President-elect Donald Trump noted that “we have a very false economy,” due to the Fed “keeping the rates down.” He is right.
Yet, the question remains how to exit from this policy while avoiding catastrophe in the bond market and building a safer monetary policy framework for the future.
The Fed needs to integrate state and bank money into the policy discourse, including its own reports to Congress and the public.
Here, Congress can help.
For full remarks:
President-Elect Trump’s nominee for Treasury Secretary, Steven Mnuchin, stated that the “number-one problem with Dodd-Frank is it’s way too complicated and cuts back lending.” He stated that he intends to “strip back parts of Dodd-Frank that prevent banks from lending,” which will be the “number-one priority on the regulatory side.” In an exclusive CNBC “Squawk Box” interview, he described the Volcker Rule as “too complicated,” and complained that “people don’t know how to interpret it.”
In the interview, Mr. Mnuchin and Trump-appointed Commerce Secretary Wilbur Ross emphasized that tax reform is also a “number one priority.” Mr. Mnuchin stated that he would effect the “largest tax change since Reagan,” and would cut corporate taxes in order to create “huge economic growth.” Mr. Mnuchin added that this change was designed to be a “middle-income tax cut and the childcare credit is a big aspect of this.”
Lofchie Comment: Maintaining a sensible financial regulatory system, in which businesses can operate freely without fearing regulatory attacks, becomes impossible when the rules are too complex to interpret. It is refreshing to hear the simple statement from the new nominee for Treasury Secretary that some of the rules we have now are just “too complicated”!
The SEC Division of Corporation Finance provided interpretive guidance that confirmed that a registered broker-dealer and investment adviser’s proposed procedures for offering and selling securities in initial public offerings would not involve a pre-effective sale. The approved procedures would allow the broker-dealer to solicit “conditional offers to buy” from high net-worth clients.
Lofchie Comment: Other firms undoubtedly will seek to apply the new procedures provided in this guidance to their own activities. Given the high potential liability for getting it wrong, firms should stay within the four corners of the no-action letter, or seek relief tailored to their different individual circumstances.