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

In Partnership with the Eris Group

A moment of silence for hockey pucks everywhere — Don Rickles, the man who said what we all wished we could, died last Thursday at 90. While young people know him as the voice of Mr. Potato Head in Toy Story, he started out to be a serious actor, training at the American Academy of Dramatic Arts. He broke into comedy as the opening act at strip clubs, where he honed the fine art of insult. Over a career of more than 60 years, he insulted everyone from Frank Sinatra to presidents — “I was the guy who could rip somebody, and they’d laugh at it.” We could use some laughs around here.

Gorsuch confirmed to Supreme Court — After a bitter procedural fight that ended in the so-called “nuclear option,” lowering the cloture threshold from 60 to 51, the Senate voted Friday morning, 54-45, to confirm Neil M. Gorsuch as an Associate Justice of the Supreme Court. Gorsuch, 49, will fill the seat left vacant by Antonin Scalia’s death in February 2016. He will be sworn in on Monday in two ceremonies, one private, one public, and will hear arguments starting on Monday, April 17.

DOL announces 60-day delay for fiduciary rule — Surprising exactly no one, the Department of Labor announced last week that it will delay the effective date of the fiduciary rule, originally scheduled for April 10, by 60 days. The new effective date is June 9, unless the Department moves to change or rescind the rule between now and then.

Cordray faces grilling, asserts authority on small business lending data — Richard Cordray, director of the Consumer Financial Protection Bureau, appeared before the House Financial Services Committee last Wednesday for a hearing that could not be described as friendly. Committee Chairman Jeb Hensarling (R-TX) repeated his call for the President to dismiss Cordray immediately, and said that the agency too needed to be reconstructed in a constitutional manner. Director Cordray said that now the agency has its HMDA rules in place, it will turn its attention to the data collection on small business lending required by Section 1071 of Dodd-Frank. Chairman Hensarling noted that the CFPB has failed to meet Dodd-Frank’s requirements for rulemaking, and that this on its own would merit Cordray’s firing.

Bankruptcy bill for giant banks clears House — The Financial Institution Bankruptcy Act of 2017 (H.R. 1667), to create an expedited process for resolving failed banks with $50 billion in assets or more, passed the House by voice vote last Wednesday. The process created by H.R. 1667 would be an alternative to Dodd-Frank’s procedures for resolving systemically important financial institutions. The House passed an earlier version of this bill in the last Congress, but it did not clear the Senate.

House approves two regulatory relief bills — The House of Representatives voted 331-87 last Tuesday to approve H.R. 1343, the Encouraging Employee Ownership Act, which would raise the sales threshold for requiring additional disclosures about compensatory benefit plans from $5 million a year to $10 million a year. The bill would make it easier for companies to offer stock options as compensation. Last Thursday the House voted 417-3 to update SEC registration requirements for venture capital funds, raising the limit of individual investors from 100 to 250.

Senate Banking okays Clayton nomination to SEC — The Senate Committee on Banking, Housing and Urban Affairs voted 15- 8 last Tuesday to approve the nomination of Jay Clayton to serve on the Securities and Exchange Commission. Democratic Senators Jon Tester (D-MT), Mark Warner (D-VA), and Heidi Heitkamp (D-ND) voted in favor of the nomination, while ranking member Senator Sherrod Brown (D-OH) said that, “With Mr. Clayton’s conflicts, and his failure to understand the concerns and risks faced by American savers, I am unable to support his nomination.”

SEC approves changes to expand crowdfunding — Two weeks ago the Securities and Exchange Commission adopted amendments to raise the amounts of money companies can raise through crowdfunding, and the threshold for eligibility for benefits to emerging growth companies under the JOBS Act. The new levels will take effect immediately upon publication in the Federal Register.

Arbitrary and duplicative, or a force for recovery? — Witnesses for the private sector told the House Financial Institutions Subcommittee last Thursday that the financial regulatory system since Dodd-Frank has been counterproductive and arbitrary, creating a one-size-fits-all dynamic that stifles competition and regulates by enforcement. Amias Moore Gerety, former acting assistant secretary of the Treasury for financial institutions, said that Dodd-Frank’s reforms had strengthened the economy and created a clear framework for preventing future crises. Committee members expressed concern about regulatory overreach on several fronts, including the FDIC’s Operation Chokepoint, Community Reinvestment Act supervision, recent CFPB enforcement actions, and the role of the Fed in supervising finance companies. Subcommittee Chairman Blaine Luetkemeyer (R-MO) voiced particular interest in a Heritage Foundation proposal for reforming the Federal Reserve System, which would eliminate the Fed’s supervisory role altogether.

Powell replaces Tarullo as Fed supervisory chair — Federal Reserve Board Governor Jay Powell has been named as Chairman of the Federal Reserve System’s Committee on Supervision and Regulation, replacing Governor Daniel Tarullo, who left the Board last week. Powell also chairs the Fed’s committees on Board Affairs, Federal Reserve Bank Affairs, Smaller Regional and Community Banking, and Payments, Clearing, and Settlement. Powell, an attorney and former investment banker, was assistant secretary and undersecretary of the Treasury under President George H.W. Bush. He was appointed to a full term as a Federal Reserve Board Governor in 2014. The Federal Reserve Board currently has three vacancies.

Richmond Fed seeks new president — The Federal Reserve Bank of Richmond has announced a search for a new president after last week’s resignation of Jeffrey M. Lacker. Margaret Lewis, chair of the bank’s board, will lead the search with the help of the firm of Heidrick & Struggles. Interested candidates can submit their information here.

Tarbert named to Treasury international post — The White House announced last Tuesday that President Trump will nominate Heath P. Tarbert as Assistant Secretary of the Treasury, International Markets and Development. Tarbert is a partner in the law firm of Allen & Overy, where he heads the U.S. Bank Regulatory group. His previous experience includes service as Special Counsel to the Senate Banking Committee, Associate Counsel to President George W. Bush, and law clerk to Supreme Court Justice Clarence Thomas.

Chaffetz calls FEMA, state response to Louisiana storm “an embarrassment” — The new acting administrator of the Federal Emergency Management Agency, the governor of Louisiana, and the CEO of a recovery contractor came in for harsh criticism at a House Oversight Committee hearing last Wednesday. Committee Chairman Jason Chaffetz (R-UT) said that the committee had identified “egregious” failures at FEMA in response to the storm that flooded central Louisiana last August, particularly with regard to the use of manufactured housing units (MHUs). Louisiana’s “shelter at home” program, designed to keep residents in their houses while the houses are being repaired, was also described as a failure in its execution. Committee members on both sides of the aisle questioned FEMA’s costs of materials and its management of contractors.

Duffy, Heck seek Congressional authority to undo insurance pacts — Representatives Sean Duffy (R-WI) and Denny Heck (D-WA) are asking colleagues for feedback on a proposal that would allow Congress to intervene and block international insurance deals under the Congressional Review Act. The bill would give Congress the authority to overturn the “covered agreements” negotiated by the Treasury Department with the EU and other countries under Dodd-Frank.

FinTech publishes 50-state survey of money transmitter laws — The George Washington Center for Law, Economics & Finance published the results of its 50-state survey of money transmission laws last week. The results are available as a web-based tool, and the researchers said “we hope that this can serve as a proof-of-concept for how state-based FinTech regulation can become more accessible while maintaining its biggest strength—adaptability.”

FDIC publishes guide for community banks on Federal Home Loan Bank programs— Last week the Federal Deposit Insurance Corporation published the third of three guides for community banks on the resources available to them to facilitate mortgage lending. The guide released this week focuses on products and services offered by the Federal Home Loan Banks, including the Affordable Housing Program and the Community Investment Program, advances, the Mortgage Purchase Program, and the Mortgage Partnership Finance® program. Earlier guides provided information about resources available from federal agencies and government-sponsored enterprises, and state housing finance agencies. All three guides are available here.

Conflict minerals may be too much for SEC — The Securities and Exchange Commission’s rulemaking process may not be the best mechanism for addressing illegal trade in conflict minerals, witnesses told the Senate Foreign Relations Subcommittee on Africa and Global Health Policy last Wednesday. While Section 1502 of Dodd-Frank has raised awareness about the use of conflict minerals, and compliance costs are significantly below the SEC’s original estimates, it has also created new opportunities for corruption and money laundering, and it has no local support from the government of the Democratic Republic of the Congo. Rescinding the rule, however, may lead to heightened activity among armed non-state groups. Witnesses called for greater involvement in the issue from the State Department and USAID.

This Week in Washington:

Congress went home last Friday for a two-week recess. Barring unforeseen cataclysms, The Golden Apple will take this Friday off for Good Friday and Passover.