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

In Partnership with the Eris Group

We begin this by wishing a happy 67th birthday to The Boss, whose autobiography goes on sale this week. In our spare time, some of us try to think up hearings that would allow a Congressional committee to subpoena him as a witness. Maybe he’s a Wells Fargo customer?

John Stumpf’s Terrible, Horrible, No Good, Very Bad Week – The CEO of Wells Fargo appeared before the Senate Banking Committee last Tuesday, and it did not go well for the bank’s management or board of directors. Nor did it go particularly well for the regulators involved, as the hearings revealed that Wells Fargo began to address unauthorized accounts in 2011, two years before CEO John Stumpf became aware of the problem and three years before the Los Angeles City Attorney took the first legal action against the bank. Senators on both sides of the aisle were particularly scathing about the $120 million in bonuses paid to Carrie Tolstedt, Senior Executive Vice President of Community Banking, before her retirement. Mr. Stumpf said that Ms. Tolstedt had received no bonus on her retirement, but that the board would have to consider whether to claw back any earlier payments. Last Thursday Mr. Stumpf resigned from the Federal Reserve Board’s Federal Advisory Council, where he represented the 12th District (San Francisco). Also, Senator Elizabeth Warren (D-MA) and seven colleagues sent a letter to the Department of Labor demanding an investigation into Wells Fargo’s compensation and employment practices under the Fair Labor Standards Act. The House Financial Services Committee will hold its own hearing on Wells Fargo this Thursday.

McHenry Introduces Bill on Fintech Regulation – Rep. Patrick McHenry (R-NC), Chief Deputy Whip of the House of Representatives and Vice Chairman of the House Financial Services Committee, introduced H.R. 6118, the Financial Services Innovation Act of 2016, in a speech before the Electronic Transactions Association’s FinTech Policy Forum yesterday. The bill would require 12 federal regulatory agencies to create Financial Services Innovation Offices (FSIOs) within their organizations, to foster innovation and implement alternative compliance plans with companies seeking to provide innovative products and services. The bill is the latest piece of the Innovation Initiative launched by Rep. McHenry with House Majority Leader Kevin McCarthy (R-CA) earlier this year.

New York to Require Consumer Cybersecurity Measures – The New York State Department of Financial Services is proposing a regulation that would require state-chartered banks, insurance companies and other supervised entities to establish and maintain cybersecurity programs designed to protect consumers and maintain safety and soundness. The proposed rule, to be published on September 28, will be open for comment for 45 days. Among other provisions, it would require institutions to adopt a written cybersecurity policy and designate a Chief Information Security Officer. These policies would also need to set standards for the use of nonpublic information by vendors and other third parties.

House Panel Discusses Rules on Shareholder Proposals, Disclosures – The House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises held a wide-ranging hearing last Wednesday to discuss how best to foster a system that promotes capital formation and maximizes shareholder value. Witnesses included former Governor John Engler, now President of the Business Roundtable; Darla C. Stuckey, President and CEO of the Society of Governance Professionals; Anne Simpson, Investment Director for Sustainability with CALPERS; and James R. Copland of the Manhattan Institute. Witnesses agreed on the need to update the rules for shareholder proposals, proxy voting, and disclosure.

Warren Warns Against “Revolving Door” Financial Regulators – In a speech before the Center for American Progress last Wednesday, Senator Elizabeth Warren (D-MA) implied strongly that she would hold Hillary Clinton to her promise “to end the revolving door between Wall Street and Washington.” She said, “personnel is policy,” criticizing “advisors who just pay lip service . . . serving government then going back to the very same industries they regulate.” She reiterated her opposition to “Citicorp or Morgan Stanley or Blackrock getting to choose who runs the economy in this country so they can capture our government.”

Senate to Vote Tuesday on Spending Bill – The Senate left last weekend without finishing work on a continuing resolution to fund government activities through December 9. Senate Majority Leader Mitch McConnell (R-KY) said last Thursday that he was offering a clean continuing resolution in response to requests from both sides of the aisle; it includes new funding for Zika research, the Toxic Substances Control Act (TSCA), flood relief and veterans’ benefits. Without a CR, government funding expires at the end of September. Democrats say the proposal is still inadequate, as it includes no funding to address the water crisis in Flint, MI.

This Week in Washington (and elsewhere):

It’s a busy week, as Congress leaves town on Friday, September 30 until after the elections. It seems almost certain that they will return for a lame duck session remains to be seen, as the spending bill before the Senate would expire on December 9.

September 26
Federal Reserve Board Governor Daniel Tarullo will give a speech on “Next Steps in the Evolution of Stress Testing” at the Yale School of Management. The speech will stream live here at 11:45 a.m.

September 26
Hofstra University hosts the first presidential debate between candidates Hillary Clinton (D) and Donald Trump (R). All major TV networks will broadcast the debate, except where local affiliates decide to preempt coverage for the Monday Night Football game between the Falcons and the Saints. 9:00 p.m.

September 27
House Financial Services Subcommittee on Financial Institutions and Consumer Credit hold a hearing to examine legislative proposals to address consumer access to mainstream banking services. Witnesses representing the Policy and Economic Research Council, the Independent Community Bankers of America, and the Heritage Foundation will testify on six bills, described here. 10:00 a.m., 2128 Rayburn House Office Building.

September 27
House Financial Services Subcommittee on Monetary Policy and Trade holds a hearing on “The Financial Stability Board’s Implications for U.S. Growth and Competitiveness.” 2:00 p.m., 2128 Rayburn House Office Building. Witnesses include representatives of the Investment Company Institute, the Securities Industry and Financial Markets Association, and the National Association of Mutual Insurance Companies. 2:00 p.m., 2128 Rayburn House Office Building.

September 28
House Financial Services Committee hears testimony from Federal Reserve Chair Janet Yellen on the Fed’s supervision and regulation of the financial system. 10:00 a.m., 2128 Rayburn House Office Building.

September 28
House Financial Services Subcommittee on Housing and Insurance holds a hearing on the impact of US-EU dialogues on American insurance markets. 2:00 p.m., 2128 Rayburn House Office Building.

September 29
House Financial Services Committee holds a hearing on “Holding Wall Street Accountable: Investigating Wells Fargo’s Opening of Unauthorized Customer Accounts.” 10:00 a.m., 2128 Rayburn House Office Building.

The Ellis Insight. Jim Ellis reports on upcoming races:

> President

Another week of polling tells us the same story. The two presidential candidates, Hillary Clinton and Donald Trump, are virtually tied in the national popular vote. Ms. Clinton has a slight advantage in the state-by-state count. If the election were today, it is projected that Clinton would win the Electoral College by a possible 272-266 count.

Six national polls were released last week. Ms. Clinton’s average advantage within these polls is a combined less than one percentage point. The range stretches all the way from Clinton +6, in the New York Times/Wall Street Journal/Marist College poll, all the way to Trump +5, the new Rasmussen Reports survey.

Libertarian Party nominee Gary Johnson generally settles between seven and nine points in national polling, but is doing considerably better in many states. His home state of New Mexico is where he performs best reaching 25% support in one poll, and reports of him attracting 23% in a local state-based poll are also surfacing.

> Senate 

Alaska:  After publicly toying with the idea of challenging Sen. Lisa Murkowski (R) as a write-in candidate, former Sen. Mark Begich (D) announced that he will not do so. He did not rule out running for Governor in 2018, however.

California:  The Golden State race has been a quiet one, mostly because it features two Democrats. Without a partisan twinge to the campaign, many see little difference between candidates Kamala Harris, the Attorney General, and US Rep. Loretta Sanchez (D-CA-46). Two new polls were out last week coming to very different conclusions. The Field Poll (9/7-13; 1,426 CA likely voters) finds Harris to be leading 42-20%, similar to other findings but lower on the Sanchez support scale. The Public Policy Institute of California, however, just released other data yielding a much different picture. According to this poll (9/9-18; 1,055 CA likely voters) Harris’ lead is only 32-25% over Sanchez. The interesting part of this latter questionnaire contains the option of skipping the race. With two members of the same party running, it is likely that many more people than usual, particularly Republicans, will opt not to vote.

Colorado:  Mesa University conducted a Colorado electorate poll (9/14-18; 540 CO registered voters) and finds what we would expect: that is, Sen. Michael Bennet (D) enjoying a comfortable 45-32% lead over El Paso County Commissioner Darryl Glenn (R). Sen. Bennet is a heavy favorite to win a second full term.

Florida:  St. Leo University (9/10-16; 1,005 FL likely voters) again tested both the presidential race and the Florida Senate poll campaign. For the second time, St. Leo sees the electorate splitting the two races between the parties. While they project Hillary Clinton to a 49-44-6% lead over Donald Trump and Libertarian Gary Johnson, Sen. Marco Rubio (R) maintains a significant lead over Rep. Patrick Murphy (D-Jupiter/West Palm Beach). According to the St. Leo results, the split is 44-35% in the GOP incumbent’s favor. Suffolk University (9/19-21; 500 FL likely voters) posts an almost identical 43-34% Rubio edge.

Illinois:  The little-polled Illinois race between Sen. Mark Kirk (R) and Rep. Tammy Duckworth (D-IL-8) saw new numbers being presented this week. Loras University (9/13-16; 600 IL likely voters) again sees Rep. Duckworth holding an advantage over the incumbent in what is thought of as the Democrats’ best conversion opportunity. While that statement may or may not be accurate, the Democratic spread continues in the five-point range. Loras finds a 41-36% Duckworth advantage. The Emerson College Polling Society (9/19-21; 700 IL likely voters) sees a closer race. They predict Duckworth leading only 41-39%.

Louisiana:  Southern Media & Opinion Research fielded a poll (9/9-15; 500 LA likely voters) bringing us quite different results from others previously seen. Here, we see jungle primary leader John Kennedy (R) drastically falling. While maintaining first place, his double-digit lead is a thing of the past, at least according to this survey. The Senate ballot test posts Kennedy at 17%, closely followed by Rep. Charles Boustany’s (R-LA-3) 15%. Former Democratic Lt. Gov. candidate Carolina Fayard is next at 11%, with fellow Democrat Foster Campbell, a Public Service Commissioner who has run statewide several times, trailing her by two points. Rep. John Fleming (R-LA-4) has 5%, with former Air Force officer and 2014 US Senate candidate Rob Maness (R) posting 3% as does former state Rep. and Ku Klux Klan leader David Duke (R). The top two finishers from the November 8th primary will advance to a December 10th run-off election.

Nevada:  A pair of new Nevada surveys was reported last week, and they again confirm Rep. Joe Heck’s (R-NV-3) lead over former Attorney General Catherine Cortez Masto (D). Rasmussen Reports (9/16-18; 800 NV likely voters) finds Heck’s advantage at 44-40%. Fox News (9/18-20; 800 NV likely voters) sees an even broader split for the Republican Congressman, 43-36%.

New Hampshire:  Monmouth University (9/17-20; 400 NH likely voters) finds Sen. Kelly Ayotte (R) climbing back into a slight lead over Gov. Maggie Hassan (D). This race has been close for well over a year, and the Monmouth data conclusion is no exception. They see Sen. Ayotte holding a slight 47-45% edge.

North Carolina:  Several polls were released in the Tar Heel State last week, and the results are disparate. Fox News (9/18-20; 800 NC registered voters), Public Policy Polling (9/18-20; 1,024 NC likely voters), Siena University (9/16-19; 782 NC likely voters), and Elon University (9/12-15; 644 NC registered voters) all arrived at very different US Senate conclusions. Fox gives Sen. Richard Burr (R) a 43-37% advantage, but Siena and Elon find challenger Deborah Ross (D) with the lead (46-42; 44-43%). PPP sees a 41-41% tie. There is no question this contest goes down to the wire on November 8th.

Ohio:  Fox News (9/18-20; 806 OH registered voters) provides further evidence that Sen. Rob Portman (R) is pulling away from ex-Gov. Ted Strickland (D). Their new data finds Portman ahead 51-37%, which is consistent with a plethora of other polling.

Wisconsin:  Both Marquette University Law School (9/15-18; 802 WI registered voters) and the Emerson College Polling Society (9/19-20; 700 WI likely voters) again see former Sen. Russ Feingold (D) leading incumbent Ron Johnson (R), as he has for the better part of a year. Marquette posts Feingold’s lead at 47-41%. Emerson’s data is even better for the Democrat, 52-42%. Since Wisconsin has consistently polled against Johnson, this may be the Democrats’ top conversion opportunity supplanting Sen. Mark Kirk in Illinois.

> House 

AZ-5:  A winner was finally declared in the August 30th District 5 Republican primary. State Senate President Andy Biggs was declared a 27-vote winner from more than 85,000 ballots cast. The re-count allowed Biggs to gain an additional eleven votes after the final canvass posted him officially ahead by 16 votes. Former GoDaddy.com executive Christine Jones conceded the race and will put forth no more legal challenges. This means Sen. Biggs will advance to the general election where he becomes the prohibitive favorite to succeed retiring Rep. Matt Salmon (R-Mesa).

NH-1:  The New Hampshire State Ballot Law Commission refused a Democratic complaint moving that Independent Shawn O’Connor (I) be stricken from the general election ballot. The Democrats argued that because he initially filed as a Democratic candidate, he should be disqualified from running as an Independent. The Commissioners disagreed and allowed Mr. O’Connor to remain a candidate. The wealthy non-affiliated candidate may become a factor in the race, and the Democratic leadership worries he may take enough votes away from twice-defeated former Rep. Carol Shea-Porter (D) to allow embattled Rep. Frank Guinta (R-Manchester) to survive.

UT-4:  A new Dan Jones & Associates survey (9/13-16; 600 UT-4 likely voters) brought good news for freshman Mia Love (R-Saratoga Springs). After seeing some close early numbers the latest data finds her leading attorney Doug Owens (D), her 2014 opponent who finished only six points behind, 53-35%.

> Governor

New Hampshire:  The aforementioned Monmouth University survey (see NH Senate above) also posts Executive Councilor Chris Sununu (R) to a 49-43% lead over Democratic Executive Councilor Colin Van Ostern. The winner will succeed Gov. Maggie Hassan (D), who is running for Senate. Despite the state swinging wildly in campaigns since 2006, the Democrats have been consistent gubernatorial winners taking nine of the last ten state contests.

North Carolina:  Just as the four polls of the week split between Sen. Richard Burr (R) and former state Rep. Deborah Ross (D) (see NC Senate above), similar findings occur in the Governor’s race. While Fox News and Elon College forecast Gov. Pat McCrory (R) leading Attorney General Roy Cooper (D), 46-43% and 49-45%, Siena University and Public Policy Polling find Cooper holding substantial leads. The favorable Cooper polls split 50-42% and 50-43%, respectively.