is almost certain to pass the Senate, and by then the damage to Democrats will already be done.

 

Where House Republicans are: Mulling their options. The lower chamber already passed the CHOICE Act in 2017, a much more conservative bill revamping Dodd-Frank that had no chance of making it through the Senate.

The Crapo bill lacks many of the provisions House Republicans say are essential to rolling back Dodd-Frank. It does nothing to the Consumer Financial Protection Bureau, maintains a hard threshold for enhanced Federal Reserve oversight, and maintains a key backstop for failing banks -- all loathed by Republicans.

But several House Republicans told The Hill on Tuesday that they could soften their stance in order to pass the last, best chance to roll back Dodd-Frank. We'll have more on that tomorrow.

 

What comes next: The bipartisan Senate coalition backing the bill is negotiating with House Financial Services Committee Chairman Jeb HensarlingThomas (Jeb) Jeb HensarlingLawmakers battle over future of Ex-Im Bank House passes Ex-Im Bank reboot bill opposed by White House, McConnell Has Congress lost the ability or the will to pass a unanimous bipartisan small business bill? MORE (R-Texas) on adding measures that passed both chambers with near-unanimous support. Those measures are intended to add more Republican votes in the House without upsetting the tenuous balance in the Senate.

Senate Democrats were clear Tuesday that overzealous changes from the House would stop the bill from passing the upper chamber again.

 

ALSO A BIG DEAL: Gary CohnGary David CohnSunday shows - All eyes on Senate impeachment trial Gary Cohn says Trump's tariffs 'hurt the US' Overnight Defense: Book says Trump called military leaders 'dopes and babies' | House reinvites Pompeo for Iran hearing | Dems urge Esper to reject border wall funding request MORE, the director of the White House National Economic Council, is resigning over Trump's plan to impose tariffs on steel and aluminum.

Cohn, Trump's top economic adviser and the former COO of Goldman Sachs, was rumored to have been broken with the president over the tariffs. He is expected to stay in the job for several more weeks.

Follow the breaking story here.

 

In Cohn's words: "It has been an honor to serve my country and enact pro-growth economic policies to benefit the American people, in particular the passage of historic tax reform," he said in a statement.

"I am grateful to the president for giving me this opportunity and wish him and the administration great success in the future," he said.

 

Trump on Cohn's exit: "Gary has been my chief economic advisor and did a superb job in driving our agenda, helping to deliver historic tax cuts and reforms and unleashing the American economy once again," Trump said in a statement.

"He is a rare talent, and I thank him for his dedicated service to the American people."

 

More reaction: Goldman Sachs CEO Lloyd Blankfein praised Cohn and said he was "disappointed" to see him leave the White House.

And a Democratic lawmaker trolled Trump after the news, citing the president's claim that everyone wants to work in his White House.

 

And there's already speculation about a replacement: From CNBC Washington correspondent Eamon Javers on Twitter:  "Administration source tells me top two candidates to replace Cohn will be Peter Navarro and Larry Kudlow - two men with VERY different views on trade."

 

ON TAP TOMORROW

  • House Financial Services Committee: Hearing entitled: "Legislative Review of H.R. 5059, the State Insurance Regulation Preservation Act"
  • Joint Economic Committee: Hearing on the White House economic report with Council of Economic Advisers Chairman Kevin Hassett, 2 p.m.
    House Financial Services Committee: Hearing entitled: "Legislative Proposals to Reform the Current Data Security and Breach Notification Regulatory Regime," 2 p.m.

 

LEADING THE DAY

GOP steps up battle against Trump tariffs: House and Senate Republicans are pleading with President TrumpDonald John TrumpSanders apologizes to Biden for supporter's op-ed Jayapal: 'We will end up with another Trump' if the US doesn't elect progressive Democrats: McConnell impeachment trial rules a 'cover up,' 'national disgrace' MORE to focus his tariffs on specific goods that are unfairly traded, not steel and aluminum across the board.

Senate Majority Leader Mitch McConnellAddison (Mitch) Mitchell McConnellDemocrats: McConnell impeachment trial rules a 'cover up,' 'national disgrace' Romney pledges 'open mind' ahead of impeachment trial McConnell proposes compressed schedule for impeachment trial MORE (R-Ky.) broke his silence on the proposed tariffs, saying he and other Republicans have "genuine concern" the administration could start a trade war.

He added that GOP senators are concerned the floated tariffs on imported aluminum and steel could "metastasize into a larger trade war" and are "urging caution" as the administration continues to finalize its plan.

Speaker Paul RyanPaul Davis RyanWarren now also knocking Biden on Social Security Biden alleges Sanders campaign 'doctored video' to attack him on Social Security record Sanders campaign responds to Biden doctored video claims: Biden should 'stop trying to doctor' public record MORE (R-Wis.) on Tuesday urged the Trump administration to take a more "surgical" and "targeted" approach to its plan to impose tariffs on steel and aluminum imports, and zero in on abuses from China.

Senate Finance Committee Chairman Orrin HatchOrrin Grant HatchKey Republicans say Biden can break Washington gridlock Trump awards Medal of Freedom to racing industry icon Roger Penske Trump holds more Medal of Freedom ceremonies than predecessors but awards fewer medals MORE (R-Utah) on Tuesday sent a letter to the president urging him to refocus his efforts on opening markets for U.S. exports without hurting domestic businesses and consumers. 

And House Ways and Means Committee Chairman Kevin BradyKevin Patrick BradyConservative groups aim to sink bipartisan fix to 'surprise' medical bills Trump economic aide says new tax proposal could be unveiled this summer Hoyer: Democratic chairmen trying to bridge divide on surprise medical bills MORE (Texas) and Ways and Means Subcommittee on Trade Chairman Dave ReichertDavid (Dave) George ReichertBottom Line The most expensive congressional races of the last decade Lymphedema Treatment Act would provide a commonsense solution to a fixable problem MORE (Wash.) argued that slapping sweeping tariffs on all imported steel and aluminum would undermine the potential economic gains generated by the tax-cuts law.

Republicans argue that passing such expansive tariffs would undercut everything else Trump has done to boost the economy, their main focus going into the 2018 elections. Trading partners have already pledged to retaliate, though Treasury Secretary Steven MnuchinSteven Terner MnuchinSecurity for Trump's Mar-a-Lago visits cost local taxpayers million On The Money — Presented by Wells Fargo — Senate approves Trump trade deal with Canada, Mexico | Senate Dems launch probe into Trump tax law regulations | Trump announces Fed nominees Senate Democrats launch investigation into Trump tax law regulations MORE said today Canada and Mexico would not face tariffs if the North American Free Trade Agreement is negotiated to Trump's liking. 

 

More money, more problems: The House could pass a $1 trillion omnibus next week to give the Senate extra time to approve the massive spending package before funding for the government runs out on March 23, Majority Leader Kevin McCarthyKevin Owen McCarthyCalifornia sues Trump administration over fracking Trump: Impeachment timing intended to hurt Sanders Overnight Energy: Schumer votes against USMCA, citing climate impact | Republicans offer details on their environmental proposals | Microsoft aims to be carbon negative by 2030 MORE (R-Calif.) told colleagues in a private meeting Tuesday.

"There was no formal guarantee but it was suggested as a possibility" that the omnibus vote would be next week, said one GOP lawmaker who attended the closed-door conference meeting.

McCarthy told rank-and-file Republicans he wants the House to act early to "beat the shutdown clock," said another GOP source in the room. The Hill's Scott Wong and Mike Lillis take us inside the plan.

 

The legislation could well be the last major bill to pass Congress before the midterm elections. That's led Washington insiders to dub the bill the "last train leaving the station," and an ideal target to load-up with policy riders. The Hill's Megan R. Wilson tells us what D.C. is trying to throw into the bill.

 

MARKET CHECK: Lethargic: The three major U.S. indexes posted minor gains Tuesday, closing far before Cohn announced his departure from the White House. The Dow Jones Industrial Average finished with a meager 0.04 percent gain, while the Nasdaq and S&P 500 ended the day with 0.6 and 0.26 percent increases each.

 

GOOD TO KNOW

  • The House on Tuesday easily approved a bipartisan bill requiring financial regulators to more frequently conduct comprehensive reviews of their banking regulations.
  • The former CEO of a payday lender that was investigated by the Consumer Financial Protection Bureau (CFPB) pitched herself as a candidate for the agency's director position, the Associated Press reported Tuesday.
  • The European Commission has drawn up a list of retaliatory tariffs that would target about $3.5 billion worth of American goods, according to Bloomberg News.
  • Conservative groups and some GOP lawmakers are pushing for more oversight of IRS rules as the agency works to carry out President Trump's new tax law.

 

ODDS AND ENDS