THE GOLDEN APPLE: Your report on the latest discord from GrayRobinson

March 1, 2019

As busy as this week has been, you can forgive us for looking at the new calendar page and noting that we’ve finally reached the month when baseball starts. Bryce Harper’s going to Philadelphia, did you hear? We’re staying here.
Powell delivers upbeat economic report — Federal Reserve Board Chairman Jay Powell appeared before the Senate Banking Committee and the House Financial Services Committee this week to deliver the semiannual report on monetary policy. The news was good, as Powell reported solid growth in net revenues, job creation, and people returning to the labor market. Powell said that the Fed would keep an even hand for now, and is continuing its slow reduction of its balance sheet. Asked to identify any red flags, he cited only the slowing of global economic growth, the uncertainty surrounding Brexit, and the unsustainability of the federal debt.
Federal data privacy legislation must preempt state laws, says Wicker — At Tuesday’s hearing on policy principles for a federal data privacy framework, Senate Commerce Committee Chairman Roger Wicker (R-MS) said that federal preemption would be necessary to ensure that all Americans are equally protected. Tuesday’s witnesses, who represented online service providers, advertisers, and retailers, warned against using the EU’s General Data Protection Regulation (GDPR) or the California Consumer Privacy Act (CCPA) as a model, but called for strong federal standards. Former FTC Chairman Jon Leibowitz, testifying for the 21st Century Privacy Coalition, recommended the FTC’s 2012 report on privacy as a starting point for a federal framework.
House Financial Services starts work on credit reporting reform — The heads of the three major credit bureaus appeared before the House Financial Services Committee on Tuesday, while members grilled them about their practices and how Chairwoman Maxine Waters’ draft legislation would change them. CEOs described their efforts to boost security after major breaches in 2013, 2015, and 2017, while Chairwoman Waters (D-CA) said they needed to consider “whether the system is so beyond repair” that it needs to be completely rebuilt.
Senate Banking hears testimony on capital formation, corporate governance bills — Senate Banking Committee Chairman Mike Crapo (R-ID) wants to pick up on the bipartisan work the Committee did last year to promote and facilitate capital formation, he said at a hearing on Thursday. The hearing addressed about two dozen proposals covering a wide range of issues, including the Helping Angels Lead Our Startups (HALOS) Act and the Fair Investment Opportunities for Professional Experts Act. Angel investor Catherine Mott, CEO of Blue Tree Capital, explained the need to clarify the meaning of “general solicitation” in order to preserve the value of “demo days” for would-be investors, entrepreneurs, students and others, and called for a modernized definition of “accredited investor” beyond solely financial criteria.
Lighthizer pledges enforceability on China trade, urges fast action on USMCA — US Trade Representative Robert Lighthizer told the House Ways and Means Committee this week that he’s optimistic about prospects for meaningful agreements with China to resolve the Section 301 tariff actions. Committee members relayed concerns about the increase in farm bankruptcies and hardships facing US manufacturers, but Lighthizer called the tariffs an “imaginative” response to China’s unfair practices. Reaching agreement on enforceability will be the key to reducing or removing the tariffs, he said. He added that Congress’s priority should be approval of the US-Mexico-Canada agreement; without this agreement, the US had no meaningful trade policy.
House Financial Institutions Subcommittee on Diversity and Inclusion holds first hearing — The new House Financial Institutions Subcommittee on Diversity and Inclusion heard Wednesday that representation of women and minorities in the senior management declining. Daniel Garcia-Diaz, Director of Financial Markets and Community Investment for the US Government Accountability Office, said that while the percentage of women in top management remained roughly steady at 30% from 2007 to 2015, the number of African Americans in top management declined in absolute numbers as well as a percentage. Both Chairwoman Joyce Beatty (D-OH) and ranking member Rep. Ann Wagner cited research showing that diversity and inclusion improve performance and financial returns, and Wagner added that corporate scandals are less common in companies that include women and minorities on their boards.
Housing groups call for administrative reforms to GSEs — Twenty-eight housing and real estate advocacy groups including the Mortgage Bankers Association, the Manufactured Housing Institute, the National Association of Home Builders and Habitat for Humanity joined forces this week in a letter to Joseph Otting, Acting Director of the Federal Housing Financial Agency, laying out key policy objectives for administrative policy reforms. While the groups emphasized that these reforms were no substitute for legislation to make structural changes, they said that the FHFA should establish policies that ensure a continuation or expansion of a liquid national market with fairly priced access to credit; strong and sustained liquidity in the multifamily market; equal secondary market access and pricing for all lenders; and the sustainable transfer of appropriate credit risk to the private sector. Administrative reforms to the GSEs must contain safeguards against higher costs, reduced access, or other market disruptions, and must include enforceable mechanisms to ensure that the GSE serves the entire market, including underserved consumers and communities and manufactured housing.
CFPB finds “widespread” elder financial abuse — Suspicious activity reports (SAR) filings on elder financial exploitation quadrupled between 2013 and 2017, the Consumer Financial Protection Bureau (CPFB) said in a report released this week. The largest increase in SAR filings came not from depository institutions but from money services businesses, which filed 57% of the elderly financial exploitation SARs filed in 2017. More than half the SARs involved a money transfer, though the types of suspicious activity varied widely, and the largest monetary losses involved checking and savings accounts. Only a small percentage of those filing SARs reported their suspicions to law enforcement or adult protective services. The report is likely to be a topic of discussion when CFPB Director Kathy Kraninger appears before the House Financial Services Committee next week.
Confirmations, nominations, departures, etc. — The Senate Banking Committee approved ten nominations for floor action on Tuesday, including that of Dr. Mark Calabria to serve as Director of the Federal Housing Financial Administration, Bimal Patel to serve as Assistant Secretary of the Treasury for Financial Institutions, and Dr. Dino Falaschetti to serve as Director of Treasury’s Office of Financial Research. The Securities and Exchange Commission named S.P. Kothari as Chief Economist and Director of the Division of Economic and Risk Analysis (DERA), and Gabriel Benincasa as its first Chief Risk Officer.
Next Week in Washington:
March 5 — Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights holds a hearing on “Does America have a Monopoly Problem? Examining Concentration and Competition in the US Economy.” 2:30 p.m., SD-226 Dirksen Senate Office Building
March 6 — House Financial Services Committee marks up FY2020 Budget Views and Estimates. 10:00 a.m., 2128 Rayburn House Office Building
March 6 — House Appropriations Subcommittee on the Departments of Labor, Health and Human Services, Education, and Related Agencies holds a hearing on “Protecting Student Borrowers: Loan Servicing Oversight.” 10:30 a.m., 2358-C Rayburn House Office Building
March 6 — House Ways and Means Committee holds a hearing “Our Nation’s Crumbling Infrastructure: The Need for Immediate Action.” 10:30 a.m., 1100 Longworth House Office Building
March 6 — House Appropriations Subcommittee on Financial Services and General Government holds a Members’ Day hearing. 10:45 a.m., 2362-A Rayburn House Office Building
March 6 — House Small Business Committee holds a hearing on “Rebuilding America: Small Business Perspective.” 11:00 a.m., 2360 Rayburn House Office Building
March 6 — Senate Small Business Committee holds a hearing on “Small Business and the American Worker.” 2:30 p.m., SR-428A Russell Senate Office Building
March 7 — House Financial Services Committee holds a hearing entitled, “Putting Consumers First? A Semi-Annual Review of the Consumer Financial Protection Bureau.” CFPB Director Kathy Kraninger will testify. 10:00 a.m., 2128 Rayburn House Office Building
March 7 — House Small Business Subcommittee on Economic Growth, Tax, and Capital Access holds a hearing on “Small but Mighty: A Review of the SBA Microloan Program.” 10:00 a.m., 2360 Rayburn House Office Building
March 7 — Senate Homeland Security Subcommittee on Investigations holds a hearing on “Examining Private Sector Data Breaches.” 10:00 a.m., SD-106 Dirksen Senate Office Building
March 7 — Senate Commerce Subcommittee on Security holds a hearing on “China: Challenges for US Commerce.” 10:00 a.m., SD-562 Dirksen Senate Office Building
March 7 — House Appropriations Subcommittee on the Departments of Transportation, Housing and Urban Development, and Related Agencies holds a hearing on “Stakeholder Perspectives: Affordable Housing Production.” 10:30 a.m., 2358-A Rayburn House Office Building.
The Ellis Insight. Jim Ellis reports on political news: 
Gov. Jay Inslee:  Reports coming from Washington State indicate that Gov. Jay Inslee (D), who formed a presidential exploratory committee in early January, will formally announce his campaign today. Gov. Inslee, by all accounts, is a minor presidential candidate who is unlikely to change the course of the race. He plans to make climate change is cornerstone issue, but it remains to be seen if he can catch fire to the point of catapulting into serious contention for the nomination.
New Hampshire Poll:  Emerson College conducted a survey of New Hampshire Democratic voters just after neighboring Sen. Bernie Sanders (I/D-VT) announced his presidential campaign. According to Emerson (2/21-22; 405 NH Democratic registered voters), Sen. Sanders has taken the lead over former Vice President Joe Biden, the first time any other Democratic candidate has led in a primary poll. 
The results post Sen. Sanders to a 27-25% edge over Mr. Biden, with California Sen. Kamala Harris trailing at 12%. In another instance where Massachusetts Sen. Elizabeth Warren fails to reach double-digits, she scores just 9% in this neighboring state poll. Also, soon after announcing, Sen. Amy Klobuchar (D-MN) jumped to 8%, followed by ex-Rep. Beto O’Rourke (D-TX) and Sen. Cory Booker (D-NJ), both tallying 5 percent.
Beto O’Rourke:  The Dallas Morning News ran a story this week saying that former Rep. Beto O’Rourke has decided not to challenge Sen. John Cornyn (R-TX) and will instead soon announce his presidential campaign. O’Rourke told the news reporter that he and his wife will have a “decision about how we can best serve our country” and “are excited to share it with everyone soon.”
Iowa:  Former Iowa Governor and ex-US Agriculture Secretary Tom Vilsack (D) indicated last weekend that he will not challenge US Sen. Joni Ernst (R) next year. Mr. Vilsack served two terms as Iowa’s Governor before going to Washington to serve in President Obama’s cabinet for the entire tenure of his Administration. During her husband’s time in Washington, Mr. Vilsack’s wife, Christie Vilsack, unsuccessfully challenged Rep. Steve King (R-Kiron/Sioux City) in 2012, losing 53-45%. 
With the former Governor disqualifying himself, it now appears that freshman Rep. Cindy Axne (D-West Des Moines) becomes a recruitment objective for party leaders. Ms. Axne upset Rep. David Young (R-Van Meter) in November and is now a familiar figure in the state’s largest media market. There is no word as to whether the Congresswoman is considering making a statewide move. Staying in the House will also lead to a competitive campaign, however, as Republicans plan to heavily target her 3rd District.
Kansas:  Now that US Secretary of State Mike Pompeo has again said he will not enter the 2020 open seat Kansas Senate race, movement is beginning to occur. Before the Pompeo statement, state Treasurer Jake LaTurner (R) had already declared his candidacy. 

Previously, Rep. Roger Marshall (R-Great Bend) indicated that he would likely be moving toward the Senate race now that Mr. Pompeo is out. Yesterday, Attorney General Derek Smith (R) confirmed reports that he, too, is considering becoming a Senate candidate. State Senate President Susan Wagle (R-Wichita) is also indicating that she will enter the statewide contest.
New Hampshire:  The aforementioned Emerson College poll (see New Hampshire Poll above) featured a ballot test question between Sen. Jeanne Shaheen (D) and Gov. Chris Sununu (R). According to their large-sample poll (2/21-22; 910 NH registered voters), the two candidates would tie at 44% support. 
Former state House Speaker Bill O’Brien, coming from the right faction of the New Hampshire Republican Party, confirms he is considering challenging Sen. Shaheen next year. The Senator has already announced that she will seek a third term. New Hampshire is a swing state, and one where the electorate moves wildly between elections. Therefore, any credible challenge to Sen. Shaheen must be viewed seriously.
AL-1:  Because Rep. Bradley Byrne (R-Mobile) has announced his US Senate campaign, the open 1st District is expected to draw a great deal of competition, particularly among Republicans. Yesterday, the first GOP candidate stepped up and announced his candidacy. Mobile County Commissioner Jerry Carl (R) says he will enter the open Republican primary, which should open the door for others to soon follow suit. 
IA-4:  Despite being publicly attacked for what many claim are white supremist comments and being stripped of his committee assignments as a result, Rep. Steve King (R-Kiron/Sioux City) says he will run for re-election next year. He was originally elected to the western Iowa seat in 2002 and has held the seat largely without major controversy until now. Already, state Sen. Randy Feenstra (R-Hull), former Irwin Mayor Bret Richards, and Woodbury County Supervisor Jeremy Taylor are announced Republican candidates.
Under Iowa election law, if no candidate receives 35% in a primary election, a district convention is then convened to choose a nominee. If a crowded field ultimately takes shape, Rep. King might have a chance of winning re-nomination with a plurality vote, or possibly prevailing in a convention. In 2018, Rep. King, as the current controversy was taking form, defeated Democrat JD Scholten, 50-46%. 
NJ-11:  Morris County Sheriff James Gannon, who Republican leaders hoped would challenge freshman Rep. Mikie Sherrill (D-Montclair), says he will not run for Congress next year. Ms. Sherrill was impressive in her 2018 campaign, putting to bed early what had been a reliable Republican seat. Her political strength suggests that she will not be a top tier GOP conversion target in 2020, at least in the early going.
NC-3:  Gov. Roy Cooper (D) set the schedule to fill the 3rd District seat left open by the recent death of Rep. Walter Jones (R-Farmville). The candidate filing deadline will be March 8th, with the partisan primaries scheduled for April 30th. If no candidate in any party receives 30% of the vote, a secondary runoff election will be held July 9th. Should all parties nominate on April 30th, the special general then would occupy the July 9th date. If a runoff is necessary, the special general won’t be held until September 10th.
Seven Republicans have already announced their candidacies. Among them are three sitting state legislators: Reps. Greg Murphy (R-Greenville), Phil Shepard (R-Jacksonville), and Michael Speciale (R-New Bern). The candidate group also includes 2016 and ’18 GOP candidate Phil Law, who performed better than most experts projected in both of his primary elections against Rep. Jones, gubernatorial aide Jeff Moore, NC Republican Party Vice Chair Michele Nix, and accountant Sandy Smith. No major Democrat has yet declared his or her intention to run.
NC-9:  Republican Mark Harris, who finished first in the November election but was denied certification due to election fraud allegations that continue to be investigated, announced that he will not compete in the newly ordered special election. This will allow the Republicans to choose a new nominee with a better ability to compete. 
Mr. Harris’ reputation was so badly tarnished during the post-election period in addition to his suffering recent health problems, led to the decision of not pursing the congressional seat in the special election. Mr. Harris endorsed Union County Commissioner Stony Rushing as part of his announcement. The NC Board of Elections is expected to schedule the election calendar on Monday.
PA-12:  Central Pennsylvania Republican delegates will meet tomorrow in a special district convention to nominate a candidate to run in the May 21st special election to replace resigned Rep. Tom Marino (R-Williamsport). A total of 24 individuals have petitioned the state Republican Party to become candidates. State Reps. Jeff Wheeland and Fred Keller appear to be the leading candidates. The winner faces Democrat Marc Friedenburg in the special general election. The GOP nominee will begin the campaign as a heavy favorite.
Indiana:  Speculation has been swirling that defeated Sen. Joe Donnelly (D) might decide to challenge Gov. Eric Holcomb (R) next year. It appears Mr. Donnelly has now put such talk to bed. The ex-Senator and Representative told a Howey Political Report representative that he is fortunate to be teaching at Notre Dame University and is concentrating on “getting my snow blower going these days.”
Mississippi:  State Sen. Chris McDaniel (R-Ellisville), a two-time former US Senate candidate, said publicly that he will not be filing as a candidate for Governor today. The open gubernatorial field appears set for Republicans with Lt. Gov. Tate Reeves leading former state Supreme Court Justice Bill Waller Jr., while the Democrats feature Attorney General Jim Hood who is a heavy favorite over Hinds County District Attorney Robert Shuler Smith.
This should be a competitive race in the fall despite Mississippi’s strong Republican voting history. Gov. Phil Bryant (R), who has already endorsed Mr. Reeves as his successor, is ineligible to seek a third term. The Mississippi primary is scheduled for August 6th. 

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