Monday Morning Cup of Coffee: Trump’s potential power play at the Fed


Monday Morning Cup of Coffee takes a look at news coming across the HousingWire weekend desk, with more coverage to come on bigger issues.

Congratulations — you made it through Thanksgiving! There was a fair amount of press last week over potential political conflict as families gathered around the table for turkey, which prompted this genius piece from The Atlantic on how to argue with your relatives no matter what political persuasion they are (especially pastafarians).

President-elect Donald Trump did not take a holiday from controversy, with tweets on the death of Fidel Castro and charges that millions of votes were cast illegally. Major questions remain about his Cabinet picks, particularly about his choice for Treasury (Jeb Hensarling?) and for secretary of the Department of Housing and Urban Development, which last week was rumored to be neurosurgeon Ben Carson.

On Wednesday the Wall Street Journal reported that Carson said “an announcement was forthcoming” about the appointment, but that didn’t happen and his sposkesperson later seemed to walk back that assertion. Other candidates for the spot include Pam Patenaude, a former HUD assistant secretary who is currently the president of the J. Ronald Terwilliger Foundation.

The choice of Carson, who has never held a position related to housing, has been a head-scratcher for many. An article in Slate questioned the effect Carson would have on the Federal Housing Administration, including fair-housing investigations by the Department of Justice in conjunction with the FHA. From the article:

To the extent HUD is capable of helping poor Americans obtain and afford good housing, it is uniquely situated to fight against poverty, crime, bad education, poor health, and other negative outcomes tied to instability at home. Under Ben Carson’s watch, HUD will almost certainly contribute as little as possible to that fight.

Cabinet positions aren’t the only areas of uncertainty under a Trump administration. With the next FOMC meeting set for Dec. 13-14, Fed watchers are speculating on what he plans to do with the Federal Reserve once in office. In an article on Sunday, The Hill outlined several Republican priorities that might now see daylight, including subjecting the Fed’s monetary policy decisions to outside review and requiring the central bank to adhere to rules in setting policy.

Ironically, one of the provisions of the Dodd-Frank Act, which Trump has pledged to dismantle, gives the president-elect a substantial stake in influencing the Fed’s future. From the article:

Outside of legislative action, who Trump appoints to the Fed will play a significant role in how the institution operates going forward. In particular, there is great focus on the vice chair of supervision, a position created specifically to monitor the Fed’s expanded powers as a financial regulator.

That position was created as part of the Dodd-Frank financial reform law as a focal point for new regulatory powers, but President Obama never nominated someone to fill it. That allows Trump to make a significant mark on how the Fed operates as a regulator with just one selection.

Speaking of regulation, the National Association of Homebuilders is celebrating the Environmental Protection Agency’s decision to “preserve the the ability of cities to choose from a wide range of options to tackle urban water pollution.”

The EPA had the opportunity to use its rulemaking to further restrict cities in how they decided to deal with wastewater, including a number of high-cost options. 

From the article:

The broad impact of this rulemaking spans across the nation, as it could have restricted how cities across the nation regulate new and re-development to comply with the Clean Water Act. NAHB petitioned the agency to return the term “narrative” to the rule text, leaving no room for misinterpretation that EPA may only accept numeric post-construction limits when reviewing state-run programs.  The agency agreed, reversing its initial proposal to eliminate non-numeric options from the list of approved practices.

Allowing narrative requirements (rather than numeric) for new development is especially important to builders in cities facing expensive federal mandates to upgrade their drinking water, sewer and stormwater programs all at once.

When it comes to fighting short-term rentals, the most aggressive city in the nation is Miami Beach, which has collected $4 million in fines since March, according to the Miami Herald. Homeowners caught renting through Airbnb, HomeAway and face a flat fine of $20,000, and the city has also gone after the rental sites themselves.

The root of the city’s opposition echoes those of other cities fighting illegal short-term rentals. From the article:

The city’s economic giant, the tourism industry, feels short-term rentals should be on an even playing field with hotels, paying taxes and complying with regulations. Real estate experts worry that short-term rentals reduce the long-term rental pool in an area already suffering from a shortage of workforce housing.

Will Miami Beach follow San Francisco’s model, where the city and Airbnb found common ground in a $50 application fee? It looks doubtful, if the mayor, Philip Levine, has anything to say about it. “I think [the fines] can be increased, actually. $20,000 is not enough. Our community is not in favor of short-term rentals,” the mayor said.




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