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

In Partnership with the Eris Group

Hail and farewell, Cassini — The Cassini spacecraft completed its 20-year mission to Saturn, after a series of maneuvers called the Grand Finale that sent one last set of extraordinary images back to earth. Any endeavor that lasts 20 years is something to applaud; one that adds so much to human knowledge is something to marvel at. You can see 100 photos from the Cassini mission here.

Senate hearing on fintech focuses on security — While fintech offers great potential for expanded services at lower costs, uncertainty remains around data security and the appropriate regulatory environment, Senate Banking Committee Chairman Mike Crapo (R-ID) said at a hearing on Tuesday. Witnesses agreed that a clear regulatory framework would benefit both consumers and innovators; the current regulatory framework is too fragmented, and was not designed for fintech companies. The OCC is developing a report for early 2018, but Senator Thom Tillis called this “dog years,” implying that the study would be out of date before its release.

CFPB issues “no action” letter, asks lender to report — On Thursday the Consumer Financial Protection Bureau (CFPB) issued its first “no action” letter, to Upstart Network, Inc., a nonbank lender that uses alternative data to make credit and pricing decisions. The CFPB letter says that the Bureau has no intention to take supervisory or enforcement action against Upstart, but asks for information about Upstart’s loan application and decision processes, and how its model reaches traditionally underserved populations. Upstart had asked for the letter under the CFPB’s Project Catalyst, which encourages consumer-friendly initiatives in the marketplace.

House spending bill would repeal Volcker rule, override fiduciary rule, curb CFPB — The House of Representatives voted yesterday to pass a spending bill that includes several regulatory measures. Among other provisions, H.R. 3354 would subject the CFPB to the appropriations process, and would eliminate its authority over payday lending and arbitration. The bill would also repeal the Volcker rule and override the Department of Labor’s fiduciary rule.

Senate Finance begins work on tax reform — “This committee has a lot of work to do,” Senate Finance Committee Chairman Orrin Hatch (R-UT) said on Thursday, as hearings began on a new attempt at tax reform. Hatch called for bipartisan effort, emphasized that tax reform should benefit the middle class, and made little direct reference to the Administration’s proposal. Witnesses included representatives of the American Enterprise Institute, who urged a broadening of the tax base, and the National Association of Realtors, who opposed any repeal of state and local property tax deductions. While one witness suggested that eliminating deductions for mortgage interest and state and local taxes could pay for overall reductions, no Senator expressed support for those changes.

Patenaude confirmed to HUD post — The Senate voted 80-17 on Thursday to confirm Pamela Patenaude as Deputy Secretary of Housing and Urban Development. Patenaude is a housing policy veteran, serving as White House liaison to HUD under President Reagan, and as assistant HUD secretary for community planning and development under President George W. Bush.

President names Montgomery to lead FHA — President Trump announced Thursday that he will appoint Brian Montgomery to serve as Assistant Secretary of Housing and Urban Development, in the position that oversees the Federal Housing Administration (FHA). Montgomery is Vice Chairman and co-founder of The Collingwood Group. He served in the Executive Office of President George W. Bush, and was Assistant Secretary of the U.S. Department of Housing and Urban Development (HUD) and FHA Commissioner from 2005 to 2009.

Ginnie Mae takes action against aggressive VA lenders — A letter to Senator Elizabeth Warren (D-MA) this week described actions Ginnie Mae is taking to curb aggressive marketing and “churning” of mortgages guaranteed by the Veterans Administration. The agency’s research found a “somewhat saturated” market for VA loans, with borrowers refinancing for high fees at little or no benefit to themselves. New standards adopted in February have expired, and abuses are already resurfacing; therefore, Ginnie Mae and the VA have created a “Lender Abuse Task Force” to develop additional policies for protecting borrowers.

Is China buying too much of the US? — The Committee on Foreign Investment in the United States (CFIUS) is responsible for reviewing transactions that could result in foreign control of US businesses that might threaten national security. Given recent Chinese investments in US companies, the Senate Banking Committee met Thursday to hear testimony about whether CFIUS has sufficient authority and resources to fulfill its mission. Witnesses urged that the US seek reciprocity when approving Chinese investments in US technology companies, and that Congress provide more specific guidance about the types of technologies that warrant security concerns.

Next Week in Washington:

All of next week is a district work period for the House, and the Senate is officially out on Thursday and Friday.

September 19
Senate Finance Committee holds a hearing on Business Tax Reform. Witnesses include Scott A. Hodge, President of the Tax Foundation; Donald B. Marron of the Urban Institute; Troy K. Lewis of the American Institute of CPAs; and Jeffrey D. DeBoer of The Real Estate Roundtable. 10:00 a.m., SD-215 Dirksen Senate Office Building.

The Ellis Insight. Jim Ellis reports on political news:

> President

California:  Political leaders in state of California have been moving their presidential primary from early to late during the immediate past presidential elections, trying to find the best strategic place for what is always the nation’s largest delegation to both national conventions. In 2016, California went back to its traditional June primary, hoping to be the deciding factor for both parties. Largely, their plan worked to a degree because they did attract major campaigning in the state, but it was evident that both Donald Trump and Hillary Clinton would win their respective nominations before voters in the nation’s most populous place had their say. Now, it looks like the state may return to a March primary. The California legislature is expected to vote on a bill next week that will again move the primary to an early voting slot.

Democrats:  Zogby Analytics (released 9/12; 834 likely US voters; 356 likely Democratic presidential primary voters) released what could be the first 2020 Democratic presidential primary poll. Vermont Sen. Bernie Sanders, not surprisingly, leads the group with 28% support from within the tiny sample sector. Former Vice President Joe Biden draws 17%, followed by Massachusetts Sen. Elizabeth Warren who has 12% support. Those in single-digits are Facebook founder Mark Zuckerberg (7%), California Sen. Kamala Harris (6), and New York Senator and Governor, Kirsten Gillibrand and Andrew Cuomo, respectively, (3). Minnesota Sen. Amy Klobuchar and Virginia Gov. Terry McAuliffe bring up the rear with 1% support apiece.

> Senate

Alabama:  Two more polls were published late last week that again return bad news for appointed Sen. Luther Strange. Strategic National (9/6-7; 800 AL registered voters) finds former state Supreme Court Chief Justice Roy Moore leading the interim incumbent, 51-35%, for the special September 26^th Republican run-off election.

Another survey, from the Emerson College Polling Society (9/8-9; 416 AL registered voters) finds Moore leading 34-22% with a much larger undecided factor. The difference in these two polls is that the survey sample was closer to a general electorate cut; therefore, the number of included evangelicals was much lower. This is particularly bad news for Sen. Strange because the other studies showing him trailing badly were all heavily weighted with Judge Moore’s strongest polling segment: evangelicals. All polls project Judge Moore with a lead turning toward the last week of the run-off campaign.

Arizona:  A new GBA Strategies poll (8/30-9/7; 600 AZ likely general election voters; 500 AZ likely Republican primary voters) tested the Arizona electorate and found beleaguered Sen. Jeff Flake falling even further in a Republican Party preference sample. According to the results, former state Sen. Kelli Ward would top Sen. Flake by a gaudy 58-31% in a test Republican primary. His job approval within the Republican segment was a poor 34:58% positive to negative. In a general election pairing with Rep. Kyrsten Sinema (D-Phoenix), an unannounced Senate candidate, the Senator would trail 40-47%. At the crux of Sen. Flake’s problem within his own party is his national feud with President Trump, a verbal scuffle that doesn’t seem to resolve itself.

Montana:  This week, former Governors Marc Racicot, also an ex-Republican National Committee chairman, Stan Stephens, and Judy Martz, along with ex-US Reps. Denny Rehberg (R-Billings) and Rick Hill (R-Helena) all endorsed Judge Russell Fagg (R) for the Republican Senatorial nomination. Judge Fagg has yet to officially announce his Senate candidacy, but he is clearly making moves to enter the race. National party leaders were behind recruiting Sate Auditor Matt Rosendale (R) into the race. Though this is likely to be a competitive statewide race, Sen. Tester must be rated as a clear favorite for re-election.

Wisconsin:  State Senate Majority Leader Scott Fitzgerald (R-Juneau), who had been considered a serious potential US Senate candidate, announced this week that he will not enter the race. He then endorsed his colleague, Sen. Leah Vukmir (R-Brookfield), who declared her own statewide bid last week. Businessman Kevin Nicholson, already being backed with multi-million dollar outside support, is the main Republican contender to date. Former candidate Eric Hovde, a venture capitalist and former Senate candidate, is also considering running again. The eventual Republican nominee challenges first-term Sen. Tammy Baldwin (D) in what will be a competitive general election.

> House

AL-5:  US Rep. Mo Brooks (R-Huntsville), after failing to qualify for the run-off in the August Senate special election, immediately drew two primary challengers. Over the weekend, the pro-Second Amendment organization, BamaCarry, Inc., released a WT&S Consulting survey (8/28-31; 863 self-identified Republican respondents via live telephone interview) that finds the Congressman drawing well over 50% of the vote against his pair of opponents. According to the results, Mr. Brooks attracts 56% support followed by state Sen. Bill Holtzclaw (R-Madison) at 22%, and businessman Clayton Hinchman at five percent.

HI-1:  Rep. Colleen Hanabusa (D-Honolulu) is running for Governor, but states that she will not resign her House seat to devote full time to campaigning. In 2010, then-Rep. Neil Abercrombie (D-Honolulu) resigned the 1^st District seat to avoid the long trips back and forth to Washington. Remaining in the state, he was able to invigorate his gubernatorial campaign and would eventually win the election. But, under Hawaii’s special election law where all candidates are placed on one ballot for a sole election, Republican Charles Djou picked up the seat for the remainder of the congressional term. Ms. Hanabusa then defeated Djou in the subsequent 2010 regular election.

The Congresswoman serving the full term will keep the House seat in the Democratic column, but whether her prolonged absences from the state will weaken her Democratic primary challenge to Gov. David Ige remains to be seen.

MI-11:  Detroit area Representative David Trott (R-Birmingham) released a statement informing his constituency that he will not seek a third term next year, citing a desire to return to the private sector. The surprise retirement sends local Republicans into a chaotic state, and will almost assuredly mean that a strong Democratic nominee comes to the forefront in a battle for the politically marginal seat.

Lena Epstein, one of President Trump’s Michigan campaign co-chairs, is currently an announced US Senate candidate. Now, however, she confirms looking at the open 11^th District as a place where her chances to win may be greater. An apparent move to encourage former Rep. Thaddeus McCotter (R-Livonia) to consider again becoming a candidate is also underway. Weeks ago, former Homeland Security official Fayrouz Saad and Treasury Department appointee Haley Stevens had declared their candidacies. More individuals from both parties are expected to step forward now that the race is open.

PA-8:  With all of the political action occurring in Pennsylvania during the past few days and weeks in relation to retirements, challenges, and appointments, it is no surprise that freshman Rep. Brian Fitzpatrick (R-Levittown) has drawn potential opposition. Former Bucks County prosecutor Dean Malik (D), who has twice run unsuccessfully for Congress, yesterday announced the formation of a congressional exploratory committee for the 2018 election. Since the 1992 election, inclusive, Republicans have only lost this seat twice, but this district runs close and we can expect a competitive 2018 campaign here.

PA-15:  Late last week, seven-term Rep. Charlie Dent (R-Allentown) announced that he will not seek re-election on the heels of state Rep. Justin Simmons (R-Coopersburg) declaring his Republican primary challenge. Congressman Dent will hold elected office for 28 consecutive years when he leaves the House at the beginning of 2019. Prior to his congressional service he spent 14 years in the Pennsylvania legislature.

Along with Mr. Simmons, state Rep. Ryan Mackenzie (R-Macungie) announced that he will join the open seat contest. Three lesser-known Democrats had declared their candidacies before Mr. Dent decided to retire. In an open configuration, we can now expect several stronger Democrats to enter the campaign. The 15^th District stretches westward from the Allentown-Bethlehem area all the way to the Harrisburg suburbs. The general election is likely to generate robust competition.

Texas:  The US Supreme Court this week dealt the Texas Democratic plaintiffs a major blow in the ongoing Lone Star State congressional redistricting saga. After originally declaring Rep. Lloyd Doggett’s (D-Austin) 35^th District illegal in 2013 and then issuing a temporary fix, the legislature and courts continued to make changes up through the present time. Several weeks ago, the three judge federal panel ordered Districts 27 (Rep. Blake Farenthold-R-Corpus Christi) and Mr. Doggett’s 35^th re-drawn because of racial gerrymandering.

Before the high court will hear the case, the 5-4 majority stayed the lower court ruling, thus returning to the map that hosted the 2014 and 2016 elections. That plan produced Republican victories in 25 of the state’s 36 districts. With the Supreme Court likely not hearing this case for several months, the chances of having a new map ready in time for the 2018 election cycle is now less likely.

WI-8:  Freshman Wisconsin Rep. Mike Gallagher (R-Green Bay) scored one of the most impressive open seat wins in the nation last year, a 63-37% thrashing of Outagamie County Executive Tom Nelson (D) to succeed retiring three-term Rep. Reid Ribble (R-Sherwood). Now, Mr. Gallagher is drawing another significant Democratic opponent. Brown County prosecutor Beau Liegeois announced his congressional candidacy this week. At this point, he is the first Democrat to come forward in the northeastern congressional district. The 8^th has proven to be a reliable Republican district but one that can flip from time to time. The Congressman begins as a heavy favorite to secure a second term.

> Governor

Michigan:  After months of speculation, a major GOP candidate has entered the open race for Governor. Attorney General and former US Congressman Bill Schuette officially announced his gubernatorial effort, late this week. The move had been expected ever since Gov. Rick Snyder (R) entered his second and final term as the state’s chief executive. Lt. Gov. Brian Calley (R) is expected to also run, and it is likely we shall see an announcement from him in the very near future.

Michigan pollster Epic-MRA released their latest Michigan statewide poll results (8/27-9/1; 600 MI registered voters) and finds Mr. Schuette and former state House Minority Leader Gretchen Whitmer (D) tied at 37% if the two win their respective gubernatorial nominations. The Attorney General would lead all other Democratic contenders by a substantial margin. The Michigan Governor’s race is highly important from a national redistricting perspective. Gov. Rick Snyder (R) is ineligible to seek a third term.