March 9, 2018

March 9, 2018

Senate moves toward vote on regulatory relief package — The Senate began debate this week on S. 2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act, and voted yesterday on the motion to proceed. Senate Banking Committee Chairman Mike Crapo (R-ID) is expected to offer a manager’s amendment on Monday, and Senate Majority Leader McConnell has already filed for cloture on the underlying bill. Meanwhile, House Financial Services Chairman Jeb Hensarling (R-TX) said that the Senate bill does not go far enough, and should include “three or four dozen bills” that had already passed the House under suspension.

House approves four more financial services bills — The House of Representatives voted on Tuesday to approve four more measures reported by the Financial Services Committee. H.R. 4607, the Comprehensive Regulatory Review Act, would change the schedule for comprehensive regulatory review to seven years (from ten), and would add the Consumer Financial Protection Bureau (CFPB) to the agencies that must comply; it passed by a vote of 264-143. The House approved by voice vote H.R. 2226, the Portfolio Lending and Mortgage Access Act; H.R. 4735, the Community Bank Reporting Relief Act; and H.R. 4768, the Strategy for Combatting the Financing of Transnational Criminal Organizations Act. “These bills demonstrate strong and bipartisan legislating while continuing to move our country forward,” said Financial Services Committee Chairman Hensarling.

TAILOR Act, Reg A+ reform and more headed to House floor — Next week the House is expected to take up an additional five financial services regulatory burden relief bills, including H.R. 1116, Rep. Scott Tipton’s bill to require federal regulators to tailor their actions based on risk profiles, rather than on size alone; H.R. 4263, which would raise the JOBS Act exemption for small company capital formation; H.R. 4545, the Financial Institutions Examination and Reform Act; H.R. 4061, the Financial Stability Oversight Council Improvement Act; and H.R. 4293, the Stress Test Improvement Act of 2017.

Data breach notification policy is a priority for House leaders, says Luetkemeyer — The House Financial Services Subcommittee on Financial Institutions and Consumer Credit held a hearing Wednesday afternoon to discuss bipartisan draft legislation setting uniform federal standards for consumer notification after a data breach that causes material harm. The hearing also covered H.R. 4028, the PROTECT Act introduced by Rep. Patrick McHenry (R-NC), which would require the examination and supervision of large credit bureaus’ cybersecurity measures, and would allow consumers to place security freezes on their credit reports. Subcommittee Chairman Blaine Luetkemeyer (R-MO) said that House leadership had tasked him with preparing a bill on the issue of data breach notification, and that “we’re one major breach from this legislation being fast-tracked.”

House panel considers simplifying insurance regulatory structure — Representatives of the insurance industry told the House Financial Services Subcommittee on Housing and Insurance on Wednesday that the federal regulatory requirements imposed on insurance companies affiliated with financial institutions are disproportionate and ruinously expensive. H.R. 5059, a bipartisan bill introduced by Reps. Keith Rothfus (R-PA) and Joyce Beatty (D-OH), would represent “common sense” regulatory burden restructuring, affirming the primacy of state insurance regulation and giving the Federal Reserve a backup role, its sponsors said.

Quarles says Volcker Rule changes are coming — “I believe the regulation implementing the Volcker rule is an example of a complex regulation that is not working well,” Federal Reserve Board Vice Chairman for Supervision Randal K. Quarles said Monday at the Institute for International Bankers Annual Washington Conference. He said that all the federal regulators agreed that the regulation should be streamlined and simplified, and have resumed the process of developing a proposal to make “material changes” to the rule. “We expect this process will proceed with dispatch,” he said, but added that the statute itself does not currently exempt community banks. Congress may choose to provide this, “which is something I also support.”

Mnuchin defends tariffs, says sanctions are coming — In testimony Tuesday before the House Appropriations Subcommittee on Financial Services and General Government, Secretary of the Treasury Steven Mnuchin said that he supported President Trump’s proposal to levy tariffs on imports of steel and aluminum, assuming that our NAFTA trading partners would be exempted. He also promised that Congressionally-mandated sanctions against Russia would be announced “in a matter of weeks.” Committee members expressed concern about the proposed tariffs and about planned reductions to IRS funding, which is already understaffed and equipped with obsolete technology.

CFPB seeks comment on rulemaking processes — As expected, the Consumer Financial Protection Bureau issued a Request for Information (RFI) on Wednesday about its own rulemaking processes. The RFI notes the statutory requirements for rulemaking imposed by Dodd-Frank, but suggests that commenters discuss potential updates or modifications, as well as areas that should not be modified. Comments are due to the CFPB by the first week of June.

SEC says digital asset trading platforms must register — The Securities and Exchange Commission issued a public statement on Wednesday warning platforms that allow investors to buy and sell digital assets that they must register with the SEC as a national securities exchange, or obtain a ruling that they are exempt. “The SEC staff has concerns that many online trading platforms appear to investors as SEC-registered and regulated marketplaces when they are not,” the guidance said.

Next Week in Washington (and elsewhere):

March 12 House Committee on Small Business holds a field hearing on “Disparities in Access to Capital: What the Federal Government is Doing to Increase Support for Minority-Owned Firms.” Jacksonville-area business owners will testify. 10:00 a.m., Jacksonville Chamber of Commerce, Jacksonville, FL.

March 13 Senate Commerce Subcommittee on Communications, Technology, Innovation, and the Internet holds a hearing to examine rebuilding infrastructure in America, focusing on next generation broadband. 10:00 a.m., SR-253 Russell Senate Office Building.

March 13 House Rules Committee meets to set rules for H.R. 1116, the TAILOR Act of 2017; H.R. 4263, the Regulation at Improvement Act of 2017; and H.R. 4545, the Financial Institutions Examination Fairness and Reform Act. 5:00 p.m., H-313 The Capitol.

March 14 House Financial Services Subcommittee on Capital Markets, Securities, and Investment holds a hearing on “Examining the Cryptocurrencies and ICO Markets.” 10:00 a.m., 2128 Rayburn House Office Building.

March 14 House Committee on Oversight and Government Reform holds a hearing on “Shining Light on the Federal Regulatory Process.” 10:00 a.m., 2154 Rayburn House Office Building.

March 14 Senate Committee on Commerce, Science & Transportation holds a hearing on “Rebuilding Infrastructure in America: Administration Perspectives.” Secretary of Transportation Elaine Chao and Secretary of Commerce Wilbur Ross will testify. 10:00 a.m., SD-106 Dirksen Senate Office Building.

March 14 House Rules Committee meets to set rules for H.R. 4061, the Financial Stability Oversight Council Improvement Act of 2017, and H.R. 4293, the Stress Test Improvement Act of 2017. 3:00 p.m., H-313 The Capitol.

March 15 House Financial Services Subcommittee on Monetary Policy and Trade holds a hearing on “Evaluating CFIUS: Administration Perspectives.” 10:00 a.m., 2128 Rayburn House Office Building.

March 15 House Financial Services Subcommittee on Terrorism and Illicit Finance holds a hearing on “After the Breach: the Monetization and Illicit Use of Stolen Data.” 2:00 p.m., 2128 Rayburn House Office Building.

March 16 House Financial Services Subcommittee on Capital Markets, Securities, and Investment holds a hearing on “Oversight of the SEC’s Division of Enforcement.” 9:00 a.m., 2128 Rayburn House Office Building.

The Ellis Insight. Jim Ellis reports on political news:


Mississippi: Sen. Thad Cochran (R), originally elected in 1978 and the 10th longest serving Senator in American history, announced that he will resign his seat on or about April 1st and retire from the Senate. Mr. Cochran issued a statement saying, “I regret my health has become an ongoing challenge. I intend to fulfill my responsibilities and commitments to the people of Mississippi . . . after which I will formally retire from the U.S. Senate.” Upon the resignation becoming final, Gov. Phil Bryant (R) will appoint a replacement. This means another Senate seat will be added to the 2018 election cycle. Like Minnesota, Mississippi will have both of its Senators standing for election this year. The eventual election winner will then serve the balance of the current term. The seat next comes before the voters to decide a full six-year term in 2020.

Gov. Bryant unequivocally removed himself from consideration for the Senate seat, saying that there is “something nefarious” about making a move to appoint himself. There is yet no indication about who the Governor is definitively leaning toward, but Lt. Gov. Tate Reeves and Secretary of State Delbert Hosemann are rumored to be at the top of the prospective appointments list.

Texas Primary: Texas Republicans and Democrats went to the polls on Tuesday to conclude the first-in-the-nation midterm primary, and the incumbents in both parties had good nights. Gov. Greg Abbott (R) and Sen. Ted Cruz (R) both won re-nomination with victory percentages of 90 and 85, respectively. The Democratic gubernatorial candidates, Dallas County Sheriff Lupe Valdez and businessman Andrew White, will advance to a May 22nd run-off election. Sen. Cruz will face Rep. Beto O’Rourke (D-El Paso) in the general election as the latter man also scored an outright victory in his Democratic primary.

Virginia: According to a new Christopher Newport University survey (2/5-28; 1,562 VA registered voters), one US Senate state the Democrats won’t have to worry about defending is Virginia. From their data, which appears to undercount minorities and seemingly fails to even segment the state’s significant Asian population (6.6%), Sen. Tim Kaine (D) leads all prospective opponents with a 56-33 or 56-32% margin spread. Looking to the Republican field, Prince William County Board chairman Corey Stewart has a small 16-7-6% lead over former Lt. Governor nominee and pastor E.W. Jackson and state Delegate Nick Freitas (R-Culpeper).


CA-44: In 2016, then-Hermosa Beach City Councilwoman Nanette Barragan’s victory over state Sen. Isadore Hall (D-Compton) in a double-Democratic general election was one of the top upsets of the last election cycle. Now, US Rep. Barragan seeks her second term. Previously, actress Stacey Dash had announced her candidacy as a Republican and is building a campaign in the heavily Democratic seat. Just before the candidate filing deadline, Compton Mayor Aja Brown (D filed a congressional campaign committee with the Federal Election Commission on Tuesday and announced her candidacy, making for an interesting June 5th qualifying election.

CA-48: California’s top-two primary system that allows members of the same party to advance into the general election may prove a major factor in Rep. Dana Rohrabacher’s (R-Costa Mesa) Orange County coastal congressional district. Yesterday, former state Assemblyman and Orange County Republican Party chairman Scott Baugh (R) pulled nomination papers in order to qualify before today’s candidate filing deadline. Mr. Baugh’s presence in the race, assuming he completes the filing process, could create a situation where both Rep. Rohrabacher and he qualify for the general election. With the Democratic field split among ten candidates, none of who have ever successfully run for office, the state’s primary system could conceivably deny the Democrats a potential target.

FL-27: The open South Florida district that Rep. Ileana Ros-Lehtinen (R-Miami) is vacating drew two new candidates during the week. Former television news anchor Maria Elvira Salazar (R) joins songwriter and non-profit organization executive Angela Chirinos, Miami-Dade County Commissioner Bruno Barreiro, and former Doral City Councilwoman Bettina Rodriguez-Aguilera, among others vying for the GOP nomination. On the Democratic side, former Health and Human Services Secretary and ex-University of Miami president Donna Shalala announced that she will enter the Democratic primary.

Should she be elected, Ms. Shalala, at 77 years of age, will become the second oldest freshman House member in history and is the ninth Democrat to enter the open seat race. The Florida primary is not until August 28th, so both sides have months of campaigning ahead of them.

IL-3: Public Policy Polling, surveying for NARAL Pro Choice America (2/27-28; 648 IL-3 likely Democratic primary voters) finds Rep. Dan Lipinski (D-Western Springs) leading his primary challenger, media consultant Marie Newman, but by only a slim 43-41% margin.

Ms. Newman enjoys support from most of the national liberal ideological groups, and local Reps. Luis Gutierrez (D-Chicago) and Jan Schakowsky (D-Evanston), but Minority Leader Nancy Pelosi (D-CA) backs the incumbent. Vermont Senator and former presidential candidate Bernie Sanders also announced his support of the Democratic challenger. An outside organization supporting Lipinski, called United for Progress, just opened with a six-figure negative ad campaign against Newman. The tactics used in this race could be a microcosm of what is to come in major Democratic primaries throughout the country. The primary is March 20th.

NV-4: Rumors are rampant that freshman Rep. Ruben Kihuen (D-Las Vegas), who announced he would not seek a second term because of sexual harassment allegations, is seriously contemplating changing his mind. With the Nevada candidate filing deadline fast approaching on March 16th, we will soon know if such conjecture has any basis. Rep. Kihuen is not confirming nor denying that he may yet enter the race. Even if he does, however, neither his re-nomination nor re-election would be a given. Already, former US Rep. Steven Horsford (D-Las Vegas) has announced his candidacy, meaning a major Democratic primary would ensue if the tainted freshman decides to reverse course. Also in the race are Democratic state Senator Pat Spearman (D-Las Vegas) and two minor candidates.

In the general election, former US Rep. Cresent Hardy (R-Mesquite) has also decided to run again, ostensibly setting up a re-match of the 2014 Hardy-Horsford campaign that the Republican won. The 4th District was created in 2012 as a result of reapportionment awarding Nevada a new district, but the CD has yet to re-elect an incumbent. The electorate here will again see major political action regardless of Mr. Kihuen’s political status.

NJ-2: Though GOP Rep. Frank LoBiondo (R-Ventnor/Atlantic City) has held the southern New Jersey 2nd District for 24 consecutive years, the Republican leadership has had a difficult time recruiting a candidate. Moderate Democratic state Sen. Jeff Van Drew (D-Cape May) currently appears to be in the driver’s seat for both the party primary and the general election. This week, former state Assemblyman Sam Fiocchi announced he would seek the Republican nomination. Mr. Fiocchi was elected to the legislature in 2013, but defeated after one term in office. Therefore, it is unclear how strong he will be in this congressional race.

PA-8: Former federal prosecutor Jon Peters (R), who had been running to succeed Rep. Lou Barletta (R-Hazelton) in the 11th District under the former congressional map, announced that he will run in the new northeastern 8th District. The new plan places his home in new District 12, but Mr. Peters said he would not oppose incumbent Rep. Tom Marino (R-Williamsport) in that CD. Assuming the new court-mandated plan will be the footprint for the 2018 elections, Mr. Peters will challenge businessman John Chrin in the Republican primary. Late last week, Mr. Chrin indicated he would also run in the 8th District instead of the new open 7th District. The eventual GOP nominee will challenge Rep. Matt Cartwright (D-Moosic/Scranton) in a district that appears more favorably Republican than the open 7th. The 8th District general election will likely become hotly contested.

PA-18: A new Emerson College poll (3/1-3; 474 PA-18 likely special election voters) finds Democrat Conor Lamb leading Republican state Rep. Rick Saccone (R-Canonsburg) by a 48-45% margin in a district that President Trump carried 58-39%, and for which resigned Rep. Tim Murphy (R-Pittsburgh) ran unopposed in the last two elections. But, Gravis Marketing (3/1-5; 911 PA-18 likely special election voters) finds Saccone leading 45-42%.

Regardless of who wins this election, a much different district will present itself if the new Pennsylvania district lines survive a Republican stay motion to the US Supreme Court. Less than 60% of the current territory will transfer to new district 14, with the remainder going to different southwestern Pennsylvania districts. A Democratic victory here would give the party a major boost in its bid to re-claim the House majority, while a loss in what normally performs as a safe seat would be devastating to the GOP.

Texas Primary: All 28 House members from both parties seeking re-election easily won re-nomination, with the lowest recorded incumbent winning percentage being Rep. Eddie Bernice Johnson’s (D-Dallas) 63.6%. The Congresswoman previously announced that the upcoming term will be her last. In the eight open House seats, all but three of the campaigns are advancing to a run-off election.

State Sen. Van Taylor (R-Plano) easily won outright the GOP nomination in the seat from which veteran Rep. Sam Johnson (R-Plano) is retiring. Turning to El Paso, County Judge (Executive) Veronica Escobar (D) also won outright the Democratic nomination to replace Rep. O’Rourke. She will have little trouble holding the seat for her party in the fall. Going southeast to Houston, state Sen. Sylvia Garcia (D) won the Democratic primary in the 29th CD, and she will come to Washington next year to replace retiring Rep. Gene Green (D-Houston).

Open seat run-offs will occur in Districts 2 (Houston; Rep. Ted Poe-R), 5 (Dallas; Rep. Jeb Hensarling-R), 6 (Arlington; Rep. Joe Barton-R), 21 (San Antonio; Rep. Lamar Smith-R), and 27 (Corpus Christi; Rep. Blake Farenthold-R). Same for Democratic challengers opposing Rep. John Culberson (R-Houston), Will Hurd (R-San Antonio), and Rules Committee chairman Pete Sessions (R-Dallas).


Colorado: Magellan Strategies, conducting an independent poll of the Colorado Republican gubernatorial primary (2/26-27; 647 likely Republican primary voters via automated telephonic device), finds state Treasurer Walker Stapleton taking the lead over Attorney General Cynthia Coffman and two others. According to the results, Mr. Stapleton holds 26% of the Republican primary vote, followed by AG Coffman’s 13%. Investment banker Doug Robinson, nephew of former presidential nominee and current US Senate candidate Mitt Romney, has 8%, while former state Rep. Victor Mitchell (R-Castle Rock) registers 5% preference.

Rhode Island: Polling is suggesting that first-term Gov. Gina Raimondo (D) is facing a more difficult re-election campaign than a Rhode Island Democratic incumbent should expect. Cranston Mayor Allan Fung (R), who lost to Raimondo, 41-36% in 2014, looks to be drawing even closer in the early going of what is likely to be a re-match campaign. Making things even more difficult for the Governor, former Democratic Secretary of State Matt Brown filed papers to run for Governor, and may do so as an Independent. Considering Mr. Brown still may have some semblance of a political base within the Democratic Party, running as an Independent would draw some votes away from Raimondo and could help put her in serious political jeopardy, ironically in one of the country’s strongest Democratic states.