While We Argued Over NFL Protests Trump Has Been Busy
(The following first appeared in Politico and was written by M. Scott Mahaskey.)
1. A new bank enforcement policy
In the pantheon of bank regulators, the Commodity Futures Trading Commission doesn’t get much attention. The CFTC is an obscure agency, but it plays a crucial role in the financial system: regulating derivatives, a $483 trillion market that contains some of the financial instruments that caused the financial crisis.
This week, the CFTC’s new director of enforcement, James McDonald, announced a new regulatory strategy that has drawn sharp pushback from financial watchdogs. In a speech Monday night in New York City, McDonald said that financial institutions that self-report wrongdoings and cooperate with the ensuing investigations will receive “concrete benefits” from the CFTC, including reduced penalties. He said the program isn’t intended to give banks or individuals a “pass” for their misdeeds, but instead aligns the incentives between regulators and financial institutions to reduce financial crimes while putting the CFTC’s limited resources to the best use. He also said he doesn’t just intend to punish ground-level traders, but to work his way up the chain of command, targeting executives and other managers. For an agency with a budget of just $250 million, this enforcement strategy sounds like a common-sense approach. But financial watchdogs, who were critical of the CFTC under Barack Obama, are skeptical that it will lead to tougher enforcement, doubting that banks can—or will—effectively police themselves.
It’s not exactly clear how the new enforcement strategy will work in practice, or how different it will actually be from the Obama administration’s approach. But given the Trump administration’s bank-friendly actions so far, including targeting many Dodd-Frank rules, many financial watchers see the move as the first step towards a lighter touch regulatory regime.
2. Trump’s trade battle with Canada intensifies
For all the talk of going after China and Mexico, Trump’s biggest trade battle so far seems to be with our close ally Canada—a puzzling fight that ramped up Tuesday when Commerce imposed giant duties—more than 219 percent—on Canadian aircraft maker Bombardier. The highly watched case began after Boeing formally petitioned against the Canadian company, accusing it of unfairly benefiting from government subsidies in a $5.6 billion deal last year to sell regional jets to Delta. Canadian leaders had heavily opposed the move; last week, Prime Minster Justin Trudeau and British Prime Minister Theresa May—Bombardier is based in Northern Ireland—appeared together to publicly lobby against the duties, arguing that Boeing didn’t even sell the type of regional aircraft involved in the Delta deal.
The duties are just preliminary, and thus won’t be finalized until early 2018, when the International Trade Commission, an independent agency, will rule on whether the practices actually harmed any U.S. manufacturer. Canada already has threatened to retaliate: If the ITC rules to make the duties permanent, Trudeau has said that Canada will not buy any of Boeing’s F-18 Super Hornet jets, a deal worth more than $5 billion. Even the preliminary duties, though, are sure to increase tensions between the two neighbors, as the NAFTA renegotiations approach a self-imposed, end-of-year deadline.
3. A new environmental rule gets an expiration date
During the final days of the Obama administration, the Department of Transportation finalized a rule to require states to reduce greenhouse gas emissions from big highway projects, a final piece of Obama’s environmental legacy. The rule was set to take effect on February 17, but the DOT has repeatedly delayed it, first until March 21 and then to May 20—then, for key pieces of the rule, indefinitely.
This week, facing lawsuits from environmental groups and state attorneys general, the department finally relented, allowing the entire rule to take effect—but with a big caveat: The rule is going away next spring. In a notice announcing that it was allowing the rule to take effect, the DOT also said it “has initiated additional rulemaking procedures proposing to repeal the [greenhouse gas] measure.” In other words, the news is a short-term victory for environmentalists and state attorneys general—but it won’t last long.
4. Interior Department rolls back Obama-era sage grouse protections
In September 2015, the Bureau of Land Management within the Interior Department finalized its plan to protect a funky-looking bird, the Sage Grouse, whose habitat sits on some of the most resource-rich land in the United States. The plan was something of a compromise between conservation groups and oil and gas companies, creating 98 separate land use plans throughout the West that provided new protections for the Sage Grouse—but the department declined to list the bird on the endangered species list.
This week, the Interior Department announced that it will reconsider those plans, a first step towards overhauling a key Obama-era environmental policy and opening up more land to oil and gas drilling. The announcement was not exactly a surprise: BLM has previously relaxed some rules around Sage Grouse habitats and an advisory report commissioned by Interior Secretary Ryan Zinke, which was released this summer, recommended broader changes to the Sage Grouse rules. Still, the news is a victory for oil and gas interests who support more drilling opportunities on federal lands and a defeat for conservationists who slammed the news as an attack on the environment and said the overhaul could eventually lead to the Sage Grouse being labeled an endangered species. The changes won’t take effect overnight, as Interior’s announcement is just a first step in a long process—and yet another sign that under Zinke, federal land management policies are turning in a new direction.
5. Trump takes a small step towards constructing his border wall.
Democrats in Congress have refused to provide any money for Trump’s wall along the U.S.-Mexico border, denying the president the chance to complete a key campaign promise—so far. But Trump continues to take baby steps towards constructing his wall.
This week, U.S. Customs and Border Protection announced that it had begun construction on eight wall prototypes in San Diego—four made of concrete and four of “other materials.” The prototype will be 18 to 30 feet tall and be completed within 30 days. This move is just a small first step, since the Trump administration has only about $20 million to construct the prototypes, money repurposed from other accounts and far less than the estimated cost for building the entire wall, which could reach $50 billion. But it’s a sign that Trump has no intention of backing off his key campaign promise.