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

In Partnership with the Eris Group

Washington, rather famously, doesn’t handle winter well. The storm that blew through last Tuesday left less snow than predicted, but managed to scramble schedules all the same. And it looks like we won’t get much of a cherry blossom season this year.

President can fire Cordray, Justice argues — The Department of Justice filed an amicus brief Friday afternoon in the case of PHH Corporation, et al. vs. Consumer Financial Protection Bureau. The brief argues in support of the US Court of Appeals’ initial ruling that the President has absolute authority to remove the Director of the CFPB, despite a provision of the law that says the President may only remove the Director “for cause.” The legal doctrine that prevents the President from removing members of multi-member commissions does not apply, DOJ argues, because the CFPB is headed by a single director. The CFPB has not yet filed its own brief in the case, which is due on March 31. The case is schedule for argument on May 24.

Trump budget proposal would eliminate housing and community development funds —Last Thursday the White House released a budget blueprint that “emphasizes national security and public safety,” President Trump said. It includes deep cuts to several domestic programs and foreign aid, and proposes the complete elimination of Community Development Block Grants, Community Development Financial Institutions Fund grants, Community Services Block Grants, the Economic Development Administration, the Minority Business Development Agency, the Neighborhood Reinvestment Corporation, the Overseas Private Investment Corporation, and Capacity Building for Community Development and Affordable Housing, among other programs.

OCC proposes standards for licensing fintech companies as special-purpose banks — The Office of the Comptroller of the Currency published a draft supplement to its Licensing Manual that explains how the agency will apply existing standards and requirements to fintech companies’ applications for special-purpose charters. The proposed changes are open for comment until April 14.

Lighthizer hearing strikes bipartisan note — The Senate Finance Committee held an unusually cordial confirmation hearing last Tuesday on the nomination of Robert Lighthizer to serve as the United States Trade Representative. Lighthizer’s work on behalf of some Chinese clients will require that he receive a waiver in order to serve, which ranking member Sen. Ron Wyden (D-OR) said Democrats would be willing to cooperate on. Senators’ priorities for the new USTR included enforcing intellectual property rights, protecting the American lumber and forestry market, and revitalizing the steel industry in the face of anticompetitive activity from China.

Senate Banking begins hearings on flood insurance reauthorization — The Senate Banking Committee heard testimony last Tuesday from FEMA Deputy Associate Administrator for Insurance and Mitigation Roy Wright on the need to reauthorize and expand the National Flood Insurance Policy, and make its financial procedures more transparent. Wright described improvements to NFIP’s practices over the past ten years, but reported that NFIP owes the Treasury $24.6 billion. Its annual interest-only payments to Treasury are nearly $400 million.

President directs OMB to reorganize executive branch, propose agencies for elimination — An Executive Order issued last Monday directs OMB Director Mick Mulvaney to “propose a plan to reorganize governmental functions and eliminate unnecessary agencies . . . components of agencies, and agency programs.” The head of each executive branch agency must submit proposals for reorganization within 180 days, after which Director Mulvaney will have 180 days to develop a reorganization plan, including suggestions for necessary legislative changes.

This Week in Washington:

March 21 
House Financial Services Subcommittee on Oversight & Investigations holds a hearing on “The Bureau of Consumer Financial Protection’s Unconstitutional Design.” 10:00 a.m., 2128 Rayburn House Office Building.

March 21
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.” Rescheduled from March 15; 2:00 p.m., 2128 Rayburn House Office Building.

March 21
Senate Commerce Subcommittee on Consumer Protection, Product Safety, Insurance, and Data Security holds a hearing on “Staying A Step Ahead: Fighting Back Against Scams Used to Defraud Americans.” Witnesses include Acting FTC Chair Maureen K. Ohlhausen; FTC Commissioner Terrell McSweeny; Ohio Attorney General Mike DeWine; former scamster Frank Abagnale; and TV reporter Mike Schwanke. 2:30 p.m., SR-253 Russell Senate Office Building.

March 22
House Financial Services Subcommittee on Monetary Policy and Trade holds a hearing on “Examining Results and Accountability at the World Bank.” 10:00 a.m., 2128 Rayburn House Office Building.

March 22
Senate Committee on Commerce, Science, & Transportation holds a hearing on “The Promises and Perils of Emerging Technologies for Cybersecurity.” Witnesses include representatives of IBM, Intel, Cylance, and the National Venture Capital Association. 10:00 a.m., SD-106 Dirksen Senate Office Building.

March 22
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.” Rescheduled from March 15; 2:00 p.m., 2128 Rayburn House Office Building.

March 23
House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law holds a hearing on the Financial Institution Bankruptcy Act of 2017. Experts include academic and legal experts on bankruptcy law, and The Honorable Mary Walrath, Esq., U.S. Bankruptcy Judge for the District of Delaware. 9:00 a.m., 2141 Rayburn House Office building.

March 23
Senate Committee on Banking, Housing, and Urban Affairs holds a hearing on the nomination of Jay Clayton to serve as a member of the Securities and Exchange Commission. Mr. Clayton will be the only witness. 9:30 a.m., SD-538 Dirksen Senate Office Building.

The Ellis Insight. Jim Ellis reports on political news:

> Redistricting

Last week we again found a federal judicial panel striking down district boundary lines, this time in Texas. Originally, the 35th CD (Rep. Lloyd Doggett-D) was declared unconstitutional in 2011, but a Supreme Court remand to the originating court has left the situation hanging in abeyance for three election cycles. Now, CDs 23 (Rep. Will Hurd-R) and 27 (Rep. Blake Farenthold-R) have also been invalidated because the court says Hispanic voters have been “packed” into these districts. This process still has a long road ahead, most likely beginning with an official appeal to the US Supreme Court.

In addition to the Texas situation, redistricting lawsuits are alive in Alabama, North Carolina, and Virginia. Democrats have been aggressive this late in the decade because they thought Hillary Clinton would be elected President, thus giving them a majority on the Supreme Court. Therefore, it appeared that the time was ripe to attempt to change how minority districts are drawn. With Trump nominee Neil Gorsuch set to soon join the high court, Republicans will assume their one-vote majority, but this does not necessarily guarantee that the latest redistricting rulings will be overturned.

> Senate

Delaware:  In the latter part of 2016, Sen. Tom Carper (D), who has been in elective office consecutively since 1977, was seriously contemplating retirement. Now, however, he seems to be changing course. Saying that he is energized in his efforts to help de-rail the Trump agenda, Sen. Carper said two weeks ago that he is heavily leaning toward seeking a fourth six-year term next year. Should he run, Mr. Carper will have little in the way of primary or general election opposition.

Indiana:  Sen. Joe Donnelly (D) may well be the Republicans’ number one target in 2018. The state went Republican from top to bottom in 2016, and the Indiana GOP has always performed at its best in the mid-term cycles. Comments made from both Reps. Luke Messer (R-Greensburg) and Todd Rokita (R-Brownsburg), the latter through a campaign spokesman, suggest that each House member is moving closer to running for Senate. Though this would be a difficult primary if the two challenge each other, it is clear that Sen. Donnelly will draw a tier-one opponent regardless of who emerges as the Republican nominee.

Nevada:  In a bit of a surprise, freshman Rep. Ruben Kihuen (D-Las Vegas) said last week that he is not “closing the door” in regard to challenging Sen. Dean Heller (R). It is clear that Sen. Heller is the most vulnerable Republican standing for re-election in 2018, considering Nevada’s strong Democratic performance in the last election. While Heller may be vulnerable, the Democrats have yet to see a credible candidate come forward. Hence, Rep. Kihuen’s potential interest is significant.

> House

GA-6:  While polling is showing the north Georgia special election to replace Health & Human Services Secretary Tom Price (R-Roswell) in the House of Representatives is headed toward free-for-all status, the economic conservative Club for Growth organization weighed in last week hoping to change the equation. The Club announced its endorsement of businessman and local city councilman Bob Gray (R) for the special election. Barely at the top of the polling sits former Secretary of State Karen Handel (R) and investigative filmmaker Jon Ossoff (D), while Gray hovers close behind. The polling so far most adversely affects Ms. Handel, as she should easily the best known of the participating candidates. With 18 candidates on the April 18th jungle primary ballot, it is possible that this contest could evolve into a legitimate three-way race among Handel, Gray, and Ossoff. If no one receives a majority vote in the first election, the top two will advance to a June 20th special general election.

IL-3:  Rep. Dan Lipinski (D-Western Springs/Chicago suburbs) may draw primary opposition. Marketing consultant Marie Newman, who would clearly hit Lipinski from the left, has filed an exploratory committee for the 3rd District Democratic primary. Mr. Lipinski, originally elected in 2004, last had a significant primary opponent in 2008. He won that particular campaign with a 54-25% margin of victory.

NE-2:  Former Rep. Brad Ashford (D-Omaha) announced that he will not seek a re-match with the man who ousted him from office in November, freshman Rep. Don Bacon (R-Papillion), despite losing by only one percentage point. Mr. Ashford’s wife, however, may enter the race. Attorney Ann Ferlic Ashford is openly considering launching a 2018 campaign.

SC-5:  Filing closed for the May 2nd special primary election in north-central South Carolina. The electoral process will replace former Rep. Mick Mulvaney (R-Lancaster/Rock Hill) who is now Director of the Office of Management & Budget. Seven Republicans, three Democrats, and five Independents filed papers to run. The special primaries are partisan. If no candidate receives an outright majority, the top two finishers advance to a May 16th run-off. The respective party nominees will then square off in a June 20th special election. Republicans are favored to hold the seat. State House President Pro Tempore Tommy Pope and state Representative and former congressional nominee Ralph Norman begin as the early favorites.

SD-AL:  Secretary of State Shantel Krebs enlarged the Republican field of at-large congressional candidates last week by announcing that she will run for Congress. Currently in the race is former Public Utilities Commissioner Dusty Johnson (R) who has already earned term-limited Gov. Dennis Daugaard’s public support. Republicans are expected to hold the open seat. At-Large Rep. Kristi Noem (R-Castlewood) is a declared candidate for Governor.

VA-10:  Reports are flying in northern Virginia that Democratic leaders are again attempting to recruit state Sen. Jennifer Wexton (D) to challenge sophomore Rep. Barbara Comstock (R-McLean). The Congresswoman scored a 53-47% victory in November even while President Trump was losing this lean Republican seat by a solid ten percentage points. Ms. Wexton has previously rebuffed overtures to run for Congress. It remains to be seen what she decides for 2018. This will likely be another expensive and hard fought contest, irrespective of who eventually earns the Democratic nomination.

> Governor

Illinois:  The 2018 Illinois Governor’s race may set a spending record. Last week, yet another multi-millionaire joined the campaign, pledging to spend heavily from his personal finances in becoming a major candidate. Venture capitalist J.B. Pritzker (D) announced that he will challenge Gov. Bruce Rauner (R). In the 2010 election cycle, Gov. Rauner, whose personal wealth extends into the $500 million range, raised, spent, and contributed over $65 million for his 2014 campaign, a state record. Also in the race is businessman Chris Kennedy (D), the son of the late Senator Robert F. Kennedy (D), one of the heirs to the substantial Kennedy fortune.

New Jersey:  Quinnipiac University tested the New Jersey electorate (3/9-13; 1,098 NJ registered voters), and found incumbent Lt. Gov. Kim Guadagno (R) facing a large polling deficit. According to the data, former Ambassador Phil Murphy (D) leads Guadagno, 47-25%, which suggests the GOP is going to have a very difficult time competing in this 2017 statewide election. Incumbent Gov. Chris Christie (R) stands at a miserable 19:76% job approval rating, something that clearly plagues Guadagno. In the Republican primary, the Lt. Governor finds herself holding a 28-18% advantage over comedian Joe Piscopo.

New York:  2014 state Comptroller candidate Harry Wilson, who impressed Republican strategists by coming within a five-point margin of victory, confirms that he is considering challenging Gov. Andrew Cuomo (D) when the latter seeks a third term next year. It is unlikely the Republicans can upend Gov. Cuomo, though he might again have trouble in the Democratic primary, but Mr. Wilson being in the race at least gives them a candidate to rally around and help build the down ballot race structure.

Wisconsin:  Ten-term Rep. Ron Kind (D-La Crosse), thought the be at the top of the Democratic recruitment list to challenge Gov. Scott Walker (R), says he will not run statewide in 2018. He will seek an eleventh term in the House. While this is viewed as a recruitment setback for statewide positioning, it is a positive for the Democratic House contingent. President Trump carried the western 3rd District, meaning Republicans would be competitive in an open seat situation.