House approves major infrastructure package
Last week the House of Representatives voted 221-201 to approve H.R. 3684, the INVEST in America Act, which would provide more than $700 billion over five years for surface transportation programs, climate change mitigation, rural bridges, new safety requirements for all forms of transportation, and a pilot program to test a national vehicle miles traveled (VMT) tax. The INVEST in America Act also includes $13 billion in earmarks (now called Projects of National and Regional Significance, or PNRS). Rep. Peter DeFazio, the bill’s principal sponsor and Chair of the Committee on Transportation and Infrastructure, had wanted to pass this bill through “regular order,” separately from President Biden’s American Jobs Plan or a reconciliation package. He said yesterday that he would push the Senate to act on legislation of its own. The FAST Act, which provides funding for surface transportation, expires on September 30.
Transportation as a climate issue
As the House was preparing to vote on the INVEST in America Act, the House Select Committee on the Climate Crisis held its own hearing on “Transportation Investments for Solving the Climate Crisis.” Much of the hearing focused on the desirability and feasibility of electrifying America’s surface transportation vehicles — not only private cars, but long-haul trucks and other commercial vehicles as well, including cargo handling equipment at ports. Republican members warned against overreliance on Chinese supplies of components essential for electric vehicles, and said that current federal incentives for EVs amount to subsidies for the wealthy. Bill Van Amburg, Executive Vice President of CALSTART, said that American truck manufacturers were bringing zero-emission vehicles to market much more quickly than anticipated, and commercial fleets are interested because of the promise of lower operating costs. Minnesota Commissioner of Transportation Margaret Anderson Kelliher reported that a dealership near the Canadian border in her state already had orders for 50 of Ford’s 2022 F-150 Lighting electric trucks.
House panel discusses “public option” for credit reporting
The House Financial Services Committee heard testimony at a long and partisan hearing last Tuesdayabout how best to reform the nation’s credit reporting system, which members did generally agree needs improvement. Committee staff has drafted legislation to create a Public Credit Registry within the Consumer Financial Protection Bureau; Chair Maxine Waters (D-CA) said President Biden had supported a similar proposal during his campaign. “We need big, bold legislative solutions to transform this broken system,” Waters said. Republican members unanimously slammed the idea, calling it socialization of a private industry. Instead, ranking member Rep. Patrick McHenry (R-NC) called for measures to encourage more competition within the private credit reporting industry, which he described as an oligopoly.
Cryptocurrency needs a clear regulatory structure, policymakers agree
Almost all the witnesses at Wednesday’s House Financial Services Subcommittee on Oversight & Investigation hearing on cryptocurrency agreed on the need for a clear federal regulatory structure for digital assets, but no consensus emerged on which agency should be responsible for that. Cryptocurrencies will persist even if the federal government creates a central bank digital currency (CBDC), witnesses said, and the underlying distributed ledger/blockchain technology has many potential uses for the financial services industry and broader security purposes. Subcommittee members expressed concern about protecting unwary retail investors, about the lack of public data on the cryptocurrency markets, and about the potential exposure of hedge funds, family funds, and large banks.
Toomey, Johnson object to asset managers’ ESG goals
Senator Pat Toomey (R-PA), ranking member of the Senate Banking Committee, and Senator Ron Johnson (R-WI), ranking member of the Senate Homeland Security Committee, sent a letter to the Federal Retirement Thrift Investment Board to express concerns that BlackRock and State Street Global Advisors (SSGA), which manage the Thrift Savings Plan (TSP), are putting environmental, social, and governance (ESG) goals above returns to federal employees’ retirement funds. The TSP has more than six million participants and more than $735 billion in assets, of which BlackRock and SSGA manage $442 billion. Senators Toomey and Johnson asked whether the two asset managers are not only making decisions based on their own CEOs’ personal policy views, but also pressuring other companies to adhere to these goals. They asked for a briefing from the FRTIB by July 26.
FinCEN will initiate no-action letter process for money laundering compliance
The Financial Crimes Enforcement Network (FinCEN) has been busy implementing the Anti-Money Laundering Act of 2020. Last week the agency completed its study of whether they should set up a process for issuing no-action letters, and “concluded that it should plan toward a rulemaking to create a process for issuing no-action letters in addition to its current forms of regulatory guidance and relief.” Based on the circulation of the announcement, FinCEN anticipates that this process will apply to casinos, depository institutions, the insurance industry, money services businesses, mortgage companies and brokers, the precious metals/jewelry industry, and the securities and futures industry. FinCEN also issued its first set of national AML/CFT priorities, which the federal banking agencies said would create no immediate change to Bank Secrecy Act (BSA) requirements for financial institutions.
CFPB issues rules for transition after foreclosure moratoria expire
Last week the Consumer Financial Protection Bureau finalized changes to the federal mortgage servicing regulations that should “protect mortgage borrowers from unwelcome surprises” after federal hardship forbearance expires at the end of this month. Just over two million homeowners remain in forbearance, and the CFPB expects that most of those homeowners will remain in forbearance for more than a year — “Not even during the worst of the Great Recession have so many borrowers been so far behind,” the agency’s release said. The new rules require that servicers meet temporary procedural safeguards before initiating foreclosures on certain mortgages, and tell borrowers their options. They also allow mortgage servicers to offer streamlined loan modifications without requiring borrowers to submit paperwork for every possible option. The rules cover loans on primary residences, generally exclude small servicers, and take effect on August 31.
130 countries agree to global minimum tax
One hundred thirty member countries of the Organization for Economic Co-operation and Development (OECD) have signed on to that would establish a “two-pillar solution” to address the tax challenges presented by the global digital economy. In a statement was the product of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS), which has been working on this issue since 2015. The statement’s first pillar would reallocate some taxing rights over multinational enterprises (MNEs) from their home countries to the markets where they do business and earn profits, regardless of whether the company maintains a physical presence there. The OECD expects more than $100 billion in profits to be reallocated to market jurisdictions every year. The second pillar, which has gotten more attention, would set a global minimum tax rate of 15%. It is expected to generate around $150 billion a year in additional global tax revenues. Participants agreed to hammer out details by October, with a plan for implementation in 2023.
Fed will release tool for CECL
The Federal Reserve Board announced that it will launch a spreadsheet-based tool on July 15 to help community banks implement the Current Expected Credit Losses (CECL) accounting standard. The Scaled CECL Allowance for Losses Estimator (SCALE) will draw on publicly available regulatory and industry data, and is intended for banks with less than $1 billion in assets. The Fed will conduct a webinar to explain the tool and answer questions, with representatives of the Financial Accounting Standards Board and the Conference of State Bank Supervisors, on July 15. Registration for the webinar is open at www.askthefed.org.
Confirmations, Nominations, Departures
- House Republicans chose Rep. Pete Sessions (R-TX) to serve on the House Financial Services Committee, filling a vacancy left by the departure of Rep. Steve Stivers (R-OH).
- Gurbir S. Grewal will become the Securities and Exchange Commission’s Director of Enforcement on July 26. He is currently Attorney General for the State of New Jersey, a position he has held since January 2018.
- Labor lawyer and former Florida legislator José Javier Rodriguez is President Biden’s choice to be Assistant Secretary of Housing and Urban Development and director of the Employment and Training Administration (ETA).
The Week Ahead in Washington
Both the House and Senate are in recess until July 9. Unless something really newsworthy happens this week, the next issue of The Golden Apple will go out on July 16.
The Ellis Insight
Jim Ellis reports on political news
Georgia: In an interview last week on the new Clay Travis and Buck Sexton nationally syndicated talk radio show, former President Donald Trump said that University of Georgia football legend Herschel Walker (R) will run for the US Senate next year.
Mr. Walker, in response, indicated that he hasn’t fully decided to enter the race but will do so shortly. He has just re-located to Georgia from Texas. He remained in the Lone Star State after retiring from the National Football League and the Dallas Cowboys in 1997. Already in the Republican primary are state Agriculture Commissioner Gary Black and construction company owner Kelvin King. Sen. Raphael Warnock (D) is standing for a full six-year term.
Missouri: Six-term Missouri Rep. Billy Long (R-Springfield) said that he is still considering entering the open Senate race and is “making preparations” to form a campaign in case he decides to join the Republican field. In the GOP contest are former Gov. Eric Greitens, Attorney General Eric Schmitt, and US Rep. Vicky Hartzler (R-Harrisonville/Columbia). Sen. Roy Blunt (R) is retiring after two terms.
Ohio: As has been expected for months, venture capitalist and author J.D. Vance, best known for his book Hillbilly Elegy, officially declared his US Senate candidacy at an event in his home city of Middletown, joining former Ohio Republican Party chair Jane Timken, ex-state Treasurer and 2012 US Senate nominee Josh Mandel, and businessmen Mike Gibbons and Bernie Moreno as announced Republican candidates.
The eventual GOP nominee will likely battle US Rep. Tim Ryan (D-Warren/Youngstown), who is becoming the consensus Democratic candidate vying to replace retiring Sen. Rob Portman (R).
Pennsylvania: Businessman and former World Affairs Council president Craig Snyder announced that he will enter the open Senate Republican primary. He joins businessman and former Lt. Governor nominee Jeff Bartos and Afghan War veteran and 2020 congressional candidate Sean Parnell as one of the more significant GOP candidates.
Democratic contenders include Lt. Gov. John Fetterman, state Rep. Malcolm Kenyatta (D-Philadelphia), and Montgomery County Commissioner Val Arkoosh. We can expect further individuals to enter on both sides before the February 2022 candidate filing deadline expires. Sen. Pat Toomey (R) is retiring after two terms.
Montana: Montana politicos are beginning to jockey for position vis-à-vis the Big Sky Country’s new congressional seat even before it is drawn. On Wednesday, state Rep. Laurie Bishop (D-Livingston) announced that she will run for Congress next year. Previously declaring was former US Interior Secretary and ex-Congressman Ryan Zinke (R). Other former statewide candidates such as ex-Judge Russ Fagg (R) and past state Senator Al Olszewski (R) have also expressed interest.
NJ-7: The New Jersey Globe news site is reporting that state Senate Minority Leader Tom Kean, Jr. (R-Ringoes), who is not seeking re-election to the legislature this year, will return for a re-match in 2022 with two-term US Rep. Tom Malinowski (D-Rocky Hill). Last November, the two fought to a 51-49% finish, with Rep. Malinowski barely holding on to win a second term.
Redistricting will undoubtedly change some of the district, so it remains too early to properly analyze a second campaign between these two political veterans. Rik Mehta, the Republicans’ 2020 US Senate nominee, will oppose Mr. Kean in the GOP primary.
OH-11: Former Cleveland state Senator Nina Turner (D) has a substantial spending lead in her special congressional election campaign. Reports are surfacing that Ms. Turner, the 2020 national co-chair of the Bernie Sanders presidential campaign, will disclose spending more than $1 million to date in her campaign to succeed Housing & Urban Development Secretary Marcia Fudge, who resigned the 11th District seat after being confirmed to her cabinet position.
It appears Ms. Turner’s spending advantage will almost triple that of her presumed closest Democratic primary rival, Cuyahoga County Commissioner Shontel Brown. The special primary is August 3rd, with the associated general election coming November 2nd. Early voting begins July 7th.
OH-15: A new Fabrizio, Lee & Associates poll for the Mike Carey for Congress Campaign (6/23-24; 400 OH-15 likely special election Republican primary voters; live interview) finds the Ohio Coal Association chairman topping the pack of GOP candidates. In the initial ballot test, Mr. Carey leads state Rep. Jeff LaRe (R-Lancaster) by a 20-9% clip with state Sen. Bob Peterson (R-Fayette County) and former state Rep. Ron Hood trailing with 7% apiece. State Sen. Stephanie Kunze (R-Hilliard) lags behind with 6% support.
When the respondents are informed that former President Donald Trump has endorsed Mr. Carey, however, his lead swells to a huge 60-8-7-7-6% spread over Mr. Hood, Rep. LaRe, and Sens. Peterson and Kunze. The special primary is August 3rd, with the associated general election coming November 2nd. Early voting begins July 7th.
Oregon: In a surprising move as reported in the Associated Press, the Oregon Democratic state house leadership agreed to a deal with Republicans that the minority party would have equal representation with Democrats on the House redistricting committee and co-chair the panel. This, in exchange for Republicans ending their blockage of the Democrats’ legislative agenda. The deal will likely have a major effect upon how the state’s new congressional district is drawn.
Voting Rights Rulings: The US Supreme Court on a 6-3 vote supported Arizona Attorney General, and now US Senate candidate, Mark Brnovich’s (R) argument defending his state’s voting rights laws over which the Democratic National Committee had sued. The rulings upheld Arizona’s prohibition on ballot harvesting, meaning any individual collecting and returning live ballots to the election authorities or ballot depositories unless done so by a family member or certified health care worker, along with the state’s prohibition of counting ballots cast outside of a voter’s home precinct.
Ballot harvesting has become a commonplace legislative initiative in many states, but the Arizona legislature acted to proactively prevent the practice. They also continued the typical procedure of not counting provisional ballots cast by individuals who don’t reside in the precinct in which they are attempting to vote. The high court also stated that Arizona law, especially with a 27-day early voting period, gives individuals plenty of access to the process.
Arizona: Businessman Steve Gaynor, who defeated a sitting Arizona Secretary of State in the 2018 Republican primary but would then lose the general election by slightly over 20,000 votes from more than 2.33 million ballots cast, announced that he is joining the open Republican gubernatorial campaign. Ironically, the Democrat who defeated him in the Secretary of State’s race, Katie Hobbs (D), is also a current gubernatorial candidate.
In the Republican primary are state Treasurer Kimberly Yee, former US Congressman and 2002 gubernatorial nominee Matt Salmon, ex-news anchor Kari Lake, and Arizona State University Regent Karrin Taylor Robson. In addition to Ms. Hobbs on the Democratic side is former Nogales Mayor Marco Lopez, along with state Rep. Aaron Lieberman (D-Paradise Valley) who also just announced his candidacy. Gov. Doug Ducey (R) is ineligible to run for a third term.
California: Once the legislature completed its administrative duties in finalizing the recall election for Gov. Gavin Newsom (D), the state’s Lt. Governor, Eleni Kounalakis (D), wasted little time in scheduling the election. The candidate filing deadline will be a quick July 17th, and the recall vote will take place on September 14th.
New York: The New York Republican Party county leaders met in convention and awarded 85% of their votes to Rep. Lee Zeldin (R-Shirley/East Long Island) in his race for Governor. This means, according to the state chairman, that Mr. Zeldin is now the “presumptive” 2022 Republican Party gubernatorial nominee. Previously, Mr. Zeldin had received party support individually from a majority of GOP county organizations.
The vote means that the party organization is now authorized to help Mr. Zeldin defeat his GOP primary opponents, former Westchester County Executive and 2014 gubernatorial nominee Rob Astorino, ex-Trump White House aide Andrew Giuliani, son of Rudy Giuliani, and Lewis County Sheriff Mike Carpinelli.
Buffalo: Buffalo apparently has not heard the last of four-term Mayor Byron Brown (D). He lost re-nomination to self-proclaimed socialist India Walton by a 52-45% margin. That spread may close when the absentee ballots count will be released today. Early last week, however, the Mayor announced that he will run in the general election as a write-in candidate, hoping yet to salvage a fifth consecutive term in office.
Mr. Brown was first elected Mayor in 2005, after previously serving in the New York Senate, as chairman of the New York Democratic Party, and as a member of the Buffalo City Council.
New York City: Last Tuesday was the deadline to accept absentee ballots, and it appears that these 125,000+ votes will decide the Democratic primary outcome. Though the City has not yet released definitive numbers of the Ranked Choice Voting count, estimated reports suggest that Brooklyn Borough President Eric Adams’ virtual ten-point margin in the election night count has decreased to approximately two percentage points. Mr. Adams is citing counting discrepancies that the city elections official acknowledge, so accurate information is difficult to obtain.
In any event, if the Adams margin is reduced to just two points over former NYC Sanitation Commissioner Kathryn Garcia, meaning approximately 3,500 votes, then the 125,000+ absentee ballot could certainly change the outcome. This is especially true when seeing that 32% of the ballots come from Manhattan, more than any of the other four boroughs and a place where Mr. Adams finished third while Ms. Garcia took first place on election night. City officials are still claiming that they won’t produce a certified winner until mid-July. The first preliminary Ranked Choice Voting count will be released today.
Late last week, the New York City Board of Elections admitted that the count of the mayor’s primary race has been contaminated. Over 135,000 ballots, used as placebos to test their machines before the election, were added to the count, therefore bringing the printed results into question. Originally, the City Clerk said there would not be a final determination as to who won the June 22nd primary elections until mid-July. Now, it could be even longer.
Pittsburgh: When state Rep. Ed Gainey (D-Pittsburgh) defeated Pittsburgh Mayor Bill Peduto in the May Democratic primary, it appeared that the Republicans had no nominee for the general election, since no one filed in the GOP primary. Now, however, the party will have representation in the November election.
Tony Moreno, a former Pittsburgh police officer, placed third in the Democratic primary. It was confirmed, however, that he received enough write-in votes in the Republican primary to qualify as the GOP nominee. Therefore, Mr. Moreno will face Rep. Gainey in the mayoral general election. Mr. Gainey remains a prohibitive favorite to win, but he is now no longer officially unopposed.