PLATFORM SURPRISE ON GLASS-STEAGALL — Republicans surprised some in the financial community by including a call to re-instate the Depression-era law forcing a separation between retail and investment banking (more on which below). The move is a populist appeal intended to try and generate some support among those who think presumptive Democratic nominee Hillary Clinton is too close to Wall Street and too timid on financial reform.
The language: “We support reinstating the Glass-Steagall Act of 1933 which prohibits commercial banks from engaging in high-risk investment. Sensible regulations can be compatible with a vibrant economy. They can prevent the strong from exploiting the weak. Right now, the regulators are exploiting everyone.”
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ON THE OTHER HAND … The platform also rips Dodd-Frank as “the Democrats’ legislative Godzilla … crushing small and community banks and other lenders.” Hard to think Bernie Sanders/Elizabeth Warren supporters will thrill to that language, though it might appeal to some in the GOP establishment otherwise not inclined toward Trump
Full, searchable GOP platform: https://goo.gl/fuhnoU
REACT — Compass Point’s Isaac Boltansky and Alison Ashburn: “While party platforms have little if any practical impact, the inclusion of the Glass-Steagall Act recommendation in the GOP platform has notable political and policy dimensions. In terms of politics, its inclusion highlights how uniquely qualified Trump is to challenge Clinton as she will now have to fend off an attack from her ideological left.
“In terms of policy, while lawmakers remain unlikely to reenact the Glass-Steagall Act, we believe the big bank bashing from both parties will eventually lead to targeted policies aimed at lessening the relative regulatory burden for regional and community banks … The Clinton campaign has refused to support the reinstatement of the Glass-Steagall Act even though the Democratic Party platform is supportive of doing so”
Hamilton Place Strategies’ Tony Fratto: “Glass-Steagall is dumb politics and dumb economics. If Republicans think they can outflank Sen. Warren they are delusional. Returning to Glass-Steagall would be destructive and unworkable. As every analysis has demonstrated, Glass-Steagall would have done nothing to prevent the crisis. There is a lot in this platform to ignore.”
WALL STREET ON EDGE — FT’s Barney Jopson in Washington and Demetri Sevastopulo: “The Republican convention has left Wall Street banks on edge by embracing a populist proposal to break up big institutions, an idea loved by many Democrats that adds a new twist to the GOP under … Trump. Defying nearly two decades of party tradition, the Cleveland convention adopted policies that include reining in banks by banning institutions that hold deposits from doing riskier investment banking …
“Presidential candidates do not have to follow party platforms, but big banks will be troubled by the cross-party support for legislation inspired by the 1933 Glass-Steagall act because such ideas can gain a life of their own once in official documents Any prohibition barring investment bankers from operating under the same roof as federally insured deposits would pose an existential challenge to Citigroup, JPMorgan, Bank of America, Wells Fargo and, to a lesser extent, Goldman Sachs” http://goo.gl/6aSdgb
CHAOS IN CLEVELAND — The convention did not exactly get off to a great start for Trump with a big fight on the floor over an effort to force a roll call vote on the rules package passed last week. The effort, driven in part by a desire among conservatives to close future primaries to only GOP voters, ultimately failed, but it did show great discord among a party Trump hopes to unify. And that came after Trump’s campaign chair, Paul Manafort, spent some of the morning ripping Ohio’s Republican governor, John Kasich.
The evening portion went somewhat better for Trump, who staged a deeply strange WWE-style entrance, to introduce his wife Melania, who gave a short and perfectly serviceable speech (which turned out to actually be somebody’s else speech, see below). But Melania Trump did nothing to really humanize her husband or offer any anecdotes about their family life or provide anything beyond boilerplate encomiums about his love of country and family. If Trump’s goal is to turn around his 60 percent disapproval ratings and broaden his appeal beyond white male voters, it’s not obviously that Night One of the GOP convention did him any good.
TRUMP’s entrance: https://goo.gl/sXJJTu
UH OH … Turns out large portions of Melania Trump’s speech were pretty much directly ripped off from Michelle Obama’s speech in 2008. Via WP’s Philip Bump: “Journalist Jarrett Hill, though, noticed something interesting about Melania Trump’s speech at the 2016 Republican convention: The values that guided Michelle and Barack Obama appear to have also guided Trump — basically verbatim.” https://goo.gl/7DkugB
CNN’s Jake Tapper after reading the side by side speeches with long phrases essentially copied: “This is plagiarism.”
Making it more awkward: Melania Trump told NBC News that she wrote much of the speech herself without a lot of help.
POLITICO Lede-all headline: “Trump’s disastrous day one.” http://goo.gl/Yx35er
Expected Trump-land response: This wasn’t really plagiarism just a goof by a speech writer. Plus the media are monsters for going after the candidate’s wife. (Someone ask Heidi Cruz about that.)
EVENT ALERT: POLITICO’s Clea Benson is joined by leading policymakers and thought-leaders for a debate over the housing policy choices facing the next Congress and administration at POLITICO’s Under Construction: How Will the Next President Remodel Home Lending? event — Today, 2 p.m. — POLITICO Hub — 925 Euclid Ave., Cleveland. Learn more: http://politi.co/29V57hO. Livestream: POLITICO.com/live
AND DON’T FORGET … our event Wednesday at the POLITICO Hub in Cleveland with Larry Kudlow, Steve Moore, Mark Zandi, Lindsey Piezga and Douglas Holtz-Eakin! None of MM’s remarks will be plagiarized.http://goo.gl/wX3JRw
WHAT DEMS FEAR FROM CLEVELAND — A top Dem close to the Clinton campaign emails on their concerns: “One of two things. Bring back the establishment GOP, which seems pretty unlikely. Make deep in-roads into blue collar union Dems in Rust Belt. More likely but probably not enough to win.”
BIG DONORS AWOL — POLITICO’s Kenneth P. Vogel: “Sheldon Adelson, David Koch, T. Boone Pickens and Paul Singer were nowhere to be found at a Monday afternoon reception on the sidelines of the GOP convention for a super PAC supporting Donald Trump called Great America PAC. …
“Instead, the roster of attendees was heavy on rich businessmen and celebrities without much big-money political pedigree — including actor Robert Davi of Goonies fame, Christian radio titan Stuart Epperson, Jewelry Exchange president Bill Doddridge and Lending Tree CEO Doug Lebda”
MAYBE DON’T HATE THE BANKS SO MUCH? — Fortune’s Chris Matthews: “[A] recent spate of big-bank earnings releases give us reason doubt the haters. If you look at the financials of four of the largest American banks, Wells Fargo, JPMorgan Chase, Citigroup, and Bank of America, they all show higher lending today than three months ago. …
“This is hugely important for the continued health of the U.S. economy, as there is a strong correlation between growth in bank lending and economic growth. In fact, one can argue that changes in lending by private banks is more important to the real economy than policy changes at the Federal Reserve. That’s because all Federal Reserve policy works through big banks before it makes it way to the broader economy” http://goo.gl/dSPFOd
HOW TO EAT NAILS — Lots of good suggestions to fulfill my bag of rusty nails pledge from edible nail polish to this from loyal reader Sam Hempel: “Make mock nails by coating pretzel sticks with gray cake frosting (take white frosting and mix in a little black food coloring until you get a suitable gray color). Cut a little circular piece of thin chocolate bark for the head of the nail.” Keep ‘em coming!
GOOD TUESDAY MORNING — What craziness awaits us on Day Two in the Cleve? Email me on bwhite@politico.com and follow me on Twitter @morningmoneyben
THIS MORNING ON POLITICO PRO FINANCIAL SERVICES — Victoria Guida on how Trump is embracing Glass-Steagall — and to get Morning Money every day before 6 a.m. — please contact Pro Services at (703) 341-4600 or info@politicopro.com.
DRIVING THE DAY — Featured speakers in Cleveland Tuesday night include Senate Majority Leader Mitch McConnell, House Speaker Paul Ryan, New Jersey Governor Chris Christie, Tiffany Trump, Donald Trump, Jr. and Ben Carson … Goldman Sachs reports earnings before the bell.
WHY THE ECONOMY NEEDS IMMIGRANTS — MarketWatch’s Rex Nutting: “Trump’s supporters have it all wrong about immigration: Immigrants make America’s economy stronger, not weaker. And we are going to need a lot more immigrants in coming decades if we want our economy to grow at a faster pace. … Trump himself distinguishes between legal immigration, which he supports (he should: he married two of them!), and illegal immigration, which he says is ‘killing us.’ …
“But many of Trump’s supporters don’t accept the distinction between legal and illegal immigrants: They don’t like either kind. About two-thirds of Trump’s supporters in the primaries said they think immigration is a burden on our country. … Most studies have shown that immigration has a modestly positive impact. For instance, immigrants (and their children) are far more likely to start businesses, including iconic companies such as Apple, Google, Intel, Bank of America, AT&T, Procter & Gamble, Kraft, Pfizer, DuPont, eBay and Ford” http://goo.gl/MiRQN0
** Presented by Grant Thornton LLP: Democrats and Republicans can all agree — tax reform must be a priority in 2017. But what would it look like under the new president? Check out our presidential candidate tax platform comparison to get a peek: http://gt-us.co/29OOggI **
CONVENTION DAY ONE WRAP — POLITICO’s Shane Goldmacher: “Trump’s supporters painted a dark and dystopian portrait of an America in decline on Monday, as a parade of people spoke about a country slipping from their grasp, cops getting gunned down in the streets, and their family members slain by illegal immigrants. It was a red-meat buffet of raw emotion for an angry Republican electorate, with little talk of ideology or policy. Indeed, there were more mentions of fallen American soldiers than conservatism.
“The Trump campaign’s stated theme for the first evening of the Republican National Convention was to ‘make America safe again,’ and they sold Trump as a rescuer of the nation by focusing almost exclusively on the current, imperiled state of affairs. Rudy Giuliani … spoke in prime-time about ‘why our enemies see us as weak and vulnerable’ and of the terroristplanning to ‘come here and kill us.’” http://goo.gl/FukVTM
RYAN: TRUMP “NOT MY KIND OF CONSERVATIVE” — WSJ’s Rebecca Ballhaus: “House Speaker Paul Ryan on Monday acknowledged … Trump was ‘not my kind of conservative’ but called for the party to rally behind the New York businessman at this week’s Republican National Convention. Speaking at a lunch hosted by The Wall Street Journal … the Wisconsin Republican said that while he and Mr. Trump differ on certain policy proposals — for example, building a wall on the U.S.’s border with Mexico, or banning Muslims from entering the country — they are ‘on the same page’ on the party’s core principles. ‘We’re a big tent party. Big tent — real big,’ he said”http://goo.gl/YzuXvG
PENCE AND TRUMP DIFFER ON BUSINESS — NYT’s Andrew Ross Sorkin: “If there is one thing consistent about the business views of Gov. Mike Pence of Indiana — better known as … Trump’s running mate — it is that they are often at odds with the views of Mr. Trump, who has campaigned on his business expertise. Among the bills that Mr. Pence opposed while he was a congressman were those that turned out to have the biggest repercussions on Wall Street and American industry: the $700 billion bailout of the financial industry … and the rescue of the auto industry.
“On the flip side, Mr. Pence voted in favor of amending the Constitution to require a balanced budget, and cutting taxes on the wealthy and on corporations. Mr. Trump’s views on these subjects are not on the record in the same way as Mr. Pence’s votes in Congress, but the signals that the presumptive Republican nominee has given in media appearances would suggest that the two are far from in lock step” http://goo.gl/SS9bIV
ASSETS FLOW OUT OF ACTIVE FUNDS — FT’s Stephen Foley: “The shift of assets from actively managed investment funds to low-cost index trackers accelerated last month, as US stock-picking funds suffered their worst outflows since the financial crisis. The new US market data … underscore the depth of the business challenges facing active fund managers. While $21.7bn flowed out of actively managed US equity funds in June, the worst monthly figure since October 2008, passive funds, including exchange-traded funds, took in $8.7bn.
“The pattern was repeated across other categories of equity fund. American savers pulled money from active funds that invest in international equities, in specialist sectors and in a combination of equities and bonds. Passive funds in all those categories continued to attract inflows Alina Lamy, Morningstar analyst, said that the shift from active to cheaper passive funds may be most pronounced during volatile markets, as investors examine whether their managers are protecting them from market declines” http://goo.gl/KDpfoU
NORTH KOREA FIRES THREE MISSILES — Reuters: “North Korea fired three ballistic missiles early on Tuesday which flew between 500 and 600 kms (300 and 360 miles) into the sea off its east coast, South Korea’s military said, the latest in a series of provocative moves by the isolated country. The U.S. military said it detected launches of what it believed were two Scud missiles and one Rodong, a home-grown missile based on Soviet-era Scud technology.
“North Korea has fired both types numerous times in recent years, an indication that unlike recent launches that were seen as efforts by the North to improve its missile capability, Tuesday’s were meant as a show of force … The launches came days after South Korea and the United States announced a final decision to deploy the Terminal High Altitude Area Defence (THAAD) anti-missile system in the South to counter threats from the North, which had prompted Pyongyang to threaten a ‘physical response.’” http://goo.gl/bheKtK
NETFLIX HITS A SPEED BUMP — Bloomberg: “Netflix Inc.’s quest to create the first global, online TV network hit a speed bump Monday when the company said a price increase cut subscriber growth to a three-year low, causing its stock to plummet and exacerbating concerns about its future growth. The streaming service added 1.68 million subscribers in the second quarter of 2016, missing its forecasts both at home and abroad .. Netflix added 1.52 million new customers overseas, compared with an April projection of 2 million. It added 160,000 in the U.S., bringing the company total to 83.2 million.
“Netflix blamed a recent price increase that affected some of its earliest subscribers, saying the change led to an increase in cancellations. While the company saw gains in sales and profit, investors focus on user growth, especially from fast-growing international markets, and were shocked by the shortfall” http://goo.gl/JdJEvb
ALSO FOR YOUR RADAR —
ANTHEM WOOS STATE POLS — IBT’s David Sirota: “Seeking regulatory approval for a controversial merger proposal, health insurer Anthem recently pumped $460,000 into groups supporting the election campaigns of governors and state attorneys general.” http://goo.gl/vC6p6G
ICI PUSHES BACK ON FSOC — The Investment Company Institute filed a letter with FSOC “strongly challenging the statements and findings they recently published on potential risk in the fund industry” https://goo.gl/9WrXOB
FSOC READOUT — Via Treasury: “During the meeting, the Council received an update on recent market developments, including developments related to the United Kingdom referendum on membership in the European Union. … The Council also discussed its ongoing assessment of potential risks to U.S. financial stability from asset management products and activities, following the Council’s public update on this topic in April. Staff provided an update regarding the ongoing work of the Council’s hedge fund working group.” http://goo.gl/vP9rFi
BANK OF AMERICA PROMISES MORE CUTS — WSJ’s Christina Rexrode and Peter Rudegeair: “Bank of America Corp. said it would deliver another $5 billion in annual cost cuts by 2018 as part of its strategy to deal with persistently low interest rates that are eating away at lenders’ profitability. The move by the second-largest bank in the U.S. by assets shows the importance Chief Executive Brian Moynihan is placing on cost discipline and job reductions to weather a tough period, even as its rivals push harder on loan growth.
“Bank of America on Monday turned in second-quarter earnings and revenue that were lower than a year ago, in part due to relatively weak progress on lending. But investors rewarded the bank for announcing the new cost-cutting target and sent the stock up 3.3 percent to $14.11. Much of the cost-cutting burden is falling on the bank’s staff. Bank of America has shed about 25 percent of its jobs since Mr. Moynihan became CEO in 2010, with employment falling to about 210,000 from nearly 284,000” http://goo.gl/X5K2jq
** Presented by Grant Thornton LLP: Since 2013, pass-through business owners have faced a higher top tax rate (39.6%) on their business income than their C corporation competitors (35%). This rate disparity puts pass-throughs at a competitive disadvantage and hinders growth. Support the Main Street Fairness Act (H.R. 5076) so business income is taxed at equal rates.
For a tax policy that treats all businesses fairly, visit: http://gt-us.co/29xCkwR
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