Overnight Finance: Treasury mulls sanctions relief for Russian aluminum firm | Trump floats tying NAFTA talks to border security | 14 states hit record-low unemployment

Happy Monday and welcome back to Overnight Finance, where we’re trying to see if we can grab a to-go box from Tuesday night’s state dinner. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.

See something I missed? Let me know at slane@thehill.com or tweet me @SylvanLane. And if you like your newsletter, you can subscribe to it here: http://bit.ly/1NxxW2N.

 

THE BIG DEAL: U.S. officials will consider easing sanctions on Rusal, an aluminum producer controlled by a businessman with ties to Russian President Vladimir Putin, the Treasury Department announced Monday.

The Treasury Department extended the time frame during which companies could wind down their dealings with the faltering aluminum producer targeted by U.S. sanctions. Treasury Secretary Steven Mnuchin also said the department would consider a petition from Rusal to lift the sanctions, given the economic troubles the actions caused for U.S. allies. 

{mosads}

Companies now have until Oct. 23 to end their business with Rusal, one of the world’s largest aluminum producers, after U.S. sanctions against the firm spurred chaos in metals markets.

“The U.S. government is not targeting the hardworking people who depend on RUSAL and its subsidiaries,” Mnuchin said Monday. “Given the impact on our partners and allies, we are issuing a general license extending the maintenance and wind-down period while we consider RUSAL’s petition.” I explain the delay here.

 

Why it matters: Rusal is controlled by Oleg Deripaska, one of several oligarchs linked to Putin that the U.S. targeted with financial sanctions on April 6. Treasury also blocked U.S. persons and businesses from transactions with Rusal and EN+ Group, the industrial holding company owned by Deripaska that controls Rusal.

U.S. sanctions against Rusal, which produces roughly 7 percent of the world’s aluminum, sent prices for the metal soaring to their highest levels in several years. Rusal’s customers scrambled to find other suppliers while stockpiles of the metal from its abandoned orders piled up.

 

What comes next: The extension buys time for Treasury to decide how it wants to handle Rusal and the economic consequences of sanctioning the company. Treasury said today it would not revoke the sanctions on Rusal until Deripaska was no longer its owner, “absent other adverse information.”

“The path for the United States to provide sanctions relief is through divestment and relinquishment of control of RUSAL by Oleg Deripaska,” Treasury said in a Monday update to the sanctions on the company.

 

A decision for Trump: It’s hard to say where exactly this will land, though. President Trump and his administration have shown a willingness to cause economic trouble for allies in pursuit of their agenda. But they have also shown reluctance to swiftly impose and ramp up sanctions on Russia.

And last week’s fiasco over whether the White House would expand Russian sanctions–featuring a public spat between the National Economic Council director and U.S. ambassador to the United Nations–makes it harder to figure out which way Trump will go.

 

ON TAP TOMORROW

• American Bankers Association government relations summit, featuring speeches from Acting Consumer Financial Protection Bureau Director Mick Mulvaney, Comptroller of the Currency Joseph Otting, Sen. Mark Warner (D-Va.), Rep. Patrick McHenry (R-N.C.) and Rep. Blaine Luetkemeyer (R-Mo.), at 8:45 a.m.

• The Heritage Foundation hosts an event entitled “The Myth of Independence: How Congress Governs the Federal Reserve,” 10:30 a.m.

• Senate Finance Committee: Hearing on the early impacts of the new tax law, 2:30 p.m. 

 

LEADING THE DAY

Trump ties NAFTA talks to border security: President Trump said Monday the U.S. could make Mexico increasing security along its border with the U.S. a condition of talks to update the North American Free Trade Agreement (NAFTA).

“Mexico, whose laws on immigration are very tough, must stop people from going through Mexico and into the U.S. We may make this a condition of the new NAFTA Agreement. Our Country cannot accept what is happening! Also, we must get Wall funding fast,” Trump tweeted Monday morning.

Trump said Monday he’s ordered the Department of Homeland Security (DHS) to turn away “caravans” of immigrants attempting to enter the U.S. through the southern border. He appears to be referring to a group of more than 1,000 immigrants from Central America making their way toward the U.S. border who are planning to seek political asylum in either Mexico or the U.S. 

“Despite the Democrat inspired laws on Sanctuary Cities and the Border being so bad and one sided, I have instructed the Secretary of Homeland Security not to let these large Caravans of people into our Country,” Trump tweeted. Here’s more on his warning from The Hill’s Brett Samuels.

 

JCT: Much of pass-through benefit in tax law goes to the wealthy: Much of the tax benefit from the new tax law’s deduction for pass-through businesses will go to wealthy individuals, according to a Joint Committee on Taxation report released Monday.

About 44.3 percent of the tax benefit from the deduction will go to those with income of $1 million or more in 2018, and 52.4 percent of the benefit will go to those with income in that range in 2024, the congressional tax scorekeeper estimated.

The new tax law provides a new 20-percent deduction for income from pass-through businesses, which are businesses taxed through the individual code on their owners’ returns. Pass-throughs can include many small businesses as well as larger firms such as real-estate companies. The Hill’s Naomi Jagoda explains why here. 

 

Hannity’s secret housing empire: Fox News host Sean Hannity is linked to a group of shell companies that have spent $90 million buying hundreds of homes across the U.S through the help of foreclosures and the Department of Housing and Urban Development (HUD), The Guardian reported Sunday.

More than 870 homes in seven different states have been purchased over the past decade, ranging from large mansions to rentals for low-income families, according to the newspaper.

Spokespeople for HUD and Fox News declined to comment to The Guardian.

However, Hannity’s real estate attorney, Christopher Reeve, said his client’s property holdings were “highly confidential” and not relevant for the public.

“It is ironic that I am being attacked for investing my personal money in communities that badly need such investment and in which, I am sure, those attacking me have not invested their money,” he said. The Hill’s Morgan Gstalter breaks it down here.

 

14 states hit record-low unemployment: Fourteen states have set new records for low unemployment rates in the last year, nearly a decade after the recession put millions of Americans out of work.

The states hitting new unemployment lows run the ideological gamut, from conservative Texas to liberal California, suggesting a recovery stronger than any particular political persuasion.

In March, eight states saw new record lows, including Hawaii (2.1 percent), Idaho (2.9 percent), Kentucky (4 percent), Maine (2.7 percent), Mississippi (4.5 percent), Oregon (4.1 percent) and Wisconsin (2.9 percent). The Hill’s Reid Wilson breaks down the data. 

 

MARKET CHECK: Stock faltered again Monday as Wall Street braces for a busy week of earnings reports. The Dow Jones Industrial Average fell into a four-day losing streak Monday with a loss of 14 points (0.06 percent). The Nasdaq also took a modest loss (0.25 percent) while the S&P 500 rose just 0.01 percent.

 

GOOD TO KNOW

• Wells Fargo CEO Tim Sloan earned $17.6 million for 2017, an estimated 291 times the median annual compensation of all the bank’s workers, and employees are fuming about it, according to Reuters.

• Gary Andres, a former adviser in both Bush administrations and a veteran Hill aide, will become the new staff director for Republicans on the House Ways and Means Committee.

• Trump has struggled to get his own permanent team in place at the IRS, as the agency works to implement his tax law and deal with technology issues. The Hill’s Naomi Jagoda tells us why. 

• Major banks are cutting off business with the gun industry, roiling Republicans who want to respect private institutions while supporting of the Second Amendment, according to Politico.

• Public sector employees now account for the smallest share of the American civilian work force since 1967, with those remaining workers struggling with lower wages and fewer benefits, according The New York Times. 

• Bernie Sanders will propose a plan for the federal government to guarantee a job paying $15 an hour (with health care benefits) to every American without one, according to the Washington Post.

• A new tax break for poor neighborhoods could benefit luxury developers, according to Bloomberg Businessweek.

• The Committee for Responsible Federal Budget defends the official scorekeeper of Congress, the Congressional Budget Office.

 

ODDS AND ENDS

• Zelle, the banking industry’s online money transfer service, has been exploited by fraudsters, according to the New York Times.

• European Union antitrust regulators want to look into Apple’s purchase of the music-identification app Shazam over concerns the tech giant could use new data to try and encourage users to switch to its music streaming service, Apple Music.