By Nick Timiraos
President Donald Trump will sign three documents Friday to advance his administration's push to reduce tax and regulatory burdens, including a measure that could rollback Obama administration efforts to prevent U.S. companies from shifting operations overseas to avoid taxes, administration officials said late Thursday.
One executive order to be signed at the U.S. Treasury will direct Treasury Secretary Steven Mnuchin to review all tax regulations the department issued last year to examine whether any impose excessive financial burdens on U.S. taxpayers or add complexity to the tax code.
The review could cover regulations the Obama administration issued last year to crack down on inversions, in which U.S. companies take up foreign addresses through mergers with other firms to cut their tax bills. The Obama administration couldn't convince Congress to take action against inversions. Instead the Treasury issued sweeping rules to limit such practices.
The government estimated the tax rules would allow the Internal Revenue Service to collect between $461 million and $600 million annually. The biggest impact would hit 6,300 companies, according to the government, that make up 0.1% of corporations but report more than half of corporate net income and nearly two-thirds of corporate interest deductions.
Corporate trade groups and Republican lawmakers urged the Obama administration to wait or start over.
Mr. Trump will also sign two previously announced presidential memos on financial regulation. One will direct Mr. Mnuchin to review authorities granted to banking regulators in the Dodd-Frank financial-overhaul legislation, known as Orderly Liquidation Authority, which gives the government the ability to take over and lend to a failing financial firm.
The memo will direct Mr. Mnuchin to complete the review within 180 days and suggests the administration may prefer to replace OLA with a different bankruptcy authority to resolve failing financial institutions.
At a conference on Thursday in Washington, Mr. Mnuchin said the administration was concerned the authority could be used to "support too-big-to-fail" institutions, but he said other aspects of banking regulation would need to be fixed if the OLA was changed.
"There are aspects of the bankruptcy code right now that do not work for a financial institution that is in a crisis. We are going to need to fix that," he said.
Many Republicans say bankruptcy should be used to handle the failure of a large financial firm. Supporters of OLA say it is necessary in case funding for a failing firm during a bankruptcy proceeding isn't available.
Both the Obama administration and regulators in other countries have used the OLA as the basis for planning for the failure of a large financial firm. "Different regulatory agencies can't agree whether it works or not," said Gary Cohn, the director of the White House National Economic Council, in a February interview. Some congressional Republicans have also challenged the value of the authority and have said they would try to change it or repeal it.
The other memo will seek an assessment of the powers handed to a committee of financial regulators that includes the heads of the Federal Reserve and the Securities and Exchange Commission known as the Financial Stability Oversight Council.
Specifically, the administration wants to consider telling regulators on the FSOC to stop designating nonbank financial firms as "systemically important financial institutions," or SIFIs, subject to stricter regulation. "We don't think nonbanks should be SIFIs," said Mr. Cohn in the February interview.
Mr. Trump signed a separate order in February directing Mr. Mnuchin to prepare a report by June on financial-regulatory policy. Mr. Mnuchin said Thursday the administration has met with 16 different groups about regulatory issues as part of the review.
"This is not about having no regulation," Mr. Mnuchin said, but rather to relax regulations that are restricting bank lending and liquidity.
Richard Rubin and Ryan Tracy contributed to this article.
Write to Nick Timiraos at firstname.lastname@example.org
(END) Dow Jones Newswires
April 20, 2017 20:50 ET (00:50 GMT)
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