Republicans who eagerly awaited a GOP president so they could take a heavy knife to many of the regulatory requirements for banks, insurers and other financial institutions finally get their chance.

The House Financial Services Committee, led by Texas Rep. Jeb Hensarling, is slated to begin work Tuesday on legislation to largely undo the Dodd-Frank law, which Congress passed and Democratic President Barack Obama signed after the financial meltdown in 2008.

 

The GOP argues that the law hurts the economy by making it harder for consumers to get credit to buy a new house or a car, or for entrepreneurs to start or expand a small business. Hensarling has complained that banks are offering fewer credit cards and free checking accounts, while community banks report that compliance with Dodd-Frank’s regulatory burdens make it harder to provide more mortgages.

 

With Donald Trump in the White House, Republicans are counting on an ally for their effort.

 

Democrats fear that the changes would allow the kind of risky practices that crashed the economy.

 

Sen. Elizabeth Warren, D-Mass., called the bill “a 589-page insult to working families.” She told the committee that banks of all sizes are posting record profits and access to consumer credit and small business lending is at historically high levels.

 

“This bill doesn’t solve a single real problem with the economy or with our financial system, but it does make some big-time lobbyists happy,”  Warren said.

 

Hensarling’s bill would repeal about 40 provisions of Dodd-Frank, targeting the heart of the law’s restrictions on banks by offering a trade-off: Banks could qualify for most of the regulatory relief in the bill so long as they meet a strict basic requirement for building capital to cover unexpected big losses. He says the capital requirements will work as an insurance policy against a financial institution going out of business.

 

Republicans are likely to pass the measure in the House, but face significant obstacles in the Senate where leaders have emphasized their desire to find areas of agreement to enhance economic growth.

 

Hensarling also goes after the consumer protection agency that Congress established after the financial crisis, the Consumer Financial Protection Bureau, reducing its powers and making it easier for the president to remove its director.

 

Hensarling disputed Democratic Rep. Maxine Waters’ assessment that the bill is “dead-on-arrival.”

 

“I do not consider this to be an exercise in futility,” he told reporters. “I think it is important to move this bill forward, and I think at the end of the day, end of the Congress, we will see major portions of the Choice Act enacted into law.”

 

 
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The U.S. Federal Reserve is expected to hold interest rates steady at its meeting this week as it pauses to parse more economic data but may hint it is on track for an increase in June.

The central bank is scheduled to release its policy decision at 2 p.m. EDT (1800 GMT) on Wednesday at the conclusion of its two-day meeting. Fed Chair Janet Yellen is not due to hold a press conference.

Most policymakers have already made plain that in contrast to previous years, the Fed feels more confident in its forecast of two more rate increases this year.

“The bar to disrupting the Fed’s plans is higher now than it was in previous years,” said Michael Gapen, chief economist at Barclays in New York in a note to clients.

The Fed is in its first tightening cycle in more than a decade. A quarter percentage point increase last December was followed two meetings later by another hike in March.

Economists polled by Reuters see little chance of a move at this week’s meeting. Investors next see an interest rate rise in June, according to Fed futures data compiled by the CME Group.

The rate-setting committee also is still waiting to see to what extent Trump administration policies on tax, spending and regulation will be able to get through Congress. A stimulus package could speed up the pace of hikes.

LIKELY TO DOWNPLAY WEAKNESS Since the last meeting economic data has been mixed. The economy grew at a sluggish 0.7 percent annual pace in the first quarter as consumer spending almost stalled.

However, a surge in business investment and the fastest wage growth in a decade suggest activity will regain momentum as the year progresses.

Jobs growth also slowed sharply in March but the unemployment rate dropped to a near 10-year low of 4.5 percent.

Economists have largely attributed the weak first-quarter reading to perennial issues with the calculation of growth during the January-March period and the pullback in hiring in March to weather effects.

“There won’t be a lot of changes to the policy statement,” said Sam Bullard, senior economist at Wells Fargo Securities. “I think they will downplay the soft first-quarter print and focus a little bit more on the labor market.”

The Fed will have two more employment growth reports to hand before its next meeting.

Policymakers are also gearing up to announce sometime this year when and how the Fed will begin shrinking its $4.5 trillion balance sheet, according to minutes from the March meeting.

An announcement this week on a concrete timeline is not expected but there could be tweaks to language in the statement to show the matter is an increasing priority for the Fed.
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Innkeepers, restaurateurs and landscapers around the U.S. say they’re struggling to find seasonal help and turning down business in some cases because the government tightened up on visas for temporary foreign workers.

At issue are H-2B visas, which are issued for seasonal, nonagricultural jobs.

The U.S. caps the number at 66,000 per fiscal year. Some workers return year after year, and Congress has allowed them to do so in the past without being counted toward the limit. No such exception was passed for 2017 after the presidential election.

Cape Cod restaurant owner Mac Hay has organized seasonal businesses to lobby Congress. He says many can’t function full time without these workers.

A government spending bill unveiled Monday would allow for more H-2B visas, but processing them would take weeks.
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Oystermen, pirates and police clashed violently more than a century ago over who could collect the Chesapeake Bay’s tasty and lucrative oysters. As the shellfish makes a comeback, a modern-day oyster war is brewing, this time between wealthy waterfront property owners and working-class fishermen.

Over the past five years, oyster production has doubled on the East Coast, driven by new farming methods, cleaner water and Americans’ growing taste for orders on the half shell. The resurgence has led to unprecedented resistance from coastal Virginians who want to maintain picturesque views from their waterfront homes and has fueled a debate over access to public waterways.

“These people can’t have it all,” said Chris Ludford, an oysterman in Virginia Beach who sells to nearby farm-to-table restaurants.  

 

Ludford said he faces fierce pushback along a Chesapeake Bay tributary from people with “a $2,000 painting in their house of some old bearded oysterman tonging oysters.

 

“But they don’t want to look out their window and see the real thing,” he said.

Views spoiled, privacy lost

 Homeowners say the growing number of oystermen — dressed in waders and often tending cages of shellfish — spoil their views and invade their privacy. Residents also worry about less access to the water and the safety of boaters and swimmers.

 

Low tides often expose oyster cages, usually accompanied by markers or warning signs that protrude from the surface. In some places, cages float.

 

“All of sudden you have people working in your backyard like it was some industrial area,” said John Korte, a retired NASA aerospace engineer in Virginia Beach who’s among residents concerned about oyster farming’s proliferation. “They may be a hundred feet away from someone’s yard.”

 

Ben Stagg, chief engineer at the Virginia Marine Resources Commission, said the state is poised to break its record of leased acreage for oyster growing. But nearly 30 percent of more than 400 new lease applications face opposition, an unprecedented number that’s led to a backlog of leases awaiting approval.

 

 “Occasionally I can resolve those by having the parties get together and adjust the area further offshore,” Stagg said. “But oftentimes, I can’t.”

Oysters make a comeback

There hasn’t been this much interest in oysters in Virginia since the early 1960s. Since then, disease and overfishing took hold and growers started to disappear.

 

Over the last few decades, breeding programs have produced more disease-resistant and faster-growing oysters. The water’s cleaner. American palettes have evolved, increasing demand.  

 

Farming techniques also changed. Traditionally, oysters are grown on the bottom of a calm and salty river or bay, then harvested with tongs or dredges that pull them onto boats.  

 

Now, fishermen are increasingly using cages to grow oysters over a two-to-three year period. The equipment keeps predators away and produces oysters with a more uniform shape and size, which restaurants prefer.

 

 But the cages are often placed in shallower water closer to shore — and people’s homes.  

 

Virginia Beach is perhaps ground zero for today’s oyster war. The state’s largest city sits at the mouth of the Chesapeake Bay. And oysters thrive in the city’s Lynnhaven River, a network of bays and creeks flowing past expensive homes. Lynnhaven oysters are well-known for their salty taste and size.

Solution is not easy to find

A state task force was formed to find compromise. It recommended giving residents more power to block nearby oyster leases. But the idea was rejected by the Virginia Marine Resources Commission, with the majority of commissioners saying state lawmakers should step in.  

 

Proposals in the Statehouse have included raising the cost of an oyster farming lease from $1.50 an acre annually to $5,000. But legislators haven’t found a solution.  

 

Conflicts also have flared up along Maryland’s Patuxent River, the coastal lagoons of Rhode Island and on Martha’s Vineyard in Massachusetts.  

 

In Delaware, a group of people who mostly own vacation homes successfully blocked potential oyster farming along their part of an inland bay.

 

“Oftentimes, affluent and new members of the community have the point of view that they own the water in front of them, which is really not true,” said Bob Rheault, executive director of the East Coast Shellfish Growers Association. “We need to win back our social license to farm.”

 

Rheault said he’s seen these battles “up and down the East Coast” — even before the crop began to double five years ago.

 

 “The industry was there before the waterfront mansions were built,” Rheault added. “But it hasn’t been there for this generation.”

 

Ludford, who also works as a Virginia Beach firefighter, is relatively new to the business. He and other relatives started growing oysters in 2010 after leaving the crab industry.

Is zoning the answer?

On a recent morning, Ludford sorted through cages as he stood in the Lynnhaven River, hundreds of yards from the nearest home.  

 

He dragged cages into view as grass shrimp wriggled on the shells. He and two helpers retrieved more than 500 oysters, which he sold at 75 cents apiece to three restaurants — totaling about $375.

“Really, people haven’t seen an oysterman behind their houses in 50 to 60 years,” Ludford said.

 

Steven Corneliussen, who owns a waterfront home in Poquoson, Virginia, said he’s among a group that successfully protested new leases along his corner of the Chesapeake. He said waterways should be subject to zoning, like land.     

 

“That water out in front of me doesn’t belong to me,” he said. “But it doesn’t belong to them, either.” 
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Kenyan President Uhuru Kenyatta spoke at the annual May Day celebrations Monday in Nairobi, a day when many countries celebrate workers. But in sub-Saharan Africa, about three-fourths of those laborers work in the informal sector, without contracts or job protections, according to the International Labor Organization.

Kenyatta pledged to tackle high unemployment during his May Day speech.

One hundred meters away, 31-year-old Christine Ndunge continued her work selling sodas and snacks. She has been a street vendor at a public park in central Nairobi for several years. 

“These days getting a job is hard,” she said. “I have decided to employ myself so that I can survive. Like now, it’s a rainy season — there are not enough customers to buy drinks. I motivate myself to continue selling because there is nowhere else I can work.”

In his address Monday, Kenyatta announced that Kenya will be raising its minimum wage by 18 percent.

The crowd cheered, but analysts say policies like raising the minimum wage won’t help a majority of the workforce. 

According to the Kenyan government’s 2017 economic survey, 833,000 jobs were created last year. However, less than 20 percent of those jobs were in the formal sector.  

“There is that disconnect,” said Kwame Owino, CEO of the Institute of Economic Affairs in Kenya. “So on one side, we have unions, which are talking for people who are in the formal sector, raising wages. And when that happens in standard economics, one of the first things that happens is employment shrinks. So when that employment shrinks in the formal sector, most of these people fall back to the informal sector. We are solving the wrong problem.”

He said Kenya and other African countries need to improve conditions for entrepreneurs.

Entrepreneurs in Africa often struggle to raise capital. Owino said what governments can do is create new regulations making it easier for small businesses to get loans. He said policymakers can also streamline the process of registering and running a legal business and make it cheaper.

Josphat Mwendo, a trained mechanic, spent years unsuccessfully looking for a job. Finally, the 32-year-old started fixing cars for money himself. Now, he has three people he pays to help him.

“I don’t feel good because they did not speak about people like us,” he said. “I think it’s good to think about those who have employed themselves too, so that they can know their worth and also feel they are Kenyans like the rest.”

The problem is particularly acute among young people.

A recent study by the Brookings Institution found that Africans between the ages of 15 and 24 are just a third of the continent’s total working-age population, but account for nearly two-thirds of the continent’s unemployed.
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With the U.S. economy on solid footing and unemployment at a near-decade low, the Federal Reserve remains in the midst of a campaign to gradually raise interest rates from ultra-lows. But this week, it’s all but sure to take a pause.

The Fed is widely expected to keep its key short-term rate unchanged after having raised it in March for the second time in three months. Most analysts foresee the Fed raising its key rate again at least twice more before year’s end, a testament to the durability of the U.S. economic recovery and a more stable global picture.

 

One reason for the Fed to stand pat this week is that even though the job market has shown steady strength, the economy itself is still growing in fits and starts. On Friday, the government estimated that the economy, as gauged by the gross domestic product, grew at a tepid 0.7 percent annual rate in the January-March quarter. It was the poorest quarterly performance in three years.

 

Though some temporary factors probably held back growth last quarter and may have overstated the weakness, the poor showing underscored that key pockets of the economy — consumer spending and manufacturing, for example — remain sluggish. On Monday, the government said U.S. consumer spending stalled in March for a second straight month. And the Institute for Supply Management reported a drop in factory activity.

 

“Given all the uncertainties they still face and especially with growth coming in so weak, the less the Fed says at this meeting, the better,” said Diane Swonk, chief economist at DS Economics.

 

Most economists have expressed optimism that the economy is strengthening in the current April-June quarter, fueled by job growth, higher consumer confidence and stock-market records. Many think that annualized growth could accelerate to around 3 percent and that the Fed will feel more confident to resume raising rates at its June meeting.

 

“The Fed will probably say in their statement that they expect the economy to rebound in the second quarter,” said Sung Won Sohn, an economics professor at the Martin Smith School of Business at California State University.

 

It isn’t just the Fed’s short-term rate — a benchmark for other borrowing costs throughout the economy — that will likely occupy attention at this week’s meeting. Officials will also likely discuss how and when to start paring their extraordinary large $4.5 trillion portfolio of Treasurys and mortgage bonds. The Fed amassed its portfolio — commonly called its balance sheet — in the years after the financial crisis erupted in 2008, when it bought long-term bonds to help keep mortgage and other borrowing rates low and support a frail economy. At the time, the Fed had already cut its short-term rate to a record low.

 

The balance sheet is now about five times its size before the financial crisis hit. The Fed stopped buying new bonds in 2014 but has kept its balance sheet high by reinvesting the proceeds of maturing bonds. The Fed’s thinking has been that reducing the balance sheet could send long-term rates up and work against its goals of fortifying the economy.

 

Now, as the Fed becomes more watchful about inflation pressures, the time is nearing when it will need to shrink its balance sheet, a process that could have the effect of raising some borrowing rates, at least modestly. The Fed jolted investors when it released the minutes of its March meeting, which showed that most officials thought that process “would likely be appropriate later this year.” This was sooner than many investors expected.

 

Could the Fed clarify its timetable for paring its balance sheet in the statement it will issue when its policy meeting ends Wednesday? It may decide against doing so, given that this meeting won’t be accompanied by a news conference with Chair Janet Yellen to explain any shifts in the Fed’s policy or thinking.

 

Mark Zandi, chief economist at Moody’s Analytics, said the more likely signal the Fed could send is to reinforce the markets’ view that it intends to raise its short-term rate again next month.

 

“I expect two more rate hikes — one in June and then one in September,” Zandi said. “Then I expect the Fed to begin allowing its balance sheet to run off.”

 

Some Fed officials have suggested that they would prefer not to be raising the short-term rate at the same time that they are beginning to reduce their balance sheet. Giving investors too much to digest at once risks unsettling financial markets. In 2013, the Fed triggered a brief storm in bond markets when then-Chairman Ben Bernanke raised the possibility that the Fed would start tapering its bond purchases later that year, catching investors by surprise.

 

“They learned their lesson with the taper tantrum of 2013 that they need to give the markets plenty of warning of changes in their bond policies,” Sohn said.

 

Some analysts say they think the Fed will reveal nothing this week about its timetable for reducing its balance sheet, in part because the policy committee has yet to reach a consensus on when or how to do so.

 

“I have a feeling we are going to get much less information than we want,” Swonk said. “The Fed wants to move slowly, but they don’t have a consensus yet on how to proceed.”

 
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