We’re running out of money. But when?
Secretary of the Treasury Janet Yellen wrote to Speaker of the House Nancy Pelosi (D-CA) to notify her that the federal government’s outstanding debt will reach its statutory limit on August 1, immediately after the suspension approved in 2019 expires. But early last week, the Congressional Budget Office released a report on “Federal Debt and the Statutory Limit” that projects that Treasury has enough cash on hand to continue payments until the first quarter of the fiscal year, sometime in October or November. Secretary Yellen is taking no chances; she told Speaker Pelosi that Treasury will suspend sales of State and Local Government Series (SLGS) securities at midnight on July 30, and if Congress fails to act by August 2, “Treasury will need to start taking certain additional extraordinary measures in order to prevent the United States from defaulting on its obligations.” She urged Congress to act “as soon as possible.”
White House announces new measures to prevent foreclosures
With the CDC’s moratorium on foreclosures set to expire this week, the White House issued new guidanceand regulatory orders to help borrowers in need. Updated information for homeowners, renters, and landlords is on the Consumer Financial Protection Bureau’s website here, but these are the highlights:
- The Federal Housing Administration (FHA) is offering enhanced loss mitigation tools and a simplified COVID-19 Recovery Modification, and is requiring mortgage servicers to offer a no-cost option for eligible homeowners who can resume their current mortgage payments. For borrowers who can’t, HUD will enhance servicers’ ability to provide a 25% reduction on principal and interest.
- The USDA will also offer borrowers new options to help them reduce monthly P&I payments by up to 20%.
- The Veterans Administration’s new COVID-19 Refund Modification tools will help some borrowers reduce monthly payments by 20% or more.
These modifications bring the agencies’ COVID relief options into closer alignment with those already in place for mortgages guaranteed by Fannie Mae and Freddie Mac. Separately, Ginnie Mae is creating a new security backed by modified loans that would allow government agencies to extend mortgage terms up to 40 years. This product should be available late this year.
Separately, Rep. Jim Clyburn (D-SC), Chair of the House Select Subcommittee on the Coronavirus Crisis, has asked four residential property management companies to provide documentation related to more than 5,000 evictions during the pandemic, in preparation for a subcommittee hearing on the topic this week.
States and localities need to distribute rental assistance, Fudge says
At her first appearance before the House Financial Services Committee in her new role, Secretary of Housing and Urban Development Marcia Fudge said that while Treasury has distributed almost all of the Emergency Rental Assistance funds authorized by Congress, and HUD is providing technical assistance, it’s up to state and local governments to get those funds to renters who need them before the eviction moratorium expires. Republican members of the Committee had asked that Secretary of the Treasury Janet Yellen appear at this hearing as well, and expressed frustration about what Rep. Patrick McHenry (R-NC), the Committee’s ranking member, called “government at its worst.”
OCC rescinds CRA rule, agencies pledge coordination on reform
The Office of the Comptroller of the Currency (OCC) announced that it plans to rescind the Community Reinvestment Act (CRA) rule it issued last May. The OCC, Federal Reserve Board, and Federal Deposit Insurance Corporation (FDIC) announced jointly that they will work together to strengthen and modernize CRA regulations: “Joint agency action will best achieve a consistent, modernized framework across all banks to help meet the credit needs of the communities in which they do business, including low- and moderate-income neighborhoods.” Federal Reserve Board Governor Lael Brainard said this effort would build on the Fed’s September 2020 Advance Notice of Proposed Rulemaking.
FDIC proposes rule to simplify deposit insurance coverage
At its meeting last Tuesday, the Federal Deposit Insurance Corporation’s board voted to issue a proposed rule that would simplify deposit insurance coverage for deposits held in connection with revocable and irrevocable trusts. “Currently, the FDIC receives more inquiries related to deposit insurance coverage for trust deposits than all other types of deposits combined,” the agency said. The proposal would merge those two deposit categories and apply a simpler calculation for coverage of all types of trust accounts. The proposal would also allow deposit insurance coverage for principal and interest funds advanced by a mortgage servicer. The proposed rule is open for comment for 60 days.
Yellen tells regulators to move quickly on stablecoins
The President’s Working Group on Financial Markets (PWG), which includes the leaders of the Federal Reserve Board, the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the Treasury Department, met last week to discuss stablecoins. Treasury staff is preparing a report that discusses the potential benefits and risks of stablecoins and makes recommendations to address regulatory gaps; Secretary of the Treasury Janet Yellen emphasized the need to put “an appropriate US regulatory framework” in place quickly.
Confirmations, Nominations, Departures
The President nominated Graham Steele to be Assistant Secretary of the Treasury for Financial Institutions. Steele, who currently heads the Corporations and Society Initiative at the Stanford Graduate School of Business, was a long-time Capitol Hill staffer who worked as a legislative assistant to Senator Sherrod Brown (D-OH), served as Minority Chief Counsel for the Senate Banking Committee, and was Staff Director of the Subcommittee on Financial Institutions and Consumer Protection.
The President also nominated Judith Pryor, a director of the Export-Import Bank, to be the bank’s First Vice President. Pryor served as vice president of external affairs at the then-Overseas Private Investment Corporation (now the US International Development Finance Corporation) under the Obama administration.
YJ Fischer is the new Director of the Office of International Affairs (OIA) at the Securities and Exchange Commissioner. Fischer was most recently the global head for YouTube product policy at Google, but during the Obama administration she held a variety of positions at the State Department, where she launched a public-private partnership to repair key infrastructure in Iraq.
The Week Ahead in Washington
The House of Representatives will vote on a package of seven appropriations bills this week -the “minibus,” which includes funding for Agriculture-FDA, Energy and Water, Financial Services, Interior-Environment, Labor-HHS-Education, Military Construction-VA, and Transportation-HUD. They plan to leave town for the August recess after they finish their business on Thursday. The Senate’s staying in for at least a week after that.
July 27 at 9:30 a.m. Senate Committee on Finance holds a hearing on “Implementation and Enforcement of the USMCA: One Year after Entry into Force.”
July 27 at 10 a.m. House Financial Services Subcommittee on National Security, International Development, and Monetary Policy holds a hearing on “The Promises and Perils of Central Bank Digital Currencies.”
July 27 at 10 a.m. House Small Business Subcommittee on Innovation, Entrepreneurship, and Workforce Development holds a hearing on “Wealth for the Working Class: The Clean Energy Economy.”
July 27 at 10 a.m. Senate Committee on Banking, Housing, and Urban Affairs holds a hearing on “Cryptocurrencies: What are they good for?”
July 27 at 10:30 a.m. House Select Subcommittee on the Coronavirus Crisis holds a hearing on “Oversight of Pandemic Evictions: Assessing Abuses by Corporate Landlords and Federal Efforts to Keep Americans in their Homes.”
July 27 at 2 p.m. House Financial Services Subcommittee on Housing, Community Development, and Insurance holds a hearing on reauthorization of the Native American Housing Assistance and Self-Determination Act (NAHASDA).
July 27 at 3 p.m. Senate Banking Subcommittee on Economic Policy holds a hearing on “Protecting Student Loan Borrowers and the Economy in Upcoming Transitions.”
July 28 at 10 a.m. House Committee on Financial Services holds a markup of various bills.
July 28 at 10 a.m. House Judiciary Subcommittee on Antitrust, Commercial, and Administrative Law holds a hearing on “Oversight of the Bankruptcy Code Part 1: Confronting Abuses of the Chapter 11 System.”
July 28 at 10 a.m. Senate Committee on Finance holds a hearing on “Building on Bipartisan Retirement Legislation: How Can Congress Help?”
July 28 at 10:30 a.m. House Energy & Commerce Subcommittee on Consumer Protection and Commerce holds a hearing on “Transforming the FTC: Legislation to Modernize Consumer Protection.”
July 29 at 9 a.m. House Select Committee on the Climate Crisis holds a hearing on “Financing Climate Solutions and Job Creation.”
July 29 at 3 p.m. House Homeland Security Subcommittee on Border Security, Facilitation, and Operations holds a hearing on “Assessing the State of America’s Seaports: Equipping for a Reopened Economy.”
The Ellis Insight
Jim Ellis reports on political news
Iowa: Saying at one time she looked up to Sen. Chuck Grassley (R), former US Rep. Abby Finkenauer (D) who in 2020 lost her seat to freshman Rep. Ashley Hinson (R-Marion/Cedar Rapids), declared her US Senate candidacy. Incumbent Grassley, first elected in 1980, has yet to confirm that he will seek an eighth term.
Already in the Democratic primary are Minden City Councilman Glenn Hurst and former Crawford County Supervisor Dave Muhlbauer. Retired Navy Admiral and 2020 Senate candidate Mike Frankel remains as a possible candidate. The 2022 Iowa race is expected to be competitive.
New Hampshire: The University of New Hampshire released the results of their July statewide survey (7/15-19; 1,794 UNH panel respondents; 1,540 NH likely voters; online) and again see Gov. Chris Sununu (R) holding a slight lead over first-term Senator Maggie Hassan (D). The ballot test gives the Governor a 49-48% edge, similar to the 48-46% spread found in February.
If former Senator Kelly Ayotte were the Republican candidate, thus setting the re-match between the two women from the 2016 campaign that Ms. Hassan won 48-47%, the ballot test breaks 49-45% in the current Senator’s favor. In February, the spread between the two was an almost identical 48-43%. If retired Army General and 2020 Senate candidate Don Bolduc were the GOP nominee, Sen. Hassan would enjoy a stronger 51-41% advantage.
On the money front, the incumbent raised a whopping $11.3 million during her out-cycle time and now reports $6.56 million cash-on-hand, meaning she is ready for a serious 2022 campaign.
Oklahoma: It was believed the members attending the Oklahoma Republican Party convention were going to impose censure on its own GOP Senators, Jim Inhofe and James Lankford, because they voted in favor of recognizing President Biden’s electoral victory. When the vote was actually conducted, however, the move to officially censure the pair of Sooner State GOP Senators failed on a 93-122 count (43% favor; 57% oppose).
Pennsylvania: It appears safe to say that none of the announced Republican candidates is catching early fire. The leading fundraiser for the second quarter was author and former congressional candidate Kathy Barnette, slightly ahead of ex-congressional candidate Sean Parnell, and 2018 Lt. Governor nominee Jeff Bartos, but none even reached the $600,000 mark in receipts for the second quarter.
Conversely, Democratic Lt. Gov. John Fetterman attracted $2.5 million for the quarter and Montgomery County Commissioner Val Arkoosh (D) scored just over $1 million. Rep. Conor Lamb (D-Pittsburgh), said to be seriously considering a Senate race, reported raising just under $1 million. The open Pennsylvania race with Sen. Pat Toomey (R) retiring could be the most pivotal campaign in the 2022 election cycle.
Wisconsin: As expected, Wisconsin Lt. Gov. Mandela Barnes (D) declared his candidacy for the Senate in next year’s campaign pledging to “change the game” while attacking Sen. Ron Johnson (R) as not delivering for his constituency. Already in the Democratic primary are state Treasurer Sarah Godlewski, state Senator Chris Larson (D-Milwaukee), Outagamie County Executive Tom Nelson, and Milwaukee Bucks basketball club senior executive and former Obama White House aide Alex Lasry. Sen. Johnson has not yet said if he will seek a third term.
CA-21: Angel Lara (D), a former staff aide to California Sen. Dianne Feinstein (D), joined the congressional primary to face incumbent Rep. David Valadao (R-Hanford/Fresno). In the jungle primary race are former state Assemblywoman Nicole Parra (D), former Fresno City Councilman and ex-New Mexico political candidate Chris Mathys (R), and Delano Mayor Bryan Osorio (D).
According to the second quarter campaign financial disclosure lists, none of the challengers are showing raising much money. All are well under Mr. Mathys’ self-funding total of $200,000. Former Rep. T.J. Cox (D) maintains he will make a final decision about his own 2022 candidacy once the new district lines are adopted. In the meantime, however, Mr. Cox has converted his campaign apparatus into a political action committee, suggesting he will not run.
CO-3: State Rep. Dylan Roberts (D-Eagle County), who was viewed as a possible 2022 congressional candidate, announced that he would run for the Colorado Senate. Mr. Roberts will seek the seat that Senate President Pro Tempore Kerry Donovan (D-Wolcott) is leaving to herself run for Congress. A total of ten Democrats have announced their congressional candidacies for the 3rd District seat, but Sen. Donovan appears to be the early leader. She raised $1.18 million in the second quarter, far more than any other Democrat.
Still, Ms. Donovan trails incumbent Rep. Lauren Boebert (R-Silt) by $800,000 in campaign receipts and approximately $700,000 in cash-on-hand. Additionally, the first unofficial Colorado redistricting commission congressional map would make Rep. Boebert’s western slope district even more Republican.
FL-13: Local St. Petersburg attorney Amanda Makki announced that she will return for a re-match in the Republican congressional primary, but this time the competition will be over an open seat. Incumbent Rep. Charlie Crist (D-St. Petersburg), who they opposed in 2020, is running for Governor. Last year, Ms. Makki lost the nomination to military veteran Ana Paulina Luna, 36-28%. The latter woman would then hold Rep. Crist to a 53-47% re-election victory in the general election, closest of any winning Florida incumbent.
Without Rep. Crist in the race and the Republican legislature likely making the 13th District more favorable to a Republican candidate, this Tampa Bay race will become a key national congressional campaign.
IL-17: National Democratic leaders attempting to find a successor for retiring Land of Lincoln Rep. Cheri Bustos (D-Moline) in a politically marginal congressional district were dealt a setback. Their top prospect, Rockford Mayor Tom McNamara (D), announced that he will not run for Congress next year. Redistricting will drastically change IL-17, a seat already having more boundary twists and turns than any Illinois rural CD. It is very difficult to predict the outcome of this open seat until we see how western Illinois is eventually configured.
NH-1: Former Trump White House aide Karoline Leavitt (R) announced her congressional candidacy last week in New Hampshire’s 1st District, the seat that has defeated more incumbents nationwide than any other since 2004. With Republicans in control of the redistricting apparatus and a sense they will make the 1st District much more Republican, thus conceding District 2 to Rep. Annie Kuster (D-Concord), a spurt of candidate activity has already erupted. In addition to Ms. Leavitt, state Rep. Tim Baxter (R-Seabrook), Iraq War veteran Julian Acciard, and 2020 congressional candidate Gilead Towne have all announced their candidacies.
For his part, Rep. Chris Pappas (D-Manchester) says he wants to seek re-election, though if the district becomes too Republican, he is exploring entering what could be an open Governor’s race. Incumbent Gov. Chris Sununu (R) is a potential US Senate candidate.
NY-21: Bridie Farrell, who was a member of the US National Speedskating Team and an advocate for protecting women from sexual assault, announced that she will enter the Democratic primary in hopes of challenging House Republican Conference chair Elise Stefanik (R-Schuylerville) next year. Ms. Farrell, at the outset, would appear to be the strongest of the three announced Democrats. For her part, Rep. Stefanik, originally elected in 2014, has already raised $2.3 million for her re-election effort holding $2.1 million in her account.
TX-6: The Texas double-Republican special election runoff between Susan Wright, widow of the late Rep. Ron Wright (R-Arlington), and state Rep. Jake Ellzey (R-Waxahachie) will be held on July 27th, and the former is viewed as the favorite. Rep. Ellzey, however, is the superior fundraiser.
According to the campaign filings, Mr. Ellzey has raised $1.74 million for the federal campaign with over $484,000 in the bank through the pre-special election disclosure period ending July 7th. Ms. Wright has raised a considerably smaller $740,000 sum with just over $164,000 in her campaign account in early July. Ms. Wright is benefiting from an $835,000 expenditure from the Club for Growth. The Elect Principled Veterans Fund has spent $155,000 to aid Mr. Ellzey.
The latest polling, coming from the Wright campaign (American Viewpoint; 7/19-21; 400 TX-6 likely special election voters; live interview) finds Ms. Wright leading Mr. Ellzey, 44-34% heading into election day.
TX-24: One of the Democrats who fled Austin to stop the passage of the Republican leadership’s voting bill has now declared her congressional candidacy. State Rep. Michelle Beckley (D-Carrollton) announced that she will challenge freshman US Rep. Beth Van Duyne (R-Irving) next year. On paper, this looks like a potential Democratic conversion opportunity since the Congresswoman won with just under 49% of the vote. Redistricting, however, will likely change this seat drastically, and in Ms. Van Duyne’s favor, so Ms. Beckley may find herself in a much different political situation once the new maps are enacted.
TX-30: House Science Committee chair Eddie Bernice Johnson (D-Dallas) said before the 2020 election that she was running for her final term in the House. Now 85 years of age, she was originally elected in 1992 after serving ten non-consecutive years in the Texas legislature. The second quarter financial disclosure reports suggest that Ms. Johnson remains on a retirement course. She has raised just $9,500 from the period beginning January 1st, clearing indicating that she is not planning on running another campaign.
California: Radio talk show host and attorney Larry Elder (R) challenged the Secretary of State for disqualifying him as a candidate in the California recall election, and late last week won his judicial ruling for placement on the ballot as a candidate in the September 14th gubernatorial recall election. The total number of qualified candidates now reaches 46. Should Gov. Gavin Newsom (D) be recalled from office, votes cast for the replacement candidates would then take effect and the top vote-getter would serve the balance of the current gubernatorial term.
Illinois: Five-term Rep. Rodney Davis (R-Taylorville) said last week that he is confident “any Republican” would defeat Illinois Gov. J.B. Pritzker (D) next year. This is a strong statement considering Illinois has been Democratic heavy throughout the past decade and one-half. Concluding his remarks, Rep. Davis said, in reference to running for Governor, “if I choose to make a race, I don’t get in it to lose.” With Illinois losing a congressional seat, there is a good chance that Rep. Davis 13th CD would be broken up or paired with another Republican member such as freshman Rep. Mary Miller (R-Oakland).
Maryland: Former Republican National Committee chairman, ex-Maryland Lt. Governor, and previous US Senate candidate Michael Steele filed an exploratory committee in the Maryland Governor’s race. With Gov. Larry Hogan (R) ineligible to seek a third term, Republicans have only state Commerce Secretary Kelly Schulz, state Delegate Dan Cox (R-Frederick), and frequent candidate Robin Ficker as announced candidates. Should Mr. Steele enter the race, he would be the favorite to capture the Republican nomination but would be cast as a decided underdog to whomever becomes the Democratic nominee.
Massachusetts: Massachusetts Republican Gov. Charlie Baker has been coy about whether or not he will run for a third term next year, but we now have a strong clue that he is taking concrete action to construct a campaign. Though he has done little to raise much money for another political bid, the Baker campaign has now scheduled a major fundraising event for August 20th, thus suggesting that he will again be on the ballot next year.
Michigan: Saying will likely become a gubernatorial candidate, former Detroit Police Chief James Craig (R) filed a gubernatorial fundraising committee with the Michigan Secretary of State but qualified his move as exploratory. Mr. Craig said he will make a final decision about running and subsequent announcement after Labor Day. Currently in the Republican primary are online talk show host Tudor Dixon, businessman Austin Chenge, and chiropractor Garret Soldano. The eventual Republican nominee will challenge Gov. Gretchen Whitmer (D).
Virginia: Though Virginia Republican gubernatorial nominee Glenn Youngkin is capable of funding his own campaign, he has yet to do so according to the second quarter financial report. As a result, Democratic nominee Terry McAuliffe, the former Governor and ex-Democratic National Committee chairman, enjoys a wide financial edge. From contributors, Mr. McAuliffe has raised $7.5 million to date as compared to $3.6 million for Mr. Youngkin. The McAuliffe cash-on-hand advantage is $9 million to $2.6 million.