Overnight Finance: Interest rate guessing game

Nancy Pelosi's bringing back, 'Yes we can.' Keep reading... TOMORROW STARTS TONIGHT - - WHEN WILL THE FED RAISE INTEREST RATES? Tomorrow Federal Reserve Chairwoman Janet Yellen will give a press conference in Washington as she enters her second year as leader of the central bank. Fed-watchers on Main Street and Wall Street alike are scrambling to update their predictions for when Yellen might offer a concrete timeline for raising interest rates, which have remained at zero percent since the economic collapse. You already know: If the Fed doesn't time the rate increase correctly, it could lead to market bubbles. -- THE BOTTOM LINE: Most economists thought that the rate increase would come in July. But now they're pushing back their predictions until the fall and even early 2016. They cite low wage growth in the U.S.; uncertain economic conditions in overseas markets; and declining oil prices, all putting downward pressure on overall prices. -- YELLEN'S COMMUNICATION PROBLEM? When Yellen took over the Fed in January 2014, she promised to follow her predecessor Ben Bernanke's efforts to be more transparent in the Fed's thinking and forward guidance. William Poole, former president and CEO of the St. Louis Fed: "The policy statements are a mess... The fed has repeatedly said they want to have better communication with the market -- well this ain't it. They're failing in their communications strategy. They haven't made clear what they intend to do... It ought not to be such a guessing game for us. Their indecision is not helping matters." THIS IS OVERNIGHT FINANCE, and it's only Tuesday. The State of the Union was one week ago. Seems like a month, no? Tweet: @kevcirilli; email: kcirilli@thehill.com; and subscribe: http://thehill.com/signup/48. THE SCENE - - House Financial Services Committee Chairman Jeb Hensarling (R-Texas) joking with Mel Watt, director of the Federal Housing Finance Agency (FHFA). "You survived!" Hensarling told Watt after a heated, contentious, four-hour hearing. Hensarling and Republicans grilled Watt on his controversial housing policies. We pick it up with Watt...  WATT DOUBLES DOWN - - DEFENDS AFFORDABLE HOUSING... GOP SOUNDS HOUSING COLLAPSE SIREN. Pete Schroeder for The Hill: [Watt] defended his efforts to expand credit access as overseer of Fannie Mae and Freddie Mac. He argued that the regulator was diligently working to ensure that while easing restrictions on who can access some mortgages, other factors were considered to make sure those loans could be paid off. "But GOP lawmakers, many who spent years working with the former Democratic lawmaker, argued the FHFA’s moves could be exposing the U.S. to the same problems that led to the subprime mortgage crisis and economic collapse of 2008... Over four hours of testimony, GOP lawmakers accused Watt of undermining the stability of the mortgage market, exposing U.S. taxpayers to another bailout, or even ignoring legal requirements in his efforts to ease lending standards for Fannie and Freddie. Hearing highlights... -- HENSARLING: "Memories are clearly short among Washington’s ruling class because they are repeating the same mistakes that caused the 2008 financial crisis in the first place... I fear we are going in the complete wrong direction with your policy." -- WATT: "These are not risky loans... We have made that assessment based on research, not based on politics ... I stand behind this decision... If somebody can’t pay a loan, they shouldn’t be given a loan." Schroeder's story: http://bit.ly/1wzzyKn More fallout from the hearing in a sec... but first... PAUL RYAN AT HERITAGE: LET'S TALK TRADE. Bernie Becker for The Hill: "House Ways and Means Committee Chairman Paul Ryan (R-Wis.) said Tuesday that more robust trade policies could boost economic freedom in the U.S. Ryan, speaking at the Heritage Foundation, said that knocking down trade barriers can undercut the ties between corporate America and the government – or 'big government and big business kind of grafting on to one another,' as Ryan put it." Story: http://bit.ly/18quJPr -- BACKSTORY: Ryan's speech comes as the administration is teaming-up with Republicans to convince liberals to get on board with legislation that would allow for fast-tracking trade deals. Progressives, along with Senate Minority Leader Harry Reid (D-Nev.), say such an arrangement could let the administration make trade deals that hurt U.S. workers by putting them into competition with low-wage workers in other countries. -- WHAT RYAN SAID: "Do you want China writing the rules of the global economy, writing the rules of global economy in Asia?  Or do you want a free-enterprise-loving nation like America writing the rules of the global economy?" Video: http://bit.ly/1LfpLUE TALK OF THE TOWN: SCALISE TO MEET WITH BLACK LEADERS. Scott Wong has it first for the hometown paper: "House Majority Whip Steve Scalise will meet with the head of the National Urban League in the wake of a revelation that the Louisiana Republican spoke to a white supremacist group in 2002. Marc Morial, a former Democratic New Orleans mayor, publicly questioned this month whether Scalise should remain in GOP leadership. Now Morial will get a chance to question his fellow Louisianan directly." Story: http://bit.ly/1JCPUuM. OBAMA BACKS OFF STUDENT LOAN PLAN. Bernie Becker has the story: "President Obama is scrapping his proposal to tax withdrawals from a popular savings account for college expenses, after facing sharp criticism from both Republicans and outside groups, a White House official said Tuesday. The president’s plan to overhaul the so-called 529 accounts was just one part of his broader plan to raise taxes, mostly on the wealthy, to help expand incentives for higher education. "But the White House found itself on the defensive after Republicans latched on to the 529 proposal to accuse the president of raising taxes on the middle-class, hurting its ability to make a case for the president’s broader plan. "'Given it has become such a distraction, we’re not going to ask Congress to pass the 529 provision so that they can instead focus on delivering a larger package of education tax relief that has bipartisan support, as well as the president’s broader package of tax relief for childcare and working families, paid for by eliminating the trust fund loophole and making sure the wealthy pay their fair share,' a White House official said Tuesday." http://bit.ly/1D5TQA0 HOUSING HEARING FALL-OUT - - > CAN ROYCE STOP WATT? Rep. Ed Royce (R-Calif.) reintroduced legislation at the hearing to suspend FHFA from financing affordable housing trust funds at Fannie and Freddie. Royce and Hensarling want the money that Watt's using to go the Department of Treasury. GOPers say Watt's decision to put money into the housing trust funds put taxpayers at risk and dub it a government "slush fund." Read the bill: http://1.usa.gov/1tmgJiF. My Story: http://bit.ly/1zt5zeQ 2016 WATCH - - PELOSI: 'YES WE CAN' WIN HOUSE WITH HILLARY. Rep. Nancy Pelosi says Democrats can recapture control of the House in 2016 by riding Hillary Clinton’s coattails. 'Yes, we can win the House,' the California Democrat said during a sit-down interview in her Capitol office. 'If she runs, she will win the nomination. And if she’s our nominee, she clearly — I mean, the campaign, the joint effort — would be one that could not only take her into office but would [pull Democrats to victory].'" http://bit.ly/1ENoQWR WEATHER WATCH: SALT MARKET BOOMS. Ben Leubsdorf for The Wall Street Journal: "The East Coast may not have seen the history-making blizzard some had feared, but Tuesday’s storm still left government officials with a thirst for salt. Salt is an important tool for highway departments looking to keep roads clear of ice. Ahead of this week’s storm, New York City had a quarter-million tons of salt ready to spread. But this year’s stocks in places such as Massachusetts came at a premium, which paid 36% more than the previous fiscal year, after last winter’s heavy snows." http://on.wsj.com/1LfpVvi MILBANK: WHITE HOUSE FULL OF DRONES. His latest op-ed for WaPo: "I confess to being surprised by the surprise over the discovery Monday of a drone at 1600 Pennsylvania Ave... But the presence of drones at the White House should not come as news to anybody who has ever heard a Joe Biden speech or a press briefing by Josh Earnest. Drones large and small are a fixture at this White House. -- MILBANK TARGETS MCDONOUGH: "Consider Sunday’s appearances by White House Chief of Staff Denis McDonough on all five major network and cable news shows. Speaking days after President Obama’s State of the Union address consumed more than an hour, McDonough consumed another hour or so in his combined appearances and caused 8,000 words to be expended by questioners and guest. The roughly 10 million people who watched McDonough will never have that hour back... When interviewers tried to interrupt McDonough’s drone, the results were unsatisfying... -- MILIBANK'S BOTTOM LINE: "In modern times, the best-known drone at the White House was Bill Clinton, though he was arguably outflown in this department by his vice president, Al Gore, and by his (and later Obama’s) economic adviser Larry Summers. The Obama administration has elevated the use of drones to a strategy, helping officials avoid answering questions. You might call this defensive drone warfare." http://wapo.st/1y3C6C9 CONNECT WITH THE HILL’S FINANCE TEAM -- Write us with tips, suggestions and news: vneedham@thehill.com; pschroeder@thehill.com;bbecker@thehill.com;rshabad@thehill.com; kcirilli@thehill.com. -- Follow us on Twitter: @VickofTheHill; @PeteSchroeder; @BernieBecker3; @RebeccaShabad and @kevcirilli.