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As Trump Investigation Clouds, Clock Is Ticking On Legislative Agenda

By Mark Melin. Originally published at ValueWalk.

With the history books potentially being re-written in the Trump investigation with obstruction of justice and a Trump impeachment a possibility, a report from Keefe, Bruyette & Woods says the real issue for markets is not a US constitutional crisis.  “These investigations threaten to continue to distract Congress from policy matters, like tax reform,” the June 8 research report observed, noting that there is still time to push through market-friendly tax policy. Another issue to slip through during the cloud of the Comey firing might be a Dodd-Frank legislative rollback known as the CHOICE Act. But ignore the bill passed by the House, the analysis says, the real bill is likely to take shape is in the Senate.

Watching who has the power to shape financial reform is in focus as the US Treasury Department recently released its own thoughts on Dodd-Frank reform. Watching the chess game play outcomes as the clock is ticking as mid-term elections are approaching and a potential Congressional re-alignment is possible.

Trump investigation CHOICE Act
Lucy_Prior / Pixabay

“Something for everyone” in the testimony of FBI Director James Comey testimony and Trump investigation

“There was something for everyone” at former FBI Director James Comey testimony last week, research from Brian Gardner and Michael Michaud noted. “Partisans on both sides of the pro- and anti-Trump divide will likely take away from the hearing what they want to take away.”

The historical importance of a special counsel to investigate Trump was the topic of the report, but there was a point that wasn’t much covered. Little noticed was how the investigation of former Attorney General Loretta Lynch was made a possibility via her request that Comey categorize the Clinton email investigation a “matter” rather than call it the politically charged “investigation” that it was.

With this statement indicating a potential shading of investigations to benefit a political party in the open, an interesting oddity occurred: political leaders appeared searching for truth on both sides of the issue emerged. Democratic Senator Dianne Feinstein said Congress should not just look just at Trump, but in a separate investigation also consider how her own party leaders may have attempted to manipulate FBI investigations. Feinstein’s willingness to look at all sides of the issue was termed as “refreshing” by a White House spokesperson over the weekend, a rare point when both sides of the political divide agreed.

Republicans need to act quickly on legislative accomplishments such as CHOICE Act, ignore Trump investigation

Are there certain issues, such as the purity of the US Justice system, which tower above common political discourse?

In their analysis last Thursday, Gardner and Michaud were more focused on practical matters that influence stock markets, as political leaders defending the US Justice system didn’t appear to be on the market’s radar.

“The political noise will not subside,” the pair of analysts predicted. Quickly coming into focus is former FBI Director Robert Mueller, a man said to be widely viewed in legal circles as committed to the independent rule of law. He is putting together what has been described as one of the highest profile special counsel teams in history to lead the Trump Investigation.

As political leaders gaze at history in the making as the US Constitutional separation of power is playing out in real time for the second time more than 40 years — Nixon’s 14 month impeachment process ended August 30, 1974 — the big problem with Congress is the lack of focus on a legislative agenda that benefits the stock market, analysts say.

This isn’t the first time investigative proceedings have been viewed as blocking the Trump legislative agenda, with many speculating it won’t happen. It is a rare moment when the situation has a countdown clock focused on mid-term elections with a debt ceiling limit fixed in the middle of a complex stew.

Democrats know the clock is ticking to the mid-term elections, after which a string of Democratic victories could mute Republican advantage in Congress, putting a crimp in the current policy direction.

“Congress has a limited bandwidth and time is becoming of the essence for big policy changes,” the report noted.

In the middle of potentially one of the most historic transitions of power in history, Congress will need to pull its act together before fall on both budget bills and a debt ceiling, mandatory to keep the government operating smoothly. US Treasury Secretary Steven Mnuchin has said unspecified plans exist to deal with the situation but has not made comments on a potential platinum coin being minted by the US Treasury to pay down the debt, as has been speculated by analysts, a concept initially popularized by a pair of business journalists.

With a US President under siege, it might be difficult to model decisions that are made as logic might not rule the day. This could be the case as not only the CHOICE Act but budget-saving legislation reaches the desk of the Trump administration — potentially as an impeachment chorus intensifies.

Trump Investigation – CHOICE Act passage more likely before mid-term elections

What can be modeled, however, is how a Dodd-Frank rollback might just find a way to pass the Republican-controlled Congress and put on the desk of a Republican president – whomever that may be – before the mid-term elections. Getting to this point might come from the US Senate.

Forget about the House, the report advises. The Senate is considering Dodd-Frank reform that would include “tweaks” to the Volcker Rule exempting community banks and moving up the “Too Big To Fail” threshold – issues that might actually have a chance of passing bi-partisan scrutiny. It is unclear if the name of the CHOICE Act will be adopted by the Senate or if the Trump administration will lead financial reform as opposed to the Senate.

But the devil is always in the details. It is unclear how the Senate version will square with former Goldman Sachs executive and US Treasury Secretary Steven Mnuchin, who has advocated a light regulatory touch for the banks.

The post As Trump Investigation Clouds, Clock Is Ticking On Legislative Agenda appeared first on ValueWalk.

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