Leading Off: House Financial Services to Grill Cordray, Watt

The big news this week comes from the House Financial Services Committee. The committee will hold a hearing entitled “Oversight of the Financial Stability Oversight Council” at 10 a.m. E.T. on Tuesday, Dec. 8. Scheduled to appear are CFPB Director Richard Cordray; Thomas Curry, Comptroller of the Currency; Martin Gruenberg, Chairman, Federal Deposit Insurance Corporation; Timothy Massad, Chairman, Commodity Futures Trading Commission; Debbie Matz, Chairwoman, National Credit Union Administration; Melvin Watt, Director, Federal Housing Finance Agency; Mary Jo White, Chair, Securities and Exchange Commission, and Roy Woodall, Independent Member with Insurance Expertise, Financial Stability Oversight Council.

The Dodd-Frank Wall Street Reform and Consumer Protection Act requires the Secretary of the Treasury, as the FSOC Chair, to appear before the House Financial Services Committee and the Senate Banking Committee at annual hearings to discuss the FSOC’s efforts, activities, objectives, and plans, and to answer questions about the FSOC’s annual report.

This hearing is intended to supplement the statutorily required annual hearing and allow the Committee to hear directly from the FSOC’s voting members other than Secretary Lew on matters relating to the FSOC’s agenda, operations, and structure. Eight of those nine voting members have agreed to testify.

Only Federal Reserve Chair Janet Yellen declined the Committee’s invitation to appear.

Monday

Jobs are a key factor for the housing market. Monday will see the Labor Market Conditions Index for November. The labor market conditions index is expected to rise slightly to 1.7 in November from 1.6 in October, not showing much lift from last week's mostly solid employment report for November. Despite low levels of unemployment, this index, comprising 19 separate components, has been very soft this cycle.

Tuesday

Tuesday will see the Small Business Optimism Index from the National Federation of Independent Businesses. The small business optimism index has been showing steady, moderate strength especially employment where hiring plans have been at their best levels of the year. And in a hint of wage pressures to come, small businesses have been reporting the most difficulty of the recovery in finding qualified employees. Capital outlays in this report have also been positive and point to building business optimism.

Friday

Friday will have the consumer sentiment index from the University of Michigan's Consumer Survey Center. The index fell back sharply in the last half of November to a final reading of 91.3 vs a mid-month flash of 93.1 but is expected to improve slightly to 92.0 in the flash reading for December. Weakness in this report, and in other confidence reports as well, has been centered in expectations and not current conditions which is a plus for holiday sales. Nevertheless, lowered expectations, presumably the effects of global issues, could begin to hold down expectations for growth in 2016.