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Letter from Washington

Political Insider

President Trump’s schedule (EDT):

11:45 AM:  Daily intelligence briefing;

  2:45 PM:  Meets with Secretary of State Pompeo;

  4:00 PM:  Departs the White House en route Joint Base Andrews;

5:55 PM:  Arrives at Gerald R. Ford International Airport, Grand Rapids, MI;

  7:00 PM:  Holds a “Make America Great Again” rally at the Van Andel Arena;

  8:30 PM:  Departs Michigan; and

11:30 PM:  Arrives at Mar-a-Lago in West Palm Beach, FL.

“HUD charges Facebook with housing discrimination over its targeted advertising platform.”  This morning’s Washington Post article leads with:

The U.S. Department of Housing and Urban Development said Thursday it is alleging that Facebook’s targeted advertising platform violates the Fair Housing Act by “encouraging, enabling, and causing” unlawful discrimination by restricting who can view housing ads.

“Trump orders Treasury, HUD to develop new plan for how home sales are financed.”  Last night’s Washington Post article led with:

President Trump ordered federal regulators on Wednesday to develop plans to change the way the country finances the majority of its home purchases.

The plan could upend decades of housing policy while finally reckoning with a major piece of unfinished business from the financial crisis — the fates of Fannie Mae and Freddie Mac, the housing finance giants that back more than half the mortgages written in the United States.

The two companies, which buy mortgages from lenders, then package them into securities to sell to investors, have been under government conservatorship for 10 years after receiving billions in taxpayer bailouts. Lawmakers have been wary of tinkering with their structure, fearful a wrong move could disrupt the housing market and the availability of 30-year mortgages, the most popular way home purchases are financed in the United States.

Trump signed a presidential memorandum Wednesday directing the Treasury Department to develop a plan that would end Fannie’s and Freddie’s government conservatorships and improve oversight of the companies, which have trillions in assets. Trump also instructed the Department of Housing and Urban Development to submit a plan to change the operations of other parts of the housing system, including the Federal Housing Administration, which helps low-income and first-time buyers.

“The lack of comprehensive housing finance reform since the financial crisis of 2008 has left taxpayers potentially exposed to future bailouts,” the proclamation says. “The housing finance system of the United States is in urgent need of reform.”

Trump’s directive comes amid growing expectations within the housing industry that the Trump administration would unilaterally release the companies from government control if Congress doesn’t act. Treasury Department officials have been meeting with industry and consumer groups over the last few weeks to identify potential sticking points to any reform effort, according to several people familiar with the meetings.

Disrupting the housing market in time for the 2020 election is a very risky strategy for Republicans, even if they are correct that Fannie and Freddie helped cause the 2008 Great Recession.  They were bailed out, but have since more than repaid what they received from Treasury.  There’s little chance, in my opinion, of getting a GSE reform bill through Congress before 2021.

Syndicated Conservation Easements Under Investigation By The Senate Finance Committee.  Yesterday’s press release led with:

WASHINGTON – Senate Finance Committee Chairman Chuck Grassley (R-Iowa) and Ranking Member Ron Wyden (D-Ore.) today launched an investigation into the potential abuse of syndicated conservation easement transactions, which may have allowed some taxpayers to profit from gaming the tax code and deprived the federal government of billions of dollars in revenue. For several years now, the IRS has been investigating these transactions. They appear to involve promoters selling interests in tracts of land to taxpayers looking for large tax deductions. In such an arrangement, the taxpayers then get inflated appraisals of those tracts of land and grant conservation easements on that land. The resulting inflated charitable deductions are then split among the taxpayers.

Auto Tariffs: “Republicans warn Trump to back off economy-wrecking tariffs.”  Last night’s Politico article led with:

Republicans are trying to head off their next potentially explosive conflict with President Donald Trump.

In a series of private meetings and conversations with Trump over the past few months, Senate Republicans have pleaded with him not to impose a new round of tariffs on foreign automakers — fearing they could debilitate Trump-backed states and cast the economy into a recession ahead of the 2020 election.

But Trump isn’t heeding the warnings so far.

Behind closed doors, GOP senators push back on Trump consistently when he brings up existing tariffs on steel and aluminum or potential tariffs on automakers, according to Republican senators. But Trump doesn’t back down from his position: He says the threat of tariffs gets the attention of trading partners — like China — who need to permit more imports of American products.

“The president likes tariffs as a threat. I hope he understands that the auto tariffs damage the autoworkers” in Midwest and southeastern states. “And I know he cares a lot about them. So I’m hopeful that he won’t do that,” said Sen. Lamar Alexander of Tennessee, where Nissan and Volkswagen have plants. But, he added: “If I were Japan and Europe, I wouldn’t relax.”

Whether GOP senators can head off another round of tariffs ultimately lies with the whims of the president. Administration officials have tried to reassure worried Republicans that the president has hit pause as he considers a trade report that would allow him to declare tariffs on the basis of national security.

“Trump pressures wary Republicans to produce replacement for health-care law.”  Last night’s Washington Post article led with:

President Trump is pressuring Republicans to produce a replacement for the Affordable Care Act, a request the GOP considers unrealistic in a divided Congress and politically perilous ahead of the 2020 elections.  

Hours after meeting with Senate Republicans at the Capitol on Tuesday, Trump spoke on the phone with a handful of senators, urging them to write a new law — even though the party failed to coalesce around a plan when it controlled the House and Senate for two years. 

The White House has no proposal in the works, according to administration officials, but Trump wants Republicans to pass a bill before his reelection effort that would do what Obamacare does — provide coverage to millions of Americans.

Trump spoke with Sen. David Perdue (R-Ga.) on Tuesday evening and listed his priorities in a phone call with Sen. John Barrasso (R-Wyo.) on Wednesday morning.

“He wants to preserve people being able to get their insurance through work . . . and focused on people with preexisting conditions,” Barrasso said. “He is 100 percent committed to ensuring that people with preexisting conditions get covered, and I understand that . . . and the president is also focused on lowering the cost of drugs.”

Trump’s push comes after his Justice Department, in a filing Monday in the U.S. Court of Appeals for the 5th Circuit, argued that the ACA should be thrown out in its entirety, including provisions protecting those with preexisting health conditions and allowing young adults to stay on their parents’ health-care plans.

If the case reaches the Supreme Court, it’s unclear how it would fare: Five justices who preserved the ACA during a previous case are still on the court.

Political Insider

About Pete Davis

Pete Davis

Pete Davis advises Wall Street money managers on Washington, DC policy developments that affect the financial markets. Visit his website here daviscapitalinvestmentideas.yolasite.com.

Articles by Pete Davis

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