Your Weekly Report on the Discord from Washington, D.C.
In Partnership with the Eris Group
. . . And we’re back. Congress won’t return to Washington until this week, but we have much to report and even more to prepare for. The federal government’s funding runs out a week from today, and the forecast calls for frenzy.
Hearing scheduled for Financial CHOICE Act — The House Financial Services Committee released a discussion draft of the Financial CHOICE Act of 2017 last week, and will hold a hearing on the bill this Wednesday. Chairman Jeb Hensarling (R-TX) said that Republicans were “eager to . . . replace the Dodd-Frank mistake,” and that the Financial CHOICE Act would offer “real consumer protections that will give you more choices.” The committee approved an earlier version of this bill last September; this year’s draft includes some updates. The bill seeks to provide regulatory relief for smaller banks, curb the supervisory authority of the Federal Reserve System, and create bankruptcy procedures for financial firms that fail. A list of the bill’s major provisions is here.
Health care repeal not dead yet, says Ryan — As rumors swirl of a deal among Republican party factions, Speaker of the House Paul Ryan told a UK think tank last week that Obamacare repeal efforts are “not dead,” and that leadership is close to announcing an updated proposal. House Republicans are scheduled to discuss this and other issues in a conference call tomorrow, and could vote on a new proposal as soon as this week.
President signs Executive Order, memoranda on tax rules, SIFI designation, liquidation authority — Last Friday afternoon President Trump signed an executive order and two memoranda for the Treasury Department. The executive order asks Secretary of the Treasury Steven Mnuchin to review 2016 regulations on the tax treatment of corporate inversions, promulgated to discourage US companies from moving earnings abroad. The first memorandum directs the Treasury to study the risks of designating financial institutions as systemically important, thus placing them under Federal Reserve supervision. The second requires the Treasury to review the FDIC’s orderly liquidation authority (OLA) for resolving failed financial holding companies and their nonbank subsidiaries, as established by Title II of Dodd-Frank.
CFPB delays effective date on prepaid accounts rule, pending review — The Consumer Financial Protection Bureau released a final rule last Thursday that will postpone the effective date of its rule on prepaid accounts from October 1, 2017 to April 1, 2018. The Bureau will revisit “at least two substantive issues” in the rule through a separate notice-and-comment process: the linking of credit cards to digital wallets, and error resolution and limitations on liability for prepaid accounts that are not registered or cannot be registered. The Bureau says it will release a proposal on these issues in the next few weeks.
Garrett, Bachus named to Ex-Im Bank — Although President Donald J. Trump had called the Export-Import Bank “excess baggage” during last year’s campaign, and had hinted that he would allow the organization to expire, he announced last week that he will appoint former Representative Scott Garrett as the Bank’s new President, and former Senator Spencer T. Bachus III as a member of its board. Garrett was Chairman of the House Financial Services Subcommittee on Capital Markets, Securities, and Investment before losing his reelection bid last year. He voted against renewing the Ex-Im Bank’s charter in 2012 and in 2015. House Financial Services Committee Chairman Jeb Hensarling, a vocal opponent of the Ex-Im Bank, said that “the President was right to choose principled leaders like these to safeguard the agency against further mission creep, fraud, waste and abuse.”
OCC schedules “office hours” on innovation — The Office of the Comptroller of the Currency’s Office of Innovation will hold private meetings next month with representatives of national banks, federal savings associations, and fintech companies to talk about the agency’s perspective on responsible innovation. The meetings will take place on May 16 and 17 at the OCC’s San Francisco office. To request a meeting, submit this form by April 25.
Bipartisan panel calls for independent federal insurance regulator — The Bipartisan Policy Center’s report on “Improving U.S. Insurance Regulation,” released at a conference last week, calls for greater authority and independence for the Federal Insurance Office (FIO) and better state-federal coordination, as well as better funding for state agencies and limited use of third-party contractors. Former FIO Director Michael McRaith and FSOC member Roy Woodall both expressed support for moving the FIO out of the Treasury Department, and including an independent FIO director on the Financial Stability Oversight Council.
This Week in Washington:
House Rules Committee meets to consider the rule on H.R. 1694, the Fannie and Freddie Open Records Act of 2017. 5:00 p.m., H-313 U.S. Capitol
House Financial Services Committee holds a hearing on “A Legislative Proposal to Create Hope and Opportunity for Investors, Consumers, and Entrepreneurs (CHOICE).” 10:00 a.m., 2128 Rayburn House Office Building.
Senate Committee on Homeland Security & Governmental Affairs holds a hearing on “Duplication, Waste, and Fraud in Federal Programs.” 10:00 a.m., SD-342 Dirksen Senate Office Building.
Senate Committee on Banking, Housing, and Urban Affairs holds a hearing on “Countering Russia: Further Assessing Options for Sanctions.” 10:00 a.m., SD-538 Dirksen Senate Office Building.
House Financial Services Subcommittee on Terrorism and Illicit Finance holds a hearing on “Safeguarding the Financial System from Terrorist Financing.” 2:00 p.m., 2128 Rayburn House Office Building.
The Ellis Insight. Jim Ellis reports on political news:
Alabama: Last week, new Gov. Kay Ivey (R) changed the Senate special election schedule. Previously, resigned Gov. Robert Bentley’s (R) placed the Alabama Senate special concurrently with the 2018 regular election cycle and appointed then-Attorney General Luther Strange (R) to fill the position until such election is held. The seat was vacant because then-Sen. Jeff Sessions (R) was appointed US Attorney General. Gov. Ivey, possibly in order to blunt a bipartisan federal lawsuit making its way through the court system demanding a schedule change, has ordered the election moved to the summer and fall. The partisan primaries will now be held August 15th, with any necessary run-off election moving to September 26th. The special general re-locates to December 12th. A large number of contenders are expected, especially now that none of the interested elected officials have to risk their current political positions in order to run. The field will form soon. The candidate filing deadline is set for May 17th, though the various state political parties have the authority to require an earlier deadline.
Florida: It appears the Sunshine State US Senate race will take a long time to develop. Last week Gov. Rick Scott (R), expected to challenge Sen. Bill Nelson (D) next year, says he will wait until 2018 to make a decision about running. The Governor’s approval ratings are at their zenith, he has the ability to self-fund, and apparently has already frozen out viable potential Republican candidates. Occupying a major political post with the ability to generate daily headlines, a short campaign cycle would play to Gov. Scott’s advantage.
Nevada: Rep. Dina Titus (D-Las Vegas) again confirmed last week that she is considering challenging Sen. Dean Heller (R), but says any final decision won’t be made until the summer. Her supposed interest in a Senate race doesn’t appear particularly sincere, however. Rep. Titus’ first quarter fundraising was virtually non-existent ($73,104 in total receipts), and she has only $274,715 cash-on-hand. These are not the finance figures of someone looking to challenge an incumbent US Senator in what will be a very tough race.
New Mexico: Sen. Martin Heinrich (D) has drawn at least one opponent, and may have two. Businessman Mick Rich (R), a member of the New Mexico Labor Commission, announced his candidacy last week but could switch to the Governor’s race if Lt. Gov. John Sanchez (R) decides to run for Senate. Originally, Mr. Sanchez was an expected gubernatorial candidate, but is now making statements that he is considering launching a challenge against Mr. Heinrich.
Texas: A new Texas Lyceum organization poll (4/3-9; 1,000 TX adults), ostensibly to track issues and attitudes, asked a question about the upcoming US Senate race. The results found Sen. Ted Cruz (R) surprisingly trailing potential opponent Joaquin Castro (D), the San Antonio Congressman, and tied with his announced adversary, Rep. Beto O’Rourke (D-El Paso). Cruz was down 31-35% to Castro, while the latter two were deadlocked at 30% apiece. The survey is flawed, at least from a ballot test perspective, in that the pollsters weighted the responses based upon the Texas population base instead of the registered voter pool. Therefore, the data skews heavily Democratic since the sample configuration contained 57% minority respondents. This number, while in line for the overall Texas population, is not accurate as it relates to the Lone Star State electorate.
Utah: More evidence is forthcoming that Sen. Orrin Hatch (R) plans to seek an eighth term. Reports suggest that his first quarter fundraising report will reveal over $1.5 million obtained for the quarter, with more than $3.5 million cash-on-hand. The activity certainly suggests the Senator is preparing for another campaign. Publicly, Mr. Hatch has stated that he is leaning toward running again, but has not made an unequivocal statement outlining his intentions.
GA-6: The long-awaited special congressional election occurred last week and, as expected, Democrat Jon Ossoff placed first in the jungle primary. He scored 48.1% of the vote, a bit more than polling predicted, but short of winning the seat outright. Therefore, he advances to a June 20th run-off election with former Secretary of State Karen Handel (R), who finished second among the 17 other candidates with 20%. The contenders, party committees, and outside organizations have already combined to spend more than $16 million. Much more will be expended in the special general election possibly making this the most expensive congressional campaign of all time. The seat is vacant because former Rep. Tom Price (R-Roswell) was appointed Health & Human Services Secretary. A Democratic victory would clearly be an upset. The combined Republican primary vote, however, was 51%. Turnout was huge, with 192,084 voters participating.
KS-3: 2016 Democratic nominee Jay Sidie, a local businessman who held incumbent Rep. Kevin Yoder (R-Overland Park) to a 51-41% victory, announced last week that he will run again in 2018. Polling suggested the race would be tighter, and the seat was rated an upset possibility heading into Election Day. Hillary Clinton carried the Republican district by a 47-46% margin. The congressional result disappointed the Democratic leadership, and Sidie, a first-time candidate, took hits for not performing particularly well on the campaign trail. It is likely he will face primary opposition before getting another shot at Rep. Yoder. The Congressman is also a potential gubernatorial candidate, so this congressional race could see a great deal of action next year.
MN-1: In 2016, Republican nominee Jim Hagedorn failed to attract much in the way of financial support spending only $368,000 and not getting national Republican backing, yet he still managed to score 49.6% of the vote against Rep. Tim Walz (D-Mankato). Now that Mr. Walz is running for Governor, Republicans have renewed interest in the 1st District. Mr. Hagedorn is already running again, and raised more than half of his 2016 total ($220,000) in the first quarter just reported. The Republican nominee’s father, former US Rep. Tom Hagedorn (R), represented the state for four terms in the 70s and early 80s.
MT-AL: The Montana at-large special election between Republican businessman Greg Gianforte and country rock singer Rob Quist (D) will soon take center stage in the special election cycle, but the state legislature last week took action to stop a major change in the voting procedure. Democrats had been attempting to convert the vote to an all-mail system, similar to what is used in Washington, Oregon, and Colorado, but the Republican-controlled legislature formally voted down the measure. Therefore, the May 25th special election will be administered in the traditional fashion.
UT-3: Rep. Jason Chaffetz (R-Alpine/Sandy) announced that he will not seek a sixth term in 2018, and now says he may not finish the current term. Rumors were abounding that his departure from Congress was imminent, but Mr. Chaffetz made clear his resignation will not come for some time. Should he not complete his term of service, Utah will hold its first congressional special election since 1930. Mr. Chaffetz is now the 14th House member and ninth Republican to announce he will not seek re-election, including the four concurrent special elections. The seat will remain in Republican hands.
VA-10: Rep. Barbara Comstock (R-McLean), who scored a hard fought 53-47% re-election victory despite President Trump losing the district by ten percentage points, has drawn yet another Democratic opponent. State Sen. Jennifer Wexton (D) announced that she will enter the 2018 congressional contest. National and state Democratic leaders had been attempting to recruit her for the past two election cycles. Already in the Democratic primary race are Kimberly Adams, the former president of the Fairfax County Education Association, Iraq War veteran Don Helmer, and former Veterans Administration official Lindsey Davis Stover. The two 2016 campaigns spent a combined $8 million, not counting substantial Super PAC and party expenditures. We can again expect a highly competitive battle in 2018.
Minnesota: Ramsey County Commissioner Blake Huffman became the first Republican to declare for the 2018 open Governor’s race. Five Democrats, including Rep. Tim Walz (D-Mankato), state Auditor Rebecca Otto, and St. Paul Mayor Chris Coleman, are already announced candidates. The eventual Democratic nominee will be favored to succeed Gov. Mark Dayton (D) who chose not to seek a third term.
Tennessee: Speculation has been mounting that Sen. Bob Corker (R) will not seek re-election and instead enter the open race for Governor. Last week, Sen. Corker did little to dissuade such talk. He indicated that he has not made any decisions about his 2018 political plans, but acknowledged he has not ruled out running for Governor.
Utah: It was readily assumed that Gov. Gary Herbert (R) would not seek a fourth term in 2020. In a news conference last week, the Governor dispelled such comments, indicating that he has not ruled out seeking re-election and that commentators and reporters should stop excluding his name from the list of potential candidates. Mr. Herbert assumed the Governorship in 2009 when incumbent Jon Huntsman (R) resigned to become US Ambassador to China in the Obama Administration. He won a special election in 2010 to serve the balance of the initial term, and was subsequently elected to full terms in 2012 and 2016. He has averaged a strong 68% of the vote in his three gubernatorial elections.