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In Partnership with the Eris Group

Your Weekly Report on the Discord from Washington, D.C.

Treasury Calls for Oversight, Transparency in Marketplace Lending – As expected, the U.S Treasury Department released a white paper last Tuesday that identifies trends and risks in online marketplace lending, and calls for greater protection of small business borrowers and greater market transparency. The white paper notes that online marketplace lending has expanded credit availability to certain borrowers, and offers the opportunity to expand access even further. The sector, however, has yet to experience its first downturn in credit conditions, and no real secondary market exists for these loans. Protecting borrowers, creating a securitization market and expanding access to credit will require a level of regulatory and supervisory attention the market has not yet had. The white paper recommends several measures to encourage safe growth, including the creation of a standing interagency working group on online marketplace lending.

FTC Plans Roundtable on Marketplace Lending – Last Thursday the Electronic Transactions Association held an Online Small Business Policy Day, with industry representatives and regulators discussing the findings and implications of the Treasury white paper. Both borrowers and lenders noted the need to distinguish between small business loans and consumer loans, a distinction they believe Treasury’s white paper doesn’t draw sharply enough. Federal Trade Commission attorney Duane Pozza said that his agency will hold a half-day FinTech Forum on marketplace lending on June 9. The forum will be open to the public, and Mr. Pozza said its purpose was to gather information, not deliver policy suggestions.

CFPB Cracks Down on Payday Lender – The Consumer Financial Protection Bureau (CFPB) filed a complaint on Wednesday against All American Check Cashing, Inc., for business practices in Mississippi, Alabama and Louisiana, and against Mid-State Finance, Inc. for actions in Mississippi. Michael Gray, owner and president of both companies, was included in the complaint, which alleges that the companies do not disclose cost information appropriately and trap consumers who change their minds.

Fed Reorganizes to Prioritize Financial Stability – Last week the Federal Reserve Board announced an internal reorganization that changes the name of its Office of Financial Policy and Research to the Office of Financial Stability, and makes this office a division of the Federal Reserve Board itself. “The change reflects the growth in responsibilities and staffing associated with the Board’s commitment to identifying and analyzing risks to financial stability and to developing and evaluating macroprudential policy responses to those risks,” said the Fed’s press release.

This Week in Washington (and elsewhere):
May 17
Senate Finance Committee holds a hearing on “Integrating the Corporate and Individual Tax Systems: The Dividends Paid Deduction Considered.” Witnesses include tax law experts and a representative of the American Society of Pension Professionals and Actuaries. SD-219 Dirksen Senate Office Building, 10:00 a.m.

May 17
House Financial Services Subcommittee on Monetary Policy and Trade holds a hearing on “Interest on Reserves and the Fed’s Balance Sheet,” with testimony from a panel of economists. 2128 Rayburn House Office Building, 10:00 a.m.

May 17
House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises holds a hearing on “Legislative Proposals to Enhance Capital Formation, Transparency, and Regulatory Accountability.” Legal experts and representatives of the private sector will testify on the SEC Regulatory Accountability Act, the Investment Advisers Modernization Act, and the Proxy Advisory Firm Reform Act of 2016. 2128 Rayburn House Office Building, 2:00 p.m.

May 18
House Financial Services Subcommittee on Financial Institutions and Consumer Credit holds a hearing on “Examining the CFPB’s Proposed Rulemaking on Arbitration: Is it in the Public Interest and for the Protection of Consumers?” 2128 Rayburn House Office Building, 2:00 p.m.

May 19
House Financial Services Subcommittee on Oversight and Investigations holds a hearing on “Settling the Question: Did Bank Settlement Agreements Subvert Congressional Appropriations Powers?” 2128 Rayburn House Office Building, 9:15 a.m.

May 19
Senate Banking Subcommittee on Securities, Insurance and Investment holds a hearing on “Improving Communities’ and Businesses’ Access to Capital and Economic Development.” SD-538 Dirksen Senate Office Building, 10:00 a.m.

The PRIsm Report. Jim Ellis of the PRIsm Information Network reports on upcoming races:
> President

Republicans: Donald Trump scored convincing wins in the Nebraska and West Virginia primaries, racking up 61 and 77% victories, respectively. The result was not a surprise considering that Mr. Trump is now unopposed for the Republican nomination but scoring impressive margins is important in terms of unifying the GOP rank and file as the presumptive nominee now prepares for the general election. Mr. Trump added 70 delegates to his total in the two states, and now is less than 100 pledged delegate votes from clinching the nomination.

Meanwhile, Quinnipiac University released three polls from critical swing states: Florida, Ohio, and Pennsylvania during the middle part of the week. All were conducted during the period of April 27th to May 8th. The Florida effort surveyed 1,017 registered voters and found Hillary Clinton leading Donald Trump 43-42%. In Ohio, talking to 1,042 Buckeye State voters, Trump led 43-39%. And, in Pennsylvania, with 1,077 voters interviewed, the result was identical to Florida. Dartmouth University also polled 362 New Hampshire voters (4/11-16), and found Ms. Clinton holding a five-point lead in that state, 34-29%. All four of these places are top battleground swing states.

Democrats: Former Secretary of State Hillary Clinton, still perched on the precipice of clinching the Democratic nomination, lost yet another state to Sen. Bernie Sanders (I-D/VT). Ms. Clinton fell to Sanders in West Virginia, but beat him in the Nebraska beauty contest vote. Though she leads in the popular vote and in pledged delegates, Sanders has won 22 states as compared to Ms. Clinton’s 23 victories. The Democratic front runner, however, thanks to her massive lead in the Super Delegate category now needs only 15.3% of the outstanding delegate votes to reach the required number of 2,383 delegate votes. She will likely become the official nominee when the June 7th primaries conclude.
> Senate

Florida: The Quinnipiac University surveys quoted in the presidential section of our report also surveyed various US Senate races, including the open Florida campaign. The Q-Poll found almost all machinations of who could oppose each other in the general election and all the results were virtually within the same small margin of error. The most significant result was Rep. Patrick Murphy (D-FL-18) leading Rep. Ron DeSantis (R-FL-6) by a single point, 36-35%. Considering all of the various candidates running it appears that Reps. Murphy and DeSantis are the two best candidates within the crowded group and are capable of running the best general election campaigns.

New Hampshire: Another new Granite State poll again finds a tight race unfolding between Sen. Kelly Ayotte (R) and Gov. Maggie Hassan (D), but this data gives the incumbent slightly more breathing room. The GS Strategy Group survey (4/25-28; 600 NH registered voters), polling for the Senate Leadership Fund Super PAC, finds Sen. Ayotte holding a 47-43% lead over Gov. Hassan. The two have been mired in the 40s in every poll for months. We can expect this situation to continue all the way to Election Day. New Hampshire’s swing nature – no state has diverted more wildly between the two parties since 2006 – means this contest won’t be decided until the campaign’s final days.

Ohio: The Ohio Q-Poll finds Sen. Rob Portman (R) and former Gov. Ted Strickland (D) again in a virtual tie. This latest data projects the Democratic challenger leading the Republican incumbent, 43-42%. For his part, Sen. Portman just reserved $14 million in media advertising time in the final week of the campaign, a huge sum to be committing this early in the campaign, but he has a 10:1 lead in cash-on-hand.

Pennsylvania: The PA Q-Poll version also finds a razor thin result in the Senate contest between incumbent Sen. Pat Toomey (R) and newly nominated Democrat Katie McGinty. The tally gives Toomey only a one-point, 45-44% lead. The Pennsylvania Senate race will become one of the country’s most important political contests.
> House

CA-7: Bad news came for Rep. Ami Bera (D) in the tight congressional race he will be facing against Sacramento County Sheriff Scott Jones (R). Dr. Bera’s father just agreed to a plea deal with the Justice Department that will send him to prison for more than a year. The Congressman’s father illegally reimbursed $260,000 in contributions to his son’s 2014 campaign, a contest with former Rep. Doug Ose (R) that was decided by less than one percentage point. How this development will affect the impending campaign is yet to be determined.

IL-10: According to an internal National Republican Congressional Committee sponsored survey, Rep. Bob Dold (R) leads former Rep. Brad Schneider (D), 48-41%, in a recent North Star Public Opinion study. This is the third campaign between Dold and Schneider, with each man unseating the other one time. The Democratic turnout has been way up in presidential election years here, but those years also featured favorite son Barack Obama at the top of the party ticket. Whether Hillary Clinton can generate equal the same degree of enthusiasm in the Chicago suburbs is a question that remains to be answered.

NE-2: Retired Air Force General Don Bacon (R), fighting back a challenge from former state Senator Chip Maxwell (R) who the Democratic Congressional Campaign Committee was strangely and overtly backing, easily won the Republican primary, 66-34%, and will now face vulnerable freshman Rep. Brad Ashford (D) in November. This race now moves to the top of the Republican conversion list.

NV-4: Eight Democrats are running for the opportunity of challenging freshman Rep. Cresent Hardy (R) in the general election. A new Greenberg Quinlan Rosner Research survey (4/25-27; 407 NV-4 likely Democratic primary voters) finds a virtual dead heat for the June 14th Nevada primary election. According to the data, former state Assemblywoman Lucy Flores (D) holds a 26-23% lead over poll sponsor Susie Lee, a wealthy school board leader. Sen. Harry Reid’s handpicked candidate, state Sen. Ruben Kihuen (D) trails well back at 11 percent. None of the other candidates appear to be much of a factor. This will be a top Democratic challenger race in the fall.

NC-2: While multiple conservative organizations announced their support of Rep. George Holding (R-NC-13) in his post-redistricting paired contest with Rep. Renee Ellmers (R-NC-2), the Congressman’s own internal campaign data, as discussed by campaign consultant Carter Wrenn, now finds the two in a “statistical dead heat” after Holding had an earlier ten-point lead. Wrenn said Holding and Ellmers are both hovering around the 25% mark. The change occurred because Tea Party activist Greg Brannon, fresh from scoring 25% against Sen. Richard Burr (R) in the March 15th Republican primary entered the race.

Because the court-ordered redistricting was so late, the legislature had to move the congressional primary to June 7th. That meant new candidates, such as those who had either been re-nominated for, say state legislature, or lost races like Brannon, could then jump into an ongoing congressional race. Brannon’s entry here has diverted a significant number of very conservative voters away from Holding, thus putting Ellmers back in the game despite the fact that the re-drawn district contains 57% of the former’s current district and only 13% of her own. Therefore, this race will become a mad dash to the June 7th primary.

WI-1: Despite the flap over House Speaker Paul Ryan’s refusal to so far endorse Donald Trump for President, his primary challenger doesn’t seem to be getting off the ground. This, despite some outside support coming from conservatives such as former Vice Presidential nominee and Alaska Governor Sarah Palin (R). According to a May 9-10 Remington Research Group survey, Speaker Ryan leads his primary opponent by a gaudy 78-14% split.

WV-2: Former state Delegate Mark Hunt (D), despite raising only around $100,000 for his race, won the Democratic primary against nationally favored candidate Cory Simpson, a former US Army attorney. The Democratic Congressional Campaign Committee wanted Simpson as their nominee to challenge freshman Rep. Alex Mooney (R), but Hunt out-polled him in a tight 29-26% finish. This result is a break for Mooney because the DCCC is less likely to put much support in the new general election contest especially with Donald Trump poised to easily win the state in November.

> Governor

West Virginia: Wealthy businessman Jim Justice (D) easily won the Democratic gubernatorial primary earlier in the week with a 50-26-24% win over former US Attorney Booth Goodwin, and state Senate Minority Leader Jeff Kessler. Mr. Justice owns coal mines and the Greenbrier Resort, so he is well known and a key figure in the West Virginia business community. Mr. Justice is reportedly West Virginia’s richest resident, with a net worth estimated at or around $1.6 billion. He will now face Republican state Senate President Bill Cole who was unopposed for his party’s nomination. The general election is expected to be close. Gov. Earl Ray Tomblin (D) is ineligible to seek a third term under West Virginia election law.