Overnight Finance: Watchdog weighs probe into handling of Cohen bank records | Immigration fight threatens farm bill | House panel rebukes Trump on ZTE | Trump raises doubts about trade deal with China

Happy Thursday and welcome back to Overnight Finance, where we’re celebrating the return of untainted romaine lettuce. 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@digital-stage.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 Treasury Department’s internal watchdog is considering a request to probe the alleged disappearance of records from bank accounts held by President Trump’s personal attorney, Michael Cohen.

Sen. Ron Wyden (Ore.), the ranking Democrat on the Senate Finance Committee, asked the Treasury inspector general to investigate whether suspicious activity reports on Cohen’s bank accounts were removed from a closely guarded Financial Crimes Enforcement Network (FinCEN) database, citing a New Yorker story this week alleging as much.

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“We have received Senator Wyden’s request that we look into how FinCEN manages the SAR database, and are developing our plan to carry out the request,” Rich Delmar, counsel to the Treasury inspector general, told The Hill.

FinCEN, an agency housed under the Treasury Department, investigates money laundering, illicit finance and other financial crimes. The agency also reviews suspicious activity reports from banks on questionable transactions of more than $10,000.

A federal law enforcement official told The New Yorker that he leaked suspicious activity reports from accounts held by Cohen after noticing two other similar records were missing from a FinCEN database. I explain it here.

 

FinCEN: Access to records such as Cohen’s is sometimes restricted: The Financial Crimes Enforcement Network (FinCEN) said in a Thursday statement that “under longstanding procedures,” the agency “will limit access to certain [Suspicious Activity Reports] SARs when requested by law enforcement authorities in connection with an ongoing investigation.”

FinCEN investigates money laundering and other financial crimes. Its work includes reviewing federally mandated SARs from banks on unusual transactions of more than $10,000.

Those reports are fiercely protected, so the leak is seen as stunning breach of FinCEN’s secrecy.

“In any event, government employees and law enforcement personnel with access to the system are not authorized to publicly disclose SARs, and, as previously reported, Treasury’s inspector general is looking into whether any SARs were improperly disclosed,” the FinCEN spokesperson said.

 

LEADING THE DAY

Immigration fight threatens farm bill: A fierce immigration fight among Republicans is threatening to derail the GOP farm bill, just hours before the legislation is scheduled to reach the House floor.

The Freedom Caucus, a band of roughly 30 conservative hard-liners, claims to have enough votes to block the farm bill unless Republican leaders agree to schedule a vote on a separate immigration measure from Judiciary Chairman Bob Goodlatte (R-Va.).

The “vast majority” of the caucus wants to vote on the Goodlatte bill before they agree to back the farm legislation, according to Freedom Caucus chairman Mark Meadows (R-N.C.).

Complicating the fight: The push comes at a time when a group of moderate Republicans are moving ahead with a discharge petition aimed at forcing a series of immigration votes on the House floor.

The latest: As of Thursday evening, GOP leaders were still pushing ahead with a planned Friday vote on the farm bill, even though the whip count remains in question. Stay tuned…

 

Trump raises doubts about possible trade deal with China: President Trump on Thursday cast doubt on the prospect of a trade deal between the U.S. and China, saying that Beijing has “become very spoiled” and is used to getting what it wants from Washington.

“You’ve never seen people come over from China to work on a trade deal. Now will that be successful? I tend to doubt it,” Trump told reporters during a meeting with the NATO secretary-general. “The reason I doubt it is because China has become very spoiled. The European Union has become very spoiled.”

“Other countries have become very spoiled because they always got 100 percent of whatever they wanted from the United States. But we can’t allow that to happen anymore,” he added. The Hill’s Niv Elis has more here.

 

House committee rebukes Trump on ZTE: The House Appropriations Committee unanimously accepted an amendment to an appropriations bill on Thursday that reinforces sanctions against Chinese telecommunications company ZTE, a rebuke to President Trump, who earlier this week tweeted support for the company.

“This amendment would prevent the Commerce Department from renegotiation of the sanctions it just enacted last month on ZTE,” said Rep. Dutch Ruppersberger (D-Md.), who authored the amendment to the 2019 Commerce, Justice, and Science Appropriations bill. 

The Commerce Department slapped heavy sanctions on the Chinese company last month, banning it from using American components in its parts and effectively causing the company to shut down its U.S. operations.

The company had broken U.S. trade control laws by selling components to Iran and North Korea. Niv breaks it down here.

 

Trump says ZTE support followed request from Chinese president: Trump on Thursday said that his surprise support for Chinese telecoms firm ZTE followed a request from Chinese President Xi Jinping to look into the matter.

“They did very bad things to our country. They did a lot of bad things to our economy,” Trump said Thursday, but added that the company also bought a large number of components from American suppliers.

The move caused ZTE to shutter its U.S. operations, and could be a death knell for the Chinese company.

 

MARKET CHECK: From CNBC: “Stocks fell on Thursday after President Donald Trump indicated trade talks between the U.S. and China may not be fruitful.

“The Dow Jones industrial average closed 54.95 points lower at 24,713.98, with Cisco Systems and Walmart dropping 3.8 percent and 1.9 percent, respectively. The S&P 500 declined 0.1 percent to 2,720.13 as tech declined 0.5 percent. The Nasdaq composite slipped 0.2 percent to 7,382.47 with Amazon, Netflix, Apple and Alphabet all falling.”

 

FINANCE IN FOCUS: The controversial consumer bureau rule on short-term, high-interest loans appears to be safe from congressional repeal efforts, elating liberal groups who sought to protect the measure.

Lawyers and financial sector watchdogs tracking attempts to repeal the Consumer Financial Protection Bureau’s rule on payday loans say Congress has run out of time to act under a regulatory review law.

Lawmakers had sought to repeal the CFPB rule under the Congressional Review Act. The law empowers Congress to kill a federal rule and prevents the agency that issued it from issuing another similar regulation.

The catch? Congress has to act within 60 legislative days on the repeal resolution before it is no longer allowed to pass it with simple majority in both chambers. Sen. Lindsey Graham (R-S.C.) introduced a measure to repeal the payday rule in March, and the deadline to act on that resolution was yesterday, according to lawyers at Ballard Spahr, which closely tracks the bureau.

“Although the Senate’s failure to pass a CRA resolution is disappointing because the CRA would have provided the ‘cleanest’ vehicle for overturning the Payday Rule, we were always doubtful that there would be 51 votes in the Senate to pass a CRA resolution,” wrote Ballard Spahr partner Alan Kaplinsky.

Progressive groups cheered the lack of congressional action, which seemed unlikely given the rough political optics of aiding payday lenders.

“Members of Congress were wise not to side with the predatory lenders charging 300% interest who were trying to overturn a common sense rule against deliberately unaffordable loans,” said Lauren Saunders, associate director of the National Consumer Law Center.

“This is welcome news for people across the country and for constituents who reached out to their members of Congress urging them to support this important consumer protection,” added Yana Miles, senior legislative counsel at the Center for Responsible Lending.

 

What comes next:  There are still several ways the CFPB payday lending rule could die. The Community Financial Services Association of America, a payday lending industry group, is suing the CFPB over the rule, and the bureau could choose not to defend itself in the case.

Acting CFPB Director Mick Mulvaney has also frozen a deadline for compliance with the rule as the bureau considers ways to amend or weaken the measure. That process would take months and would not likely yield action until 2019.

 

Further reading:

• Consumer bureau releases short-term lending rule meant to curb debt traps, 10/5/17
• Consumer bureau takes first step to revise payday lending rule, 1/16/18
• New CFPB director puts target on payday loan rules, 1/17/18

GOOD TO KNOW

• Retiring House Financial Services Committee Jeb Hensarling (R-Texas) said in a public interview Thursday that he’s not interested in taking the helm of the Federal Housing Finance Agency after he leaves Congress, though he didn’t rule out returning to D.C. someday. “It would be tempting, but my future has me going back home to Dallas, Texas,” Hensarling said.
• Some employees in a Wells Fargo unit that handles business banking improperly altered information on documents related to corporate customers, according to the Wall Street Journal.
• The Senate on Thursday overwhelmingly rejected Sen. Rand Paul’s (R-Ky.) plan to balance the budget by making steep cuts in spending.
• Divisions among NAFTA negotiators on complex and controversial issues are driving a stake through the heart of President Donald Trump’s goal of signing a new agreement into law this year, according to Politico.
  

 

ODDS AND ENDS

• The Vatican called for more regulation of markets and financial systems on Thursday, saying economic crises showed they were not able to govern themselves and needed a strong injection of morality and ethics.