R.I.P., Rosetta – The spacecraft Rosetta ended its 12-year journey last week by landing gently on Comet 67P/Churyumov-Gerasimenko, which it had been orbiting for the past two years, and shutting itself down. Rosetta sent an extraordinary amount of information back to earth, which scientists around the world will be sifting through for years to come. The project began more than 20 years ago; its managers decided to bring it to an end on the comet rather than let the spacecraft disappear into the far reaches of the universe. It’s a rare project that accomplishes its mission and brings itself to an end. We salute Rosetta and all who worked on it. This article explains more, and the European Space Agency’s short film that explains the mission, Ambition, is worth your time.

The Future of Compliance? – IBM announced last week that it is acquiring Promontory Financial Group, the risk-management and compliance consulting firm founded by former Comptroller of the Currency Eugene Ludwig. Promontory operates worldwide, advising clients in more than 50 countries. IBM’s acquisition seeks to combine Promontory’s operations with IBM’s industry expertise and the cognitive capabilities of Watson, IBM’s artificial intelligence platform to “directly address the massive operational effort and manual cost of escalating regulation and risk management requirements,” a release said. The acquisition is scheduled to close before the end of this year.

Fed Proposes Limiting, Fine-Tuning Stress Tests – In a major speech last Monday, Federal Reserve Board Governor Daniel K. Tarullo expanded on the Fed’s recent proposal to reduce the number of large financial holding companies subject to quantitative Comprehensive Capital Analysis and Review (CCAR), or stress testing. The Fed issued a notice of proposed rulemaking that would exempt all banks with less than $250 billion in assets that do not have significant nonbank or international activities from stress test requirements. Tarullo said that the Fed expects “roughly 30 firms” to be covered under the new stress test requirements, and that their reviews will be more closely aligned with existing capital regulations. The eight institutions designated as global systemically important banks (GSIBs) “will see their capital requirements rise,” he said, but all other firms subject to stress testing “will see some reduction in their capital requirements.”

Should Asset Managers Be Systemically Important? – This was the question before last Tuesday’s hearing of the House Financial Services Subcommittee on Monetary Policy and Trade. Subcommittee Chairman Bill Huizenga (R-MI) called the hearing to discuss the Financial Stability Board’s consideration of whether to designate certain asset management firms as global systemically important financial institutions, a designation the United States’ Financial Stability Oversight Council has not yet extended to asset managers. Paul Schott Stevens, President and CEO of the Investment Company Institute, argued that the FSB should not apply bank-centric regulations to regulated funds. Jonathan Bergner, testifying for the National Association of Mutual Insurance Companies, noted that U.S. state insurance regulators are not even represented on the Financial Stability Board, which could put US companies at an economic disadvantage. Chairman Huizenga expressed concern about the FSB becoming a “shadow regulator” with undue influence over US financial regulations.

House Subcommittee Reviews Six Bills to Boost Access to Banking Services – The House Financial Services Subcommittee on Financial Institutions and Consumer Credit heard testimony last Tuesday from academics and a community banker on six different proposals designed to increase access to mainstream banking services. These bills included clarifications and expansions of credit reporting procedures, and clarifications of what constitutes a brokered deposit. Dr. Michael Turner, President and CEO of the Policy and Economic Research Council, emphasized the need to improve consumers’ financial literacy, while Ronald D. Paul, Chairman and CEO of Eagle Bank, highlighted the benefits of reciprocal deposits to community-based banks. Dr. Norbert J. Michel, a research fellow with the Heritage Foundation, argued that the FDIC should not be insuring brokered deposits at all, as this practice creates moral hazard and increases risk-taking incentives.

Judges Named to Hear MetLife SIFI Appeal – U.S. District Court Judges Sri Srinivasan, Patricia Millett and A. Raymond Randolph will hear the Financial Stability Oversight Council’s appeal to reinstate MetLife’s designation as a systemically important financial institution (SIFI) on October 24. Judges Srinivasan and Millett are Obama Administration appointees. The case is scheduled for 9:30 a.m.; time limits for arguments have not yet been set.

House Panel Discusses Application of International Insurance Standards – The application of international standards to the American insurance industry was the topic of last Wednesday’s hearing before the House Financial Services Subcommittee on Housing and Insurance. Former Illinois Commissioner of Insurance Michael McRaith, who now serves as director of the Treasury’s Federal Insurance Office (created by Dodd-Frank), said that while international insurance regulations would be neither self-executing nor binding in the U.S., state and federal authorities could test and tailor those standards for the U.S. market. He emphasized the need for coordination among U.S. insurance regulators, and to maintain an even playing field for U.S. insurers. Tennessee Commissioner Julie Mix McPeak said that the states and Congress should decide on the parameters of U.S. regulatory authority, rather than any federal agency or international organization. H.R. 5143, introduced by Subcommittee Chairman Blaine Luetkemeyer (R-MO), would clarify the limits on the application of international insurance standards, and require Congressional oversight of any new standards. The full Committee approved this bill in June, but it has not come to the House floor.

Bipartisan Bill to Address Insurance for Flood-Prone Areas – Last Wednesday, Reps. Edward R. Royce (R-CA) and Earl Blumenauer (D-OR) introduced H.R. 6196, the Repeatedly Flooded Communities Preparation Act, to reduce losses to the National Flood Insurance Program before its scheduled reauthorization next year. The bipartisan proposal would require communities with “repetitive loss” structures to identify areas prone to chronic flooding and develop their own mitigation plans.

“Fraud is fraud and theft is theft” – Wells Fargo Chairman and CEO John Stumpf was back on Capitol Hill last week to testify before the House Financial Services Committee, where Chairman Hensarling berated him for a “sordid affair” that had “broken my trust as you have broken the trust of millions.” Chairman Hensarling said that last week’s hearing was only the beginning of the Committee’s investigation, and that they would also be asking serious questions of the federal regulators involved. “Maybe our Federal regulators deserve a pat on the back,” he said, “but maybe they deserve a swift kick in the backside.” The Committee has not yet scheduled testimony from the regulatory agencies. Earlier in the week, Wells Fargo’s board voted to deny Mr. Stumpf a bonus for 2016 and reclaim $41 million in unvested stock awards. Carrie Tolstedt, the recently retired head of Wells Fargo’s retail banking division, will return $19 million in unvested stock awards.

House Subcommittee Will Look at Barriers to Short-Term Financing – Before Congress left town last Friday, House Financial Services Committee Chairman Jeb Hensarling (R-TX) announced that the Subcommittee on Capital Markets and Government Sponsored Enterprises will hold a hearing before the end of the year on the effects of federal regulation on short-term funding markets. By request of Committee members Rep. Steve Stivers (R-OH) and Rep. Keith Rothfus (R-PA), the hearing will also look at the impact of the SEC’s money market fund rule, scheduled to take effect on October 14.

SEC Announces Fintech Forum – The Securities and Exchange Commission will hold a public forum on November 14 to discuss financial technology (Fintech) innovation. “The forum is designed to foster greater collaboration and understanding among regulators, entrepreneurs and industry experts into Fintech innovation and evaluate how the current regulatory environment can most effectively address these new technologies,” said the announcement. The session will be open to the public and webcast live; details on timing will follow.

This Week in Washington (and elsewhere):

Congress is out this week, until after the election, and The Golden Apple will move to a bi-weekly schedule between now and then. Look for editions on October 14 and 28, with a post-election wrap-up after November 8.

October 5
The Securities and Exchange Commission’s Advisory Committee on Small and Emerging Companies will meet to discuss Regulation S-K disclosure requirements, recent research on corporate board diversity, and outreach to smaller companies about raising capital. The meeting is open to the public, and comments are invited. 9:30 a.m., 100 F Street NE.

The Ellis Insight. Jim Ellis reports on upcoming races:

> President
Last week featured the first national presidential debate between Hillary Clinton and Donald Trump, and the consensus conclusion was that the former was the clear victor. Though Trump came out strong early in the session on US trade policy and job protection, he became sidetracked with questions about racial relations and President Obama’s birth certificate. He failed to steer the debate toward Clinton’s email server – though he did mention her 30,000 deleted electronic messages one time – the Clinton Family Foundation finances, and her refusal to release health records.

Ms. Clinton, on the other hand, was adept in making Trump not publicizing his taxes a center point issue, and came away with the upper hand. Though Trump missed opportunities and performed rather poorly in the second half of the debate, he did not make any major mistake that should cause a long-term problem for him. Even though what appears to be an audience of over 100 million people watching on television, listening on radio, or viewing through live streaming, this debate will most likely figure as a minor event because it featured no major mistake, clever phrase, or popular policy point. Expect a slight Clinton bump in polling but, after a short period, the two candidates will probably come back to the virtually even situation in which they found themselves before debate commencement.

Polling for the week does show a slight Clinton increase, with the average of seven polls yielding more than a three-point advantage for the former Secretary of State. The polling range is +5 for Clinton (NBC News/Survey Monkey) to Clinton +1 (Quinnipiac University and Rasmussen Reports).

Ms. Clinton also maintains a slight lead in the Electoral College count, with a possible final outcome in the 272-266 range, if current state trends hold over the remaining six weeks of campaign time. Early voting is already underway in Minnesota and Vermont, and in localities throughout Idaho and Wisconsin. Next up to begin voting: Indiana, Nebraska, New York, and Ohio.

> Senate
Colorado:  Gravis Marketing released a Colorado shock poll (9/22-23; 799 CO likely voters) that actually posts El Paso County Commissioner Darryl Glenn (R) ahead of Sen. Michael Bennet (D) by a slight 45-43% margin. The other Colorado poll of the week, from CNN/ORC (9/20-25; 784 CO likely voters), casts the race in familiar territory with Sen. Bennet forging a 53-43% advantage. The CNN poll is certainly more consistent with all other polling data we have seen in this race.

Louisiana:  Another new poll, this one from JMC Analytics (9/22-24; 905 LA likely voters), detects state Treasurer John Kennedy (R) dramatically falling as the November 8th jungle primary approaches, thus validating the numbers we reported upon last week from Southern Media Research & Opinion.  The JMC poll actually finds Kennedy dropping out of the lead for the first time in the election cycle. Rather, they see Rep. Charles Boustany (R-LA-3) and Democratic Public Service Commissioner Foster Campbell tied with 15%, apiece. Shreveport area Rep. John Fleming (R-LA-4), the poll’s sponsor, was third at 14%, followed closely by former Democratic Lt. Gov. candidate Caroline Fayard who has 12%. Kennedy, though still very much alive with a chance to advance, drops all the way to 11 percent support from a previous high in the low 30s. The JMC data suggests that all five of the top finishers still have the ability to qualify for what will certainly be a secondary December 10th run-off election.

Nevada:  Another state that Greenberg Quinlan Rosner Research tested was Nevada (9/10-19; 400 NV likely voters as part of a 1,600 person sample from four states). Their survey re-affirms the tight contest between Rep. Joe Heck (R-NV-3) and former Attorney General Catherine Cortez Masto (D). GQR finds Heck leading 47-41%. The data is consistent with all other polls that have shown this race to be within the margin of polling error, or slightly beyond like this study, for the last several months.

North Carolina:  The craziest polling week for any 2016 contest occurred in the Tar Heel State with three surveys coming into the public domain showing completely different results. In this case, a Democratic survey research firm finds Sen. Richard Bur (R) opening up a large lead, a Republican firm finds former state Rep. Deborah Ross (D) doing the same, and a local university projects a virtual tie between the two candidates. Greenberg Quinlan Rosner Research (9/10-19; 400 NC likely voters as part of a 1,600 person sample from four states) posts the Senator to a shocking 46-30% lead, a margin that no other pollster has detected. Conversely, Gravis Marketing (9/23; 624 NC likely voters) finds Ross ahead 48-39%, clearly her largest margin of the entire campaign. Summing it all up, the local North Carolina High Point University Research Center (9/17-22; 404 NC likely voters) sees the race as a dead heat, as most other pollsters have, 45-43% in Burr’s slight favor. It is safe to say that no one knows how this campaign will end. Public Policy Polling (9/27-28; 861 NC likely voters) also contributed their latest NC survey, posting Burr to an edge of 41-39%.

Pennsylvania:  Here, we see yet another US Senate race with conflicting data. In September, six polls were published and each detects a very close race, but often with different leaders. Garin Quinlan Rosner Research, CNN/ORC, Gravis Marketing, Morning Call/Muhlenberg, Harper Polling, and Mercyhurst Polling conducted this month’s polls. Three find Sen. Pat Toomey (R) leading by a point or two, two project challenger Katie McGinty ahead by a small margin, and one sees the two candidates locked in a tie. The PA race continues to be one of three toss up races – Nevada and New Hampshire are the other two – that will likely determine which party controls the Senate.

Wisconsin:  The Democratic Senatorial Campaign Committee is so confident of former Sen. Russ Feingold (D) defeating Sen. Ron Johnson (R), that they are pulling back on their television budget, in lieu of spending the money in other races that the committee leaders believe are closer. Feingold has been ahead in all polling for the better part of a year, of varying margins, but looks in obviously strong position to close the race out in early November.

> House
AZ-2:  Arizona’s 2nd District proved to be the closest of the 2014 campaigns. In that year, retired Air Force officer Martha McSally (R-Tucson) won a 167-vote victory over then-Rep. Ron Barber (D-Tucson). WPA Research released their survey for the current 2nd District race on the 26th, (400 AZ-2 likely voters) and it finds the Congresswoman leading Democratic nominee Matt Heinz by a substantial 56-37% count. McSally has been stalwart on the fundraising circuit, too, and will easily top the $3 million mark for her re-election effort.

IA-1:  A new Loras College survey (9/20-22; 368 IA-1 likely voters) finds freshman Rep. Rod Blum (R-Dubuque) maintaining a 45-38% lead over Cedar Rapids City Councilwoman Monica Vernon (D). Though the most Democratic of Iowa’s four congressional districts, these polling trends are similar to what Blum posted in 2014, the race he won going away despite his party being in a distinct minority. The 1st District is one of the top Democratic conversion opportunities, but polling like this may suggest that the contest is once again tilting toward the GOP incumbent.

IA-3:  Rep. David Young (R-Van Meter/Des Moines) represents another district that generally votes Democratic for president, but then turns to the GOP for congressional representation. A new Tarrance & Associates poll (9/20-22; 400 IA-3 likely voters) suggests that this particular pattern will continue. Though Hillary Clinton will likely carry the 3rd by a small margin, Rep. Young has opened a substantial 52-37% advantage over Iraq War veteran and former 4th District nominee Jim Mowrer (D), obviously casting the freshman Congressman on a clear path for re-election.

ME-2:  Countering an earlier poll that found Rep. Bruce Poliquin (R-Oakland/Bangor) holding a small lead over former state Senator and 2014 congressional nominee Emily Cain (D), the Normington Petts research firm polled the district for the latter’s campaign (9/21-22; 400 ME-2 likely voters) and found the two candidates tied at 45% apiece. The same sampling group gave Donald Trump a 44-40% margin in the district that will carry one electoral vote for the presidential campaign.

> Governor
Missouri:  Remington Research, a Missouri Republican polling firm, surveyed the Show Me State Governor’s race and produced bad news for GOP nominee Eric Greitens, a former Navy SEAL. According to Remington’s 9/26-27 poll (1,279 MO likely voters), Attorney General Chris Koster has expanded his lead to 51-35%, and looks to be strengthening his grip on the open seat race. This same polling sample projects Donald Trump to a ten-point lead, but the Senate race results, if tested, are not yet publicized.

North Carolina:  The Tar Heel State Governor’s race is another that has seesawed back and forth for the past several weeks. Public Policy Polling surveyed the North Carolina electorate as they do every month (9/27-28; 861 NC likely voters), and this time finds Attorney General Roy Cooper (D) leading Gov. Pat McCrory (R), 45-42%. Most of the polling does find Cooper leading, but several see McCrory not only within striking distance, but surging past his Democratic opponent. Figure upon a toss-up here for the rest of the cycle.

West Virginia:  Garin Hart Yang Research conducted a poll of the open West Virginia Governor’s race (9/13-17; 500 WV likely voters) and released the results late last week. The data again pits wealthy businessman Jim Justice (D) substantially ahead of state Senate President Bill Cole (R). This time, the margin is 56-33%. Mr. Justice, commonly referred to as West Virginia’s richest man, is attempting to hold this Governor’s office for the Democratic Party. Current incumbent Earl Ray Tomblin (D) is ineligible to seek a third term.