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Rosenstock: Veep Debate Preview, What about Wall Street?

October 4, 2016

In today's "Morning Money," Politico quoted Thorn Run Partner's Jason Rosenstock on tonight's Vice Presidential debate and whether the candidates are likely to discuss Wall Street. “The main purpose of a vice presidential debate is to show the voters an insight into the candidates' decision making process," Rosenstock says. "To the extent that any issue resonates, and Wall Street and banking issues could be one of them, it will likely be passing at best. People expecting fireworks from the debate – either rhetorically or via policy announcements- are going to be disappointed.”

A larger excerpt of the article is below. 

Morning Money: Veep Debate Preview

VEEP DEBATE PREVIEW — Truth be told it’s not likely to make a huge difference unless either Mike Pence or Tim Kaine blow it big time. VP debates tend toward the substantive and genial and leave everyone wondering why the ticket toppers can’t be more like their understudies. Well, because the stakes are so much lower. Some VP debates matter or at least prove amusing (Palin, Quayle) but chances are this won’t be one of them.

Kaine will likely try and yolk Pence to Trump’s outlandish statements and tax return issues. Pence will try to make the case for change, especially on trade and the economy. Kaine could hit back by citing Pence’s strong pro-trade position before joining the MAGA forces.

Story Continued Below

WHAT ABOUT WALL STREET? — Jason Rosenstock, partner at lobbying firm Thorn Run, emails: “The main purpose of a vice presidential debate is to show the voters an insight into the candidates' decision making process. To the extent that any issue resonates, and Wall Street and banking issues could be one of them, it will likely be passing at best. People expecting fireworks from the debate – either rhetorically or via policy announcements- are going to be disappointed.”

HELLO, FARMVILLE! — A Roanoke Times editorial spotted by new Roanoke resident and Morning Money Mom, Ann White: “Farmville may seem an unusual place for the vice presidential debate, which will take place Tuesday night at Longwood University. But it’s definitely a good one. … Longwood … pitched out-of-the-way Farmville as being squarely in the middle of two events that shaped the country.

“The Civil War ended at the north end of campus … The civil rights movement had a historic moment on the south end of campus. … It’s also a good place to look at the nation’s changing economy. The biggest private sector employment in the county is in health care. The biggest private employer in the county — and the second biggest overall — is Centra Southside Community Hospital” Read more.

NO BIG MARKET IMPACT LIKELY — Keefe, Bruyette and Woods’ Brian Gardner and Michael Michaud: “We expect there will be some policy discussion as Kaine tries to show how Pence has deviated from conservative orthodoxy … However, we think most of the debate will be superficial and absent some gaffe, we doubt it will impact the election or the markets.”

NICE GUY SHOWDOWN — Compass Point’s Isaac Boltansky and Alison Ashburn: “John Adams, the nation’s first vice president, once described the post as ‘the most insignificant office that ever the invention of man contrived or his imagination conceived.’ … While Kaine and Pence have significant ideological differences, they share a mild-mannered demeanor which should lessen the volatility in this debate.”

TRUMP TAX MUST READ — Bloomberg View’s Tim O’Brien is one of few people on earth outside of Donald Trump’s inner circle who has seen the GOP nominee’s tax returns. So his writing on the subject is critically important. And he argues that if Trump were to release the documents, the world would see his “empire” is “made of sand”:

“[T]his has nothing to do with genius. If it did, Trump would have already released his returns in full so the public could have a transparent look at his brilliance. … While I can’t write specifically about what I saw, I can say that the returns would give voters useful and tangible insights into Trump’s actual track record as a businessman, philanthropist and taxpayer.

“But Trump has chosen not to release his returns. And I doubt he ever will, because they would reveal that the career he boasts so much about is built on sand. That’s just one reason the 1995 tax return anonymously sent to the Times is so valuable. It refutes Giuliani’s argument in big numbers (numbers that even the Trump campaign does not dispute).

“Most of the $916 million loss that Trump claimed for 1995 is probably derived from about $900 million in bank loans taken out in the mid- to late 1980s that he had personally guaranteed and that he used to wildly overpay for hotels, airlines, yachts, barren land and other trinkets … The $900 million in loan guarantees reflected in the 1995 return expose decision-making so poor, it almost forced Trump into personal bankruptcy.” Read more.

MM EMAIL BAG — From Michael J. Novogradac: “[K]udos for the “Fiduciary Duty Nonsense” lead. As a CPA, I was shocked yesterday to hear a former federal prosecutor say that an individual has a fiduciary duty to claim losses on his own tax return, else fear being ‘sued.’”

TRUMP CALLS HIMSELF “BRILLIANT” — POLITICO’s Nolan D. McCaskill: “Trump on Monday defended his aggressive use of tax laws that likely resulted in him not paying any personal income taxes for multiple years, saying he ‘brilliantly’ worked the system.

“‘As a businessman and real estate developer, I have legally used the tax laws to my benefit and to the benefit of my company, my investors and my employers. I mean, honestly, I have brilliantly — I have brilliantly used those laws,’ Trump said during a rally in Pueblo, Colorado.” Read more.

THE NYT has other ideas … From the edit page: “If Mr. Trump wanted to defend his tax practices, he could simply release his returns. But it seems that even for Mr. Trump, paying no taxes would be a political embarrassment. It would show that the government bailed him out of his catastrophically bad business decisions. Legal or not, this is the kind of handout no ordinary citizen could hope to get no matter how dire the circumstance. …

“Every new revelation about Mr. Trump’s business career shows that he’s built his millionaire’s lifestyle on debt, tax avoidance and other people’s money. From bankrupt casinos to a so-called university, he milked them for all he could and left workers, students and taxpayers holding the bag” Read more.

CLINTON: NOMINEES WILL HAVE TO RELEASE RETURNS — POLITICO’s Brent Griffiths: “Trump’s refusal to release his tax returns has broken decades of tradition of both sides of the aisle. On Monday … Clinton vowed that if she becomes president, Trump will be the first and last major party nominee to keep his taxes largely under wraps. ‘If I’m fortunate enough to be president, we’re going to pass a law requiring anybody who is a nominee of a major, national party to have to release their taxes,’ Clinton said on the stump in Akron, Ohio.” Read more.

GOOD TUESDAY MORNING — A huge welcome to Andrew Hanna, a Princeton grad and newly minted POLITICO, to the MM team. Andrew will be helping me out on the column so email him on and follow him on Twitter @andrewbhanna. And as always, email me on and follow me on Twitter @morningmoneyben.

FLIP ON THE TV/TWITTER — Wikileaks is supposed to be releasing its latest docu-dump in Berlin early Wednesday. No idea if it will live up to the billing from Roger Stone and others on the right but certainly worth checking out.

EVENT ALERT – Boomer Women and The Election: What's at Stake? A deep-dive conversation on the concerns of women over 50 and how the candidates plan to meet them. We’ll discuss how boomer women will influence elections, candidates’ plans on Social Security and how they reflect women’s economic concerns, policy options to address Alzheimer’s Disease and more. Speakers include Lake Research Partners President Celinda Lake, CAP CEO Neera Tanden and more. Thursday, October 6-8 a.m. – The Mayflower Hotel. RSVP: here

THIS MORNING ON POLITICO PRO FINANCIAL SERVICES – Lorraine Woellert on the Baptist ministers weighing in on Fannie Mae and Freddie Mac – and to get Morning Money every day before 6 a.m. – please contact Pro Services at (703) 341-4600 or

CLINTON TAKES SWING-STATE POLL CONTROL — POLITICO’s Steven Shepard: “Hillary Clinton has done more than just stifle Donald Trump’s momentum in the presidential race. She's also established a far clearer path to winning an Electoral College majority than Trump, according to the latest battleground-state polls. In the aftermath of the first debate, Clinton has opened up a lead in vote-rich Florida, according to two polls conducted there.

“The Democratic former secretary of state is also ahead in post-debate polls in Colorado, Michigan, Nevada, New Hampshire, North Carolina and Virginia. And while her lead in some of those states is more precarious than in others, current polls indicate Clinton would win upwards of 300 electoral votes if the election were held today” Read more.

TRUMP’S DECLINE REVEALED — NYT’s Russ Buettner and Charles V. Bagli: “Abraham Wallach thought he had scored a major career break when Donald J. Trump hired him in 1990 for a senior executive role. Based on Mr. Trump’s boasting and gaudy lifestyle, Mr. Wallach imagined he would soon be leading impressive construction projects around the globe. … Instead, he found an array of failing enterprises ..

“That year, he would later learn, was the beginning of Mr. Trump’s reckoning with a decade of rapid, debt-fueled expansion. The eclectic empire Mr. Trump had built with leverage from his father’s brick-and-mortar fortune began to fail, generating enormous losses and bringing him to the brink of personal bankruptcy. The full magnitude of the financial hemorrhaging was a closely held secret until this weekend, when The New York Times published portions of Mr. Trump’s 1995 tax records that showed business losses of $916 million … For a single businessman to declare losses approaching $1 billion is so extraordinary that it caused several accountants and lawyers consulted by The Times to blanch” Read more.

WHY U.S. BANKS BEAT EUROPE — FT’s Ben McLannahan: “Deutsche Bank’s transatlantic influence is falling in more ways than one — last week proved the German lender cannot even infect US banking stocks any more. Europe’s banks felt every blow almost as painfully as Deutsche, falling sharply during a torrid few days on the European stock market. … But Wall Street enjoyed much more stable trading. Here’s why. …

“Eight years on from the financial crisis, the US banking industry has record capital, record amounts of liquidity and each year undergoes a pretty severe stress test. After the most recent round of tests, in June, two banks — both European — had their capital-return plans rejected, while Morgan Stanley was given a conditional clearance, and told to fix flaws by the end of the year” Read more.

POUND PLUMMETS — WSJ’s Mike Bird and Saumya Vaishampayan: “The British pound slumped Monday after U.K. Prime Minister Theresa May set a March date to begin exiting the European Union and said that controlling immigration was a higher priority than maintaining full access to the country’s largest trading partner.

‘Sterling reached a post-Brexit low against the euro on Monday, falling 0.88% to €1.1434 in European trading. The pound fell by more than 1% against the U.S. dollar, reaching $1.2818, just a fraction above its post-Brexit low of $1.2798, set in early July.” Read more.

CEASE AND DESIST — Politico’s Josh Gerstein: “[New York] Attorney General Eric Schneiderman's office sent the Trump Foundation a ‘Notice of Violation’ dated Friday and released publicly Monday, instructing the organization to ‘immediately cease soliciting contributions or engaging in any other fundraising activity in New York.’

"The foundation has become a major political headache for GOP presidential candidate Donald Trump, following reports it sent an illegal $250,000 donation to a Florida political group and spent funds on unusual items, like portraits of Trump.” Read more.

CLINTON RIPS TRUMP ON LOSSES — Business Insider’s Allan Smith: “Clinton lambasted … Trump during a Monday speech in Toledo, Ohio, after a bombshell New York Times report dropped on Saturday revealed the Manhattan billionaire suffered a $916 million loss in 1995 and could have avoided paying federal income taxes for 18 years. ‘Yesterday his campaign was bragging it makes him a genius,’ Clinton said. ‘Here's my question: What kind of a genius loses $1 billion in a single year?’” Read more.

SYRIA TALKS OFF — NYT’s Michael Gordon: “The United States formally suspended talks with Russia about the protracted Syria conflict on Monday because of the Russian military’s role in the assault on the besieged Syrian city of Aleppo.
“’This is not a decision that was taken lightly,’ Mr. Kirby said … ’Unfortunately, Russia failed to live up to its own commitments,” the statement added.

“Rather, Russia and the Syrian regime have chosen to pursue a military course, inconsistent with the cessation of hostilities, as demonstrated by their intensified attacks against civilian areas, targeting of critical infrastructure such as hospitals, and preventing humanitarian aid from reaching civilians in need.’” Read more.

PRAIRIE STATE PUNISHES WELLS FARGO — FT’s Alistair Grey: “Illinois is to stop using Wells as a broker dealer for about $30bn worth of annual short-term investments, such as repurchase agreements and commercial paper. It will re-evaluate its position after a year.

“Illinois may take further action against Wells. It is conducting an audit of unclaimed accounts and has written to the Illinois state board of investment — a pensions manager — calling on it to review its dealings with the bank.” Read more.

MASS. REGULATOR TAKES ON MORGAN STANLEY — POLITICO’s Victoria Guida: “Massachusetts' securities regulator … announced it is charging a unit of Morgan Stanley with ‘dishonest and unethical conduct’ as part of high-pressure sales practices in that state and in Rhode Island. ‘Morgan Stanley's firm-wide culture emphasizes the aggressive cross-selling of banking and lending products to wealth management clients,’ Secretary of the Commonwealth of Massachusetts William Galvin said in a filing.

“‘In 2014 and 2015, this culture inspired at least two sales contests in Massachusetts, which ran undeterred for sixteen months because of Morgan Stanley's lack of adequate compliance and supervisory oversight.’ The sales contests focused on securities-based loans, which allow customers to borrow against the value of securities in their investment accounts, using the securities as collateral”

FIDUCIARY DUTY … LAUGHABLE — NYT’s Gretchen Morgenson: “Simply put, a person who is a fiduciary must act in the best interests of another person, putting that person’s interests ahead of his or her own. But in the context of Mr. Trump’s personal tax returns, legal experts said, the argument that he has a fiduciary duty to others is, well, laughable.” Read more.


NEW ON THE TWITTERS — Bloomberg now controls the @Brexit handle as well as a new Brexit Bulletin daily newsletter.

POLITICO Europe also has a new daily take on all things Brexit called “Brexit Files.” Check it out here.

BROWN DRAFTS ARBITRATION BILL — POLITICO’s Zachary Warmbrodt: “The top Democrat on the Senate Banking Committee, Sherrod Brown, is drafting a bill intended to prevent Wells Fargo from using arbitration clauses that would prevent customers from taking the bank to court in light of revelations that it opened unauthorized customer accounts. The bill, Brown's office said in an announcement, would work ‘hand-in-hand’ with arbitration regulations from the CFPB.

“Brown says his bill would allow existing Wells Fargo customers to go to court even if they signed contracts that included arbitration requirements for legitimate accounts in the past, while the CPFB's rule would apply to contracts signed after the rule is final”

ICYMI: STATE INSURANCE CRONYISM — The Center for Public Integrity’s Michael J. Mishak looks into the often cozy relationship between statue insurance regulators and insurance companies: “An investigation … found that half of the 109 insurance commissioners who have left their posts in the last decade have gone on to work for the industry they used to regulate — many leaving before their terms expire. Just two moved into consumer advocacy” Read more.

HOT READS — In the New Yorker … Sheelah Kolhatkar writes about Juno, a new ride-hailing company attempting to rival Uber and Lyft by promising drivers more money and better treatment. Please see this link … Nathan Heller reports from Sweden, a country that’s well on its way to phasing out paper currency” … And James Surowiecki examines why America’s racial wealth divide persists.