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

In Partnership with the Eris Group

We’re not dressing up for Halloween this year. As Washington insiders, aren’t we scary enough? We hear that lit candles inside jack-o-lanterns keep evil spirits away. We don’t know whether they’re effective against door-to-door canvassers.

Community Organizations Warn OCC on National Fintech Charter – The National Community Reinvestment Coalition and dozens of other community advocacy groups told the Office of the Comptroller of the Currency last week that they would oppose any national charter for fintech institutions that preempts state law or does not subject these institutions to strong safety and soundness standards. In an eight-page letter, the groups said that they believe the OCC has the authority to impose CRA-type standards on these non-depository institutions, and that their risk profiles differ too much from existing limited-purpose trust banks to be regulated or supervised in the same way. “Any new framework that the OCC contemplates for fintechs must have an aggressive oversight regime as its central component,” the letter said.

OCC Creates Office of Innovation, Recommends Guidelines – As part of a set of recommendations for creating a framework for responsible innovation, Comptroller of the Currency Thomas J. Curry announced last Wednesday that the agency will establish an Office of Innovation. With staff in Washington, New York, and San Francisco, the Office will serve as the central point of contact and clearinghouse for all requests related to innovation. It will provide technical assistance to banks and nonbanks, conduct awareness and training programs for OCC examiners, promote coordination and collaboration among agencies, and conduct research on innovation. Beth Knickerbocker has been named acting Chief Innovation Officer, with the office to begin operations in the first quarter of 2017.

Disclosure, Privacy, Fraud Key Issues for Peer-to-Peer and Crowdfunding – The Federal Trade Commission hosted a forum last Wednesday to discuss regulatory issues surrounding peer-to-peer payments and crowdfunding. Representatives of the private sector agreed that the industries should be allowed to set and maintain standards, but that some federal regulation would be necessary for uniformity, redress and support. Peer-to-peer payment providers must currently comply with a patchwork of state laws as well as federal rules, such as the CFPB’s recent rule on prepaid cards. Some crowdfunding falls under SEC rules, but the charitable and rewards-based models of crowdfunding operate in a gray area where the FTC has already had to intervene. Wednesday’s forum was the second in a series on FinTech issues, following a June discussion of marketplace lending.

NCUA Expands Field of Membership Rules – The line between credit unions and community banks became even thinner last week, when the National Credit Union Administration approved a final rule to expand fields of membership in several ways. Community charter credit unions will have more flexibility to define “community;” the agency has updated standards for defining “underserved” populations for purposes of membership eligibility; rural district credit unions may serve up to one million members; honorably discharged service members may join credit unions that serve active duty service members; and it will be easier for common-bond credit unions to add affiliated groups. The rule takes effect in 60 days, or before the end of this year.

CFPB Turns Attention to Debt Collectors – In a speech last Thursday, Consumer Financial Protection Bureau Director Richard Cordray discussed the agency’s plans to “overhaul the entire process” of third-party debt collection, and to extend that overhaul to student loan servicing. The CFPB published an outline of proposals under consideration in July.

Fed’s Secure Payments Task Force Wants Industry Feedback – Three online surveys request input from the financial services industry on the key payment security issues of payment identity managementinformation for the mitigation of payment risk/fraud, and data protection. The surveys are open for comment until Tuesday, November 8.

Agencies Seek Comment on Enhanced Cyber Risk Management Standards – Two weeks ago the federal banking agencies issued an advance notice of proposed rulemaking on enhanced cyber risk management standards for large, interconnected entities and their service providers. The proposed rule would address risk standards in five areas: cyber risk governance; cyber risk management; internal dependency management; external risk management; and incident response, cyber resilience, and situational awareness. Comments are due to the agencies by January 17, 2017.

DOL Replies to FAQs on Exemptions to Fiduciary Rule – The Department of Labor has issued a 24-page document in response to frequently asked questions about the Best Interest Contract (BIC) exemption and the Principal Transactions Exemption (PTE) to the agency’s new fiduciary rule. The rule takes effect on April 10, 2017, but financial institutions that expect to rely on the exemptions will have an additional transition period until January 1, 2018. During this transition period, financial institutions must notify retirement investors of their fiduciary obligation and of any material conflicts of interest.

US Unbanked Rate Drops – Only seven percent of American households did not have a checking or savings account in 2015, according to a report released two weeks ago by the FDIC. The percentage is the lowest in the history of the FDIC’s survey, but still represents approximately nine million households and 15.6 million adults. An additional 19.9 percent – 24.5 million households – were “underbanked,” meaning that they had at least one bank account, but still used a financial service or product outside the banking system. Income volatility was the strongest correlating factor among the unbanked and underbanked households, even among those with higher levels of income. The use of online banking, mobile banking and prepaid cards grew from 2013 to 2015, as the use of bank tellers declined.

Are You Voting Early? You’re not alone — Jim Ellis offers some thoughts about what the early voting trends mean (or don’t) for the 2016 election. An excerpt from a recent email:

. . . It is likely that either a majority of 2016 voters, or close to one, will cast their ballots prior to the actual November 8th Election Day, up from approximately 40% in the last presidential election.

Forty states have some type of no-excuse early voting procedure, including every individual entity west of the Mississippi River. Six states: Kentucky, Mississippi, Missouri, New York, South Carolina, and Virginia, technically allow early voting, but one must indicate a coming absence from the home area during the Election Day period in order to cast an early ballot.

An additional seven states: Alabama, Connecticut, Delaware, Michigan, New Hampshire, Pennsylvania, and Rhode Island, have no early voting process. At the other end of the spectrum, Oregon and Washington require all ballots to be mailed into election processing offices, while Colorado now offers the mail-in option to every registered individual.

The ideas behind early voting were to increase voter participation, and make the voting process easier for regular registrants. While there is no doubt the process is easier, as evidenced by the large number of people taking advantage of the new options, it remains debatable whether early voting, in and of itself, has actually increased voter turnout . . .

Some interesting patterns are developing, however, as we can now see from the states that release their early voting figures.

In Arizona, more people have already voted early than did in the 2012 election, by a substantial amount. From the state’s latest public release, more than 438,000 Arizonans have voted early. In 2012, just over 285,000 did so for the entire process. All of the party classifications are up, with more Democrats (164,270) voting early as compared to Republicans (160,154). In 2012, more Republicans chose to vote early. But, non-affiliated early voting is also way up, to 114,354 from a 2012 total of 71,817.

On the other hand, Iowa, where 43% voted early in 2012, seems to be running behind their pace of the last election. Nevada totals are strong, with more Democrats again taking advantage of the early processes, rather than Republicans or Independents. Fewer early votes have been cast in North Carolina when compared to the last election, but the voting window is also smaller this year than in the past.

Though conclusions are already being drawn about how the election will end based upon early voting patterns, the changing systems throughout the nation suggest that we still need the final voting numbers before any tangible conclusion can be drawn.

Coming up in Washington (and elsewhere):

November 8
Election Day. In case it wasn’t already on your calendar.

The Ellis Insight. Jim Ellis reports on upcoming races:

> President
The presidential campaign is, of course, winding down and it appears Hillary Clinton is headed for victory. Donald Trump, however, appears to be making gains in some critical states such as Florida, Ohio, North Carolina, and Nevada, but even if he were to sweep the aforementioned the Republican nominee would still be short of the electoral votes needed to score a national victory. Therefore, it now appears that Trump’s best-case scenario is a close loss.

Early voting statistics are being released and they show increased participation in three of four states where returned ballot data has been publicized: Arizona, Florida, and Nevada. The Iowa numbers are running behind the 2012 progression. Both parties are spinning the stats as favorable to their side. In reality, since more states employ early voting procedures, and clearly more people from both parties will be taking greater advantage of the available system, it is difficult to draw viable conclusions as to whether Hillary Clinton or Donald Trump is benefitting the most from the early voting programs. It is also difficult to tell, at this point, how many people voting early would not have done so through the conventional system.

> Senate
Arizona:  Monmouth University (10/21-24; 401 AZ likely voters) tested the Grand Canyon State electorate and found Sen. John McCain (R) expanding his previous lead to 50-40% over Rep. Ann Kirkpatrick (D-Flagstaff). With the Democratic Senatorial Campaign Committee (DSCC) canceling their media buys for the rest of the campaign, this race is virtually conceded to McCain. The same polling sample posts Donald Trump to the slightest of advantages, 46-45% over Hillary Clinton.

Florida:  Bloomberg Politics (10/21-24; 953 FL likely voters) turns in Sen. Marco Rubio’s (R) best poll of the election cycle, a 51-41% posting over Rep. Patrick Murphy (D-Jupiter). Survey USA (10/20-24; 1,251 FL likely voters) found a lesser Rubio lead, 45-41%. Rubio has led or is tied in 33 consecutive Florida polls, but the Survey USA spread is closer to Rubio’s average lead of 5.5 percentage points.

Indiana:  Republican pollster Gravis Marketing (10/22-24; 596 IN likely voters) again finds the US Senate race becoming more competitive. Former Sen. Evan Bayh (D) again is posted to an advantage over Rep. Todd Young (R-Bloomington), but this time the edge is only two points, 39-37%.

Louisiana:  The Bayou State has a unique electoral system, as we have mentioned before. Using the jungle primary system, the state’s primary vote is concurrent with the general election. That way, they can continue their tradition of holding just one election for most of their offices. With all candidates on the same ballot, if any one individual scores a majority vote in any race, that person is elected outright. The open Senate race is one campaign that will definitely be forced to a December 10th run-off election.

Vying for the two qualifying spots are five of the 24 candidates on the ballot. A Mason-Dixon Polling & Research survey for the Fox 8 affiliate in New Orleans found state Treasurer John Kennedy (R) re-assuming the lead (24%) followed by Democratic Public Service Commissioner Foster Campbell (19%). Democrat Caroline Fayard is third with 12%, with Reps. Charles Boustany (R-Fayette) and John Fleming (R-Minden/ Shreveport) at 11 and 10%, respectively. Therefore, virtually any combination of the five could advance on November 8th.

Nevada:  Rasmussen Reports (10/20-22; 826 NV likely voters) finds Democratic former Attorney General Catherine Cortez Masto leading Rep. Joe Heck (R-Henderson), 43-41%. Heck has been leading most of the year, but the race has trended toward Masto just as Hillary Clinton began opening up a lead in the Silver State. But, a NBC News/Wall Street Journal/Marist College survey (10/20-24; 707 NV likely voters) draws a completely different conclusion. This poll finds Rep. Heck pulling away to a 49-42% advantage. This race is of critical importance to Republicans because Nevada is the only state they can realistically expect to take from the Democrats. The GOP winning here would give them a much stronger chance to hold the Senate majority.

New Hampshire:  UMass/YouGov (10/17-21; 848 NH adults; 772 NH likely voters) conducted a New Hampshire Senate poll and found Sen. Kelly Ayotte (R) taking a 46-43% lead over Gov. Maggie Hassan (D). The lead expands to 48-44% when “leaners” are included. New Hampshire has no early voting system so this race will go through in its entire to Election Day, November 8th. As we have stated repeatedly about this campaign, the contest has polled as a virtual tie for the entire year. Monmouth University (10/22-25; 401 NH likely voters) projects a 46-46% tie between the two candidates. NBC News/Wall Street Journal/Marist College sees Sen. Ayotte clinging to a 48-47% margin.

North Carolina:  Sen. Richard Burr (R) has been running ahead in the last four consecutive polls and eight of the last nine, but finds himself trailing once again according to the New York Times/Siena College survey (10/20-23; 792 NC likely voters). The Senator drops behind former state Rep. Deborah Ross (D) by a 46-47% split, but does much better than any other Republican polled in the companion statewide races. Since this poll suggests a different trend than the others conducted in a similar time frame, anomaly potential is present.

Wisconsin:  Former Sen. Russ Feingold (D) has just about put his challenge to first-term Sen. Ron Johnson (R) to bed. The latest Monmouth University poll (10/15-18; 403 WI likely voters) finds Feingold climbing back to an eight-point lead, 52-44%. The previous polls had shown a tightening, but now Feingold is back to a commanding position.

> House
FL-7:  A Global Strategy Group survey, in conjunction with Lester & Associates released their October 13-15 survey of 400 likely voters in Florida’s 7th District. The seat was fundamentally changed in the mid-decade court-ordered redistricting and is now a 50/50 district between Democrats and Republicans. With this background, the GSG/LA poll finds Democratic challenger Stephanie Murphy leading veteran Rep. John Mica (R-Winter Park), 48-45%. Both parties are now investing heavily in this district and will continue to do so through Election Day. This is another key opportunity race for Democrats and a must-hold for the GOP.

IN-9:  The open 9th District should be a Republican seat, but the GOP candidate is having trouble nailing it down. This is largely because he moved to the district from Tennessee just a month before candidate filing concluded. A new Normington Petts poll taken for the liberal House Majority PAC (10/12-13; 400 IN-9 registered voters) finds the Republicans have reason for concern and Democrats hopeful for a sleeper conversion opportunity. The ballot test data finds Republican Trey Hollingsworth leading Democrat Shelli Yoder by only a 40-38% margin.

MN-8:  Survey USA (10/16-19; 650 MN-8 registered voters) released a new poll of the Iron Range congressional district, and the results are surprising. In a re-match of a 2014 campaign that was decided by less than one percentage point, the S-USA data finds challenger Stewart Mills (R) leading Rep. Rick Nolan (D-Crosby/Duluth) by a 45-41% margin. Though this district is heavily Democratic, the mining and mineral extraction issues are dominant. Therefore, Donald Trump leads here by an even bigger margin than Mills, 47-35%.

NE-2:  In a potential GOP conversion race, a new North Star Opinion Research survey (10/22-24; sampling group size not released) finds GOP retired Air Force General Don Bacon now leading freshman Rep. Brad Ashford (D-Omaha), 48-44%. Prior to Ashford winning in 2014, the seat had been in Republican hands for eight consecutive terms in the person of former Rep. Lee Terry (R-Omaha).

NY-19:  A Public Policy Polling survey for Democrat Zephyr Teachout’s campaign (10/23-24; 1,218 NY-19 registered voters via interactive voice response system) gives the Democratic nominee a 44-41% edge over former state Assembly Minority Leader John Faso (R) in their battle to replace retiring Rep. Chris Gibson (R-Kinderhook). This is a Democratic conversion opportunity race.

UT-4:  The Doug Owens (D) challenger campaign released the results of their Anzalone Liszt Grove survey (10/11-13; 500 UT-4 likely voters) even though it shows their candidate trailing incumbent Rep. Mia Love (R-Saratoga Springs) by a substantial margin. According to the Democratic data, Republican Love leads, 50-40%. The poll was released to show the race closer than previously published surveys.

> Governor
Missouri:  Remington Research (10/23-25; 2,559 MO likely voters via interactive voice response system) finds the Show Me State Governor’s race tightening. This data suggests Republican former Navy SEAL Eric Greitens is pulling to within a 45-47% margin of Attorney General Chris Koster (D). The two are competing for the opportunity to replace term-limited Gov. Jay Nixon (D), who is ineligible to seek a third term.

North Carolina:  We continue to see disparate polling results from the Tar Heel State Governor’s race, which is one of the most surveyed states in the country. The latest three, from Monmouth University (10/20-23; 402 NC likely voters), New York Times/Siena College (10/20-23; 792 NC likely voters) and Public Policy Polling (10/21-22; 875 NC likely voters) finds Gov. Pat McCrory (R) leading Attorney General Roy Cooper by one point in the Monmouth survey, but trailing by six and two points in the NYT/Siena and PPP polls. North Carolina continues to project as one of the Democrats’ best chances to unseat a GOP Governor.

Vermont:   A new local Burlington WCAX television poll (Braun Research; 10/20-22; 603 VT likely voters) released the second consecutive Vermont gubernatorial poll that shows Republican Lt. Gov. Phil Scott leading the open race to succeed retiring Gov. Peter Shumlin (D). The polling results find Mr. Scott leading former state Labor Secretary Sue Minter (D), 47-40%. The margin is much stronger than the 39-38% split reported from an earlier survey. Though Vermont is heavily Democratic, Republicans can still win elections here, so the fact that the GOP nominee would be leading this particular race is not altogether astonishing. Two years ago, Gov. Shumlin failed to reach majority support, thus forcing his bid for re-election into the state legislature.

Washington:  The University of Washington just released the results of their extensive poll conducted during the October 6-13 period of 750 registered voters. The data finds Republican gubernatorial nominee Bill Bryant closing the gap between he and Gov. Jay Inslee (D), who is seeking a second term. According to this survey, Inslee’s margin over Bryant is only 46-42%, going to 51-45% when “leaners” are added to the totals.