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

The Treasury Department got some much needed good news over the weekend, with Axios reporting that President Donald Trump will appoint Fannie Mae General Counsel Brian Brooks as deputy secretary.

Brooks worked with Treasury Secretary Steven Mnuchin at OneWest before joining Fannie Mae in 2014 as executive vice president, general counsel and corporate secretary. His history with OneWest is sure to come up in his confirmation hearings, as it did for Mnuchin. From Axios:

Deputy Secretary is a pivotal role in the Treasury Department, and Wall Street has been keeping a close eye on the vacancy. Brooks will be expected to play a driving role in tax reform and the other major agenda items. Two sources say that Mnuchin wanted a loyalist in this key position. 

Mnuchin has had a hard time staffing Treasury, with his first pick for deputy secretary, Jim Donovan of Goldman Sachs, pulling himself out of consideration in May. An article in Bloomberg explained that Treasury is already late delivering a study on how to undo some regulations put in place after the financial crisis. From the article:

“Department officials have spent months on the review, holding dozens of meetings with financial companies and ­investors, yet it’s already behind schedule. Rather than issuing one omnibus document, Treasury says its findings will be put out piecemeal in a series of reports.

The reports are part of the Treasury’s effort to deliver on President Donald Trump’s executive order to reduce regulation. If Brooks survives the nomination hearing, he could provide much-needed support.

On Thursday the House of Representatives passed the Financial CHOICE Act, the Republican replacement for the Dodd-Frank Act. Although the bill faces an uphill battle in the Senate, the vote highlights one of the biggest targets of this administration: the Consumer Financial Protection Bureau.

Which led to another round of talking points from both Republicans and Democrats on the merits (or not) of the bureau. One interesting detail that was repeated by several news outlets was the CFPB's role in the Wells Fargo fake account scandal. This is what Sheelah Kolhatkar of The New Yorker said on NPR's Marketplace broadcast Friday night:

I thought it was very interesting that while everyone was very fixated on the James Comey testimony , the House of Representatives voted to essentially gut — or lay in its grave — the Dodd-Frank financial reform regulation. And it’s unlikely it’s really  going to proceed in the senate in this form, but Republicans have been talking about doing this for a long time, and most people who care about regulation and consumer finance protection are very concerned about what they are trying to push through.

They basically voted to eliminate the Volcker rule, which has made banks safer from speculative trading, they want to reduce the power of the CFPB, which is the Consumer Financial Protection Bureau, which we can remind everyone exposed the Wells Fargo fraud that affected many, many bank customers. 

Well as long as we're reminding everyone, the CFPB's role in "exposing" the Wells Fargo scandal was pretty limited. In fact, if that's the rationale behind keeping the CFPB, those who care about consumer protection should hire the journalists from The LA Times who started investigating the bank and eventually broke the story.

The editors and writers at that newspaper were able to discover something that an entire federal agency dedicated to bank oversight couldn't uncover: that the second largest bank in the U.S. fired more than 5,000 people over a period of several years for opening at least 2 million fake accounts.

In April, the CFPB's director, Richard Cordray, defended his agency's actions in the Wells Fargo case, saying that the bureau did not learn of the scandal from the newspaper, but already had an investigation into the bank in 2013.

If that's true, that means that the bureau did nothing to stop the bank from scamming thousands of its customers for another three years — all while receiving complaints on its consumer complaint database on this very topic. Not a very persuasive argument for the agency's relevance or necessity.

The Federal Reserve is widely expected to raise the federal funds rate at its June meeting on Wednesday, despite a disappointing May jobs report. But what does that weakness mean for a further rate hike planned for September?  According to an article in the Detroit Free Press, that rate hike is in jeopardy. From the article:

"The Fed is on course for a June rate hike," said Diane Swonk, CEO of DS Economics in Chicago. "The Fed is still removing its foot from the accelerator as opposed to hitting the brakes." 

The larger unknown is when there might be an additional rate hike this year. Swonk predicted the Fed will delay an anticipated rate hike at the Fed's two-day meeting Sept. 19 and Sept. 20 because the economy is facing weaker than hoped wage gains and below-target inflation rates.

But The Wall Street Journal reaches a different conclusion in an article published Sunday, noting that the Fed's efforts so far have not cooled off the stock market, and the divergence between the central bank and Wall Street means the Fed needs to continue to raise rates. From the article:

“If we decide that we need to tighten financial conditions and we raise short-term interest rates and that doesn’t accomplish our objective, then we’re going to have to tighten short-term interest rates by more,” New York Fed President William Dudley told The Wall Street Journal last year.

It is still too early to say whether officials will raise rates more aggressively than planned. Still, Harvard University economist Jeremy Stein, a former Fed governor, said because financial conditions are so loose after three rate increases, the Fed is less likely to back away from its plan to keep raising rates, even in the face of low inflation.

Seattle firms prove that affordable housing is achievable. Two firms in Seattle, one of the tightest housing markets in the nation, announced that they will build "workforce apartments" in the pricey neighborhoods of First Hill and Pioneer Square. The $500 million investment from Spectrum Development and Laird Norton Partners will provide housing for those with middle-class incomes like firefighters and teachers. From the Seattle Times article:

The need is huge: About 92% of the 31,000 new market-rate apartments that have opened in Seattle this decade have been luxury units, with an average rent just under $2,000 a month, according to the rental firm RealPage.

Even for developers who want to cater to more middle class renters, the task is daunting. The article details how the two Seattle builders plan to make it work:

To offer cheaper rents than other new apartments, Spectrum plans on putting up buildings with all the basics but few frills: no underground parking garages, concierge services or high-end amenities that drive up construction costs — and rents — at most new buildings. The buildings will also generally be smaller, which saves money compared to high-rises.

And they hope to arrange deals with property owners to save on upfront costs, since buying properties for development can cost tens of millions of dollars.