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

In Partnership with the Eris Group

House Panel Calls Shenanigans on FDIC Obstruction – FDIC Chairman Martin J. Gruenberg told the House Oversight & Government Reform Committee last Wednesday that the agency is taking action to encourage new bank charters and help groups apply for deposit insurance, but senior Committee members weren’t buying it. “[T]he fact is you’re not approving anybody,” said Rep. Jim Jordan (R-OH), while Committee Chairman Jason Chaffetz (R-UT) asked, “Do you really believe that all those bank applications don’t meet the needs of the communities?” Matthew Browning, appearing on behalf of the National Association of Industrial Bankers and the Utah Bankers Association, and Guy Williams, speaking for the American Bankers Association, told the Committee about specific cases of sliding standards, unwritten rules and inexplicable delays.

House Subcommittee Talks FinTech – The growth in online lending platforms was the topic of a hearing last Tuesday before the House Financial Services Subcommittee on Financial Institutions and Consumer Credit. Witnesses representing the industry told the panel about current practices, while a representative of the National Community Reinvestment Coalition warned against the risks of unchecked rapid growth.  All agreed that FinTech companies are finding ways to serve consumers and business borrowers whose needs are unmet by traditional lenders, but no consensus emerged on the appropriate regulatory structure for these companies. Parris Sanz, speaking for the Electronic Transactions Association, warned that Treasury’s proposal to subject small business loans of less than $100,000 to consumer-style regulations could affect 90% of all small business loans.

Senate Committee Looks at Ways to Boost Venture Capital – Funding more research and development, broadening criteria for accrediting investors and expanding crowdfunding were among the strategies recommended at a hearing before the Senate Small Business & Entrepreneurship Committee last Thursday. Joseph L. Schocken, Founder and CEO of Broadmark Capital, recommended the creation of a Presidential Commission on the Innovation Economy, to provide a forum for policy development on a continuing basis.

House Report Finds FDIC is Careless with Confidential Information – FDIC Chairman Marty Gruenberg’s bad week on Capitol Hill continued last Thursday, when he appeared before the House Committee on Science, Space and Technology to discuss the results of a Committee investigation into the agency’s response to seven major data breaches between October 2015 and February 2016. The Committee’s interim report, released on last Wednesday, found that the FDIC’s Chief Information Officer had “created a toxic work environment, misled Congress, and retaliated against whistleblowers.” It charged the FDIC with deliberately evading Congressional oversight, and said that the FDIC’s historical deficiencies in cybersecurity continue to the present day. Fred W. Gibson, the FDIC’s Acting Inspector General, told the committee that the agency’s planned insider threat program has been stalled since 2014.

House Freedom Caucus Seeks Impeachment of IRS Commissioner – Representatives John Fleming (R-LA) and Tim Huelskamp (R-KS) offered a resolution last Wednesday and a privileged motion on last Thursday to impeach IRS Commissioner John Koskinen. “He deliberately kept Congress and the American people in the dark, making materially false statements under oath,” said Rep. Fleming in a statement. “It is time for him to be impeached and removed,” said Rep. Huelskamp. The privileged motion means that its sponsors can force a floor vote on the question when Congress returns in September.

SEC Votes to Simplify Disclosures – The Securities and Exchange Commission voted last Wednesday to propose changes that would eliminate redundant, overlapping and outdated disclosure requirements, as part of the agency’s disclosure effectiveness review. The agency is seeking comments on whether and how to eliminate these requirements, particularly in cases where US Generally Accepted Accounting Principles (GAAP), International Financial Reporting Standards (IFRS) or other SEC requirements apply. The proposal is open for comment for 60 days.

SEC Changes Rules of Practice for Administrative Proceedings – The SEC also voted last Wednesday to update their rules for administrative proceedings. The amendments include extending the potential length of the prehearing period from four months to a maximum of 10; allowing additional depositions in certain cases; clarifying the admissibility of certain types of evidence; and clarifying the types of dispositive motions that may be filed at different points. The changes take effect in 60 days.

This Week in Washington (and elsewhere):

Congress is gone now until September 6. The Golden Apple, too, will be taking an extended leave, returning on September 9 unless we have critical news to report between now and then.

July 18-21
Republican National Convention, Cleveland, Oh

July 25-28
Democratic National Convention, Philadelphia, PA

The Ellis Insight. Jim Ellis reports on upcoming races:

> President

Donald Trump officially announced Indiana Gov. Mike Pence (R) as his Vice Presidential running mate on July 16th. Choosing Pence indicates that Trump is looking to secure his conservative base, particularly on social issues. Trump’s numbers are not as strong as necessary to secure some of the 23 bedrock Republican states, like Utah, but he needs them all if he is to have any chance of attaining national victory. Gov. Pence, during his tenure as Indiana’s chief executive and six terms in the House of Representatives, developed a strongly conservative social issues record as his signing of the Religious Freedom Restoration Act in early April underscores.

On the whole, Pence is a relatively safe pick for Trump. He compliments the presumptive nominee with a calm, unflappable demeanor and hails from a geographical region where the Republican campaign needs to excel. His ballot presence will attract additional conservative support. Gov. Pence will ignite controversy among Democratic activists on LBGT issues particularly in reference to the Restoration Act. But, in the bedrock Republican states, seeing the hard left attack will not necessarily hurt the Trump-Pence ticket.

Hillary Clinton will now have the opportunity of pivoting as an indirect result of the Pence selection as she continues to consider her own decision. Who she picks will likely tell us a great deal about how she views her own electoral prospects.

If she goes with an ideological liberal, such as Sen. Elizabeth Warren (D-MA) or Ohio Sen. Sherrod Brown, this will tell us she feels the need to strengthen her own base and that her standing in Democratic bedrock states weaker than desired. A pick closer to the ideological center, such as Sen. Tim Kaine (D-VA), would signify that she is feeling positive about her prospects and opts for a benign political choice. Going with one of the Obama Administration’s Hispanic cabinet members such as Housing and Urban Development Secretary Julian Castro or Labor’s Thomas Perez will be indicative of a candidate who believes she is not maximizing her Hispanic support.

Quinnipiac University just completed three critical swing state polls during the June 30-July 11 period, and all point to Trump positioning for an upset. In Florida (1,015 registered voters) and Pennsylvania (982 registered voters), Quinnipiac projects the presumptive Republican nominee to be leading Ms. Clinton, 42-39% in the former and 43-41% in the latter. The two are tied at 41% apiece in Ohio (955 registered voters). Trump does better in all three places when Libertarian Gary Johnson is included on the ballot test. His margin expands to 41-36-7% in Florida, 40-34-9% in PA, and 37-36-7% in Ohio.

Though the sampling period is long, that doesn’t necessarily mean a Republican skew incurred just because the results are showing a differing trend. Had the poll begun sampling immediately after the FBI decision not to recommend charges against Ms. Clinton, such could have been the case. The fact that about half of the survey was conducted prior to the decision becoming public suggests less chances of a skewed sample.

> Senate

Colorado:  Two polls were released in the newly formed Centennial State campaign between incumbent Sen. Michael Bennet (D) and El Paso County Commissioner Darryl Glenn, who won the Republican primary in late June. Both Harper Polling (7/7-9; 500 CO registered voters) and Monmouth University (7/8-11; 404 CO likely voters) surveyed the Colorado electorate and arrived at the same conclusion but with much different margins. Harper sees Sen. Bennet leading Commissioner Glenn 46-40%, but Monmouth finds a more robust 48-35% Democratic spread.

Florida:  The Quinnipiac Florida poll also tested the US Senate race. Here, Sen. Marco Rubio (R) notches his strongest showing since deciding to seek re-election. According to this respondent sample, Rubio leads Rep. Patrick Murphy (D-FL-18), 50-37%. One reason for the improved showing over Murphy – earlier polling uniformly had the two battling within the margin of error – is the brewing controversy of the Democrat’s personal biography that media reports are saying was strongly embellished. This premise is further supported when looking at the Rubio-Rep. Alan Grayson (D-FL-9) pairing. For the first time this cycle, Grayson actually fares a bit better in a Republican match-up than Murphy. The Q-Poll posts Rubio to a 50-38% lead over Rep. Grayson.

Indiana:  The surprise happening last week found former Sen. Evan Bayh (D) coming out of nowhere to enter the state’s open Senate race in an attempt to re-claim the office he left behind in 2010. The day before Bayh’s announcement, former Rep. Baron Hill (D-IN-9) who won the Democratic primary in May, withdrew in a series of moves orchestrated by the Indiana Democratic Party leadership. Mr. Hill, the leaders could see, was running a lackluster campaign with little chance of defeating GOP nominee Todd Young (R-IN-9). With Bayh, and the $9+ million he still has in his campaign account six years after he left federal office, the Democrats are moving this open seat campaign into the competitive category.

Iowa:  A pair of polls came to the identical conclusions pertaining to the Sen. Chuck Grassley (R) and ex-Lt. Gov. Patty Judge (D) race. Both Monmouth University’s survey of 401 likely Iowa voters and NBC/Wall Street Journal/Marist College’s 822 registered voters poll finds the Senator leading his challenger 52-42%. The duplicate findings represent an improvement for Grassley over other recent studies that projected a slightly slimmer advantage.

Ohio:  The Ohio Q-Poll finds a Republican advantage here, too, and actually gives Sen. Rob Portman (R) his best showing of the election cycle, a 47-40% spread over former Gov. Ted Strickland (D). But, the NBC/Wall Street Journal/Marist College survey (released 7/13; 848 OH registered voters) finds a very different result, and one that is more in line with other polls conducted over the past few months. They show the two candidates tied at 41%.

Pennsylvania:  The Keystone State Q-Poll finds Sen. Pat Toomey (R) leading Democrat Katie McGinty 49-39%, while the July NBC/WSJ/Marist College poll finds a radically different result: McGinty ahead 47-44%. Here, it is the Q-Poll that comes to a conclusion more consistent with previous polls.

Wisconsin:  Marquette Law School, which frequently polls the Wisconsin electorate, is among the more recent Senate pollsters who now see a tightening of former Sen. Russ Feingold’s (D) lead over incumbent Sen. Ron Johnson (R). The Marquette results (7/7-10; 801 WI registered voters) portend Feingold now leading 45-41%. Earlier research studies found Feingold’s margin reaching as high as eleven points.

> House

DE-AL:  Six Democrats filed in the open at-large seat, three of whom appear to be substantial candidates. Former state Labor Secretary Lisa Blunt Rochester, state Sen. Bryan Townsend, and ex-gubernatorial aide and Iraq War veteran Sean Barney are vying for the Democratic nomination. Republicans have only Wyoming (DE) Mayor Hans Reigle as their lone candidate. The Democratic nominee will be a heavy favorite to replace Rep. John Carney (D-Wilmington), who is running for Governor.

GA-3:  The open seat Republican run-off between state Sen. Mike Crane and West Point Mayor Drew Ferguson is laced with charges and counter-charges. The latest controversy surrounds an ad Ferguson is running claiming the conservative Crane has encouraged drawing arms against the police should they invade his private property. Rep. Lynn Westmoreland (R-Grantville) is retiring.

IN-4 & 5:  Gov. Mike Pence’s selection as the Republican Vice Presidential nominee appears to be opening two more congressional districts. Reps. Todd Rokita (R-IN-4) and Susan Brooks (R-IN-5) both say they will withdraw from their respective campaigns and put their name in consideration to the state Republican Party Executive Committee for purposes of replacing Pence on the gubernatorial ticket. Lt. Gov. Eric Holcomb is also a candidate. The Republican apparatus could then reinstate one or both House member(s) who aren’t tabbed for the Governor’s nomination. Both seats are likely to remain in Republican hands.

WI-1:  House Speaker Paul Ryan’s (R-Janesville) support could be waning back in his home district if a poll from his primary opponent proves accurate. The survey, from research firm PMI (released 7/9; 424 WI-1 likely primary voters) finds the Speaker leading his opponent, businessman Paul Nehlen (R), for the August 9th primary election, 43-32%. The age segmentation reveals that 89% of the respondents are 50 and over, but this would also suggest their primary turnout probability is in the highest category.