Your Weekly Report on the Discord from Washington, D.C.
In Partnership with the Eris Group
Happy new year!
The 115th Congress is already in session, with committees organizing and hearings scheduled. Some of us are still wondering how we got here, and what things might look like going forward. If you are too, we recommend a look at these maps, which ran in the New York Times shortly after the election. The urban/non-urban political divide that determined the Presidential election is not going away any time soon, and will color every policy debate of this Congress.
Jay Clayton nominated for SEC Chair – President-elect Donald Trump announced last Tuesday that he will nominate attorney Jay Clayton to succeed Mary Jo White as Chair of the Securities and Exchange Commission. Clayton is currently a partner with Sullivan & Cromwell, where his clients have included Ally Financial, Goldman Sachs, Blackhawk Network Holdings and Oaktree Financial. He has extensive experience in both acquisitions and IPOs, and published most recently on the issue of cybersecurity. He has no regulatory experience.
McRaith to step down from Federal Insurance Office – Michael T. McRaith, appointed in 2011 to serve as the first director of the Federal Insurance Office, has announced that he will resign that position on January 20. Dodd-Frank created the FIO to monitor access to insurance products and represent the U.S. in international insurance policy discussions. The Director also serves as a non-voting member of the Financial Stability Oversight Council. The longstanding opposition of Congressional Republicans to the FIO raises the question of whether the new administration will appoint a successor to McRaith at all.
New members, new subcommittee chairs in House Financial Services – House Financial Services Chairman Jeb Hensarling (R-TX) announced the committee’s Republican leadership for the new Congress last Friday. The committee is adding a new Subcommittee on Terrorism and Illicit Finance this year, replacing last Congress’s Task Force to Investigate Terrorism Financing.
Financial Services Committee Republican leaders for the 115th Congress are:
Rep. Jeb Hensarling (R-TX), Chairman
Rep. Patrick McHenry (R-NC), Vice Chairman
Rep. French Hill (R-AR), Republican Whip
Rep. Bill Huizenga (R-MI), Chairman, Subcommittee on Capital Markets
Rep. Randy Hultgren (R-IL), Vice Chairman, Subcommittee on Capital Markets
Rep. Blaine Luetkemeyer (R-MO), Chairman, Subcommittee on Financial Institutions
Rep. Keith Rothfus (R-PA), Vice Chairman, Subcommittee on Financial Institutions
Rep. Sean Duffy (R-WI), Chairman, Subcommittee on Housing and Insurance
Rep. Dennis Ross (R-FL), Vice Chairman, Subcommittee on Housing and Insurance
Rep. Andy Barr (R-KY), Chairman, Subcommittee on Monetary Policy and Trade
Rep. Roger Williams (R-TX), Vice Chairman, Subcommittee on Monetary Policy and Trade
Rep. Steve Pearce (R-NM), Chairman, Subcommittee on Terrorism and Illicit Finance
Rep. Robert Pittenger (R-NC), Vice Chairman, Subcommittee on Terrorism and Illicit Finance
Rep. Barbara Wagner (R-MO), Chairman, Subcommittee on Oversight and Investigations
Rep. Scott Tipton (R-CO), Vice Chairman, Subcommittee on Oversight and Investigations
New Republican members of the House Financial Services Committee are:
- Dave Trott (MI-11), 2nd term. Trott was first elected to Congress in 2014, winning over incumbent freshman Kerry Bentivolio. His background is in law; he is chairman and CEO of Trott & Trott PC, a law firm specializing in representing mortgage servicers and banks for default servicing.
- Lee Zeldin (NY-01), 2nd term. Zeldin was first elected to Congress in 2014, after an unsuccessful bid in 2008. He previously served in the New York Senate from 2010 to 2014. Following his graduation from law school, Zeldin was deployed to Iraq, and in 2007 transitioned to the reserves. Since in Congress, he has focused much of his legislative efforts on veterans’ bills.
- Barry Loudermilk (GA-11), 2nd term. Loudermilk was elected to Congress in 2014, after serving in the Georgia House of Representatives for six years and the Georgia Senate for three. Loudermilk served in the Air Force for eight years, and is a member of the Freedom Caucus.
- Tom MacArthur (NJ-03), 2nd term. MacArthur was first elected to Congress in 2014, and has previous public service experience as a local Mayor and Councilman. MacArthur has had a 30-year career in the insurance industry, finishing as Chairman and CEO of York Risk Services Group, Inc. He also has experience as a partner in multiple private equity funds.
- Claudia Tenney (NY-22),1st term. Tenney is a freshman in the 115th Congress after an unsuccessful bid for Congress in 2014. In 2010, she was elected to represent the 101st Assembly District in the New York State Assembly. Tenney has a background in media, having worked in publishing and co-hosted a few television and radio programs.
- Alex Mooney (WV-02), 2nd term. Mooney was first elected to Congress in 2014, and served in the Maryland State Senate from 1999 to 2011. He focuses his legislative efforts on conservative fiscal and social values and Second Amendment rights.
- Trey Hollingsworth (IN-09), 1st term. Hollingsworth is a freshman in the 115th Congress, winning the Indiana seat in “a race to watch.” He was a member of the NRCC’s Young Guns Program in 2016. Previously, Hollingsworth shared numerous business opportunities with his father, as well as starting his own company specializing in finding and refurbishing abandoned factories and warehouses. He has numerous real estate holdings in multiple states.
- David Kustoff (TN-08), 1st term. Kustoff is a freshman in the 115th Congress, and previously served as U.S. Attorney for the Western District of Tennessee, appointed by President Bush in 2006. He has set his sights on fighting regulation to relieve small business burdens, and opposing wasteful government spending.
- Ted Budd (NC-13), 1st term. Budd is a freshman in the 115th Congress, replacing Rep. George Holding (R) as representative to the 13th District following a February 2016 redistricting that caused Holding to pursue the state’s 2nd district. Holding won that seat in the 2016 election. Budd has worked in his family’s businesses prior to gaining his political seat, and intends to focus on reducing overregulation.
- Warren Davidson (OH-08), 1st term. Davidson was elected to Congress in a 2016 special election, following the resignation of then-Speaker of the House John Boehner. He is a member of the Freedom Caucus, a former U.S. Army Ranger, and has previously served on House Committees on Small Business, and Science, Space and Technology.
House Ways & Means adds three Republican members – House Ways and Means Committee Chairman Kevin Brady (R-TX) announced last Wednesday that three new Republican members will join the committee:
- David Schweikert (AZ-06), 3rd term. Schweikert relinquishes his seat on the Financial Services Committee in order to join Ways and Means. He was a co-author of the JOBS Act, chaired the EPA Oversight Subcommittee, and is a vocal advocate of blockchain technology.
- Jackie Walorski (IN-02), 3rd term. Walorski previously served on the Armed Services, Veterans Affairs, and Agriculture Committees. She chaired the Nutrition Subcommittee and was co-author of a bipartisan law to protect victims of military sexual assault.
- Carlos Curbelo (FL-26), 2nd term. At 36, Curbelo is one of the youngest members of Congress. He previously served on the Transportation and Infrastructure, Education and the Workforce, and Small Business Committees.
Paul reintroduces “Audit the Fed” bill – Senator Rand Paul (R-KY) and eight co-sponsors reintroduced the Federal Reserve Transparency Act as S. 16 last Wednesday. The bill passed the Senate last year by a vote of 53-44. It would require the GAO to conduct a full audit of the Federal Reserve Board and all 12 Federal Reserve Banks, including any transactions with or for foreign central banks; any transactions made under the direction of the Federal Open Market Committee; and all deliberations, decisions and actions on monetary policy matters. Rep. Thomas Massie (R-KY) has introduced a companion bill as H.R. 24.
Warren announces re-election bid – Senator Elizabeth Warren (D-MA) announced on Friday that she will run for a second term in 2018. She is not expected to face a primary opponent; Curt Schilling, former pitcher for the Boston Red Sox, announced last fall that he will run for the seat as well.
OCC warns of rising risks – “The worst loans are made in the best of times,” Comptroller of the Currency Thomas Curry said last Wednesday in releasing the agency’s semiannual report on risks in the banking industry. The agency is particularly concerned about strategic risks for banks of all sizes, as they change their business models in response to low interest rates and new consumer expectations. Significant loan growth in a competitive environment is creating new levels of credit risk, and operational risks are increasing with advances in technology and greater cyber threats. Changes in the Bank Secrecy Act, the Military Lending Act, and mortgage disclosure requirements have also boosted compliance risk. The complete report is here.
This Week in Washington:
The week is crammed with confirmation hearings and other activities related to the Presidential transition. The complete Senate hearing schedule is here. Of particular interest:
Senate Judiciary Committee begins hearings on the nomination of Senator Jeff Sessions to serve as Attorney General. Senator Sessions will be the only witness on the first panel. 9:30 a.m., SR-325 Russell Senate Office Building.
Senate Judiciary Committee continues hearings on the nomination of Senator Jeff Sessions to serve as Attorney General. The second panel will include witnesses chosen by both the majority and minority members of the Committee. 9:30 a.m., SR-325 Russell Senate Office Building.
Senate Committee on Banking, Housing, and Urban Affairs holds a hearing on the nomination of Dr. Benjamin Carson to serve as Secretary of the Department of Housing and Urban Development. 10:00 a.m., SD-538 Dirksen Senate Office
Senate Commerce Committee holds a hearing on the nomination of Wilbur L. Ross, Jr. to be Secretary of the Department of Commerce. Mr. Ross has already submitted responses to the Committee’s questionnaire. 10:00 a.m., SR-253 Russell Senate Office Building.
The Ellis Insight. Jim Ellis reports on political news:
President-Elect Donald Trump has one more hurdle to overcome, and that occurred on Friday. Objections can be made to the official electoral vote count when the state results are released to a joint congressional session. On Election Night, Mr. Trump scored a 306-232 victory over Hillary Clinton. After the official electors cast their votes, the state tallies suggest the final margin will be 304-227, with seven votes going to other individuals according to the New York Times.
Members of Congress can still object to certain electors. To lodge an objection, a member of the House and Senate must jointly object. The houses then return to their respective chambers and debate the issue for no more than two hours. They then vote whether or not to sustain the objection. Two times in US history has this happened, the latest in 2005. Neither challenge was sustained. This may be the final venue, however, where the Russian hacking issue and the seating of electors could still come to the forefront.
Once this process concludes, Mr. Trump will be officially inaugurated as the nation’s 45th President on January 20th.
Minnesota: Sen. Amy Klobuchar (D) announced to the Minneapolis media that she will seek a third term next year. The Senator had been contemplating a run for Governor, since incumbent Mark Dayton (D) is ineligible to run for a third term. A crowded field for Governor, featuring two competitive primaries and a general election battle, will overshadow the Senate race, which all plays to Ms. Klobuchar’s favor. She should be re-elected with little in the way of challenge or fan fare.
Nevada: In what is likely the Democrats’ top conversion target, Sen. Dean Heller (R) publicly committed last week to seeking re-election next year. He had been openly testing the waters for a gubernatorial run since Gov. Brian Sandoval (R) cannot run for a third term. Sen. Heller was not particularly supportive of Donald Trump even after the latter became the official Republican nominee. Therefore, he reportedly feels politically weak in a contested Republican primary. With only a one-point victory to his credit in 2012 – 46-45% over then-Rep. Shelley Berkley (D-Las Vegas) – we can expect the upcoming Silver State race to be one of the most competitive Senate campaigns in the nation.
North Dakota: For the first time, at-large Rep. Kevin Cramer (R-Bismarck) is admitting to at least considering a challenge to Sen. Heidi Heitkamp (D) next year. Mr. Cramer says he will make a decision about running in the “next few months.” As time passes, it appears more likely that Sen. Heitkamp will not be joining the Trump Administration so it is probable that she will seek re-election in 2018 and become a major national target.
FL-13: Rep. Charlie Crist (D-St. Petersburg), who formerly served as Florida’s Governor, says he will not run statewide in 2018. Rep. Crist notes that he is already planning his first re-election campaign for the House seat that he just won in November.
MT-AL: Under Montana law, when a vacancy in the state’s lone congressional seat occurs, the political parties will meet in convention to choose special election nominees. This means we will see a large number of candidates “applying” for the nomination in each of the major parties. Despite Rep. Ryan Zinke (R-Whitefish) still having to endure a confirmation process, thus precluding the scheduling of any special election, three Democrats and two Republicans, all from the state legislature, have already declared themselves as candidates.
For the Democrats, three state Representatives: Amanda Curtis, Casey Schreiner, and Kelly McCarthy are in the candidate mix. Ms. Curtis has statewide experience, losing 58-40% to Sen. Steve Daines (R) in the 2014 general election. Whether such a failed run helps her secure this congressional nomination remains to be seen. For the Republicans, state Senators Ed Buttrey and Daniel Zolnikov have made official public candidacy declarations. The special election will be within 100 days of the seat becoming vacant. If Rep. Zinke is confirmed sometime in February, the subsequent special election will be held in late May, or more likely, June.
SC-5: State Representative and former congressional candidate Ralph Norman (R) became the first individual to declare for the eventual special election to replace Office and Management & Budget Director-Designate Mick Mulvaney (R-Lancaster/Rock Hill) upon the latter’s confirmation to his new position in the Trump Administration. Mr. Norman previously ran for the congressional post in 2006, losing to then-incumbent John Spratt (D), 57-43%. Four years later, Mr. Mulvaney would defeat Rep. Spratt, 55-45%. State Rep. Norman won his House seat in 2004, but chose to run for Congress instead of re-election. In 2009, he re-claimed the state position via a special election victory.
Colorado: Super Bowl champion Denver Broncos Vice President and General Manager John Elway (R) announced that he will not enter the open gubernatorial contest next year. Just before the Elway announcement, wealthy Democratic businessman Noel Ginsburg declared that he will become a candidate. Both parties are expected to field several strong candidates, apiece. Gov. John Hickenlooper (D) is ineligible to seek a third term.
Iowa: Former state Natural Resources Director Richard Leopold (D) announced that he will run for Governor next year, presumably against what will be an un-elected incumbent. With Gov. Terry Branstad (R) being appointed US Ambassador to China, Lt. Gov. Kim Reynolds (R) will ascend to the Governor’s position. It is unlikely that she will face a strong Republican primary challenge, but it is way too early to tell how all of the political dominos may yet fall.
New Jersey: State Assembly Minority Leader Jon Bramnick, a legislative ally of Gov. Chris Christie (R), announced that he will not enter the open Governor’s campaign next year. Mr. Christie is ineligible to seek a third term, but would likely fare poorly if he were able to run. Lt. Gov. Kim Guadagno (R) is expected to make a gubernatorial bid, but the eventual Democratic nominee will likely begin the general election as the early favorite.
Virginia: Former Rep. Tom Perriello (D-Charlottesville) surprisingly announced his own gubernatorial campaign at the end of last week. Mr. Perriello was elected to Congress in 2006, but lost the Republican-leaning district two years later. He will face Lt. Gov. Ralph Northam in the Democratic nominating process, which will likely be a statewide primary. Gov. Terry McAuliffe (D) cannot run for re-election. Former Republican National Committee chairman and US Senate candidate Ed Gillespie is the leading GOP candidate. Virginia is the only state in the nation to limit its chief executives to one term in office.