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

In Partnership with the Eris Group

Some things being equal — Best wishes on the autumnal equinox, which officially happens today at 4:02 p.m. EDT. Theoretically, day and night are exactly the same length today. We’d check it with a stopwatch, but we have plans for the evening.

Industrial bankers, Utah bankers push back on ICBA moratorium demand — The Independent Community Bankers of America, upon learning that Square intends to apply for deposit insurance for an industrial bank charter, wrote the FDIC last week to tell the agency to “the FDIC should deny SoFi Bank’s application and impose a moratorium for at least two years on future ILC deposit insurance applications, including any application by Square.” This week produced a forceful reply from the National Association of Industrial Bankers and the Utah Bankers Association, calling the ICBA letter “unfounded and factually incorrect.” Congress has had ample time to reconsider the industrial bank charter, they argued, but has not even held hearings on the subject — while ILCs continue to be some of the strongest, most profitable financial institutions in the country. “The ILC exemption from the Bank Holding Company Act (BHCA) is not a loophole, it is an intentional creation of Congress.”

Congress must fix housing finance first, industry says — A fifteen-member coalition representing many of the nation’s housing advocates, homebuilders, mortgage lenders and real estate professionals sent a letter to Treasury Secretary Steven Mnuchin and FHFA Director Mel Watt urging them to prioritize comprehensive housing finance reform before recapitalizing Fannie Mae and Freddie Mac. “[K]ey structural reforms must be implemented by Congress before a decision is made regarding the GSEs and capital retention,” the groups argued. Signatories to the letter included the Mortgage Bankers Association, the American Bankers Association, Habitat for Humanity, the Housing Council of the Financial Services Roundtable, and the National Association of Home Builders.

Senate Finance talks business tax reform — The Senate Finance Committee’s second hearing on tax reform, held Tuesday, focused on proposed changes to the business tax structure. Chairman Orrin Hatch (R-UT) expressed optimism about a bipartisan plan, while ranking member Senator Ron Wyden (D-OR) said an overexpansion of pass-through status for businesses would amount to “Christmas morning in America” for tax cheats. Scott Hodges, President of the Tax Foundation, called for a move to a territorial system; Urban Institute Fellow Donald B. Marron agreed that preferential rates for pass-throughs would encourage tax avoidance; Troy K. Lewis of AICPA emphasized the need to keep cash accounting; and Jeffrey DeBoer of the Real Estate Roundtable warned against changes that would destabilize the capital markets.

Americans don’t trust financial regulators — Three-fourths of Americans believe that financial regulators are more interested in their own careers than in the public good, according to a survey released this week by the Cato Institute. Eighty percent of those surveyed believe that financial regulation is politically biased, and 74 percent believe that regulations often fail to achieve their desired effect. That said, most Americans agree that regulations have produced benefits in the past (59 percent), and that regulations can make businesses more responsive to consumers (56 percent). Bankers, however, came off even worse in the poll, as 77 percent of those surveyed said they believe bankers would harm the public if it made them enough money and they thought they could get away with it. The vast majority, however (90 percent), said that they’re happy with their own financial institution.

CFPB tweaks ECOA, seeks comment on HMDA information-sharing — This week the Consumer Financial Protection Bureaufinalized changes to the Equal Credit Opportunity Act rules (Regulation B) that give mortgage lenders additional flexibility in collecting and reporting information about applicants’ race, color, religion, national origin, or gender. The changes are designed to make it easier for lenders to comply with Regulation C (the Home Mortgage Disclosure Act), and the CFPB is asking for comment on a proposed new policy about what reported HMDA data should be available to the public, and how. Comments on this policy are due to the CFPB by November 20.

SEC reports intrusions into EDGAR system — Securities and Exchange Commission Chairman Jay Clayton released a statement on cybersecurity on Wednesday that included the news that “cyber threat actors have managed to access or misuse our systems.” Specifically, Clayton said, a software vulnerability in the EDGAR test filing system may have given hackers access to nonpublic information that they used to make illicit trading gains. The SEC does not believe that this cyber attack stole any personally identifying information. “Our investigation of this matter is ongoing . . . and we are coordinating with appropriate authorities,” said Clayton.

HUD recovery spending will target low-income housing, but not until 2018 — The $7.4 billion authorized for housing relief after Hurricane Harvey “is not going to do the job,” HUD Secretary Ben Carson told a press briefing on Wednesday, especially not after additional damage caused by Hurricanes Irma and Maria. HUD and FEMA personnel are making damage assessments in Texas and Florida, and helping survivors find interim housing, but the agency is concerned about shortages of affordable rental housing. HUD is drafting rules for distributing the $7.4 billion and any additional relief funds, but this money will not be available until next year.

Next Week in Washington:

September 26
Senate Committee on Banking, Housing and Urban Affairs holds a hearing on “Oversight of the Securities and Exchange Commission.” SEC Chairman Jay Clayton will be the only witness. 10:00 a.m., SD-538 Dirksen Senate Office Building.

September 26
Senate Commerce Subcommittee on Consumer Protection, Product Safety, Insurance, and Data Security holds a hearing on “FTC Stakeholder Perspectives: Reform Proposals to Improve Fairness, Innovation, and Consumer Welfare.” 2:30 p.m., SR-253 Russell Senate Office Building.

September 27
House Financial Services Subcommittee on Housing and Insurance holds a hearing on “Overview of the Family Self-Sufficiency Program.” 10:30 a.m., 2128 Rayburn House Office Building.

September 28
Senate Banking Committee holds a hearing on “Evaluating Sanctions Enforcement and Policy Options on North Korea: Administration Perspectives.” 9:30 a.m., SD-538 Dirksen Senate Office Building.

September 28 
House Financial Services Subcommittee on Housing and Insurance holds a hearing on “Examining Insurance for Nonprofit Institutions.” 9:30 a.m., 2128 Rayburn House Office Building.

The Ellis Insight. Jim Ellis reports on political news:

> Senate

Alabama:  A New JMC Analytics & Polling survey (9/16-17; 500 AL GOP run-off likely voters based upon previous primary participation; automated system) shows appointed Sen. Luther Strange still trailing beyond the polling margin of error. The results find former state Supreme Court Chief Justice Roy Moore leading the interim incumbent, 47-39%.

Outside allies for Strange are making their major push as the run-off election draws to a close next Tuesday. About $2 million in media expenditures from the NRA, Senate Leadership Fund, and US Chamber of Commerce is being spent to aid Sen. Strange. Turnout will be determinative. Judge Moore is working to maximize evangelical turnout, while the Strange campaign focuses on upping traditional Republican voter turnout. The winner will face former US Attorney Doug Jones in the December 12th special general election.

Indiana:  Rep. Luke Messer (R-Greensburg/Muncie) has not officially announced his Senate candidacy, but he’s all but a formal candidate. Weeks ago, responding to Rep. Todd Rokita’s (R-Brownsburg/Lafayette) Senate candidacy, Rep. Messer tweeted that he is “in” the race, which may in retrospect prove to be his announcement. This week, Mr. Messer received a key Senate endorsement: from fellow Rep. Susan Brooks (R-Carmel) who represents the adjacent district. Reps. Messer and Rokita are the headliners in the ensuing Republican primary with the winner drawing first-term Sen. Joe Donnelly (D) in the general election.

North Dakota:  A new potential Republican candidate could be soon coming forward if the latest WPA Intelligence survey (9/10-11; 406 ND likely voters) is a precursor to an announcement. State Treasurer Kelly Schmidt (R), an individual not previously mentioned as a potential candidate, actually leads first-term incumbent Heidi Heitkamp (D), 48-44%, according to the WPA data.  State Sen. Tom Campbell (R-Grafton/Grand Forks) is a declared candidate, but was not tested in this poll. This is the first poll of any kind this year to show Sen. Heitkamp trailing.

Tennessee:  With Sen. Bob Corker (R) still not fully committing to seeking re-election, though indications are that he will run, Tennessee moves up the Democrats’ opportunity list. Former Gov. Phil Bredesen, who served from 2003-11, appears to be the party leaders’ target. Whether they can convince the 73-year old former state chief executive to actually run for the Senate, in what would be a tough race for any Democrat whether it is a challenger or open race, may be another story, however.

Virginia:  The Princeton Survey Research Associates, International in partnership with the University of Mary Washington  (9/5-12; 1,000 VA adults; 867 VA registered voters; 562 VA likely voters) made public their Senate results after releasing their Governor’s numbers the day before. If Prince William County Board chairman Corey Stewart (R) were to advance to the general election to face Sen. Tim Kaine (D), the former would trail the incumbent by a 54-39% clip. The Senator scores similarly against Reps. Scott Taylor (R-Virginia Beach) and Dave Brat (R-Glen Allen) but neither appear inclined to enter the statewide campaign.

> House

MD-6:  State House Majority Leader Bill Frick (D-Bethesda), who had announced his candidacy for the open 6thCongressional District (Rep. John Delaney (D-Potomac) retiring to prepare a presidential campaign), has now reversed his political course. Late this week, Mr. Frick withdrew from the congressional race and will instead enter the open race for Montgomery County Executive. Remaining in the Democratic primary congressional race are five announced candidates, including Total Wine, Inc. founder David Trone, state Sen. Roger Manno (D-Montgomery County), and state Delegate Aruna Miller (D-Montgomery County). Democrats are favored to hold the seat in the 2018 general election.

MI-11:  In the wake of Rep. David Trott’s (R-Birmingham) surprise retirement announcement at the end of last week, three Republicans officially entered the new open race. US Senate candidate and former Trump Michigan co-chair Lena Epstein has decided to exit the statewide race and run for the open congressional seat. State Rep. Klint Kesto (R-Oakland County) is also a new congressional candidate, along with former state Rep. and US Senate nominee Rocky Raczkowski who served as state House Majority Leader before exiting to run unsuccessfully for Senate in 2002. More Republicans are expected to round out what will become a crowded open seat primary field.

NV-3:  Freshman Rep. Jacky Rosen (D-Henderson), already leaving the House to take a run at Sen. Dean Heller (R) next year, leaves a void in her politically marginal Clark County 3rd District. Democrats appear to be coalescing around a candidate who they believe will be a strong contender to keep the seat. Wealthy former school board president Susie Lee has already drawn endorsements from ex-Senate Democratic Leader Harry Reid, Sen. Catherine Cortez Masto, Reps. Dina Titus (D-Las Vegas) and Ruben Kihuen (D-Las Vegas), along with the departing Rep. Rosen.  The voting history here suggests this race will be a toss-up next year, but the Democratic power structure already jointly supporting one candidate is the soundest strategy for them to gain a general election advantage.

NY-11:  Former three-term US Rep. Michael Grimm (R-Staten Island), who was forced to resign from office when he was convicted for tax fraud and would later spend seven months in federal prison, appears likely to officially announce a primary challenge to his successor, Rep. Dan Donovan (R-Staten Island), in early October. The former Congressman is accusing Mr. Donovan of drifting away from the conservative wing of the party as his reason for wanting to re-enter elective politics.

NY-27:  Democrat Erin Cole, a former State Department official, yesterday ended her congressional challenge campaign against Rep. Chris Collins (R-Clarence) citing fundraising and organizing difficulties. The 27th CD is the most reliably Republican district in the state. At this point, no other Democrat has declared for the seat but much time remains for the party to slate another contender. The federal candidate filing deadline will be scheduled for a date next April with the statewide primary in June. Rep. Collins, originally elected in 2012, is a heavy favorite to win a fourth term next year.

NC-2:  Three-term US Rep. George Holding (R-Raleigh) drew two Democratic challengers this week. Ex-state Rep. Linda Coleman (D), who lost her seat to a Republican in 2012, decided to re-enter elective politics with an attempt against a formidable GOP incumbent. A day later, former software company CEO Ken Romley announced that he will challenge Ms. Coleman for the Democratic nomination, with the primary winner drawing Rep. Holding in the general election. In a reliably Republican seat, Mr. Holding begins this re-election drive as the clear favorite.

> Governor

Alabama:  New Gov. Kay Ivey (R), who recently declared for a full term next year, just received her first polling report and its results are very favorable. The Tarrance Group survey (8/28-30; 601 AL likely Republican primary voters) finds Gov. Ivey scoring an almost unanimous 80:5% job approval rating among the GOP sample respondents, and records a 66:11% ballot test against Huntsville Mayor Tommy Battle, an announced gubernatorial candidate who appears intent on staying in the race even though he is now facing an incumbent. Interestingly, the two statewide officials likely to be her principal opponents: state Agriculture Commissioner John McMillan and Alabama Auditor Jim Zeigler were not tested in this poll.

California:  Statisticians from the University of California at Berkeley’s Institute of Governmental Studies went into the field to test the Golden State’s electorate for the upcoming open Governor’s race (YouGov; 8/27-9/5; 1,000 CA likely voters online; questions provided both in English and Spanish). The data shows, as previous polls have, that Lt. Governor Gavin Newsom (D) leads the pack of candidates and is in the best position to capture one of the two general election slots in next year’s June qualifying election.

Mr. Newsom has 26% support, followed by frequent Republican candidate John Cox at 11%. Former Los Angeles Mayor Antonio Villaraigosa is next attracting 10%, which represents a significant seven percentage point drop from the organization’s June survey, which means he is now just ahead of GOP Assemblyman Travis Allen’s 9 percent. State Treasurer John Chiang (D) follows with 7%, ahead of former State Superintendent of Public Instruction Delaine Eastin (D) who posted 5% support.

New Jersey:  The new Fox News poll for the Garden State Governor’s race (Anderson Robbins Research (D) and Shaw & Company Research (R); 9/17-19; 804 NJ registered voters) finds Republican Lt. Gov. Kim Guadagno closing the gap between she and former US Ambassador to Germany Phil Murphy (D), but the separation margin is still very significant. According to the new results, Mr. Murphy’s lead is 42-29%. The election is scheduled for November 7th. Incumbent Gov. Chris Christie (R) is ineligible to seek a third term.

Texas:  Rep. Joaquin Castro (D-San Antonio) has been under pressure from major Democratic Party leaders, such as national chairman Tom Perez, to challenge Gov. Greg Abbott (R) next year. But, such won’t happen. Late this week, Rep. Castro declared that he will seek a fourth term in the House, thus bypassing what would have almost assuredly been a losing gubernatorial campaign.

Virginia:  Several new polls were released in the past few days for the upcoming open Virginia Governor’s race. A Suffolk University survey for USA Today (9/13-17; 500 VA likely voters) finds Lt. Gov. Ralph Northam (D) and former Republican National Committee chair Ed Gillespie tied at 42%, which is a marked improvement for the GOP contender. Another survey, however, brings the totals closer to other previously seen data.

The University of Mary Washington partnered with Princeton Survey Research Associates (9/5-12; 1,000 VA adults; 867 VA registered voters; 562 VA likely voters) to release their new poll that finds Mr. Northam still holding a close lead. According to these results, the spread is 44-39% in the Democrat’s favor within the likely voter segment. Mason-Dixon Polling & Research (9/10-15; 625 VA registered voters) also released their most recent data. They find Northam’s edge to be only 44-43 percent. Conversely, Quinnipiac University (9/14-18; 850 VA likely voters) finds Mr. Northam holding a much larger lead, 51-41%. The regular election is scheduled for November 7th.