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Yellen on the Hill

Secretary of the Treasury Janet Yellen appeared before the and the last week to present — and defend — the President’s FY 2022 budget. Yellen said that while pandemic recovery had been the Administration’s priority at the beginning of the year, next year’s budget seeks to address problems that preceded the lockdown but have worsened in the meantime: gaps in wages, differences among geographic regions, a decline in labor force participation, the acceleration of climate change, and the persistence of racial inequality. “There are some tough trade-offs in fiscal policy, but this — a fairer tax code for a structurally sound economy — is not one of them.” Questioning on both sides of the Hill ran along partisan lines, with Republicans voicing specific objections to proposals to raise the capital gains tax and end step-up basis.

House to vote next week on reversing OCC “true lender” rule

House Majority Leader Steny Hoyer (D-MD) that the House will consider three resolutions of disapproval under the Congressional Review Act this week. Among these is S.J.Res. 15, which would overturn the Office of the Comptroller of the Currency’s rule on the application of state usury limits to loans made by financial companies that partner with national banks. The Senate approved on May 11 by a vote of .

CFPB to resume examinations under Military Lending Act

The Consumer Financial Protection Bureau explained its authority to supervise lenders for compliance with the Military Lending Act (MLA) in an last week. The MLA generally sets a 36% cap on annual percentage rates charged to military borrowers, and prohibits lenders from forcing military borrowers into arbitration. It also bans prepayment penalties and says that lenders may not require military borrowers to use military allotments to repay a loan. The CFPB had stopped examining for MLA compliance in 2018, but Acting Director Dave Uejio said that this supervision is necessary to fulfill the purpose of the law.

Mortgage servicing, data access top CFPB regulatory agenda

The Consumer Financial Protection Bureau’s is conservative, the Bureau said, because the agency is still under interim leadership. Ongoing rulemaking processes will be a priority, but the Bureau plans to issue new rulemaking on mortgage servicing “to provide relief to those facing hardship due to COVID-19 and the related economic crisis.” Among the rules the Bureaus is working on is one that would address the availability of consumer financial account data in electronic form under Section 1033 of Dodd-Frank. Implementation of that rule “can lead to competitive, consumer-friendly markets, while recognizing the importance of ensuring the safety and security of consumer account data,” the Bureau said. That rulemaking process has been underway since 2016.

House approves bills on ESG disclosure, credit protection for trafficking victims

, the ESG Disclosure Simplification Act of 2021, passed the House of Representatives by a single vote last Wednesday. The bill would require publicly traded companies to make annual disclosures of exposure to certain environmental, social, and governance risks, and would establish a Sustainable Finance Advisory Committee to recommend SEC policies that would facilitate environmentally sustainable investments. Also last Wednesday, the House voted 287-140 to approve , the Debt Bondage Repair Act, which would require the CFPB to promulgate a rule prohibiting consumer reporting agencies from reporting adverse information that resulted from severe forms of human trafficking. Neither bill has a Senate companion.

Making a digital currency accessible

If designed properly, a central bank digital currency (CBDC) should not require access to a computer or broadband, last week. It should be able to exist on a smart card in people’s wallets, as cash does. Bipartisan interest in a CBDC is strong, and the joint project of MIT and the Federal Reserve Bank of Boston, Project Hamilton, will publish a paper and open-source software later this summer. Witnesses told the Task Force that they did not expect a CBDC to drive out private cryptocurrency or the use of cash.

Confirmations, Nominations, Departures

  • (R-OH) is the new ranking member of the House Financial Services Task Force on Fintech.
  • The Senate voted 69-28 to confirm as Chair of the Federal Trade Commission
  • ​The Securities and Exchange Commission Renee Jones as Director of the Division of Corporate Finance and John Oates as SEC General Counsel.

The Week Ahead in Washington

Sometime this week, the House Judiciary Committee will .

June 22 at 10 a.m. Senate Committee on Banking, Housing, and Urban Affairs holds a of Brian Eddie Nelson to be Under Secretary of the Treasury for Terrorism and Financial Crimes and Elizabeth Rosenberg to be Assistant Secretary of the Treasury for Terrorist Financing.

June 22 at 2 p.m. House Select Subcommittee on the Coronavirus Crisis holds a hybrid hearing on “.” Federal Reserve Board Chairman Jerome H. Powell will testify.

June 22 at 2:30 p.m. Senate Commerce Subcommittee on Communications, Media, and Broadband holds a hearing on “.”

June 23 at 10 a.m. House Financial Services Committee holds a of various measures.

June 23 at 10 a.m. House Committee on the Budget holds a . HUD Secretary Marcia Fudge will testify.

June 23 at 2 p.m. Senate Appropriations Subcommittee on Financial Services and General Government holds a hearing on the FY 2022 Budget for the Department of the Treasury. The two-panel hearing will include testimony from Mr. Noel Andres Poyo, Deputy Assistant Secretary of the Treasury for Community and Economic Development, and Secretary of the Treasury Janet Yellen.

June 23 at 2:30 p.m. Senate Banking Subcommittee on Economic Policy holds a hearing to examine the role of child care in an equitable post-pandemic recovery.

June 23 at 2:30 p.m. Senate Commerce Subcommittee on Aviation Safety, Operations, and innovation holds a .

June 24 at 10 a.m. House Appropriations Subcommittee on Financial Services and General Government holds a markup.

June 24 at 10 a.m. Senate Committee on Banking, Housing, and Urban Affairs holds a hearing on “.”

The Ellis Insight

Jim Ellis reports on political news


Georgia: It appears that former University of Georgia football star Herschel Walker (R) is getting ready to enter the US Senate contest against freshman incumbent Raphael Warnock (D). Mr. Walker remained a Texas resident after staying in the Lone Star State once his professional football career concluded with the Dallas Cowboys. He released a video depicting him standing next to his car as the camera zeroes in on its Georgia license plate, suggesting that he is in the process of moving back to his home state.

Currently in the GOP race are state Agriculture Commissioner Gary Black, construction company owner Kelvin King, and financial executive and ex-Trump White House aide Latham Saddler.

Missouri: On the heels of Rep. Vicky Hartzler (R-Harrisonville/ Columbia) announcing her run for the Senate, Remington Research released a new Missouri Senate Republican primary poll (6/9-10; 1,011 MO likely Republican primary voters; interactive voice response system), the first such study testing the three major GOP candidates. The results find former Gov. Eric Greitens still leading the group, this time with 34%, followed by Attorney General Eric Schmitt with 25%, and Rep. Hartzler trailing with 14% support. Incumbent Sen. Roy Blunt (R) announced in March that he will not seek a third term.

US Rep. Blaine Luetkemeyer (R-St. Elizabeth/outer St. Louis suburbs) then announced that he will not enter the open 2022 US Senate race, choosing to remain in the House where he is an apparent contender to chair the House Financial Services Committee if the Republicans regain the majority in the 2022 elections.

North Carolina: According to a new Meeting Street Insights survey for the Ted Budd for Senate campaign (6/9-10; 500 NC likely Republican primary voters; live interview), former Gov. Pat McCrory’s (R) early lead dissipates once voters become aware that ex-President Trump has endorsed Rep. Budd for the open Senate race to replace outgoing incumbent Richard Burr (R).

The poll’s initial ballot test finds Mr. McCrory leading the pack of candidates with 45%, followed by US Rep. Ted Budd (R-Advance) at 19%, and former Rep. Mark Walker (R) trailing with 12% support. Only 20% of the respondents indicated that they are aware of Mr. Trump’s endorsement of Rep. Budd. Once fully educated, the respondent sample flips to the point that Mr. Budd has a 46-27-8% advantage over Mr. McCrory and former Rep. Walker.

Pennsylvania: Days after two-term Pennsylvania Rep. Chrissy Houlahan (D-Devon) announced that she would forego a US Senate run in order to seek re-election to the House, neighboring Rep. Madeleine Dean (D-Jenkintown) has followed suit. Rep. Dean this week made known her decision not to enter the Senate race but will seek a third term in the House next year.

The leading Democratic open seat announced candidates are Lt. Gov. John Fetterman, state Rep. Malcolm Kenyatta (D-Philadelphia), and Montgomery County Commissioner Val Arkoosh. Rep. Conor Lamb (D-Pittsburgh) and state Sen. Sharif Street (D-Philadelphia) are possible candidates.


SC-6: House Majority Whip Jim Clyburn (D-Columbia) emphatically replied that he will seek a 16th term next year from his expansive South Carolina congressional district that stretches from the capital city of Columbia through some of the Charleston suburbs, and then south to the Georgia border including the territory leading into Savannah. When a local news reporter asked if he would seek re-election, Rep. Clyburn retorted, “not just yes, but Hell yes!” The Congressman, who will be 82 years of age at the next election, had been the subject of retirement speculation.

SC-7: State Rep. William Bailey (R-Myrtle Beach) who was the first Republican primary challenger to US Rep. Tom Rice (R-Myrtle Beach) after the Congressman supported the second effort to impeach then-President Trump is now the first to drop out of the race. He announced early last week that he is exiting the congressional contest but will seek re-election to the state House. He says there are plenty of other conservatives in the race that will prove strong opposition to Mr. Rice.

A total of 11 announced Republicans remain in the primary contest. The top two appear to be Horry County School Board chairman Ken Richardson and former Myrtle Beach Mayor Mark McBride. South Carolina features a runoff system, so Rep. Rice will have to obtain majority support among all dozen candidates to avoid a secondary election.

TX-28: Attorney Jessica Cisneros, who held veteran Texas Rep. Henry Cuellar (D-Laredo) to a 52-48% primary victory in March of 2020, released a new video that suggests, without actually announcing, that she will return to launch another run at the Democratic Congressman who she once served as an intern.

Mr. Cuellar went onto win a 58-39% general election victory in one of the Texas-Mexico border districts that tilted somewhat away from the Democrats in the November election. President Biden carried the 28th CD that stretches from the San Antonio area to the Mexican border through Laredo and then east to capture the city of Mission but with a significantly reduced percentage.


Arizona: Former Arizona Congressman Matt Salmon, who was the 2002 Republican gubernatorial nominee, formally declared his intention to enter the 2022 open Governor’s race a full 20 years after he first ran for the position. Mr. Salmon lost a close plurality gubernatorial election to then-Arizona Attorney General Janet Napolitano (D) by less than one percentage point. He served five non-consecutive terms in the US House and a pair of two-year terms in the Arizona Senate.

Already in the open Republican primary are state Treasurer Kimberly Yee, State University System Regent Karrin Taylor Robinson, and former television news anchor Kari Lake. Gov. Doug Ducey (R) is ineligible to seek a third term.

California: The Moore Information Group conducted a survey of the California recall election for the John Cox (R) gubernatorial campaign and reports a tightening of the recall position from previous polling. According to the just released Moore data (6/1-3; 800 CA registered voters; 684 CA likely recall election voters; live interview), Gov. Gavin Newsom (D) would face a tougher going to survive the effort to remove him from office.

The Moore results portend, among the 684 tested likely voters, that a plurality, 49-46%, would vote to remove Gov. Newsom from office. Among the larger registered voter universe, the balance tips back in favor of state chief executive retaining his position, 50-44%. Even this latter ratio, however, is closer than the previous surveys that projected the Governor as surviving the recall by a spread of between 9-12 percentage points.

If the recall is successful, and the special election still has not yet been scheduled, the Moore poll finds Mr. Cox leading the large group of candidates, but their roster includes former Los Angeles Mayor Antonio Villaraigosa and billionaire Tom Steyer. The latter man has said he won’t run, while the former has not indicated that he will enter the race.

Florida: The Listener Group just released a Florida Democratic gubernatorial poll (6/9-11; 660 FL likely Democratic primary voters; live interview) that sees US Rep. Charlie Crist’s (D-St. Petersburg) lead over state Agriculture Commissioner Nikki Fried (D) diminishing. In late May, St. Pete Polls (5/24-26; 2,572 FL registered voters; online) found the Tampa Bay area Congressman and former Governor leading Ms. Fried, 56-22%. The Listener numbers find the spread to be only 41-31%, suggesting this race could be much more competitive than first thought.

Iowa: State Rep. RasTafari Smith (D-Waterloo) announced last week that he will enter the Democratic primary for purposes of challenging Iowa Republican Governor Kim Reynolds next year. She will be on the ballot for a second full term in 2022 after winning election in her own right three years ago. She served the balance of former Gov. Terry Branstad’s (R) previous term. As Lt. Governor, she ascended to the office when Mr. Branstad became US Ambassador to China in the Trump Administration.

Virginia: The Glenn Youngkin for Governor campaign released a WPA Intelligence survey that found the Republican nominee pulling to within just two percentage points, 46-48%, of former Governor Terry McAuliffe (D). This week, in the first post-Democratic primary poll, the JMC Analytics firm basically confirmed those results. According to their latest Virginia poll (6/9-12; 550 VA likely 2021 general election voters; live interview) Mr. McAuliffe leads Mr. Youngkin by a similarly small 46-42% margin.


Texas: Texas Attorney General Ken Paxton (R) has been under a federal indictment cloud since 2015 and is now besieged with new accusations of him having an extra-marital affair and ex-aides claiming he accepted bribes. Unsurprisingly, these charges and attacks have already drawn Mr. Paxton serious Republican primary opposition, and now another has come to the forefront.

Stepping down from the Texas State Supreme Court to oppose Mr. Paxton in the Republican primary is Justice Eva Guzman, who began her service on the high court in late 2009. She not only joins the incumbent in the race, but also Texas Land Commissioner George P. Bush, son of former Florida Gov. Jeb Bush, and nephew to former Texas Governor and US President George W. Bush.


Cleveland: Former Cleveland City Councilman, Mayor, City Councilman again, state Senator, US Congressman, and presidential candidate Dennis Kucinich (D) formally announced his new Mayoral campaign yesterday. In doing so, Mr. Kucinich is running for an office that he first held 44 years ago and would then lose two years later to Republican George Voinovich, who would later become Governor and US Senator.

New York City: Three media entities, WNBC television in New York, Telemundo 47, and Politico joined to sponsor a Marist College poll of the New York City open Democratic mayoral primary scheduled tomorrow Tuesday, June 22nd. The pollsters (6/3-9; 876 NYC likely Democratic primary voters; live interview) carried the ranked choice voting system to its extreme, which is a complicated undertaking, and again found Brooklyn Borough President Eric Adams eventually leading the group of 13 Democratic candidates vying to succeed term-limited Mayor Bill de Blasio (D).

Two more polls are reporting slightly differing results. The Public Opinion Strategies survey (6/9-13; 500 NYC potential Democratic primary voters; live interview) returns numbers that are similarly close to Marist’s. The POS study agrees that former NYC Sanitation Commissioner Kathryn Garcia, civil rights activist Maya Wiley and former presidential candidate Andrew Yang together with Mr. Adams form the top tier of contenders. At the end of the laborious ranked choice process, POS, like Marist, finds the race evolving into a two-way battle between Mr. Adams and Ms. Garcia that tilts toward the former.

Change Research (6/11-14; 822 NYC likely Democratic primary voters; online) also found a compatible result in their most recent poll, though they project a different winner at the end of the ranked choice process. Change sees Ms. Garcia edging Mr. Adams in an 11th counting round by a scant 51-49% split.