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good morning everybody and welcome to the third and final day of the TCH PPI annual conference thanks for waking up early and joining us we've got an exciting panel to start us off and as everybody knows at this particular point the politics from Washington DC have undergone a major shift following the midterm elections and we've got a panel here to help explain what that means for the banking world so joining us today our two award-winning journalists Deborah Solomon and Ben white and one of the beltway's most insightful and often quoted banking policy analyst isaac bolton ski deborah is the economics editor than washington DC bureau for the new york times where she oversees the teams of reporters covering economic policy issues prior to that she was with the brunswick group and also held roles The Wall Street Journal and wrote for Bloomberg view USA Today and the San Francisco Chronicle Ben is political prose chief economic correspondent and author of the morning money column covering the nexus of finance and public policy prior to joining Politico been reported for the New York Times the Financial Times and The Washington Post Isaac is the director of policy research for Compass Point Research and trading where he coordinates the firm's Washington Policy Analysis prior to compass point Isaac was with the Troubled Asset Relief Program congressional oversight panel and previously worked for AGI ejf Capital a multi-strategy hedge fund helped facilitate this discussion we have Mark Oesterle who is the senior vice president and deputy general counsel for SunTrust he oversees their Washington operations but prior to that he served on the Senate Banking Committee for approximately ten years doing such things as chief counsel and deputy chief of staff where he was involved in every key issue moving before the committee in the Congress on financial services policy so with that mark let me kick it to you take us away Thank You Anthony good morning everybody hopefully we know it's early we can bring some energy and I guess with the way things are in Washington there's always something interesting to talk about but let's level set real quick with DC it has become exceedingly difficult to find consensus on anything and that was before you had divided government and now we're looking at a situation where to the last election with the democrats taking the house control is flipped so consensus is probably going to be an even rare bird I'll just start with Ben we can work back just what do you think the prevailing political climate is going to be are we in the Twenty twenty election already and we can then work that back into how that may or may not affect financial services policy but just where are we now that we've just had this election Ben you know deep in hell is where we are right now pretty much thank you for having me first of all and I don't generally talk about bank regulatory politics or politics in general before 8 a.m. but I'll make an exception today for you guys yeah I mean obviously we're in the 2020 cycle already unfortunately for a lot of us who really you know like covering policy and regulation and all the rest of it so you're not gonna see any significant legislation coming off of Capitol Hill in the next Congress with Democrats in control the house and and Republicans in control of the Senate and obviously president Trump's still in the White House and Democrats are mainly going to be focusing on you know organizing and preparing for the 2020 election you'll see you know half of the Senate half of the Democrats on the Senate Banking Committee running for president at this point so they're not gonna be especially friendly to a lot of the interests in this room and not gonna want to be seen as you know in favor of any more Bank deregulation we're just talking beforehand about what happened to Senate Democrats who supported the Crapo bill most of them lost although that wasn't the reason they lost but they're gone so there isn't a lot of room for consensus all the action will be you know at the Fed at the regulators and what you're gonna see Democrats do on that front you know they can't repeal anything they can't roll back any of the stuff that Republicans did in the last Congress but they can pull up all of the various regulators for hearings which they will do and there'll be more oversight out in the house side of all the financial regulators and then you'll see Democrats trying to figure out exactly how they're gonna run in 2020 with their nominee is going to be how far left they're gonna go the extent to which you know they see resonance and relevance in being tough on Wall Street and cracking down on Wall Street you know you'll see the war on arm and maybe Booker and some others really kind of go hard on that and then other Democrats who may take a more sort of middle-of-the-road approach with the focus on the industrial Midwest and flipping back Michigan Pennsylvania and you know some of those other states that Trump took away from Democrats so it'll be mostly positioning for 2020 action at the regulators more oversight on the hill well now that we're talking about switching to the hill we do have a new chair a been kind of touched on this but Deborah any thoughts in particular about where chairman waters wants to go and she's got a new position but obviously with all these other people in the world moving around in this space it's not her space to navigate a loan will she work with them won't it won't she but what do you think about the direction she wants to take the House Financial Services Committee you know I think that she is she is seen as sort of this populist anti Bank congresswoman but she's actually more substantive than that I think and she but she has made clear what her priorities are and that is bringing big banks before her committee to hold them accountable she is you know singled out a couple Wells Fargo she seems particularly interested obviously she's from California and has said that she's going to call them up before her committee you know the last two years have been fairly fairly muted tone on Capitol Hill for four banks I mean you didn't really have hearings where they were getting called up there and interrogated nor did you have regulators and I think she's trying to to flip that dial in part because they are gearing up for 2020 and they want to have a villain and thanks for always a great villain for the Democrats you know whether whether that's true or not they they liked it you know to kind of be seen as the protector of the little people and the you know the consumers and I think that you're gonna wind up seeing a lot of that kind of rhetoric that we haven't really heard the last couple of years other than maybe from Liz Warren but she's been made to her priorities player about you know looking at the ties between President Trump and Deutsche Bank so you know there's gonna be is going to take I think she's gonna take a you know a more skeptical view of the banking industry obviously then then jeb Hensarling did and she also has said she's going to take a pretty hard look at the CFPB or whatever we're calling it now and you know I was talking to one of my reporters and I said well you know the real action is at the Fed and the regulators and he said well but you know she can she can kind of really cause a lot of political problems for the banking industry so you know don't dismiss her power so I do think that there is there is a real you know there is a real sea change this sort of a tale of two Washington's that the regulatory agencies that are trying to take a you know somewhat moderate and muted approach to to rolling back some of the the regulatory regime and then sort of the rhetoric that you're gonna see from her committee but I do think you know there are areas where she has already said she's willing to compromise and she does work across the aisle and I think she you know she and Crapo I think may senator people may have some some similar views about the need to not necessarily be able to weigh - but the need to deal with federal flood insurance and you know don't forget about the Fannie's and Freddie's of the world we have you know for we've not talked about them in a long time and you're gonna see a changeover at the FHFA know whatts tenure is expiring and sort of a mystery to us why he's stayed there that long but he's sort of the last holdover from the Obama administration so I think you know those are the areas GSEs in the flood insurance I think of the two areas maybe but to Ben's point you're not really gonna see a lot of substantive regular legislation I think you're gonna see more a lot more hearings and you know and grillings well I will turn to Isaac and talk about the Chairman Crapo he's gotta navigate a few things but one of the other responsibilities he has that the Chairman waters does not have is to get nominees through I think we'll see one probably next week for the CFPB I actually got called by the FBI a week or so ago on somebody else who's gonna come up with maybe FHFA so I wish I could break news but I'm not allowed to do that but tell me and don't tell that might have a little bit actually but what woody what do you think about what chairman cray pose got to do and how does he work with the the new environment and what's his agenda gonna look like sure also thank you for having me my clients are hedge funds who have the attention span of Nats with a DD so it's been nice to spend two days with folks who actually have a longer term strategic view this has been fun for me look to answer your question I think the deadlock that we're going to see is going to make it difficult to have any significant legislative movement there will be efforts and I think we'll have a brief and ill-advised another turn with GSE reform that will not actually result in enactment think that there's going to be a focus on data privacy issues that's something the Chairman Crapo cares about I think that there's also going to be a push within the Republican caucus to look into the use of the payment system as a means of implementing social policy which is something that's been an issue over the past year or so but really I think mostly what we're going to have is a whole lot of noise a turrent of headline risks from the house and then slow but steady work in the Senate to continue the confirmations to hold hearings on areas of interest such as FinTech and cryptocurrency in other areas but this Congress I doubt is going to produce anything of consequence for our area the only real opportunity I think mark is is during these appropriations bills and so you know I often tell clients the big bills are tough but it's sometimes easier to get something through on page 1078 affinia probes bill and I think that those are going to be the only real moments of legislating from the next Congress in part because now we have two chambers in control of different parties which means you can actually have a negotiation which is structurally different than what we had with the current Congress where we have both sides controlled by one party and so I think in that negotiating process there are small targeted narrow bills that I think can be attached to approps packages that must pass and become law but the big-ticket items there's just no shot well but where we start now we see that do you and anybody please but I'll start with Isaac ad chimed in are there any kind of situations where things could play out where a big bill could pass I mean I worry all the time about a cyber issue or whatever but with the presidential stuff coming up it's going to be talked about more do you think there's some scenarios where there is a higher risk of major legislation coming down the pike so in my experience Congress is kind of like the the dog in the movie up they see a squirrel and they lose their attention on what they were focused on before and so I think that what we don't know is what the next big storyline is gonna be what the next big cyber attack or data breach will be feel pretty safe on the GSEs I don't think that they're going to be the next blow up that catalyzes legislation data security is the one area where just by the law of large numbers and this is something that I took away from the past day there will be another breach you can continue to build 10-foot walls and the bad guys will build 11-foot ladders so there will be another breach and I think that Congress will we'll get in a tizzy about that but even that mark I have trouble seeing how we get to the point where we actually have legislative action look at what happened this most recent Congress that didn't produce anything of consequence in that space and so I have trouble seeing anything that catalyze is it the caveat of course is that Congress tends only act when there's a fire so let's figure out what the next fire is yeah I mean I would concur with that particular energy GSE reform there's just no chance of that happening you know I don't even know that Stephen minuchin likes to talk about how they're gonna move on next GSE reform and come out with new white papers and have a you know coherent policy I don't know whether they're actually gonna do that or spend a lot of time on it given that they have no prospects of getting anything done on the hill and and data security is another one where you would have to see an absolutely massive breach that galvanizes the entire country and somehow brings the parties together to address it because is going to be to many areas of disagreement on the specifics and you know pushback from you know your industry and and others that that could wind up blocking it in the Senate even if you know House Democrats kind of galvanized behind one approach to it so you know and the point is well-taken that you know we're in a new cycle in an environment where you know everything changes one moment to the next you know I have no idea what President Trump is tweeted this morning that's gonna send me off down a rabbit hole the rest of today you know whether he said that you know chairman Powell is responsible for you know the Redskins not playing well or some other things like that so you know nobody knows how these things are gonna play out what the molar report is ultimately going to show and whether we get into an impeachment scenario I doubt it but you know with all the latest news on Manta Ford it's really hard to tell so sitting up here and predicting the extent to which Congress can come together on a major piece of legislation than anything is essentially impossible it the president does make it interesting I think we can leave it at that but he did have a few things to say Debra what do you think that means for the folks who that the Fed is not full I don't know if there are other people considering going in but I'm not sure I would put my name up at this point after what we saw what do you would how do you think the president's kind of constant engagement with chairman Powell is going to impact or not the Federal Reserve well I mean yes he has made something of a sport of feeding up on his bed his bed pick his hand-picked bed chairman you know practically I think he's putting the Fed in somewhat of a box I you know I don't get the sense at all that the Fed is going to bend to what he says but they are you know there are some signs of slowing in the economy and and and real signs of weakness that you know in particular spots maybe a little bit housing obviously the GM stuff is a little bit troubling and so if and when they do see a need to slow down I think it does put a little bit more pressure on him in terms of actually doing the right policy versus being seen as as being political that said I think you know the people who have been picked you know I've been pretty impressed by his his picks for the Fed I mean Randy Quarles is you know very experienced you know former Treasury official and Nellie lang if she gets through you know he has not picked he has not picked people that would change the trajectory of interest rates so I'm not quite sure if he doesn't understand that or if he just wants to find somebody to blame I mean trying to predict what look Trump goes through trumps mind and what his motivations are is you know not som thing I really want to spend a lot of time doing because you just wind up down that crazy rabbit hole but he has not done what he could do to change the trajectory of the Fed that said I think he is making it more challenging you know if you are a serious economist and you want to or serious you know regulator and you and you want to go into the to the Fed I think you would probably think twice you know I've talked to folks at Treasury who say you know we're having a lot of trouble recruiting people and it's like well you know I I don't I don't how could that possibly be yeah you know cuz it treats as nominees so well yeah well and it's a such a fun process you know and I think there is a loss here you know we we've seen it you know the whole nominee process has been a nightmare you know for the last few years and good people drop out all the time but you know and it but it's also you've got a Fed nominee Martin Marvin good friend who's been sitting in the you know sort of in the holding chamber for four months and you know there's no movement there so it's just you know it is is kind of curious the kind of the position we're in but you know they're slowly stopping the Fed and I think they're stopping them with you know with you know well-qualified people and I think that's actually where you know forget Congress you're gonna see a lot more action at the regulatory agencies and pretty substantive action as well and if I can just throw in there with the election last night the Senate Republicans have now picked up two net seats and so it will be slightly easier to move through the confirmation process because you're no longer as beholding to some of the swing votes in the Senate within that Republican caucus like senators Collins Murkowski or Paul so it becomes slightly easier to move nominees through with those added to seats in their majority just make one point on Nelly yang because I'm sort of obsessed with this nomination and I'd be if in Isaac's thoughts on this and if anybody wants to talk to me off-the-record afterwards I can figure out the white house remains super confident that they can get her through and yet if you talk to bank industry lobbyists or some people on the banking committee they like now in a way she's not even to come up for a vote she's a Democrat blah blah blah but there there is this iron-clad belief inside the White House that you know she's gonna sail through which just gets to the point of how weird this nominating process is and how difficult it is to figure it out anyway I'm that's just an obsession of well there's an added feature if at the rate we're going every person who needed to be confirmed goes through the entire process it will take 11 years so there's a lot of people are not gonna get through that process and so adding tough ones or easy ones makes you know just add so the end of senator or president Elizabeth Warren's second term well that's a good segue and there's one person on the panel here who worked for Elizabeth Warren one bit she's probably running sherrod Browns probably running let's start with the because we care about banking the microcosm the Senate Banking Committee what in each of you can chime in like you just did but I'll start with you Isaac what do you think of what that's gonna mean that the two of them seem very interested in getting out there and running are they just gonna be in Iowa all the time sure so I think we're in this phase now that some call the ideas primary and it's where we're going to see all of the folks who are running for president which has been said is going to be a fair amount of the Senate Democratic caucus throwing out big ideas that I think are meant to play to the Democratic presidential primary voters and so what does that mean well I think good examples are senator Brown and Booker's over overdraft fee legislation where Senator Harris's rent subsidization bill these are the types of big ideas that aren't meant to be enacted they're meant to be talking points on the campaign trail and so I think that we're going to have a slew of these between now in Iowa which is by the way 440 days away if anyone's counting and so that's the type of headline that I'm talking about within that for our industry I think we should be cognizant it will have some big bank bashing element to it whether it's the return of glass-steagall or ATM fees or I do think student loan debts going to be a big talking point on the campaign trail so you'll see refi proposals there and other items so those are the types of proposals that we're going to see because all of them are running and every one of them is cognizant of the fact that actually legislating is gonna be incredibly difficult so why not throw out messaging bills they'll help you on the trail and I think I mean you know literally nothing's gonna get through the Senate but that the Democrats proposed but I do think that you're gonna start to see more discussion around you know a bank tax talking about how banks are so profitable you know they've had great run in the last few years and they're not so worried about you know even Maxine Waters said she's not that worried about lending it's more about kind of what banks are doing with all this capital and how you know how that interplays with the deficit and the big tax cut we got so you already see folks in you know in the Senate talking about how we could take some of this money from the banks and use it to you know distribute more evenly among you know for income and equality or whatnot so I do think I mean the bank tax is always a you know it's a nice trope but I do think you're gonna start hearing more about that because it's just an easy layup for them yeah I mean I don't know a whole lot to add to that other than I'm thinking about whether if you're Senate Democrat thinking about running for president like brown and Booker and Harris you know how much time do you want to spend in DC versus Iowa New Hampshire given that there's not gonna be much happening in DC so you pretty much get a free pass you have to show up or else you get beat up for you know the permanent campaign and all the rest of it but you know they're gonna beat a path there and stay there and all the action will be around like as Isaac said the ideas primary which of these ideas catch on the most who can harness kind of the populist fervor inside the Democratic Party in a way that also doesn't alien eight the voters that they need to flip those industrial Midwest states I talked about because 2020 really depends on Democrats at the presidential level you know taking back Pennsylvania Michigan Wisconsin you do that you win the white house even if you don't win Ohio in Florida you know which Democrats will try to do although it does look like Ohio is trending away from them sherrod Brown which would change that calculus if he somehow managed to get the nomination I don't think you will but it's you know it's plausible that he could but you know if you're in this industry and you are expecting any legislation you're not gonna get it and if you're expecting you know to avoid negative headlines you're not gonna get that either because it's gonna be open season among Democrats you threw out speculation about sherrod Brown does anybody want to speculate on who they think the nominee will be actually on both sides are we gonna see president now Trump and I were any ideas come on you're pretty yes Ben yeah I will start it off because you know I predicted the 2016 election so perfectly you know I was I was out there saying President Trump was definitely gonna win on election night which of course I wasn't although I did you know you could tell at the end of that campaign talking to Hillary Clinton's campaign about those Midwestern states that they had a problem you know that the numbers weren't moving the way they needed to and that's why you saw Obama get deployed late to those states it was too late to change the momentum away from her and to Trump so I actually on election night itself I was not that surprised that what looked like was happening in those states wound up happening I have no idea who's going to get the Democratic nomination in 2020 nobody else does either I mean I tend to like sort of think that Biden is the default frontrunner among Democrats given that you know is the former vice president he's popular he is good in the Midwest he's maybe not quite as progressive as some Democrats would like he's certainly not Bernie Sanders he's not Elizabeth Warren but if Democrats decide that the most important thing to them is winning in 2020 and defeating President Trump he's probably their safest nominee even though he's an you know an older gentleman he come across this youthful wood vigorous and all the rest of it so you know I'd have to put him as the the favorite but you know that's essentially meaningless and as for Trump being the nominee for the Republican Party absolutely hundred-percent he will be unless something crazy happens with with Muller and with impeachment and with all the rest of it nobody has any idea I think if we stayed status quo where we are right now this approval rating stays where it is and the economy softens in 2019 heading into 2020 he's gonna get a primary challenge whether it's flake or whether it's John Kasich who is you know obviously running for president and it has been for ever you know there will be a challenge to him the question is how seriously to take it and whether it will actually damage him or strengthen him president Trump is best when he's got a foil an opponent he can beat up on and make it all about them which you know made him less effective in the midterms he was fairly effective in some of the red states that that flipped to Republicans but you know he couldn't engage on the house side because he didn't have a foil you know so he could probably beat up on anybody who tries to challenge him for the Republican nomination and maybe that even makes him stronger going into the general election but my guess is he does face a primary challenge and if the economy is not super strong and if he's had a run of very bad news out of the Malheur probe that challenge could be significant he doesn't it'll get dispensed with pretty quickly I mean I I agree I'll oh I guess you know 440 days seems you know may not seem that far away but a lot can happen with the economy between now and then and wages I feel like the you know we're gonna have to watch and see how badly the Midwest sort of fares with Trump's trade war if it continues you know if the tariffs on China continue if he doesn't you know have some kind of truce at his dinner with Jay on Friday night you know there there are some real signs that the manufacturing sector is hurting from this I mean you know and the durable goods orders in October we're pretty dismal and I think you seeing slow wage growth and nobody quite knows why so you know there is there are sort of these outliers in the economy that could make it easier for a Democrat like sherrod Brown out there and talk about you know the left behind the people who have not really you know benefited from the recession from the recovery from the recession and you know and I do think that one of the things he will do is talk about banks and their profitability and how you know the the riches have not flown down flowed down to to the middle and lower middle class so I think it's hard to predict but yeah I would agree with with Ben that you know barring the unforeseen Trump will be the nominee in 2020 and would probably win sorry I mean I'm you know it's there when you you when you go to these states that have been decimated almost by some you know soybean farmers and corn farmers in Iowa they still love Trump they think he's fighting a good fight for them and they don't see any downside to what he's doing now that may change you know that could change if we're if we continue to see this and if you know and if we do get into a protracted trade war with you know with China that could change but I you know all signs are pointing towards his popularity despite what the polls say continuing so so generally agree with everything just two points add on to it number one is if we go back into the Wayback Machine to 2006 I don't think many folks would have predicted that Barack Obama would be the nominee let alone the next president and so I think that's just instructive in thinking about this both because of the normal timeline but also because the news cycle is now in dog years right so goodness only knows what'll change between now and and and the primary point number two is something I've been thinking about a fair amount which is you know history doesn't repeat itself but it often rhymes and I think just like the Republican Party had its tea party moment in 2010 and that battle for the soul the Republican Party I think the Democrats are going to go through something similar with an herbal tea party right where we're going to have they'll just make that up we're gonna have the far left and the centrist I think battling a bit for the soul of the party here's just to throw some numbers around it in the next Congress the two largest ideological based caucuses the Congressional Progressive Caucus for Democrats the Congressional Progressive Caucus which is farther left and the new Dems which are seen as the centrist well eacho have over 90 members so each one of them will control over 40 per about excuse me 40 percent of the total Democratic caucus and so seeing that battle and how that plays out I think it's gonna be significant in trying to figure out who the next nominee is for the Democrats and what direction they take the party it's gonna be interesting and it's going to be expensive those are the two things we know for sure at this point I'm going to look to the first question coming from the audience you guys'll like this it's gotten the most votes notes that big banks lean heavily blue small banks skew heavily red just probably well-known just because they're businesses but then here's the interesting question how do we convince the Democrats not to make us the villain so I assume that's coming from a banker yeah well I mean the first answer to that question is like don't have any scandals between now and the primaries you know don't get yourselves in trouble you know it's gonna be very difficult because they'll be salience too in both parties frankly and president Trump you know showed this at the end of the campaign I mean he was attacking Goldman Sachs and you know bankers on Wall Street and that the whole Steve Bannon populist message is in part you know based on that the idea that you know the powerful interest control Washington and drain the swamp and so you know that will continue to some degree on the right as it's become quite popular on the right and and on the left it's you know been the mantra for quite a long time and will continue to be so I don't know the great answers on on how you convince either side to kind of drop that approach since it works and remains kind of popular so you know don't mess up don't get in trouble don't have scandals don't try to rollback you know capital standards across the board I mean I think you know groups like BP I and others are making the arguments that you know there are smart shifts to make both and you know in stress tests and in the g-sib surcharge and all the rest of it and you can continue to make that case but like being hugely public about it is probably not the the greatest idea in the world and then you know the lending and making good loans to small businesses and talking about that and the extent to what you talked about that super helpful so if I can throw on there just just two points first well my favorite sayings is that in DC stories are better than spreadsheets and so I think this is something that we heard about yesterday on the CEO panel which is explaining to folks in DC the banks are the engine for economic growth and I think that's still lost on some of the members and the twenty six-year-old staffers who actually run DC and so explaining that story to those folks is important and the second is I agree with what Benson is staying under the radar to a degree and this is something that I've been thinking abou with the House Financial Services Committee they're a panoply of issues that they can look at they're going to have to prioritize and I think that they're going to prioritize based on issues that are accessible to the public whether that is the next big scandal or it's consumer facing issues from the bureau like payday lending or debt collection so really it's it's staying under the red radar and explaining the importance of banking to growing the economy and jobs those two things together will blunt the ultimate impact of what's coming yeah I mean you know are you already starting to see people question people Democrats questioning what banks have done with the tax cut right so if the answer is they've just bought back shares probably not gonna be the best selling point but if you have an alternate and I'm not in the business of anymore giving banks advice but on how to how to improve their image but you know if if banks can show that they have taken that tax cut and rewarded workers and increased wages and you know started helping you know lower-income communities you know those are obviously the the areas but again it is you know you just don't know what's gonna happen I mean who you know who would have predicted the Wells Fargo situation I mean Wells Fargo had been sort of the darling of Capitol Hill for so long so we're trying to predict is impossible but you know going out there and and champing you know more transparency and stress test and having lower capital ratios is probably not going to be a winning argument given the split in Congress well one of the things that the industry is considering very closely and it has to do with California's acted on privacy Europe has acted on privacy I think the industry is now considering what can we do to get ahead of things probably anticipating to the point you made before there's going to be another issue there's also a very wide variance in the privacy standards across industries the the financial services industry at least through gramm-leach-bliley unbelievably almost twenty years ago has had some standards for probably the longest other folks have stepped into them but what are your views on threading the needle or maybe it just becomes an issue for now but the privacy stuff will be put out there by the industry itself and I think folks understand they're gonna have to give some to get some as well it's not gonna be an easy thing but Isaac any thoughts on where the privacy legislation may go sure I I have trouble seeing movement on the federal side but I want to highlight what I think will be a trend over the next few years which is more action on the state level and let's just throw out a couple numbers in the most recent election Democrats won seven more governorships they won four more AG's and we know what a G stands for aspiring governor and they have now six different states where they have six additional states where they have a trifecta where you have the governorship and both houses of the legislature and so I think as we see the Fed the federal government in a lot of ways standing still on certain issues from a legislative perspective moving slowly on the regulatory side I think some of these states are going to become much more aggressive and we've already seen that in California but I think we're gonna see it in other states New York with their regulation best interest Colorado with their payday lending ballot initiative so I think we will continue to see the states moving which ultimately is going to pressure federal action I just don't see it in this Congress yeah I would agree I mean I think the action is all gonna be at the AG level especially you know you're seeing that with student lending with now you know they're sort of you know if the CFPB continues to be sort of this paper tiger that it's become or if that's the view of it the AG's have already made clear that they're gonna pick up where the CFPB left off and obviously it's not as you know it may not be as onerous as having a federal agency but it can be pretty pretty damning and you know the same thing with with privacy I mean California is going to be leading on that antitrust issues you know I really do think that you know if you don't have a pretty strong lobbying team in California New York Illinois you probably should get one I wouldn't disagree with any of that the only additional point I would make is that some degree on the privacy front the banking industry is protected a little bit by the fact that you know people are more angry and upset about Facebook and social media so you know I guess you could thank yourselves that they can be the focus of it for a while and should be given all the data breaches and issues we've seen with you know the advertisements that ran on Facebook and Russian influence and all the rest of it so there'll be a lot of focus on on that and Sheryl Sandberg and Mark Zuckerberg and all their problems and bringing up to the hill so you'll get a break from the headlines a little bit as at least Capitol Hill focuses on social media and Facebook but again there's lots of action as I said Deborah said at the state level that you need to worry about so just to confirm this the holy grail of preemption and a unified national standard is gonna be far it'll be like a Monty Python exercise of anything industry yes yes yes yes yeah get more questions here one specifically goes do you think Kathy crane injures going to be confirmed and I'll sort of answer that I believe this time next week she will be confirmed but for you the panel how do you believe her confirmation may or may not change the CFPB's direction going forward it's a great question I mean I think you know she was she worked with Mick Mulvaney fairly closely at the OMB she's been described as somebody who shares his views I don't think she's quite as big of a bomb thrower as he is and you know she's not I don't think she's gonna be sending scathing memos to the CFPB staff in the way that that Mick Mulvaney has been but I don't see any great change in the in the way that that agency is operating and I think you know the industry has made a fairly persuasive case I think to you know the folks in the administration that there was overreach and duplet you know duplication of regulation and that it was you know really hurting their industries my concern is that if you see an issue with you know military lending or veterans you know it one scandal is just going to to break you know kind of the break wide open the you know the roll back because those are the areas where for a while there was still protection and there was you know still a focus on enforcement but that sort of been from what we've reported and others there has been less focus on military lending scams and and protecting veterans and I think that you have to be really careful of that you know I don't know what she's going to do and and I mean the folks I talked to at the CFPB said that there's very little that they're doing now I mean there's you know they don't do much and I would assume that she's going to take over and want to have you know some power but I don't expect her to put out rules on payday lending or anything that would really change the course you know significantly but others may disagree so so I'll throw I think all that's fair just a couple items one is I think she's gonna dramatically cut the budget I think that's something if you watch if you watch a hearing that point was made and it was a question from Senator Warren and what what does that really mean I think that it's going to continue the dramatically diminished enforcement profile and then for bankers there are two things that I will be watching one is the payday Rule which they will be a dramatic softening so you're absolutely right they have to come out with something to pull the backbone out of the rule which is the ability-to-repay standard I think that matters for bankers because I truly believe that small dollar lending can return to the banking system much like US banks new product and I think that that's one of the trends that we'll see with the change in the payday rule that's going to come early and the other is debt collection there is going to be a proposal to update the Fair Debt Collection Practices Act a law from the late 70s that hasn't really been updated since then it literally references della telegrams in the law but it doesn't we need an update for you know email and cell phones and those things so that's something that I think there's actually agreement from both the consumer side and industry on updating that so really it's exactly what we expected it's just now you'll have a director in place yeah I mean it's absolutely right that she her agenda and budget priorities and the rest of it will be the same as mulaney's and some reason why she's nominated they were close and similarly aligned I think the question for her will be you know how good is she at testifying before houses financial services because once they do this stuff on payday lending and debt collection all the rest of it she's immediately gonna be called up to testify about it and talk about it and say why it's you know a good idea or a bad idea Democrats will look to score you know points against her and against Republicans in general and banks on all these things and can she make the arguments that you know we're trying to get you know more lending to more people and and all the rest of it and I have no idea I don't really know her and I seen her testify before but she's going to get a lot of opportunities to to go up there and explain these things switching back to another question and I know we've done all the setup on this and even talked a little bit about the something I think that's relevant the investigation of President Trump and I'll add a comment I used to have to tell House staffers that the Senate was the place where all their hopes and dreams went to die and I was usually going to kill them but folks want to know if there are any prospects for a MLB si reform legislation which I've already teed up probably not but it's gonna be tough right I think I think there's been a lot of good work done and explaining the issue and why it needs updating it's just it's just hard to see that getting much air it feels like it's gonna get crowded out next year it's gonna be it's worth the try it's great and meaningful to continue educating staffers and lawmakers about the importance of it but it just feels like there's too many other things on the legislative agenda just concur with that I mean it's worthwhile exercise I suppose but nothing is gonna happen yeah unfortunately and I've tried to push this for years there's never been a closed hearing the Banking Committee and the House Financial Services Committee on the use of all the stuff that the banks generated I would love for them to go behind closed doors and actually hear from folks to get a better understanding here's the good stuff here's the wasteful stuff so that hasn't even happened and there's a lot of things like that that need to happen for it to to get further along well we've been asking for a lot of answers this is kind of open-ended would like to hear from each of you as we're getting close to the end what do you think are the big questions for this group our industry the world going forward where what should we be looking at besides thing out of scandals doing nice loans to good people and all the things we know we're supposed to do but what else are we missing what should we be thinking about I mean the one thing we haven't really talked about is the Community Reinvestment Act which is you know everybody's favorite CRA I never thought about that I always thought about the congressional but there seems to be you can tell a little bit that there is you know what had initially been seen as a fairly you know kind of not a not a really aggressive approach by Treasury and and you know sort of a respected idea about how to reform CRA has sort of morphed into well into a you know to a partisan issue the Democrats are saying that it's it's basically going to help banks avoid making investments in low-income communities and I think that narrative is going to start to take off just because it is it is so local and I mean every every lawmaker knows what CRA is and CRA is incredibly important to the banks in terms of what they can do you know in terms of mergers and acquisitions so I do think that is an area to pay to pay attention to I mean it's happening at the regulatory level but you know never never underestimate the power of Maxine Waters and others to really call attention to you know disparities in how banks are utilizing it so so I'll throw in that's absolutely right that's gonna be the main battleground I think when we think about these things but here's one I've been thinking about we will have a new head of the FHFA the Federal Housing Finance Agency over the next few months and I think that's incredibly important for a couple reasons number one housing is 20% of GDP so who's in that seat and who oversees Fannie and Freddie that's meaningful but number two is there's this this this sort of yin and yang push and pull on the one hand there's classic GOP orthodoxy on Fannie and Freddie which is to shrink the footprint and on the other hand we have the Trump administration's growth agenda and you can't have both of those things at the same time you can't lower loan limits and increase fees while still expecting economic growth and so I think that's gonna be an interesting thing to watch with the FHFA director nomination with the Treasury plan if there is such a plan that will come with the legislative efforts that are gonna be forthcoming so that that's what I'm watching yeah I don't think have anything more to add that what we've already talked about I mean I'm mostly focused now on the broader macroeconomic picture and the extent to which we are seeing a softening and then the you know the capex story is the big one that that I think bears very close watching you know whether that slowdown in the third quarter and capital expenditures is a real one that gets repeated or if it's you know as Larry Kudlow suggests kind of a one-off based on the number of factors then that this you know boom in capital expenditure is gonna continue in the fourth quarter and into next year because you know if it doesn't we got a lot of problems and the economic slowdown story is real if it comes back and tax cut you know benefits are really being reinvested in in plants and equipment and workers and wages then you know you've got a pretty decent growth story still going into next year even as some of the stimulus fades you know add on top of that the trade concerns and you know this meeting was G is incredibly important the extent to which you know I painted sort of three scenarios in the column this morning being that you know the big deal could they actually announce something where the Chinese give some ground on IP and force technology transfer and agree to buy a bunch more of our natural gas I don't think that'll happen I also don't think they'll be you know disastrous meeting in which the two don't get along and the Chinese offer nothing Trump comes out of it you know angry tweeting against G and markets then tanked on on Monday and Tuesday we probably get something in the middle where there's an agreement to have further talks and the Chinese maybe offer one or two things that the Trump can boast about and we avoid getting to 25% tariffs on everything the China exports to the United States next year because if we do get that you know that's real trade war that's real cost for consumers that impacts the Fed and the inflation picture there's just a lot of uncertainty on capital expenditure and on trade that could really impact the way the economy looks next year what the political landscape looks like based on that so you know we've covered all of the nitty-gritty of some of the Finn Raikes stuff and the lack of legislation coming off the hill next year but to me real question is you know is this economy ticking toward recession or do we have more of the you know the Trump boom in 2019 and that'll decide you know whether he gets reelected or whether Democrats can can reclaim the White House well I guess that's the last word thank you for coming out early and kind of on bankers hours and helping the group kind of understand a very muddled mess in Washington appreciate it