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

In Partnership with the Eris Group

DOL announces temporary enforcement relief on fiduciary rule — The Employee Benefits Security Administration of the Department of Labor issued a Field Assistance Bulletin last Friday to clarify its enforcement procedures for the new fiduciary rule while the proposed 60-day delay is pending. The Department issued a proposal on March 2 seeking comment on postponing the April 10 effective date, and that postponement would take effect if and when it’s published in the Federal Register. While DOL expects to announce a decision before April 10, the bulletin issues today clarifies that the department will not take any enforcement actions against advisers or financial institutions that do not comply between April 10 and the enactment of the 60-day delay. If the Department decides not to implement the delay, advisers or financial institutions will not be subject to enforcement actions as long as they’re in compliance with the rule “within a reasonable period after the publication of a decision.”

House, Senate Committees approve securities reform measures — Both the House Financial Services Committee and the Senate Banking Committee approved five bills designed to facilitate capital formation last week:

  • H.R. 910/S. 327, the Fair Access to Investment Research Act of 2017, directs the SEC to provide a safe harbor for research reports that cover exchange traded funds.
  • H.R. 1219/S. 444, the Supporting America’s Innovators Act of 2017, raises the limit on the number of investors in certain venture capital funds before those funds must register as investment companies from 100 to 250.
  • H.R. 1257/S. 462, the Securities and Exchange Commission Overpayment Credit Act of 2017, allows national securities exchanges registered with the SEC to apply overpayments before the bill’s enactment to future SEC fees.
  • H.R. 1366/S. 484, the U.S. Territories Investor Protection Act of 2017, clarifies that investment companies in Puerto Rico, Guam, and other U.S. territories will be subject to the same rules as their U.S. counterparts.
  • H.R. 1343/S. 488, the Encouraging Employee Ownership Act, raises the threshold for additional disclosures to shareholders from $5,000,000 in aggregate securities sold within a year to $10,000,000.

The House Financial Services Committee also unanimously passed H.R. 1312, the Small Business Capital Formation Enhancement Act introduced by Rep. Bruce Poliquin (R-ME), which would require the SEC to respond to any findings or recommendations presented by the SEC’s Government-Business Forum on Small Business Capital Formation. H.R. 1312 does not yet have a Senate counterpart.

Community bankers, President Trump talk regulatory burden — CEOs of small and community banks, including officers of the Independent Community Bankers Association, met with President Donald Trump last Thursday for a National Economic Council Listening Session. President Trump called the discussion “crucial to my jobs agenda and the American people,” and added, “the community banks have been in big trouble.” House Financial Services Committee Chairman Jeb Hensarling (R-TX) said, “It is encouraging to have a president who is listening to the concerns of community bankers who have been buried under an avalanche of burdensome regulations as a result of Dodd-Frank.”

OCC fintech charters will build on existing authority, says Curry — In a speech before the LendIt USA conference last Monday, Comptroller of the Currency Thomas J. Curry said that the OCC will begin to issue charters to fintech companies under procedures to be published as a supplement to the agency’s Licensing Manual. “The OCC has been issuing national charters to banks with limited purposes for decades,” he noted. OCC examiners already specialize in banking technology, payment systems, and consumer protection, areas that fintech supervision will involve. “Whether it’s an issue of law, appropriate governance, or a complex question of modeling risks, the OCC has the resources to meet the challenge,” Curry said.

This Week in Washington:

March 14 
Senate Finance Committee holds a hearing to consider the nomination of Robert Lighthizer to serve as United States Trade Representative. 10:00 a.m., SD-215 Dirksen Senate Office Building.

March 14
Senate Committee on Banking, Housing & Urban Affairs holds the first of multiple hearings on reauthorization of the National Flood Insurance Program. Roy E. Wright, Deputy Associate Administrator for Insurance and Mitigation, Federal Emergency Management Agency, will be the only witness. 10:00 a.m., SD-538 Dirksen Senate Office Building.

March 15
House Financial Services Subcommittee on Capital Markets, Securities and Investment holds a hearing on “The JOBS Act at Five: Examining Its Impact and Ensuring the Competitiveness of the U.S. Capital Markets.” 10:00 a.m., 2128 Rayburn House Office Building.

March 15
Senate Committee on Health, Education, Labor & Pensions holds a hearing to consider the nomination of Alex Acosta as Secretary of Labor. 1:30 p.m., 430 SD-Dirksen Senate Office Building.

March 15
House Financial Services Subcommittee on Financial Institutions and Consumer Credit holds a hearing on “Ending the De Novo Drought: Examining the Application Process for De Novo Financial Institutions.” 2:00 p.m., 2128 Rayburn House Office Building.

March 16
House Financial Services Subcommittee on Monetary Policy and Trade holds a hearing on “Sound Monetary Policy.” 10:00 a.m., 2128 Rayburn House Office Building.

March 16
House Financial Services Subcommittee on Housing and Insurance holds a hearing on “Flood Insurance Reform.” 2:00 p.m., 2128 Rayburn House Office Building.

The Ellis Insight. Jim Ellis reports on political news:

> Senate

Florida:  Two polls were released last week as a prelude to a possible Sen. Bill Nelson (D) vs. Gov. Rick Scott (R) 2018 US Senate contest, and both showed approximately the same results. The University of Northern Florida, in a survey of questionable methodology because the pollsters did not reveal whether the sample group was comprised of adults, registered voters, or those likely to participate in 2018, (2/16-26; 935 “completed surveys”), and Mason-Dixon Polling & Research (3/2-3; 625 FL registered voters) found Sen. Nelson leading the Governor by just beyond the margin of polling error. UNF sees Nelson’s advantage to be 44-38%, while Mason-Dixon projects 46-41%. Sen. Nelson has indicated he will seek a fourth term in 2018. Gov. Scott is ineligible to seek a third term as Governor, and has publicly disclosed he is considering running for the Senate.

Mississippi:  State Sen. Chris McDaniel (R), who came close to upsetting Sen. Thad Cochran in the 2014 Republican nomination battle – he lost 51-49% after forcing Cochran to a run-off – is reportedly considering a primary challenge to Sen. Roger Wicker (R). McDaniel has expressed disappointment with Wicker and the other GOP members of the Mississippi delegation for “being silent instead of championing conservative reform in D.C.”  After losing the Senate nomination, Sen. McDaniel was re-elected to his post in the state legislature one year later. He was considering launching a primary challenge to Rep. Steve Palazzo (R-Biloxi), but did not pursue such a race. Still, considering McDaniel did so well against Sen. Cochran, this race should be closely monitored.

Missouri:  State Attorney General Josh Hawley (R) confirmed that he will not challenge Sen. Claire McCaskill (D) next year. The Missouri Senator is viewed to be one of the more vulnerable Democrats seeking re-election in 2018, but as yet the Republicans do not have an announced candidate.

Utah:  Sen. Orrin Hatch (R) tells media sources that he “currently” plans to seek re-election to an eighth term in the Senate. During the 2012 campaign, Sen. Hatch indicated that he would retire once that term was completed, but he has apparently changed course. His office spokesman was less definitive saying, “Senator Hatch appreciates the encouragement he’s receiving to run for reelection. While he has not made a final decision about his plans for 2018, he has made plans thus far to ensure all options remain on the table.”  Sen. Hatch, 82, is the eighth longest serving US Senator in history, and the top Republican in longevity. He was originally elected in 1976.

> House

CA-25:  While Rep. Steve Knight (R-Palmdale) won a 53-47% re-election victory, Hillary Clinton was carrying the 25th District by seven-plus percentage points. This likely means the Congressman will be a more serious Democratic target next year. This week, a new Democratic candidate already came to the forefront. Katie Hill (D), the executive director of the homeless advocacy non-profit association, PUSH, announced that she will run. Attorney Bryan Caforio, the 2016 nominee who attracted 47% of the vote, is likely to seek a re-match.

CA-49:  Rep. Darrell Issa (R-Vista) won the closest election in the country last November, taking only 50.3% of the vote. Hillary Clinton sweeping the 49th by eight percentage points after the constituency had long supported Republicans in the presidential contest largely explains the shifting political tone in this San Diego/Orange County district. Last week, environmental attorney Mike Levin (D) said he will enter next year’s congressional contest. He will join 2016 nominee Doug Applegate (D), the retired Marine Colonel who came so very close to toppling Issa, in the field of challenger candidates.

GA-6:  The Trafalgar Group conducted a new survey for the upcoming special election (3/2-3; 450+ GA-6 likely special election voters) and found no clear favorite. Democratic candidate Jon Ossoff and former Secretary of State Karen Handel (R) were in a virtual tie, with businessman and local city councilman Bob Gray about five points behind. Combined, however, 45% of the sampling group chose a Republican candidate versus just 21% who voiced preference for a Democrat. Eighteen candidates, including 11 Republicans are on the April 18th jungle primary ballot. Assuming no one takes a majority of the vote, the top two finishers will advance to a June 20th special general vote.

MT-AL:  The major parties met in convention earlier last week and chose their special election nominees. Former Rep. Ryan Zinke’s (R-Whitefish) confirmation as US Interior Secretary created the vacancy in the state’s lone congressional district. Gov. Steve Bullock (D) scheduled May 25th for the at-large special replacement election.

As expected, the GOP delegates chose businessman Greg Gianforte, the 2016 gubernatorial nominee who held Gov. Bullock to a 50-46% re-election win. Mr. Gianforte claimed to have enough delegate support to clinch a first ballot victory, and such proved true. Democrats, however, produced a surprise nominee. Instead of going for state Rep. Amanda Curtis, the party’s 2014 US Senate nominee, the delegates reached for country rock singer Rob Quist, a local Montanan who is well known in Rocky Mountain music circles. In post-convention interviews, most Democratic delegates simply believed that Quist is the more electable candidate, hence their choice. This special election will likely be more interesting that originally believed now that Mr. Quist is in the race, but Greg Gianforte is still the clear favorite to win in late May.

> Governor

Colorado:  Former Interior Secretary and US Senator Ken Salazar (D) confirms that he is considering entering the open Colorado Governor’s race next year. Though not being present on the Colorado ballot since 2004, the Salazar name is still strong in the Centennial State so he will be a strong figure particularly in the Democratic primary. Ken Salazar’s brother, John, was elected to the US House during the same election that the former won his Senate seat. But, Republican Scott Tipton ousted Rep. Salazar six years later. Prior to his election to the Senate, Ken Salazar served as Colorado Attorney General.

Florida:  After speculation was growing that Tampa Mayor Bob Buckhorn (D) would enter the open Governor’s race, such talk came to an abrupt end last week. Citing the difficulty in raising millions of dollars to compete statewide, Mayor Buckhorn announced that he will not become a gubernatorial candidate.

New Hampshire:  Just elected in 2016, Gov. Chris Sununu (R) already needs to begin gearing up for his re-election. New Hampshire is one of just two states (neighboring Vermont is the other) that hold gubernatorial elections every two years. Democrats are speculating that Attorney General Joe Foster (D), who leaves office at the end of March, is a potential Sununu opponent. In New Hampshire, Attorneys General are appointed by Governors and serve definitive terms. Gov. Sununu won a close 49-47% victory over former Executive Councilor Colin Van Ostern (D). It is also possible that Mr. Van Ostern seeks a re-match.

Ohio:  Former Rep. Betty Sutton (D-Copley) announced her candidacy for Governor last week. She joins state Senate Minority Joe Schiavoni in the fledgling Democratic primary. For the Republicans, Lt. Gov. Mary Taylor and Attorney General and former US Senator Mike DeWine are officially in the race. This will be one of the most important gubernatorial campaigns in the country next year. Gov. John Kasich (R) is ineligible to run for a third term.

Tennessee:  Former state Economic and Community Development commissioner and businessman Randy Boyd (R) announced that he will enter the open race for Governor next year. Mr. Boyd has the ability to self-fund his campaign, but will likely expand his fundraising and grassroots effort way beyond himself. He joins state Sen. Mark Green as the only two announced GOP candidates, but many more are expected to follow. Former Nashville Mayor Karl Dean is the lone Democratic entry so far.

> Mayor

Los Angeles:  Mayor Eric Garcetti (D) won re-election to a second term earlier last week, sweeping back into office with an 80% victory opposite little serious opposition. Since the Mayor’s race will be moved to run concurrently with the mid-term election cycle, Mr. Garcetti is granted a five and one-half year term. He will be ineligible to seek re-election in 2022, however. He is considered a potential gubernatorial candidate, so now that re-election is behind him we may see Mayor Garcetti move toward a statewide campaign.

St. Louis:  City Alderman Lyda Krewson eked out a close 32-30% win over city Treasurer Tishaura Jones (D) to clinch the Democratic Mayoral nomination for the fall campaign. Ms. Krewson was able to build a strong coalition among whites, as the majority African American population segment divided their votes among three candidates. With no run-off in the St. Louis electoral system, Ms. Krewson has likely won the post. Republicans nominated utility executive Andrew Jones, but the general election will likely be just a pro forma affair in this highly Democratic city.