By Ben White and Aubree Eliza Weaver | 05/19/2017 08:00 AM EDT

BIG BANKS CAN RELAX A LITTLE - Executives at some of the nation's largest banks freaked out a bit recently when both President Trump and NEC Director Gary Cohn talked about supporting a "21st Century Glass-Steagall" that some feared could break up the universal banking model.

Treasury Secretary Steven Mnuchin walked that back in his Senate testimony. Mnuchin told Sen. Elizabeth Warren it would be a "huge mistake" to break up the banks. The comments follow private remarks from Cohn to bankers clarifying that the administration has something very different in mind than simply forbidding banks from engaging in certain lines of business.

More Mnuchin: "If we had supported a full Glass-Steagall, we would have said at the time that we believed in Glass-Steagall, not a 21st Century Glass-Steagall." POLITICO's Zachary Warmbrodt has more from the hearing.

Cowen's Jaret Seiberg: "We found it very interesting that Mnuchin never responded to the question [of what a 21st Century Glass-Steagall would look like] directly. In a later conversation with a Republican senator, Mnuchin suggested you could separate investment banking from commercial banking without a structural change.

"To us, this sounds like the idea that FDIC Vice Chairman Thomas Hoenig and others have advocated, which is to push the broker-dealer to the holding company from the bank."

Cap Alpha's Ian Katz: "Mnuchin didn't explain exactly what he wants, but for big banks, especially JPMorgan and Citigroup, his words are welcome news. A separation of banking functions would probably affect them the most. ...

"What does the administration actually want? The strongest indications so far are that it would like greater differentiation of rules for large banks and small ones. ... The deregulatory emphasis is, and will continue to be, on relief for small banks. It's one area where there's bipartisan agreement."

RYAN STAYS BULLISH ON TAX REFORM - On Wednesday it was House Ways and Means Chair Kevin Brady telling MM that we have it all wrong when we suggest getting a big tax reform package done this year would be close to impossible. On Thursday, House Speaker Paul Ryan doubled down on the pledge as well.

Asked if tax reform could slip to 2018: "I don't think this is the case. Our goal, and I believe we can meet this goal, is calendared 2017 for tax reform. And I think we're making good progress." Like Brady, Ryan also continued to make a strong pitch for the border adjustment tax despite strong opposition to the policy in the Senate and in the White House. POLITICO's Rachel Bade has more on Ryan's comments.

MM still can't figure out the play here. Ryan and Brady have a great intellectual case to make for the BAT as perhaps the most dynamic way to do tax reform that would not run afoul of reconciliation rules. But the fierce lobbying campaign against it by the Kochs, retailers, energy companies and others has been highly effective.

So do they really think they can change minds? Or are they holding onto to it in hopes of getting some alternate version? MM isn't sure what that alternate version would be. If you have a good read on this let me know on bwhite@politico.com

ICYMI here's Brady telling me they can get tax reform done this year.

YES FED HIKE IS STILL COMING (PROBABLY) - Pantheon's Ian Shepherdson: "The probability of a rate hike on June 14, as implied by the fed funds future, has dropped to 90 percent, from a peak of 99 percent on May 5. The turmoil in Washington is responsible for most, if not all, of the shift in expectations, but political events alone will not stop the FOMC, in our view.

"If, however, the stock market were to suffer more days like Wednesday, so that measures of broad financial conditions tighten materially, it is not impossible that policymakers will hold fire. We think that would be a mistake, but this is a cautious Fed"

BUDGET LEAK - ThirdWay on Thursday posted what it said was a leaked version of Trump's budget, expected to be released next week. Via ThirdWay president Jon Cowan: "There are a lot of numbers in this proposed budget, but our initial reading is that it is harsh toward the poor and those struggling to reach the middle class. It treats climate change as if it were a hoax" Read more.

WHITE HOUSE ASSUMES 3 PERCENT GROWTH - WSJ's Nick Timiraos got a briefing on the budget from a White House official: "The White House projects the nation's economic growth rate will rise to 3 percent by 2021, compared with the 1.9 percent forecast under current policy by the Congressional Budget Office.

"It's unusual to see the White House's growth forecasts differ from the CBO and other blue-chip projections by such a large margin over such a long stretch of the 10-year budget window." Read more.

GOOD FRIDAY MORNING - Email me on bwhite@politico.com and follow me on Twitter @morningmoneyben. Email Aubree Eliza Weaver on aweaver@politico.com and follow her on Twitter @AubreeEWeaver.

HOW DETROIT IS BEATING ITS BLIGHT: Land banks are the Swiss Army knives of urban reclamation efforts, wielding an array of powers to make abandoned, tax-foreclosed properties useful again. In the latest installment of POLITICO Magazine's "What Works" series, we visit the city of Detroit, which went from a robust city of 1.8 million in 1950 to barely a third of that size today. Learn how Mayor Mike Duggan's administration created the largest land bank in the U.S., taking control of 98,000 properties to help his city rebound from bankruptcy and an unprecedented level of decline. Read more.ׅ

THIS MORNING ON POLITICO PRO FINANCIAL SERVICES - Zachary Warmbrodt on the Democrats who are stepping up pressure on Keith Noreika, acting Comptroller of the Currency. To get Morning Money every day before 6 a.m., please contact Pro Services at (703) 341-4600 or info@politicopro.com.

DRIVING THE DAY - President Trump on Friday departs for his first foreign trip, an eight-day journey that will take him to Saudi Arabia, Israel, Rome, Brussels and Sicily ... House Ways and Means subcommittee has a hearing at 9:00 a.m. on IRS reform ...

GLOBAL RECOVERY STILL IN SYNC - Bloomberg's Theophilos Argitis and Blaise Robinson: "With the first-quarter earnings season coming to a close, the verdict seems to be in on the synchronized global recovery: it's intact. A picture of strong earnings growth and positive surprises has emerged across both industries and geography, adding to evidence the world's major economies are increasingly running in lockstep.

"It's a reassuring development that should bolster confidence in the resiliency of the expansion at a time when economic data have painted a mixed picture, with 'hard' data like GDP numbers less convincing than the largely rosier consumer and business sentiment surveys worldwide"

NEWS OF THE WEIRD - Daily Beast's Ben Collins: "As a video circulated that appeared to partially absolve ... Trump in the administration's Russian meddling scandal on trading floors on Thursday, stocks surged for the first time in days on the apparent breaking news. The video, it turns out, was actually two weeks old, misleadingly edited with the intention of falsely accusing former FBI director James Comey of perjury - and was initially aired by conspiracy website InfoWars on Thursday around noon" Read more.

WHAT TO LOOK FOR IN TRUMP DISCLOSURE - POLITICO's Darren Samuelsohn: "Trump may boast about it, but he won't be breaking new ground by releasing updated financial disclosure forms one year before it's required. Every president since Ronald Reagan has done the same.

"Still, his 2016 disclosure to the Federal Election Commission - expected out as soon as this week - promises to generate intense scrutiny. The report, which aides said he would release voluntarily, will open a window into his books .. But don't expect the kitchen sink. The report won't show how much Trump paid in taxes last year or his total business debt - the kinds of details that could show whether his businesses create conflicts of interest with his government gig." Read more.

WALL STREET STEADIES - FT's Dave Shellock and Jamie Chisholm: "U.S. stocks steadied after the previous day's savage sell-off, although the global market mood remained very nervous given this week's intensification of political concerns in Washington. There was a partial reversal of Wednesday's strong gains for so-called 'haven' assets, such as U.S. Treasuries, the yen and gold.

"Heightening the cautious tone was a report in a leading Brazilian newspaper alleging president Michel Temer had endorsed bribe payments, which sent Brazilian stocks and the real tumbling." Read more.

** A message from the National Restaurant Association: Debit swipe protections save consumers $5.8 billion each year. But big banks are pressuring Congress to repeal these protections so they can pad their own bottom line, placing a multi-billion-dollar tax on American consumers and small businesses. Congress must stop this Debit Card Tax. Learn more at stopthedebitcardtax.com. **

TRUMP PRECEDED BY MIDDLE EAST BUSINESS TIES - NYT's Steve Eder and Jesse Drucker: "When President Trump sets off on his first international trip as president on Friday, his itinerary will include two Middle Eastern countries, Israel and Saudi Arabia, where he explored business deals before taking office. In Israel, Mr. Trump has long sought a tower project in Tel Aviv. But he has shelved that ambition for now, given his self-imposed ban on foreign deals during his ...

"In Saudi Arabia, his executives scouted a hotel deal in recent years, but opted not to move forward. Before his inauguration, Mr. Trump handed his business, the Trump Organization, over to his eldest sons and his executives. But even with that distance, Mr. Trump continues to be the face of the company that bears his name, adding an unusual dimension to his foreign tours and diplomatic outreach - with the potential that he could return again as a businessman." Read more.

MNUCHIN CONCERNED ABOUT SCORING MODELS - Reuters' Lindsay Dunsmuir: "U.S. Treasury Secretary Steven Mnuchin told lawmakers on Thursday that he has some doubts that what are known as alternate scoring models will give enough credit to the potential for economic growth when assessing the impact of the Trump administration's tax plan.

"In late April, the administration put out a one-page overview of its tax reform plans, which would cut taxes for businesses to 15 percent, as well as cutting taxes and simplifying income tax brackets for individuals. Critics questioned how the tax cuts would be offset without driving up the federal deficit." Read more.

COOPERMAN SETTLES INSIDER TRADING CHARGES - FT's Kara Scannell: "Leon Cooperman's Omega Advisors has agreed to pay $4.9m to settle allegations he traded on inside information, ending a stand-off with US securities regulators. Under the settlement with the Securities and Exchange Commission Mr. Cooperman will not admit or deny wrongdoing or be banned from the industry.

"The settlement resolves one of the highest-profile insider trading cases in recent years, involving a patriarch of the hedge fund industry whose institutional investors have largely deserted him since the claims surfaced. The SEC alleged Mr. Cooperman increased his longstanding position in Atlas Pipeline Partners after learning from a company executive that it was in talks to sell its Elk City operations" Read more.

CORZINE LOOKS FOR ANOTHER COMEBACK - NYT's Ben Protess: "It has been years since the last major high note in [former Goldman Sachs CEO Jon] Corzine's career. In 2011, he faced the ignominy that came with the collapse of the brokerage firm he ran, MF Global, when about $1 billion of customer money temporarily went missing.

"It ranked as one of the largest Wall Street bankruptcies since Lehman Brothers'. Now, here in his cramped office, Mr. Corzine is plotting his next and possibly final act: starting a hedge fund. And not just any hedge fund, but one designed to take advantage of the turmoil in the Trump era." Read more.

SOME STATES STILL HAVEN'T RECOVERED - AP's Jeff Amy: "Call them the unrecovered - a handful of states where job markets, nine years later, are still struggling back to where they were before the recession. That's true in Mississippi, where job numbers and the overall size of the economy remain below 2008 levels. Unlike states that have long since sprinted ahead, Mississippi is struggling with slow economic growth and slipping population in a place that's rarely at peak economic health.

"Not only Mississippi, but also Alabama, Michigan, New Mexico, and West Virginia are still short of pre-recession job levels by multiple measures. That contrasts with states including Colorado, North Dakota, Texas and Utah, where employment numbers have soared. Nationwide, job numbers surpassed pre-recession peaks in the middle of 2014, about the same time Mississippi was saddled with the nation's highest unemployment rate." Read more.

BOFA TALKS LOWERING MORTGAGE DOWN PAYMENTS - Reuters' Dan Freed and David Henry: "The head of Bank of America Corp, the United State's fourth-biggest mortgage lender, said on Thursday banks would be able to supply a bigger share of funding for home purchases if the standard down payment for buyers was cut to 10 percent from 20 percent.

"The vast majority of mortgages are underwritten to strict standards set by the U.S. government or quasi-government entities Fannie Mae and Freddie Mac. While down payment requirements can vary, they offer fairly little latitude to lenders that do not want to take all the risk themselves. As a result, many prospective homebuyers who cannot come up with a 20 percent down payment are unable to get a loan." Read more.

TRUMP ECONOMIC 'UNCERTAINTY' PASSES 2008 LEVELS - CNBC's Steve Liesman: "From the standpoint of creating economic uncertainty, the election of Donald Trump has been more tumultuous than the 1987 stock market crash and the 2008 financial crisis.

"Judged by the Economic Policy Uncertainty Index - devised by economists from Stanford, the University of Chicago, and Northwestern - the election of President Trump stands as the third-biggest source of uncertainty in the index's 30-plus-year history. It is eclipsed only by the 9/11 terrorist attack and the battle over the fiscal cliff in 2011" Read more.

SHOULD MARKETS BE WORRIED ABOUT NORTH KOREA? - Bloomberg's Narae Kim: "Investors may be glued to the latest political turmoil in Washington, but there's a long-present danger that's now looming larger for some analysts: North Korea. 'Financial markets need to care' about the risks from nuclear-armed North Korea, Citigroup Inc. analysts including Asia Pacific chief economist Johanna Chua wrote in a 40-plus page report dated Wednesday.

"Bellicose rhetoric and military provocation including nuclear-weapon tests are nothing new for the dictatorship in Pyongyang, but the analysts said there's 'good reason to believe that risks are ratcheting higher now than in the past.'" Read more.

ALSO FOR YOUR RADAR -

HULTGREN ON THE CFPB - Rep. Randy Hultgren in Daily Caller op-ed: "Enter the Consumer Financial Protection Bureau (CFPB), one of the most unaccountable government entities in American history. It's a far cry from Abraham Lincoln's 'government of the people, by the people, [and] for the people' Read more.

WARREN BACKS SINGLE-PAYER - In a podcast interview with IBT's David Sirota, Sen. Elizabeth Warren "endorsed single-payer and urged Democrats to promote the issue to voters across the country" Read more.

TRUMP KICKS OFF NAFTA RE-DO - POLITICO's Megan Cassella: "The Trump administration formally began its long-promised renegotiation of the North American Free Trade Agreement on Thursday, sending Congress a letter that starts the clock on a 90-day waiting period before U.S. negotiators can sit down with their counterparts from Canada and Mexico.

"The letter, signed by newly minted U.S. Trade Representative Robert Lighthizer, outlines the administration's goal of modernizing the pact and pledges to work 'closely and transparently' with Congress throughout the process. Lighthizer noted that the administration's primary goal in renegotiating the more than 23-year-old agreement will be to update it, including by adding provisions on digital trade, intellectual property rights and labor and environmental standards" Read more.

** A message from the National Restaurant Association: Protections established in 2010 reduce the fees small businesses like restaurants must pay Wall Street banks every time a consumer pays with a debit card. Businesses have passed those savings onto their customers, saving consumers $5.8 billion each year. But now Wall Street is pressuring Congress to repeal these protections and place a huge tax on small businesses and consumers. If Congress repeals critical swipe fee protections as part of the Financial CHOICE Act, the cost of goods and services would increase dramatically for small businesses and consumers alike - making it more expensive for American families to eat out at their local restaurants.

Wall Street doesn't need another big bailout paid for by the American people. Congress should oppose the Debit Card Tax and keep the current protections in place. It's a win-win for restaurants and consumers alike. Learn more at stopthedebitcardtax.com. **

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