November 9, 2018

November 9, 2018

News, news, and more news. The big news this week, of course, is the election. Jim Ellis’s report provides more state-by-state detail, and votes are still being counted in several races. But as things stand this afternoon, Democrats have won 225 seats in the House of Representatives, with Republicans holding 197, with 13 seats still being counted. Republicans preserved their Senate majority, holding a total of at least 51 seats; Democrats hold 46, with votes still being counted in Arizona and Florida, and Mississippi facing a run-off on November 27.

Some notable changes from Tuesday night:

House

  • House Appropriations Committee members John Culberson (R-TX), Kevin Yoder (R-KS), and Scott Taylor (R-VA) lost their races to Democratic opponents.
  • In the House Energy and Commerce Committee, Rep. Tim Walberg (R-MI) won his contested election, and Rep. Mimi Walters (R-CA) appears to have won hers; Rep. Leonard Lance (R-NJ) lost his race to Democrat Tom Malinowski.
  • In the House Financial Services Committee, Rep. Andy Barr (R-KY) and Rep. Scott Tipton (R-CO) won their contested races, while voters retired Rep. Keith Rothfus (R-PA). Rep. Bruce Poliquin (R-ME) awaits the results of Maine’s ranked-choice voting system, and Reps. Mia Love (R-UT), Thomas MacArthur (R-NJ), and Claudia Tenney (R-NY) are trailing in vote counts, but have not yet conceded.
  • House Oversight and Investigations Committee member Rod Blum (R-IA) was defeated by Abby Finkenauer, one of the youngest women (at 29) ever elected to Congress.
  • In the House Committee on Transportation and Infrastructure, Rep. Barbara Comstock (R-VA) and Rep. John Faso (R-NY) lost their bids for reelection; Rep. Jeff Denham (R-CA) is leading in the vote count for his race, which has not yet been called.
  • House Ways and Means Committee members Peter J. Roskam (R-IL), Erik Paulsen (R-MN), Carlos Curbelo (R-FL), and Mike Bishop (R-MI) lost their seats to Democratic opponents.

Senate

  • Senator Joe Manchin (D-WV) won his reelection campaign, while Senator Claire McCaskill (D-MO) lost hers to Republican Josh Hawley.
  • In the Senate Banking Committee, Senator Dean Heller (R-NV) lost a close race to Jacky Rosen, while Senator Heidi Heitkamp (D-ND) and Senator Joe Donnelly (D-IN) lost to Republicans Kevin Cramer and Mike Braun. Senator Jon Tester (D-MT) defeated his Republican challenger.
  • Senator Bill Nelson (D-FL), ranking member of the Senate Committee on Commerce, Science, & Transportation, appears to be within the margin that would require a hand recount in his race against outgoing Governor Rick Scott.

Leadership elections and committee assignments will not be official until the new Congress convenes in January, but members will caucus next week to start organizing. Rep. Patrick McHenry (R-NC), Chief Deputy Whip in the current Congress, said this week that he would be seeking the ranking Republican seat on the House Financial Services Committee, opposite presumptive Chair Maxine Waters (D-CA). House Minority Leader Nancy Pelosi (D-CA) is poised to return to the Speaker’s chair, but may be challenged.

Congress returns on November 13 for a lame-duck session expected to go until December 13 (on the House side) or 14 (on the Senate side). They’ll break for a week-long Thanksgiving recess, from November 19 to 22. In the legislative time remaining, Congress needs to complete appropriations for Commerce, Justice, and Science; Homeland Security; State-Foreign Operations; Interior-Environment; Financial Services; Agriculture-FDA; and Transportation-HUD. The continuing resolution currently funding the government expires on December 7.

Beyond that, Congress must deal with the farm bill, which expired on September 30, and the National Flood Insurance Program, which expires on November 30. The Senate also has more than 150 committee-cleared nominations to consider, including those of Michelle Oliver and Marvin Goodfriend to the Federal Reserve Board, Michael Bright to head Ginnie Mae, and Kathy Kraninger to be director of the Bureau of Consumer Financial Protection. Oh, and the Attorney General resigned on Wednesday, so the Senate might need to start the confirmation process for a new nominee, too.

Judge grants delay of payday lending rule — The judge who had initially denied the Bureau of Consumer Financial Protection’s decision to delay implementation of its payday lending rule reversed himself this week, and granted the Bureau’s request for a delay. The Bureau’s announcement that it will issue a new proposed rule in January changed things, Judge Lee Yeakel ruled; therefore, “to prevent irreparable injury a stay of the Rule’s current compliance date of August 19, 2019, is appropriate.”

FHA may charge fees to fund technology upgrades — The Federal Housing Administration needs to upgrade its operating systems, Commissioner Brian Montgomery said this week, and has suggested adding an administrative fee to new mortgages in order to raise the necessary funding. “The day of reckoning has arrived,” Montgomery told a Women in Housing and Finance luncheon on Wednesday; the FHA’s systems are 35 years old, and “are darned expensive to maintain.” Montgomery estimated that the first round of upgrades would take 18 to 24 months.

Nonbanks’ share of housing loans increases, while banks move toward C&I — The Federal Reserve Board published its first Supervision and Regulation report this week, in advance of next week’s Congressional hearings on the state of the banking system. Findings were generally upbeat, as the Fed reported declining volumes of nonperforming loans and higher loan loss ratios. While banks’ “loan growth remains robust,” the Fed said, the vast majority of that has been in commercial and industrial (C&I) or non-residential real estate. Banking lending on residential real estate “exhibited tepid growth,” the Fed said, with “nonbank finance companies are increasing their market share in new mortgage originations, and large banks are shifting their mortgage exposures from loans to securities.”

Business Roundtable asks for “comprehensive and consistent national privacy law” — The Business Roundtable submitted comments to the National Telecommunications Information Administration (NTIA) today that sets forth basic principles of a policy framework for federal privacy legislation. “Privacy regulation fragmentation leads to a disjointed user experience and misalignment of expectations for consumers,” the Roundtable wrote, and threatens the free flow of data across borders. A national consumer privacy law, they said, should champion privacy promote accountability; facilitate innovation; harmonize regulations; and achieve global interoperability. Roundtable President & CEO Joshua Bolten said earlier this week that the association will soon release its complete policy framework.

American Express gets first approval for clearing & settlement license in China — American Express announced today that the People’s Bank of China has granted the company preparatory approval for a clearing and settlement license on the mainland. This is a joint venture with LianLian, a Chinese fintech services company, and will be the first foreign payments network allowed in mainland China.

Next Week in Washington:

November 13: Senate Judiciary Committee holds a hearing on “Big Bank Bankruptcy: 10 Years after Lehman Brothers.” 2:00 p.m., SD-226 Dirksen Senate Office Building (Note: this hearing has already been rescheduled a few times, and is likely to be rescheduled again.)

November 14: House Financial Services Committee holds a hearing to receive Semi-Annual Testimony on the Federal Reserve’s Supervision and Regulation of the Financial System. Federal Reserve Board Vice Chairman Randal Quarles will be the only witness. 10:00 a.m., 2128 Rayburn House Office Building

November 15: Senate Banking Committee holds a hearing to receive Semi-Annual Testimony on the Federal Reserve’s Supervision and Regulation of the Financial System. Federal Reserve Board Vice Chairman Randal Quarles will be the only witness. 10:00 a.m., SD-538 Dirksen Senate Office Building

The Ellis Insight. Jim Ellis reports on political news:

Senate

Senate Election Results:  Republicans have held the Senate majority in the election conducted on November 6th. Depending upon the final outcome in Arizona and Florida, the Republican gain will be between one and three seats. Democratic incumbents Heidi Heitkamp (North Dakota), Joe Donnelly (Indiana), and Claire McCaskill (Missouri) were all defeated as was Republican Senator Dean Heller (Nevada).

Alabama:  After Sen. Doug Jones (D) won the controversial Alabama special election in 2017, it was clear he would become the Republicans’ number one target in the 2020 regular election. The Senator’s decision to oppose Justice Kavanaugh’s confirmation heightened his top target status even more. Now, he may draw a very well-known Republican opponent. Departing Attorney General and former US Senator Jeff Sessions confirms that he would consider entering the race to attempt to regain the Senate seat he relinquished to become Attorney General.

Arizona:  The race between Reps. Kyrsten Sinema (D-Phoenix) and Martha McSally (R-Arizona) has yet to be called. More than 460,000 ballots remain uncounted. Rep. Sinema took a small 9,610 vote lead after the first day of counting that included votes not previously tabulated in heavily Democratic Pima County. Prior to this, Rep. McSally held leads of between 15-32,000 votes throughout the original count.

Local Republican authorities have filed lawsuits against county clerks in several counties, attempting to ensure that the state adopts uniform procedures for handling questionable mail ballots and those delivered to “emergency voting centers.”  It is likely that this situation will drag on for days.

Florida:  While the statewide vote count continues to draw closer as more votes are continually counted and controversy arises over the process in Broward County, Senate candidate Rick Scott (R) has accused the Democrats of attempting to “steal” the race and has sued at least one election supervisor. Originally, it appeared that he had won a close victory.

In his capacity as Governor, Mr. Scott has ordered the Florida Department of Law Enforcement to investigate the counting. This outcome is very much in doubt and will likely go on for many days reminiscent of the 2000 Florida recount that decided the presidential contest that proved one of the closest in history. Mr. Scott’s opponent in this race is Democratic Sen. Bill Nelson.

Though the margin is greater in the open Governor’s race between former Rep. Ron DeSantis (R) and Tallahassee Mayor Andrew Gillum (D), the outcome of this contest is also now in question.

Mississippi:  The partisan division includes the Republicans winning the Mississippi special election. The race now advances to a November 27th run-off election because neither candidate reached the 50% mark. Appointed Sen. Cindy Hyde-Smith (R), however, is a heavy favorite to defeat former US Agriculture Secretary and ex-Mississippi Congressman Mike Espy (D).

Montana:  The Montana Senate election proved close as predicted, and now we have a final projection. Sen. Jon Tester (D) has been re-elected to a third term, winning 51.2 – 46.0% with the remainder of absentee and provisional ballots still to be counted. Therefore, the numbers are not final, but the quantity of outstanding ballots cannot alter Sen. Tester’s lead. Thus, the outcome has been officially declared. The Tester victory guarantees that the Democrats will have at least 46 Senators in the next Congress.

House

House Election Results:  Democrats successfully took control of the House and when the final nine uncalled races are determined, the new Democratic majority is likely to exceed 230 seats meaning that the final gain number will exceed a net 35 conversions.

CA-25:  Though there could be as many as 100,000 votes still to count, Rep. Steve Knight (R-Palmdale) announced that he is conceding the congressional race to Democratic opponent Katie Hill. It is obvious that the Knight political team has calculated that he cannot make up his current deficit even with the large number of outstanding ballots.

CA-49:  As has been the speculation for months, the San Diego area coastal district long held by retiring Congressman Darrell Issa (R-Vista) has now officially flipped to the Democrats. Attorney Mike Levin (D) has defeated Board of Equalization member Diane Harkey (R), 53.5 – 46.5%, with many more ballots to be added. Though thousands of ballots remain to be counted in each California congressional district, victory projections have been made in now all but five of the state’s 53 CDs.

CA-50:  Another of the California contests has been decided. In San Diego County, embattled Rep. Duncan D. Hunter (R-Alpine) has officially been re-elected despite his outstanding federal indictment on a multitude of campaign finance charges. Mr. Hunter defeated Ammar Campa-Najjar (D) by a current 54.3 – 45.7% victory margin.

The other indicted or past indicted sitting lawmakers, Rep. Chris Collins (R-NY) and Sen. Bob Menendez (D-NJ), respectively, were both re-elected on Tuesday night.

GA-6:  Democratic challenger Lucy McBath was declared the winner of the contested 6th District race as she built a 2,900 vote lead in late counting. Rep. Karen Handel (R-Roswell), who won the seat in a 2017 special election despite having $36 million spent against her, could not hold it in the regular election. She has formally conceded the race to Ms. McBath, so there will be no recount of the eventual final result.

GA-7:  Though the state’s 6th District race has now concluded, the adjacent 7th District is still very much undecided. Late counting has eroded Rep. Rob Woodall’s (R-Lawrenceville) lead to 890 votes with an unannounced number of ballots outstanding. The Democratic candidate is former state House Budget Committee staff director Carolyn Bourdeaux.

MN-1:  In one of the few Republican conversions of a Democratic seat, GOP businessman Jim Hagedorn (R), whose father served four terms in the US House, defeated Democrat Dan Feehan in another race that has been finally projected. Mr. Hagedorn will succeed Democrat Tim Walz who left the House to run successfully for Governor. The Hagedorn victory margin was a scant 1,312 votes, or 50.2 – 49.8%. This is the second consecutive close election in this southern Minnesota district that covers most of the area on the Iowa border. In 2016, Rep. Walz was re-elected with just a 50.3% margin.

MT-AL:  While a projection was made to give Montana Democratic Sen. Jon Tester his victory, at-large Republican Rep. Greg Gianforte (R-Bozeman) was also re-elected. Mr. Gianforte leads the race by 24,801 votes with ballots remaining, but he has been declared the victor over former state Rep. Kathleen Williams (D). The Gianforte victory percentage spread is 51.2 – 46.0%. The Congressman was originally elected in a 2017 special election, so he has now been elected to his first full term.

NY-22:  Though the outcome in this Upstate New York race is razor-thin, it appears that freshman Rep. Claudia Tenney (R-New Hartford) has been defeated. The race was originally called for state Assemblyman Anthony Brindisi (D), but then the result appeared to be unclear when more ballots were counted. In the end, however, Mr. Brindisi looks to have scored a 1,293 vote win pending further counting and possible individual vote challenges.

WA-3:  In another close contest, four-term Rep. Jamie Herrera Beutler (R-Vancouver) has been projected as the victor over Democratic candidate Carolyn Long. Washington, like California, allows voters to postmark their ballots on Election Day, so the counting process can consume days, if not weeks, to complete. It is clear, however, that her 13,000+ vote advantage would hold through the final counting process, hence her projection. The current percentage division is 52.6 – 47.4.

WA-8:  The open Republican 8th District from which Rep. Dave Reichert (R-Auburn) is retiring has gone Democratic. Late yesterday, pediatrician Kim Shrier (D) was declared the winner, defeating former statewide candidate and ex-state Senator Dino Rossi (R). Dr. Shrier has a 12,600+ vote lead entering final counting, which is enough to compensate for any gains that Mr. Rossi could see as the vote count progresses. This is Dr. Shrier’s first run for public office. With this Republican seat converted to the Democrats, it appears the latter party will gain more than 30 seats.

Governor

Gubernatorial Election Results:  Democrats made significant gains in the 36 Governor’s races held on November 6th. The party converted state houses in Illinois, Kansas, Michigan, Nevada, New Mexico, and Wisconsin, while Georgia and now Florida appear to be undecided. Republicans converted the Independent-held state house in Alaska. If Georgia and Florida hold for the leading GOP candidate, the new gubernatorial party division will be 27R – 23D, a net gain of seven seats for Democrats.

The Democratic victories in Michigan and Wisconsin have major 2021 redistricting implications, though the GOP did hold both state legislative chambers in each state. Michigan voters appear to have adopted a redistricting commission ballot proposition, but that procedure will undoubtedly be challenged in court. Republicans held the critical gubernatorial position in Ohio, again in a redistricting context, as well as Florida, if the current count holds through the post-election counting process.

Florida:  See Florida Senate above.

Georgia:  Secretary of State Brian Kemp (R) has declared victory in the Governor’s race and resigned his current statewide position. The Democratic nominee, former state House Minority Leader Stacy Abrams (D), however, is pursuing all options in the post-election counting process. Under Georgia law, winning candidates must receive majority support. The current vote count, and ballot tabulations are still ongoing, puts Mr. Kemp’s percentage at 50.3%. Republicans, however, are confident that his margin will remain about 50%.

If Ms. Abrams is right and he drops below 50%, the two candidates will advance to a December 4th run-off election. This situation will continue to remain undecided for the next several days.