Your Weekly Report on the Discord from Washington, D.C.
In Partnership with the Eris Group
House panel votes for CHOICE — While most in Washington were watching the vote on health care, the House Financial Services Committee passed H.R. 10, The CHOICE Act, on a party-line vote last Thursday afternoon. The markup began last Tuesday and continued for three days, as the panel rejected a series of amendments offered by Democratic members of the committee. Chairman Jeb Hensarling (R-TX) offered an amendment in the nature of a substitute, which was accepted before the final vote. Among other provisions, the bill would repeal the Volcker Rule and replace the procedures for orderly liquidation to a new form of bankruptcy for large financial institutions. The 591-page bill comprises several regulatory burden relief measures that the committee previously approved. More information about the bill is here. The CHOICE Act does not yet have a companion bill in the Senate.
Spending measure will keep government running until September — The House voted last Wednesday and the Senate voted last Thursday to approve a spending bill that will keep the federal government open until September 30. The bill boosts spending for defense and border security, but did not authorize any funds for construction of a border wall.
Flood insurance can be reauthorized on schedule, says Crapo — The Senate Banking Committee held a second hearing on the reauthorization of the National Flood Insurance Program (NFIP) last week, with testimony from taxpayer advocates, the Coalition for Sustainable Flood Insurance, and the Association for State Floodplain Management. Witnesses agreed on the importance of improving flood mapping capabilities, and tying mitigation efforts to higher costs for those who disregard risk. Larry Larson, speaking for the Association of State Floodplain Management, said that the NFIP is not an insurance program, but the nation’s flood management program. The NFIP’s current five-year reauthorization expires in September, and Chairman Mike Crapo (R-ID) said that he believes the Senate can act on new legislation before then.
Senate Banking discusses US-EU insurance agreements — A Senate Banking Committee hearing last Tuesday focused on the agreements governing U.S. insurance companies’ international operations and international insurers’ operations in the U.S. Michael McRaith, former director of the Federal Insurance Office (FIO), told the panel that the covered agreement negotiated by the U.S. and the European Union allows for unprecedented participation by state regulators, while establishing a structure that gives American reinsurers full access to the European market. Julie McPeak, Tennessee Commissioner of Commerce and Insurance, said that state insurance regulators had not been included in the Joint Committee on the agreement. The National Association of Insurance Commissioners (NAIC) wrote to Treasury Secretary Steven Mnuchin and the US Trade Representative last month to ask for clarification on this and other issues.
Noreika replaces Curry at OCC — As expected, President Donald Trump removed Thomas J. Curry from his position as Comptroller of the Currency last week, replacing him on an acting basis by Keith A. Noreika. Curry’s five-year term expired on April 9. Noreika, who takes office today, has been a partner with Simpson Thacher & Bartlett LLP and was previously a partner at Covington & Burling, specializing in bank regulation. He has an undergraduate degree from the Wharton School at the University of Pennsylvania, and is a graduate of Harvard Law School. Noreika is unlikely to be appointed to the job on a permanent basis; news reports suggest that Joseph Otting, former CEO of OneWest, will be the President’s choice.
FDIC publishes final handbook for de novo organizers — Last week the Federal Deposit Insurance Corporation released its long-awaited manual Applying for Deposit Insurance — A Handbook for Organizers of De Novo Institutions, which it called “a practical and plain language guide.” The guide explains how to prepare an application, offers guidance on how the FDIC evaluates applications, and provides advice on assembling a board of directors and management team, developing a business plan, and calculating the necessary amount of initial capital. The guide is largely the same as the draft released in December 2016, but includes additional clarifications requested by commenters. The FDIC has been holding regional outreach meetings for those interested in organizing new banks, and will hold meetings in Kansas City and Chicago later this month.
Luetkemeyer, Republicans challenge Fed capital review process — Rep. Blaine Luetkemeyer (R-MO), Chairman of the House Financial Services Subcommittee on Financial Institutions and Consumer Credit, led a group of 30 Republicans on a letter to Federal Reserve Chair Janet Yellen last week to express concern about “the lack of transparency in the Board’s process and analyses” in enforcing Comprehensive Capital Analysis and Review (CCAR) requirements. The congressmen argued that the current system drives financial institutions “to overcompensate in their diversion of resources,” and that as a result, “significant amounts of capital that would have otherwise been available is ring-fenced, constricting lending and economic growth.” The letter asked the Fed to consider a public review of testing models, and warned Chair Yellen against “adding to the Board’s supervisory activities.” The group asked Chair Yellen to respond to the letter by May 18.
This Week in Washington:
May 10
Senate Banking Subcommittee on National Security and International Trade and Finance holds a hearing on “Secondary Sanctions Against Chinese Institutions: Assessing Their Utility for Constraining North Korea.” Witnesses will be Adam Szubin, former Acting Secretary of the Treasury and former Acting Under Secretary of the Treasury for Terrorism and Financial Crimes; and the Honorable Juan Zarate, Chairman of the Financial Integrity Network and former Assistant Secretary of the Treasury for Terrorist Financing. 10:00 a.m., SD-538 Dirksen Senate Office Building.
May 10
Senate Committee on Homeland Security & Governmental Affairs holds a hearing on “Cyber Threats Facing America: An Overview of the Cybersecurity Threat Landscape.” 10:00 a.m., SD-342 Dirksen Senate Office Building.
May 11
Senate Committee on Banking, Housing and Urban Affairs holds a hearing on “The Status of the Housing Finance System after Nine Years of Conservatorship.” The Honorable Mel Watt, Director of the Federal Housing Finance Agency, will be the only witness. 10:00 a.m., SD-538 Dirksen Senate Office Building.
The Ellis Insight. Jim Ellis reports on political news:
> Senate
Alabama: A somewhat surprising turn of events occurred last week, as two House members thought to be in good position to run for the Senate because they don’t have to risk their current positions to enter the special election, both announced they will not challenge appointed Sen. Luther Strange (R). Reps. Robert Aderholt (R-Haleyville) and Bradley Byrne (R-Mobile) say they won’t run statewide, though the latter man leaves the door open for a gubernatorial campaign next year. State Senate President Del Marsh, who appeared to be a sure Senate candidate, also has not yet entered the race. The candidate filing deadline is May 17th.
Arizona: Rep. Kyrsten Sinema (D-Phoenix), who had been at the top of the Democratic recruitment list to challenge Sen. Jeff Flake (R), announced on a Phoenix radio station late last week that she will seek re-election to the House next year. Speculation was becoming strong that the three-term Congresswoman would enter the Senate campaign because her first quarter fundraising had been so strong. Raising almost $700,000, Rep. Sinema’s campaign has just under $2.8 million in the bank, exactly $1 million more than Sen. Flake. With Sinema out of consideration, the next key recruitment target will likely be Dr. Randall Friese, a Democratic state Representative and surgeon who operated on former Rep. Gabrielle Giffords (D-Tucson) after she suffered a near fatal gunshot attack. Former state Senator and 2016 US Senate candidate Kelli Ward remains a GOP primary opponent to Sen. Flake. State Treasurer Jeff DeWit, the chairman of President Trump’s Arizona campaign, is a potential Republican candidate.
Missouri: The first Republican at-large primary poll was conducted last week. Kansas City-based Remington Research (4/28-29; 915 likely MO Republican primary voters; via Interactive Voice Response system) finds Attorney General Josh Hawley leading Rep. Ann Wagner (R-Ballwin), 30-14%, with two other potential candidates in single-digits. Mr. Hawley is unlikely to run for the Senate, while Rep. Wagner is expected to announce her own campaign in several weeks. The eventual Republican primary winner will challenge Sen. Claire McCaskill (D) next year, in what promises to be a highly competitive race.
Pennsylvania: Luzerne County US Rep. Lou Barletta (R-Hazelton) confirms that he is considering entering the statewide Republican primary for purposes of challenging two-term Sen. Bob Casey Jr. (D) next year. With a campaign treasury holding less than $400,000, Mr. Barletta must quickly organize a major statewide fundraising operation if he is to become a credible candidate. Sen. Casey is working to maximize his advantage. In the first quarter, he raised $2.7 million, and has $3.8 million cash-on-hand.
West Virginia: Rep. David McKinley (R-Wheeling) says he will make an announcement this week regarding challenging Sen. Joe Manchin (D) next year. Until last week, Mr. McKinley had not factored in the US Senate conversation. Most of the discussion surrounded only Attorney General Patrick Morrisey (R) and Rep. Evan Jenkins (R-Huntington). A McKinley entry would certainly add an unexpected twist to this campaign.
> House
FL-27: The dean of the Florida congressional delegation and the first Cuban American to ever win election to Congress announced her retirement last week. Rep. Ileana Ros-Lehtinen (R-Miami) says her current 15th term in the House will be her last, as she will not run for re-election next year. This means at least 15 seats will be open for the next vote, including the special elections, with another 27 where members are considering running for other positions or retiring from elective politics. The Ros-Lehtinen seat, Hillary Clinton’s strongest district that elected a Republican to the House (+19 percentage points), will be a major Democratic conversion target as a 2018 open seat.
GA-6: Democratic pollster Anzalone Liszt Grove Research conducted the first special general election poll that has been publicly released. The poll (4/23-26; 590 GA-6 likely special election voters) finds Democrat Jon Ossoff leading Republican former Secretary of State Karen Handel, 48-47%. Ossoff continues to perform well in this contest, but Handel is clearly uniting the Republican base considering her jungle primary total was only 20%. This expensive race appears poised to be close all the way to the June 20th special general vote.
IA-1: After filing a congressional exploratory committee a few weeks ago, state Rep. Abby Finkenauer (D) announced that she will challenge sophomore Rep. Rod Blum (R-Dubuque) in what is the strongest Democratic district in the state. Mr. Blum has won two convincing elections against strong opponents, so he will not be easy to dislodge. Despite the district giving 56% of its votes to President Obama in 2012, Donald Trump carried the seat 49-45% last November. Even so, the 1st was Hillary Clinton’s best Iowa district.
MT-AL: Candidates Greg Gianforte (R), Rob Quist (D), and Mark Wicks (Libertarian) participated in a televised debate in anticipation of their May 25th special election to fill the state’s lone congressional district, vacant once former Rep. Ryan Zinke (R-Whitefish) was appointed US Interior Secretary. Mr. Gianforte appeared to command the debate, effectively neutralizing Quist’s attacks, and moving the Democratic nominee to the left. Though Quist has raised well over $1.5 million for the race, the national Democratic Party leadership now seems less enthused with the race, and looks to be diverting even more resources from here to the Georgia special.
SC-5: Voters went to the polls last week to begin the party nomination process to replace former Rep. Mick Mulvaney (R-Lancaster/Rock Hill), who is now Director of the Office of Management & Budget. On the Republican side, a virtual tie resulted. The two favorites in the field of seven candidates, state House Speaker Pro Tempore Tommy Pope and former state Representative and 2006 congressional nominee Ralph Norman were separated by only 118 votes. The 40% who voted for other candidates will become key targets for the run-off election, scheduled for May 16th, and the final nomination result is very much in doubt. Both men also hail from York County, the district’s largest population entity, and the two candidates came within 177 votes of each other. For the Democrats, former Wall Street executive Archie Parnell easily won the party nomination, scoring 71% of the primary vote. He advances to the June 20th special general election, and awaits either Pope or Norman. Republicans are favored to hold the seat.
> Governor
Florida: Former US Rep. Gwen Graham (D-Tallahassee), the daughter of ex-Governor and US Senator Bob Graham (D), announced that she will enter the open gubernatorial campaign next year. Already in the Democratic primary is Tallahassee Mayor Andrew Gillum and real estate investor Chris King. State Agriculture Commissioner and former US Rep. Adam Putnam (R-Lakeland), often projected as the favorite to capture the Governor’s mansion, has yet to announce his own candidacy but is expected to do so shortly.
Iowa: State Sen. Nate Boulton (D-Des Moines) announced his gubernatorial campaign last week, becoming the fifth Democratic candidate to do so. Sen. Boulton joins state Rep. Todd Prichard, former state Democratic Party chair Andy McGuire, ex-Des Moines School Board president Jon Neiderbach, and Polk County Conservation Director Rich Leopold in the race. The winner will likely face Lt. Gov. Kim Reynolds (R), who will ascend to the Governorship once Gov. Terry Branstad (R) is confirmed as US Ambassador to China.
New Mexico: Television executive Jeff Apodaca, son of former Gov. Jerry Apodaca (D) who served in the mid to late ‘70s when New Mexico limited its state chief executives to one term in office, entered the open Democratic gubernatorial primary for next year’s race. He faces Rep. Michelle Lujan Grisham (D-Albuquerque) and state Sen. Joe Cervantes so far in the Democratic primary. Others are expected to join the race. Gov. Susana Martinez (R) is ineligible to seek a third term.
Oklahoma: Continuing last week’s theme of relatives running for Governor, former four-term Attorney General Drew Edmondson (D) announced that he will again run for the state’s top office. Mr. Edmondson lost the 2010 Democratic primary. His father, Ed Edmondson, was a Democratic Congressman, uncle J. Howard Edmondson became Governor, and his brother James Edmondson is a Justice of the Oklahoma Supreme Court. Gov. Mary Fallin (R) is ineligible to seek a third term. Republicans will be favored to hold the open seat.