Your Weekly Report on the Discord from Washington, D.C.
In Partnership with the Eris Group
The searches all say they’d have made Whitefish Bay
If they’d put fifteen more miles behind her . . .
Could the Senate have passed health care if they’d put another fifteen miles behind them? That seemed to be Speaker Ryan’s implication last Friday, when House Republicans met behind closed doors to discuss the next steps. The Senate voted down three separate proposals to repeal or curtail the Affordable Care Act last night and this morning, and some of us stayed up too late to watch the final votes. We’re not comparing anything here to a shipwreck, or a train wreck, or Tyrannosaurus Rex, or . . . never mind. Even without the health care votes, it was a busy week in the nation’s capital.
House votes to nullify CFPB rule on mandatory arbitration — The House of Representatives voted 231-190 last Tuesday to approve H.J.Res 111, which would nullify the Consumer Financial Protection Bureau’s rule that prohibits the use of mandatory arbitration clauses. Rep. Keith Rothfus (R-PA) introduced the measure, which was co-sponsored by the Republican members of the House Financial Services Committee. Rep. Walter Jones (R-NC) was the only Republican no vote, while Democrats voted unanimously against the measure.
Bipartisan House Financial Services Committee approves four bills — Not everything split along party lines last week. The House Financial Services Committee voted unanimously last Tuesday to approve four bills that offer great flexibility, certainty and accountability to different sectors of the financial industry. H.R. 2864, the “Improving Access to Capital Act,” would make it easier for smaller reporting companies to raise capital; H.R. 1624, the “Municipal Finance Support Act,” would allow Federal banking agencies to treat certain municipal obligations as level 2A liquid assets; H.R. 3110, which allows the independent member of the Financial Stability Oversight Council to serve until a successor is appointed; and H.R. 3226, the “World Bank Accountability Act of 2017.”
Otting, Quarles testify before Senate Banking — The Senate Banking Committee welcomed Comptroller of the Currency nominee Joseph Otting and Federal Reserve Vice Chairman nominee Randal Quarles to a confirmation hearing last Thursday. Otting took rigorous questioning about his tenure at OneWest, and OneWest’s foreclosures on loans it acquired from IndyMac. Otting said that a “false narrative” had evolved around OneWest’s operations, and emphasized the need for strong underwriting standards. Quarles said that government should be a referee in the financial sector, rather than a player. He endorsed recommendations made by former Vice Chairman Daniel Tarullo, which included repealing the Volcker Rule, easing regulations on community banks, and eliminating the qualitative portion of the Comprehensive Capital Analysis and Review (CCAR).
Mnuchin talks mainly domestic issues at House international finance hearing — The Secretary of the Treasury appeared before the House Financial Services Committee last Thursday to present his annual testimony on the condition of the international finance system, but Secretary Mnuchin and the members of the Committee were more interested in talking about domestic financial services reform. Secretary Mnuchin reiterated the Administration’s concern about excess regulatory burden on small, mid-sized and regional banks, and called for the creation of a single regulator that would eliminate overlap and duplication. He also said that the current housing finance structure was “not sustainable.” Secretary Mnuchin said that comprehensive tax reform remains a priority, and that the plan under consideration would include a significant middle income tax cut while “bringing back the trillions of dollars that are sitting overseas.”
Fintech startup seeks national bank charter — San Francisco-based Varo Money applied last week for a national bank charter and to the FDIC for federal deposit insurance. Varo Bank, N.A. is a mobile-only organization, and would be the first national bank to operate only via smart devices. Varo customers can withdraw cash through the Allpoint ATM network worldwide. The fintech company received funding from Warburg Pincus, the private equity firm that employs former Secretary of the Treasury Timothy Geithner. The Conference of State Bank Supervisors (CSBS) is suing the OCC to block the agency from issuing national bank charters to fintech companies. Another fintech company, SoFi, has applied for a Utah state bank charter and is also seeing federal deposit insurance.
SEC names Wood top lobbyist — The Securities and Exchange Commission announced last Monday that it has named Bryan Wood as Director of the Office of Legislative and Governmental Affairs. Wood has most recently served as Senior Advisor and Counsel to the House Financial Services Committee. He was previously Counsel for the Subcommittee on Capital Markets, Securities, and Investment, and served as Legislative Director to Rep. Robert Hurt (R-VA), former vice chairman of the Capital Markets and Government-Sponsored Enterprises Subcommittee.
Banking agencies to ease CRE appraisal requirements — The Federal banking agencies announced two weeks ago that they plan to raise the threshold for commercial real estate (CRE) transactions that require appraisals to $400,000. Instead, these transactions would require an evaluation that provides a market value estimate of the collateral, without the need for a state-licensed or certified appraiser. The notice of proposed rulemaking is open for comments for 60 days.
SEC says digital tokens are securities — The Securities and Exchange Commission released a study last week that found that “initial coin offerings” and “token sales” offered through distributed ledger or blockchain technology are securities, and are thus subject to federal requirements for sales of securities. Stephanie Avakian, Co-Director of the SEC’s Enforcement Division, said, “The innovative technology behind these virtual transactions does not exempt securities offerings and trading platforms from the regulatory framework designed to protect investors and the integrity of the markets.” SEC Chairman Jay Clayton encouraged market participants “to engage with us.”
Piwowar submits comments on DOL fiduciary rule — Securities and Exchange Commissioner Michael S. Piwowar filed a public comment letter last Monday in response to the Department of Labor’s request for information on the agency’s fiduciary rule. Writing for himself as an individual, not on behalf of the SEC, Piwowar wrote that the fiduciary rule disregards the effectiveness of conflict of interest disclosure, fails to distinguish between “selling” and “advice,” and will disrupt the broker-client relationship in general. “The Fiduciary Rule will have a dramatic impact on the provision of financial services to retail clients throughout the financial services industry,” the Commissioner concluded..
This Week in Washington:
The House is scheduled to begin a month-long recess this week, returning on Tuesday, September 5th. The Senate has no floor activity on the calendar, but committees will hold hearings.
Senate Finance Committee holds a hearing to examine America’s affordable housing crisis. 10:00 a.m., SD-215 Dirksen Senate Office Building.
Senate Commerce, Science and Transportation Subcommittee on Consumer Protection, Product Safety, Insurance, and Data Security holds a hearing to examine insurance fraud in the United States. 10:00 a.m., SR-253 Russell Senate Office Building
Senate Finance Committee holds a hearing on the nominations of Gilbert B. Kaplan to serve as Under Secretary of Commerce for International Trade, and Matthew Bassett to serve as Assistant Secretary of Health and Human Services. 10:00 a.m., SD-215 Dirksen Senate Office Building
The Ellis Insight. Jim Ellis reports on political news:
Alabama: An independent political survey from the local Alabama Cygnal research firm (7/20-21; 500 AL likely Republican primary voters) finds appointed Sen. Luther Strange obtaining 30% support among the Republican base followed by former Alabama state Supreme Court Chief Justice Roy Moore at 26%. Rep. Mo Brooks (R-Huntsville) is falling back, according to this small-sample response group, registering 16 percent.
Though nine Republicans are competing in the August 15th special primary election, the race consistently appears to be among the three polling leaders. If no candidate receives majority support in the mid-August vote, the top two finishers will advance to a September 26th run-off election. At this point, it appears a virtual certainty that a secondary nomination vote will be necessary; hence, these three top candidates are fighting over two positions.
California: Several months ago, California former Gov. Arnold Schwarzenegger (R) tantalized politicos with statements that he might be considering running for the Senate. In an interview with Politico, he announced that he will do no such thing. It was thought Schwarzenegger could be a viable candidate should Sen. Dianne Feinstein (D) decide to retire, and if the former Republican Governor would run as an Independent. He left the Governorship with poor approval ratings and is not favorably viewed within the GOP’s conservative wing.
Hawaii: It had been long speculated that Rep. Tulsi Gabbard (D-Kailua) was considering a Democratic primary challenge to Sen. Mazie Hirono. Such talk was quelled, however, when Sen. Hirono announced that she is fighting kidney cancer but still plans to seek re-election. Last weekend, Rep. Gabbard firmly ended the conjecture by announcing her endorsement of Sen. Hirono’s re-election bid.
Indiana: Rep. Luke Messer (R-Greensburg/Muncie), who has for weeks been considered a sure Senate candidate, confirmed via Twitter last Thursday that he will enter the statewide race. Mr. Messer has scheduled a formal announcement for August 12th. To counter Messer’s tweet, another assumed candidate, Rep. Todd Rokita (R-Brownsburg/Lafayette), released the results of his GS Strategy Group poll (7/16-18; 500 IN likely Republican primary voters) that projects Messer to be trailing the former, 21-14-11%, with support for “others” covered by the last number. If the two Congressmen were the only candidates, Rep. Rokita would lead Mr. Messer, 28-20%.
Nevada: Though it appears most of the Nevada political establishment is following former Senate Democratic leader Harry Reid’s lead and announcing support for Rep. Jacky Rosen (D-Henderson) in the 2018 Senate race, Las Vegas Rep. Dina Titus stated that she is still considering entering the statewide Democratic primary. As part of her statement, and to prove her viability as a potential Senate candidate, Rep. Titus released a Anzalone Liszt Grove Research poll (6/23-29; 602 NV likely voters) that projects her lagging only two points behind incumbent Sen. Dean Heller (R), 45-47%.
West Virginia: Sen. Joe Manchin (D) confirmed last Thursday that he will seek re-election next year. Most indications were that he would run for another term, but speculation did abound that he also might retire. Republican Attorney General Patrick Morrisey and Rep. Evan Jenkins (R-Huntington) oppose each other in what will become a heated primary battle for the Republican nomination.
Wisconsin: As had been expected, businessman Kevin Nicholson (R) announced his candidacy for US Senate earlier last week. Mr. Nicholson has strong financial donor ties as evidenced by a Super PAC already organized to promote his candidacy. Already, more than $3.5 million has been raised for the entity, largely from one mega-donor.
AZ-2: Former US Rep. Ann Kirkpatrick (D-Flagstaff), who gave up her 1st District House seat to unsuccessfully challenge Sen. John McCain (R) last year, announced that she will enter the crowded Democratic primary for a chance to challenge two-term Rep. Martha McSally (R-Tucson) in the southeast Arizona congressional district. The move had been anticipated when Ms. Kirkpatrick re-located from Flagstaff to Tucson. Returning to the 1st District was not a realistic option for her because fellow Democrat Tom O’Halleran (D-Sedona) succeeded her. Seven other Democrats are already in the primary race, so Ms. Kirkpatrick is not even a sure winner in the August 28, 2018 primary. For her part, Rep. McSally already has almost $1 million cash-on-hand.
FL-27: Former state judge Mary Barzee Flores (D), who Sen. Marco Rubio (R) blocked from being confirmed to a federal judgeship during the Obama Administration, announced that she will enter the open seat South Florida race to replace retiring Rep. Ileana Ros-Lehtinen (R-Miami). Ms. Flores becomes the seventh Democrat to declare her candidacy for the seat that may be the Democrats’ best national conversion opportunity.
The Democratic field includes two state legislators, and two local officials, one from Miami, the other from Miami Beach. On the Republican side, former Miami-Dade County School Board member Raquel Regalado, the daughter of Miami Mayor Tomas Regalado, and Miami-Dade County Commissioner Bruno Barreiro lead the candidate contingent.
MD-6: Three-term Rep. John Delaney (D-Potomac) announced Saturday he will run in the 2020 presidential contest. The Montgomery County anchored 6th Congressional District will be open for the coming election.
NV-3: Former Rep. Cresent Hardy (R-Mesquite), who represented the central Nevada 4th District for one term and was contemplating launching a comeback in the newly opened 3rd District, said last Thursday that he will not run for any position next year. Mr. Hardy upset then-Rep. Steven Horsford (D-Las Vegas) in 2014, but was unseated himself two years later. Rep. Ruben Kihuen (D-Las Vegas) scored a 48-44% victory over Mr. Hardy last November.
UT-3: Now just a little over two weeks from the August 15th special Republican congressional primary, Gov. Gary Herbert (R) has weighed in with his endorsement. The Governor supports Provo Mayor John Curtis over the party endorsed candidate Chris Herrod and public relations executive Tanner Ainge. The latter is the son of Boston Celtics general manager and former Brigham Young University basketball star Danny Ainge. The August 15th Republican primary winner will be a heavy favorite to defeat Dr. Kathryn Allen, the Democratic standard bearer who was chosen in the party’s March special nominating convention. The 3rd District general election is scheduled for November 7th.
Kansas: President Trump nominated Kansas Gov. Sam Brownback (R) as the international US Ambassador-at-Large for International Religious Freedom last week, a position that recent legislation has greatly enhanced. Upon Mr. Brownback’s confirmation, he will resign the Governorship and Lt. Gov. Jeff Colyer (R) will assume the state’s top job, and then be able to run for a full term as the sitting incumbent. Mr. Colyer had not officially joined the Governor’s race, but was reportedly planning to do so, and always understood that his chances of becoming the incumbent before the next election were quite high.
Secretary of State Kris Kobach, prominent oil businessman Wink Hartman, former state Sen. Jim Barnett, and former state Rep. Ed O’Malley, are all active GOP gubernatorial candidates. Former Wichita Mayor Carl Brewer and former state Agriculture Secretary Joshua Svaty are the top Democratic candidates.
New Jersey: Facing an electorate where 71% believes New Jersey is on the “wrong track,” Lt. Gov. Kim Guadagno (R) again sees a poll showing her in desperate straits for her November gubernatorial election battle with former US Ambassador and Wall Street executive Phil Murphy (D). According to the new NBC 4 News/Marist College survey (7/13-18; 895 NJ adults; 187 NJ registered voters), Murphy’s lead stands at 54-33% over Guadagno, which is consistent with other previous polls.
Virginia: Monmouth University just released their new Virginia statewide poll (7/20-23; 502 VA likely voters) and detects a surprisingly tight 2017 gubernatorial campaign to be decided on November 7th. The results find Lt. Gov. Ralph Northam (D) and former Republican National Committee chairman Ed Gillespie tied at 44%, apiece. Examining the polling sample more closely, however, reveals a slight Republican skew. Considering the sample’s GOP tilt, it is more likely that Mr. Northam maintains a low single-digit lead, but Mr. Gillespie certainly remains within striking distance.
Wisconsin: State Education Superintendent Tony Evers (D) filed a gubernatorial campaign committee two weeks ago, but still maintains he has not yet made a final decision about whether to challenge Gov. Scott Walker (R). Mr. Evers was re-elected to a third term in 2017 to his statewide non-partisan office, so he would not have to risk the position in order to run for Governor. Businessman Andy Gronik and state Sen. Kathleen Vinehout (D-Alma/Eau Claire) both have filed committees but also stop short of officially announcing their candidacies.
The Last Word
“They’ll all be fired by me. I fired one guy the other day. I have three to four people I’ll fire tomorrow.”
— new White House communications director Anthony Scaramucci