March 2, 2018

March 2, 2018

A great wind is blowing, and that gives you either imagination or a headache.

—    Catherine the Great

It’s true: Washington is closed today because of wind. The federal government is closed. The schools are closed. Even the Zoo is closed, and they never close for anything. We at Eris are working from home, and feeling both imaginative and headachy. In other news . . .

Senate will consider regulatory reform next week — Yesterday Senate Majority Leader Mitch McConnell (R-KY) moved to proceed on S. 2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act, introduced by Senate Banking Committee Chairman Mike Crapo (R-ID). The bill has strong bipartisan support, and passed the Senate Banking Committee in December by a vote of 16-9. Floor action on the bill may start as early as Tuesday afternoon.

House passes bill to change capital requirements for operational risk — The House voted on Tuesday to approve H.R. 4296, Rep. Blaine Luetkemeyer’s bill to require regulatory standards for operational risk-based capital to be based on current risks and forward-looking assessments, rather than on historical activities. The bill passed by a vote of 245-169, and its language is included in S. 2155, the Senate bill to be considered next week.

Powell makes upbeat appearances before House, Senate committees — Federal Reserve Board Chairman Jerome H. Powell appeared before the House Financial Services Committee and the Senate Banking Committee this week for his first Humphrey-Hawkins hearings as Chairman. He had good news about the economy, reporting continuing growth without excessive inflationary pressure; in fact, he said, the Fed would like to see the inflation rate rise closer to the target rate of 2%. The process of normalizing the Fed’s balance sheet continues as expected, with minimal disruption to the market, and Powell said that he expects it to reach a “new normal” within four years. Wages have not grown as quickly as the Fed expected, Powell said, but he believes they will catch up as the economy continues to improve.

Senate begins committee work on infrastructure — The Senate Committee on Environment and Public Works held its first hearing on President Trump’s infrastructure proposal yesterday, with testimony from Secretary of Transportation Elaine Chao and Assistant Secretary of Defense for Civil Works R.D. James. Senator Tom Carper (D-DE), the Committee’s ranking member, said that Assistant Senate Majority Leader John Cornyn (R-TX) had told him that the Senate is unlikely to act on infrastructure this year, but Carper and other Committee members objected — “We’ve got work to do,” he said. Discussion focused on ways to streamline the permitting process, and on sources of funding for infrastructure projects; the Administration’s proposal calls for a 20-80% split between federal “seed money” and state, local, and private funding for new projects, a flip from earlier practices.

CFPB should review TRID guidance and participate in EGRPRA review, says GAO — The GAO submitted its report on compliance burdens of community banks and credit unions to the House Small Business Committee this week, with recommendations that the Consumer Financial Protection Bureau (CFPB) clarify its guidance on the TILA-RESPA Integrated Disclosure Rule (TRID). “GAO found that some compliance burdens arose from misunderstanding the disclosure regulations — which may in turn have led institutions to take actions not actually required,” the report said. It also found that “Regulators do not assess the cumulative burden of the regulations they administer,” and recommended that the federal banking agencies coordinate the 10-year regulatory reviews required by the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA), with CFPB participating in that review.

CFPB seeks comment on consumer complaint reporting — The CFPB issued a Request for Information (RFI) yesterday about how the Bureau publishes consumer complaint information. While some reports are explicitly required by statute, the Bureau has published reports that include information not required by law. The Bureau also maintains a public database of consumer credit card complaints. Specifically, the RFI asks for comment on the usefulness of complaint reporting and analysis to stakeholders, and suggestions for best practices in this area. Comments will be due 90 days from publication in the Federal Register, which is expected next Tuesday. The RFI is the sixth issued by the CFPB since the beginning of the year; the complete list of areas open for comment is here.

Noreika predicts more power for national bank charter — In remarks before the Mid-Size Bank Coalition’s annual Financial Services Conference on Monday, former acting Comptroller of the Currency Keith Noreika said that he expects the agency to issue further guidance or rules to help national banks shed their holding company structure. He also predicted that foreign banks will move to federal licenses for their US operations, and said that current Comptroller Joseph Otting is “a strong believer in the supremacy of the federal charter.”

House Oversight wants details of HUD spending, retaliation charges — Rep. Trey Gowdy (R-SC), Chairman of the House Committee on Oversight and Government Reform, wrote to HUD Secretary Ben Carson on Wednesday to ask about a report that the agency retaliated against a HUD employee who objected to excessive spending on office furniture. Helen Foster, former chief administrative officer of HUD, said she was removed from that position after refusing to authorize excess funds to redecorate Secretary Carson’s office. Gowdy asked for all documents relating to Ms. Foster since August 2017, and all documents and receipts relating to redecorating or refurnishing the Secretary’s office. HUD has until March 14 to supply these materials.

Warren asks institutional investors to press gun companies for changes

Senator Elizabeth Warren (D-MA) wrote to nine major investment groups, including BlackRock, Invesco, Vanguard, and Fidelity, this week to urge them to “use [their] financial leverage as a major gun company shareholder to encourage more responsible actions by these companies.” Warren charged that these companies “directly benefit from sales of weapons, including those that are used in violent assaults.” She asked the companies to brief her staff on their plans for action by March 9.

No, Ruth Bader Ginsburg is NOT in the cryptocurrency business — The Texas State Securities Board issued an emergency cease-and-desist order to Panama-based tech company LeadInvest this week, which (among other things) commanded it to stop marketing bitcoin services with the use of a photo of a “CodeofEthics Association” that included Supreme Court Justice Ruth Bader Ginsburg. “Respondent LEADINVEST is . . . not telling investors that this photograph appears in an article published in the Fall 2005 edition of GW Law Briefs,” the order notes.

Next Week in Washington:

March 6          House Appropriations Subcommittee on Financial Services and General Government hears testimony from Secretary of the Treasury Steven Mnuchin on the FY19 Budget for the Department of the Treasury. 10:00 a.m., 2359 Rayburn House Office Building.

March 6          House Committee on Financial Services marks up FY19 Budget Views and Estimates. 10:00 a.m., 2128 Rayburn House Office Building.

March 7          House Financial Services Subcommittee on Housing and Insurance holds a hearing on “Legislative Review of H.R. 5059, the State Insurance Regulation Preservation Act.” 10:00 a.m., 2128 Rayburn House Office Building.

March 7          House Committee on Small Business holds a hearing on “Regulatory Reform and Rollback: The Effects on Small Business.” 11:00 a.m., 2360 Rayburn House Office Building.

March 7          Senate Committee on Aging holds a hearing on “Stopping Senior Scams.” 1:00 p.m, SD-562 Dirksen Senate Office Building.

March 7          House Financial Services Subcommittee on Financial Institutions and Consumer Credit holds a hearing on “Legislative Proposals to Reform the Current Data Security and Breach Notification Regulatory Regime.” 2:00 p.m., 2128 Rayburn House Office Building.

March 7          Joint Economic Committee holds a hearing on “The Economic Report of the President.” Kevin Hassett, Chairman of the Council of Economic Advisers, will testify. 2:00 p.m., SH-216 Hart Senate Office Building

March 7          Senate Judiciary Subcommittee on Oversight, Agency Action, Federal Rights, and Federal Courts holds a hearing on Small Business Bankruptcy. 2:30 p.m., SD-226 Dirksen Senate Office Building.

March 8          Quarterly meeting of the SEC Investor Advisory Committee. The meeting will include panels on regulatory approaches to combat investor fraud and efforts to prevent the financial exploitation of vulnerable adults. 9:30 a.m., 100 F Street, NE.

The Ellis Insight. Jim Ellis reports on political news:

Senate

Florida:  Quinnipiac University surveyed the Florida electorate (2/23-26; 1,156 FL registered voters) and found consistent results with other firms who have recently asked ballot test questions for the impending US Senate contest between Sen. Bill Nelson (D) and Gov. Rick Scott (R). According to the results, Sen. Nelson claims a 46-42% advantage. Gov. Scott has not announced a campaign for the Senate, but an unconnected political action committee has been running extensive media spots in an effort to promote the Governor’s agenda and accomplishments in office. He is expected to soon become an official candidate.

Mississippi:  State Sen. Chris McDaniel (R-Ellisville) announced his primary challenge to Sen. Roger Wicker (R) this week. Mr. McDaniel, who came close to upending Sen. Thad Cochran (R) in the 2014 nomination process, faces an uphill battle as he enters the race with just over three months remaining. If time is not his biggest problem, the resource imbalance may well be the greater obstacle. Sen. Wicker already had over $4.12 million in the bank at the end of 2017, while Mr. McDaniel is just getting going and the likelihood of outside conservative Super PACs lending strong support to the challenger’s effort is much less now that former presidential advisor Steve Bannon is no longer much of an influential factor in active campaign circles. The primary election is scheduled for June 5th.

North Dakota:  A new Tarrance Group poll (2/18-20; 500 ND likely registered voters) finds at-large US Rep. Kevin Cramer (R-Bismarck) taking a lead over Sen. Heidi Heitkamp (D) by a 49-44% margin, a spread large enough to be just beyond the polling margin of error. Mr. Cramer, after originally saying he would not run for the Senate and instead seek re-election, two weeks ago changed his mind and entered the race. The Tarrance poll is the first publicly released data that shows Sen. Heitkamp in a state of vulnerability to this degree. We can expect this race to now be rated as a pure toss-up campaign.

Tennessee:  Sen. Bob Corker (R) reiterated his retirement decision this week, and will leave office when his current terms ends. With former US Rep. Stephen Fincher (R-Crockett County) withdrawing earlier, US Rep. Marsha Blackburn (R-Brentwood) appeared unopposed for the Republican nomination until businessman Darrell Lynn came forward pledging to spend $5 million to become the party standard bearer. The eventual nominee faces former two-term Gov. Phil Bredesen (D) in the general election to replace the retiring Sen. Corker.

House

AZ-8:  Former state Senate President Pro Tempore Debbie Lesko (R-Peoria) won the GOP special primary last night and now becomes the heavy favorite to replace resigned Rep. Trent Franks (R-Peoria) in the April 24th special general election. Ms. Lesko attracted 36% of the closed Republican primary vote. Ex-state Rep. Phil Lovas (R-Glendale) and former state Sen. Steve Montenegro (R-Surprise), whose sex texting messages to a state Senate staff member came into the public view during the campaign, both finished with 24% of the vote. Former Public Service Commissioner Bob Stump, no relation to the late US Rep. Bob Stump (R-AZ) who served 26 years in the House, finished with just 5% of the vote.

Democrats easily nominated physician Hiral Tipirneni to advance into the special general. She scored a 60-40% victory over auto sales manager and LGBT activist Brianna Westbrook. More than 36,000 people voted in the Democratic primary, a large increase over past similar elections. But Republican turnout topped 71,000, thus reflecting the majority party’s large advantage here.

GA-6:  Jon Ossoff (D), who made history in being the candidate for the country’s most expensive-ever congressional race (over $30 million through his campaign alone, not counting several more million in outside organization expenditures on his behalf) only to lose the June special election to current Rep. Karen Handel (R-Roswell), announced on Friday that he will not become a candidate in the regular election later this year. With the candidate filing deadline approaching on March 9th, it appears that former Atlanta TV anchorman Bobby Kaple, businessman Kevin Abel, and attorney Sam Levine will comprise the Democratic field. Considering the regular election voting history in this district, Ms. Handel begins her first re-election campaign as the favorite.

MN-1:  Republican Jim Hagedorn (R) lost the second-closest congressional race of 2016, falling to Rep. Tim Walz (D-Mankato), 50.3 – 49.6%. He returns for his third consecutive congressional run, but this time in an open seat campaign. Harper Polling, surveying for the Hagedorn Campaign (2/19-20; 412 MN-1 likely Republican primary voters), finds the previous Republican nominee leading state Sen. Carla Nelson (R-Rochester), 54-21%, in a hypothetical GOP primary vote. Though Minnesota candidates typically abide by the state party endorsement convention results, Sen. Nelson recently said that she would take the race to an August 14th primary should the convention delegates side with Mr. Hagedorn. The seat is open because Rep. Walz is running for Governor.

NH-1:  Levi Sanders, the 48-year old son of Vermont Senator and former presidential candidate Bernie Sanders (I-VT), declared his candidacy for the eastern New Hampshire congressional seat from which Rep. Carol Shea-Porter (D-Rochester) is retiring after four non-consecutive terms.
Mr. Sanders, however, lives in the state’s 2nd District, which could become an issue in parochial New Hampshire. Seven Democrats are already in the race, including Executive Councilor Chris Pappas, former NH state AFL-CIO president and state Rep. Mark MacKenzie (D-Bedford), and Rochester City Attorney Terence O’Rourke.  The general election is likely to become yet another toss-up campaign in a district that has unseated more incumbents than any CD in the nation.

NM-2:  The open 2nd District (Rep. Steve Pearce (R-Hobbs) running for Governor) now has an official party endorsed candidate. Republicans met in convention and awarded the New Mexico Republican Party primary endorsement to state Rep. Yvette Herrell (R-Alamogordo). The move was a bit of a surprise because the convention delegates eschewed their former state chairman, Marty Newman. Rep. Herrell received a whopping 69% of the GOP delegates’ support. Candidate filing closed on February 6th, which yielded only two Democrats declaring themselves, surprising for an open seat. College professor Madeline Hildebrandt and attorney Xochitl Torres-Small will square off for the party nomination. This race begins as a Lean R campaign.

PA-8:  Venture capitalist John Chrin (R) announced that he will continue to challenge Rep. Matt Cartwright (D-Moosic/Scranton) in the upcoming election. Since the new Pennsylvania redistricting plan radically changed Rep. Cartwright’s 17th District, there had been some question as to whether Mr. Chrin, who has over $914,000 in his campaign account thanks largely to his $700,000 personal loan, would remain in the new 8th District or battle for the open 7th CD. The latter seat houses the Lehigh Valley area where Mr. Chrin was raised, but the new 8th’s Republican numbers are stronger. The new PA-8 is the only current Democratic district that now becomes competitive under the new plan.

UT-4:  Local Salt Lake City pollster Dan Jones & Associates (2/9-21; 404 UT-4 registered voters) released another survey in their ongoing testing of the impending campaign between Rep. Mia Love (R-Saratoga Springs) and Salt Lake County Mayor Ben McAdams (D). As has been the case in previous polls, Rep. Love maintains a lead but the results are close. According to their February release, the Congresswoman leads Mr. McAdams, 49-43%, which is almost identical to the group’s January survey that found Rep. Love up 47-42%.

Governor

California:  In early January, former US Rep. Doug Ose (R-Sacramento) announced that he would enter the open 2018 Governor’s campaign. Now, less than two months later, he’s dropping out. Republicans need a strong candidate just to qualify for the November ballot in the state’s top-two jungle primary format and Mr. Ose was thought to be such. Again having two Democrats run against each other in the Governor’s general election will ostensibly make it more difficult for Republicans to turn out their voters for the down ballot campaigns, especially when not fielding a Senate candidate, either.

Georgia:  A new Georgia statewide poll from Mason-Dixon Polling & Research (2/20-23; 625 GA registered voters with an over-sample of 500 GA likely Republican primary voters and 500 GA likely Democratic primary voters) tested both the open GOP and Democratic gubernatorial primaries. According to the survey results, Lt. Gov. Casey Cagle has a 27-13-12-11% Republican primary advantage over Secretary of State Brian Kemp, Iraq War veteran Clay Tippins, and former state Sen. Hunter Hill, respectively. For the Democrats, in a battle of Stacey’s, former state House Minority Leader Stacey Abrams leads ex-state Rep. Stacey Evans, 29-17%.

Illinois:  The Paul Simon Public Policy Institute of Southern Illinois University conducted a survey for the state’s upcoming March 20th primary election. According to the data (2/19-25; 1,001 IL registered voters; 472 likely Democratic voters; 259 likely Republican primary voters), the results appear consistent with other recent research studies. The Simon Poll finds venture capitalist J.B. Pritzker, who has already spent $56 million for his campaign, leading state Sen. Daniel Biss (D-Chicago) and businessman Chris Kennedy, son of the late Attorney General and US Senator Robert F. Kennedy, 31-21-17%, respectively.

Maine:  Two Democrats announced yesterday that they are withdrawing from the open Governor’s race, even before the campaign officially begins. Former Bangor Mayor Sean Faircloth, who contemplated for a long while before announcing his candidacy, has quickly backtracked and will exit. The same for ex-state Sen. James Boyle (D-Scarborough). The departing pair still leaves the Democrats with a dozen candidates including Attorney General Janet Mills, former state House Speaker Mark Eves (D-North Berwick), and state Sen. Mark Dion (D-Westbrook). The candidate filing deadline is March 15th for the June 12th primary. Gov. Paul LePage (R) is ineligible to run for a third term.

Maryland:  Mason-Dixon Polling & Research looked at the developing Maryland gubernatorial campaign. Here, despite representing one of the most loyal of Democratic states, Republican Gov. Larry Hogan maintains excellent job approval ratings. According to this latest poll (2/20-22; 625 MD registered voters), the Governor’s favorability index is 63:26% positive to negative.

The approval rating also translates into substantial leads for him in the ballot test. Against Prince George’s County Executive Rushern Baker, who leads in Democratic primary polling, Gov. Hogan scores a 51-36% margin. If Baltimore County Executive Kevin Kamenetz were the Democratic nominee, the Governor’s margin would be a similar 49-34%. Should NAACP president Ben Jealous advance to the general election, Gov. Hogan’s preference rating is 50-33%.

Michigan:  Public Opinion Strategies, surveying for the Bill Schuette for Governor campaign (2/10-13; 800 MI previous Republican primary voters), finds the Attorney General in strong shape to capture the open GOP gubernatorial nomination. According to the results, Mr. Schuette leads Lt. Gov. Brian Calley, 42-15%, with state Sen. Patrick Colbeck (R-East Lansing) tallying only 5% support. The Michigan primary isn’t until August 7th, so much time remains for change. Former state House Minority Leader Gretchen Whitmer appears to be the leading Democratic candidate. Gov. Rick Snyder (R) is ineligible to seek a third term.