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Gensler says SEC rules must stay current, consider changes in market structure

At a , the House Financial Services Committee grilled new Securities and Exchange Commission Chairman Gary Gensler about whether and how the SEC should intervene to prevent volatility events such as the one around GameStop and other “meme stocks” in January. Gensler reminded the Committee that he’d only been in the job three weeks, but said that he had asked SEC staff to prepare a request for public comment on user interfaces for stock trading that may encourage investors to trade more frequently, and could affect users’ financial well-being. He said that the practice of payment for order flow raises several questions, including whether it presents an inherent conflict of interest — but he wants to look at this in a broader context that includes rebates on exchange trades. Gensler, a cryptocurrency expert, suggested that Congress consider creating a regulatory framework for crypto exchanges, and agreed that the SEC needs to provide clarity to crypto market participants.

Senate Appropriations Committee opens requests for earmarks

Senate Appropriations Committee Chairman Patrick Leahy (D-VT) announced that ,” otherwise known as earmarks, on a bipartisan basis. Leahy said that “without the ability to influence where the funds are spent, members seem to have lost incentive” to debate appropriations bills. “Members must have a stake in these bills.” The committee has placed a 1% cap on all congressionally directed spending items, and will not allow congressionally directed spending for for-profit entities. Senators must make their requests public on their websites, and the Appropriations Committee will publish all items actually funded. The GAO will audit a sample of these projects to ensure accountability.

Congress must extend, reform flood insurance, witnesses say

Congress has approved only two five-year reauthorizations of the National Flood Insurance Program (NFIP) since 1994, Rep. Steve Stivers (R-OH) noted at a last week, along with 16 short-term extensions. Both sides of the aisle agree on the need for long-term authorization and reform, but continue to wrestle with details. Witnesses at Tuesday’s hearing said that Congress should codify the Community Development Block Grant-Disaster Recovery (CDBG-DR) program, which has provided essential assistance to families and areas that were not eligible for FEMA assistance. Connecticut Insurance Commissioner Andrew Mais said that Congress should not only reauthorize the NFIP, but also encourage investments in flood mitigation and facilitate the private sector’s participation in the flood insurance market.

House panel warns companies against doing business with China

Bipartisan support continues to grow on both sides of Capitol Hill for sweeping measures to sanction the Chinese government for its genocide of the Uyghurs and other human rights violations. At , the House Foreign Affairs Committee heard testimony from a survivor of the atrocities and discussed ways the US could respond independently and in cooperation with international allies. Committee Chairman Gregory Meeks (D-NY) and ranking member Rep. Michael McCaul (R-TX) have introduced a , but McCaul and other committee members criticized US corporations, particularly technology firms, that continue to do business with firms owned or controlled by the Chinese government. “We cannot put profits ahead of doing what’s right,” McCaul said, adding that the American people need to know what companies are making “Faustian deals” with the Chinese Communist Party.

Fed seeks comment on access to accounts and payment services

Last Wednesday the for evaluating requests for accounts and services at the nation’s 12 Federal Reserve Banks. Acknowledging that “the payments landscape is evolving rapidly,” and noting the “uptick in novel charter types,” the Fed said that Reserve Banks are receiving more and more requests for access to accounts and services. While the individual banks have granted access on a case-by-case basis, the Fed said the time had come for a more transparent and consistent policy. The proposed guidelines would require institutions to be Fed member banks or “meet the definition of a depository institution under Section 19(b) of the Federal Reserve Bank.” The guidelines specify that institutions must be in sound financial condition and compliant with all relevant federal and state laws, particularly Bank Secrecy Act and anti-money laundering requirements. The Fed wants feedback on whether these guidelines address risks sufficiently while supporting financial innovation. The proposal is open for public comment for 60 days.

Confirmations, Nominations, Departures

  • Rep. Cheri Bustos (D-IL) announced that she will not seek a fifth term in the House of Representatives.
  • Rep. Charlie Crist (D-FL) announced that he will run for Governor as a Democrat next year, rather than seeking another term in the House of Representatives.
  • Treasury Secretary Janet Yellen announced that she is appointing Michael J. Hsu as a Deputy Comptroller of the Currency, and that Hsu will serve as Acting Comptroller until President Biden makes a nomination to that office. Hsu has been an associate director in the Federal Reserve Board’s Division of Supervision and Regulation.
  • Secretary of Education Miguel Cardona announced that Richard Cordray, former Director of the Consumer Financial Protection Bureau (CFPB) will head the department’s Office of Federal Student Aid.
  • The Securities and Exchange Commission named Jessica Wachter as Chief Economist and Director of the Division of Economic Risk Analysis (DERA). Wachter has been a professor at the Wharton School since 2003.

The Week Ahead in Washington

The Ellis Insight

Jim Ellis reports on political news


Arizona: Solar company CEO Jim Lamon (R) declared his US Senate candidacy last week, becoming the first credible Republican to enter the race against incumbent Mark Kelly (D). Sen. Kelly was elected in a 2020 special election and now must stand for a full six-year term next year. Attorney General Mark Brnovich and Rep. Andy Biggs (R-Gilbert) are also potential GOP candidates, among others, so a Republican primary is expected.

Florida: Aramis Ayala (D), who was the State’s Attorney for the district that includes Orange (Orlando) and Osceola Counties, formed an exploratory campaign committee to assess her chances of competing against Sen. Marco Rubio (R) next year. Ms. Ayala was elected to one term in her post but chose not to seek re-election. She refused to ask for the death penalty in murder cases, so then-Gov. Rick Scott (R) transferred many capital cases to other jurisdictions. Court rulings later upheld Mr. Scott’s actions after Ms. Ayala protested.

North Carolina: The Spry Strategies research firm released a survey of the likely 2022 Republican electorate for the open US Senate race (4/21-24; 700 NC likely Republican primary voters and Independents who say they would vote in the Republican primary; combination live interview and online sampling) and the results project former Gov. Pat McCrory to be holding a large advantage.

According to the Spry numbers, Mr. McCrory would lead former Rep. Mark Walker and current US Rep. Ted Budd (R-Advance), who just announced his candidacy last week, 40-11-5%, respectively. The NC Senate race promises to be a premier national midterm campaign. Sen. Richard Burr (R) is not seeking a fourth term.

Pennsylvania: According to a Politico news article, Pennsylvania Rep. Conor Lamb (D-Pittsburgh) is telling donors and close supporters that he will likely enter the crowded open seat Democratic primary for US Senate. At this point, the leading Democratic candidate is Lt. Gov. John Fetterman. State Sen. Sharif Street (D-Philadelphia), state Rep. Malcolm Kenyatta (D-Philadelphia), and Montgomery County Commissioner Val Arkoosh are also announced candidates.


FL-13: A day after Rep. Charlie Crist (D-St. Petersburg) announced his gubernatorial campaign, we already see the first of what is assumed will be a plethora of Democrats coming forward to declare their candidacies in the politically marginal district self-contained within Pinellas County in the Tampa Bay region.

Eric Lynn (D), a former Obama Administration Defense Department official who ran unsuccessfully for the state House of Representatives, announced that he will enter the open congressional contest next year. The first Republican in the race is Anna Paulina Luna, the party’s 2020 nominee who held Rep. Crist to a 53-47% victory margin.

FL-20: Gov. Ron DeSantis (R) scheduled the special election to replace the late Rep. Alcee Hastings (D-Delray Beach) and it will be a long campaign cycle. The Governor set November 2nd as the partisan primary election date with the special general on January 11, 2022. Already, 11 Democrats, including three sitting state legislators and two local officials, along with two Republicans have declared their candidacies. The Democratic primary winner will become the prohibitive favorite to win the seat.

IL-17: Five-term Illinois Rep. Cheri Bustos (D-Moline), fresh from her closest re-election victory – a 52-48% win over Republican Esther Joy King – announced that she will not seek re-election next year. Ms. Bustos was the Democratic Congressional Campaign Committee chair for the 2020 cycle. For her part, Ms. King immediately declared her candidacy for the open seat election.

MS-4: Early last week, local police officer Raymond Brooks became the third Republican to announce a primary challenge to six-term Rep. Steven Palazzo (R-Biloxi). The most serious of the three candidates is Jackson County Sheriff Mike Ezell. Having a primary challenge is nothing new to Rep. Palazzo, however. He has faced Republican opposition in four of his five runs for re-election and has won re-nomination with percentages between 50.5 and 70.5% of the GOP vote.

OH-15: Ohio state Senator Stephanie Kunze (R-Hilliard) became the fifth Republican to announce for the soon-to-be-vacant 15th Congressional District that will go to special primary election on August 3rd with a general election on November 2nd. She is the fourth sitting state legislator to declare her candidacy. Since this is an odd-year special election, none of the legislators are forced to risk their current position to run. Rep. Steve Stivers (R-Columbus) will resign the seat on May 16th to become the President/CEO of the Ohio Chamber of Commerce.

The other Republican candidates are state Sen. Bob Peterson (R-Fayette County), state Reps. Jeff LeRe (R-Violet Township) and Brian Stewart (R-Ashville), along with Fairfield County Commissioner Jeff Fix. The lone announced Democratic candidate is actor Daniel Kilgore.

OR-4: Military veteran Alex Skarlatos (R), one of the individuals who subdued a terrorist on a train in France for which a subsequent movie was made, announced he will return next year to seek a re-match with 18-term Congressman Peter DeFazio (D-Springfield/Eugene). Mr. Skarlatos, who raised over $5.4 million for his campaign, held the incumbent, who is currently chairman of the House Committee on Transportation and Infrastructure, to a 52-46% re-election victory.

TX-6: The GOP scored a coup in Texas, as Susan Wright (R), widow of the late Congressman Ron Wright (R-Arlington), and state Rep. Jake Ellzey (R-Waxahachie) advanced into a yet-to-be-scheduled runoff election. Under Texas state law, Gov. Greg Abbott (R) can only call the runoff after the final canvass makes the result official.

Mr. Wright captured just over 19% of the vote and carrying the Tarrant County portion of the district, something her husband was unable to accomplish in his two congressional runs. Rep. Ellzey finished second with 13.9% of the vote, just 354 tallies ahead of the leading Democratic candidate, 2018 congressional nominee Jana Lynne Sanchez (D). Virtually all special election polling suggested that she and Ms. Wright would be the runoff participants.

TX-32: National Hispanic Christian Leadership Conference executive direct Gireon Salazar announced his intention to enter the Republican primary in hopes of challenging two-term Rep. Colin Allred (D-Dallas). Two obstacles stand in his way. First, 2020 Republican nominee Genevieve Collins, who spent over $6 million on her campaign, won her primary outright, and held Rep. Allred to a 52-46% victory, has already announced that she will run again. Second, it is likely the 32nd will become more Democratic in redistricting in order to strengthen surrounding Republican CDs.


California: Republican 2018 gubernatorial finalist John Cox, as expected, announced that he will run again in the recall election that will likely be held in October or early November. Mr. Cox has previously run for President, offices in Illinois, and for California Governor, winning none. He announced his candidacy with the accompaniment of a full-grown live bear, which is the state’s official animal. Other Republicans in the race are former San Diego Mayor Kevin Faulconer and ex-US Rep. Doug Ose (R-Sacramento). The votes for the replacement election only count if Gov. Gavin Newsom (D) loses the initial recall question.

Survey USA, polling for KABC television in Los Angeles, released their latest study of the California electorate (4/30-5/2; 642 CA registered voters; live interview) regarding whether the Governor should be recalled from office. The results found 36% saying they would vote to recall while 47% said they want to retain Mr. Newsom.

Florida: US Rep. Charlie Crist (D-St. Petersburg), who served one term as Governor when he was a Republican, announced last week that he will enter the statewide Democratic primary with the intent of challenging Gov. Ron DeSantis (R) next year. He will first, however, likely face a daunting Democratic primary, which will feature state Agriculture Commissioner Nikki Fried (D), the only current Democratic statewide office holder, and possibly US Rep. Val Demings (D-Orlando).

Victory Insights went into the field in Florida to query a sample of 600 Florida likely voters just after the Crist announcement. According to VI, Gov. DeSantis would lead all the announced and potential contenders.

Against Rep. Crist, Mr. DeSantis would hold a six-point, 53-47% advantage. If US Rep. Val Demings (D-Orlando) were to make the race and win the party nomination, she would trail Gov. DeSantis, 54-46%. Should Agriculture Commissioner Nikki Fried, who is soon expected to announce her own gubernatorial candidacy, oppose DeSantis, the Governor would also lead 53-47%. In the Democratic primary, Rep. Crist would top Rep. Demings and Commissioner Fried, 53-30-17%, respectively.

Maryland: Baltimore County Executive Johnny Olszewski (D), who was forecast to be one of the top contenders for the 2020 Democratic gubernatorial nomination, won’t run. Last week, he announced that he will seek re-election to his current position, thus bypassing the opportunity to run for Governor for what could be a nine year period assuming the 2022 winner runs for and wins a second term in 2026.

New York: Rep. Lee Zeldin (R-Shirley/Long Island) has been very busy since announcing last month that he would enter the 2022 New York Governor’s race. Mr. Zeldin has already secured local Republican Party endorsements in a majority of counties, meaning he will be designated as the party endorsed candidate for the June 2022 primary election. Rep. Zeldin is also reportedly in strong position to gain the Conservative Party ballot line.


Atlanta: After holding a fundraiser with President Joe Biden that grossed at least $500,000 for her re-election campaign, Atlanta Mayor Keisha Lance Bottoms (D) has scheduled a news conference to announce her decision not to run for a second term. Further details as to her reasoning will be forthcoming. Democrats will retain the Mayoral slot, but now we will see a wide-open campaign to replace the incumbent who came to national prominence when she was at one time under consideration to be Mr. Biden’s running mate.

Cincinnati: The Cincinnati Mayoral primary was held on Tuesday, and the general election will feature two candidates who, among other commonalities, have both lost to US Rep. Steve Chabot (R-Cincinnati).

The first-place finisher was Hamilton County Clerk of Courts Aftab Pureval (D), who lost the 2018 congressional race to Mr. Chabot in a 51-47% margin. Mr. Pureval captured 39% in Tuesday’s Mayoral result. The second runoff qualifier is 81-year-old City Councilman and former US Congressman David Mann (D). In 1994 when Rep. Chabot was first elected to the House, he unseated Mr. Mann. On Tuesday, the Councilman garnered 29% of the vote, a full 13 points ahead of the third-place finisher, state Senator Cecil Thomas (D-Cincinnati).

New York City: As the open June 22nd New York City Democratic Mayoral primary draws nearer, the Benenson Strategy Group surveyed the City’s Democratic electorate for the Students First NY organization.

The poll (4/16-21; 1,558 likely NYC likely Democratic primary voters; method not disclosed) finds former presidential candidate Andrew Yang leading Brooklyn Borough President Eric Adams and NYC Comptroller Scott Stringer, 22-17-11%, with all other candidates not exceeding 8 percent support. The study also attempted to survey the ranked choice voting system that will be used in this primary election. After seven hypothetical rounds, Mr. Yang is projected to ultimately defeat Mr. Adams, 56-44%.

San Antonio: In the May 1st San Antonio Mayoral runoff election, incumbent two-term Mayor Ron Nirenberg easily defeated former City Councilman Greg Brockhouse, 61-39%, to score a convincing re-election in the nonpartisan campaign. Mayor Nirenberg will now serve at least until 2023 after securing a third two-year term.