News about us — The Eris Group will be merging into the Florida law firm of GrayRobinson on February 1. This union has been in the works for some time, and should benefit both Eris’s clients and GrayRobinson’s. GrayRobinson, a full-service corporate law firm with 300 attorneys and consultants throughout 14 offices across Florida, did not have a formal Washington presence; by merging with the larger organization, Eris gains new resources and the opportunity to serve clients at the state level. The Florida connection runs deep, as Eris co-founder Doyle Bartlett is a native Floridian and former Chief of Staff to Rep. Bill McCollum (R-FL). Doyle will head GrayRobinson’s Washington office, and coordinate the firm’s federal lobbying activities. “The cultural fit and like-minded goals we share made this an easy decision,” Doyle said in the statement released on Tuesday. Some things will be changing — our email addresses, for example, though the erisgrp.com addresses will still work — but nothing will change about our commitment to our clients’ goals. We’re excited about this big step forward, and glad and grateful to have you along.
House, Senate cancel recess as shutdown continues — Monday is still a federal holiday, but the House and Senate will not be taking their District Work Periods as scheduled next week. House Majority Leader Steny Hoyer (D-MD) announced on Tuesday that the House will not go in to recess as long as the government shutdown continues, and Senate Majority Leader Mitch McConnell said that the Senate “certainly will not be in recess next week if the government is still shutdown.” The House Rules Committee will consider another package of funding bills on Tuesday. The Senate has not taken up any of the legislation the House has sent over.
New Democrats, Republicans assigned to House Financial Services Committee — House Democrats and Republicans finalized the membership of the House Financial Services Committee this week. Sixteen Democrats and five Republicans will join the panel:
Senate Banking organizes, welcomes four new members — The Senate Committee on Banking, Housing, and Urban Affairs has added four new members, two from each side of the aisle. Joining the panel are Senator Martha McSally (R-AZ), Senator Kevin Cramer (R-ND), Senator Tina Smith (D-MN), and Senator Kyrsten Sinema (D-AZ). Senate Banking Committee Chairman Mike Crapo (R-ID) and ranking member Sherrod Brown (D-OH) announced subcommittee assignments today:
- Housing, Transportation, and Community Development: Perdue (R-GA), Chairman, and Menendez (D-NJ), Ranking Member; Shelby (R-AL), Cotton (R-AR), Rounds (R-SD), McSally (R-AZ), Moran (R-KS), Cramer (R-ND); Reed (D-RI), Warren (D-MA), Cortez Masto (D-NV), Jones (D-AL), Smith (D-MN)
- Financial Institutions and Consumer Protection: Scott (R-SC), Chairman, and Warren (D-MA), Ranking Member; Rounds (R-SD), Tillis (R-NC), Kennedy (R-LA), Moran (R-KS), Cramer (R-ND), Shelby (R-AL), Toomey (R-PA), Sasse (R-NE); Reed (D-RI), Tester (D-MT), Warner (D-VA), Schatz (D-HI), Van Hollen (D-MD), Cortez Masto (D-NV), Jones (D-AL)
- Securities, Insurance, and Investment: Toomey (R-PA), Chairman, and Van Hollen (D-MD), Ranking Member; Shelby (R-AL), McSally (R-AZ), Scott (R-SC), Cotton (R-AR), Rounds (R-SD), Perdue (R-GA), Tillis (R-NC), Kennedy (R-LA); Reed (D-RI), Menendez (D-NJ), Tester (D-MT), Warner (D-VA), Warren (D-MA), Smith (D-MN), Sinema (D-AZ)
- National Security and International Trade and Finance: Sasse (R-NE), Chairman, and Warner (D-VA), Ranking Member; McSally (R-AZ), Moran (R-KS), Toomey (R-PA), Scott (R-SC); Schatz (D-HI), Van Hollen (D-MD), Sinema (D-AZ)
- Economic Policy: Cotton (R-AR), Chairman, and Cortez Masto (D-NV), Ranking Member; Cramer (R-ND), Sasse (R-NE), Perdue (R-GA), Tillis (R-NC), Kennedy (R-LA): Menendez (D-NJ), Jones (D-AL), Smith (D-MN), Sinema (D-AZ)
Waters sets priorities: CFPB, fintech, credit reporting, housing — In remarks at a Center for American Progress event this week, House Financial Services Committee Chairwoman Maxine Waters (D-CA) said that protecting consumers would top her list of priorities for this Congress. She plans to try to reverse several of the changes Acting Director Mick Mulvaney made to the Consumer Financial Protection Bureau, and will reintroduce her bill to reform the credit reporting system. She said the Committee would be paying close attention to the growth of fintech, seeking to “encourage responsible innovation with the appropriate safeguards in place . . . and without displacing community banks and credit unions.” Waters sees the need to reform Fannie Mae and Freddie Mac, but wants to do that in the context of broader housing finance reform. She also said that she plans to create a Subcommittee on Diversity and Inclusion, the first of its kind in Congress.
Waters, McHenry introduce bipartisan bill on insider trading — HFSC Chairwoman Maxine Waters and ranking member Patrick McHenry (R-NC) introduced their first bill as joint sponsors this week: HR 624, the Promoting Transparent Standards for Corporate Insiders Act. The bill would require the SEC to consider amendments to SEC Rule 10b5-1 that would make sure corporate insiders cannot conduct illegal trades through their trading plans.
Senate Aging Committee will target elder fraud, says Collins — The Senate Special Committee on Aging held its first hearing of this Congress on elder fraud, which Chairwoman Susan Collins (R-ME) said would be a priority for the Committee this year. Collins said she found it “very troubling” that companies are not using the technology available to block robocalls and prevent the spoofing of legitimate phone numbers. The “IRS scam” remains the most-reported scheme defrauding senior citizens, but the “grandparent scam,” romance scams, and the “drug mule” scam are prevalent, as is financial exploitation of the elders by family members and service providers. The Senior Safe Act, enacted last year, extends immunity to financial service providers who, “with reasonable care,” disclose suspected senior fraud to a regulator or law-enforcement agency, and encourages financial institutions to educate their employees about the signs of fraud.
Luetkemeyer urges regulators to take formal action distinguishing guidance from rulemaking — In letters to Federal Reserve Board Chairman Jay Powell, FDIC Chair Jelena McWilliams, NCUA Administrator Mark McWatters, and Comptroller of the Currency Joseph Otting, Rep. Blaine Luetkemeyer (R-MO) urged the federal banking regulators to begin a formal rulemaking process that clarifies the distinction between guidance and rulemaking. The agencies issued an Interagency Statement to this effect last fall, but Luetkemeyer called this a “first step” that would not be fully effective without a formal rule. “This clarity will ensure banks and examiners clearly understand the grounds for enforcement actions and that regulations are enforced consistently across institutions,” he said.
Warren asks Mnuchin, big banks about December liquidity concerns — Senator Elizabeth Warren (D-MA) sent letters this week to Secretary of the Treasury Steven Mnuchin and the CEOs of Morgan Stanley, Wells Fargo & Co., Goldman Sachs & Co., JP Morgan Chase, Citigroup Inc., and Bank of America to ask about Secretary Mnuchin’s December 23 announcement that he had called the CEO to check on their liquidity during a stock market downturn. Warren asked Mnuchin what he saw that caused these concerns, and whether Treasury has any information suggesting that the nation’s largest banks face unusual liquidity risks. She asked the CEOs to provide detailed summaries of their calls with Mnuchin, and to describe the effects of the stock market downturn on their liquidity. These letters followed letters she’d sent the CEOs earlier this week, asking how they are helping those affected by the government shutdown.
SEC files charges in EDGAR hacking case — Despite being largely closed because of the government shutdown, the Securities and Exchange Commission brought charges this week against nine defendants — seven individuals and two entities — for trying to steal nonpublic information from the SEC’s EDGAR database for use in illegal trading. The SEC charged these defendants in 2015 for a similar scheme involving the theft of embargoed information from newswire services. The SEC said the operation’s ringleader was Ukrainian, but the scheme involved individual traders in California, Ukraine, and Russia as well. The U.S. Attorney’s Office for the District of New Jersey today announced parallel criminal charges.
Kraninger asks for Military Lending Act authority — Consumer Financial Protection Bureau (CFPB) Director Kathleen Kraninger has submitted a legislative proposal to clarify the Bureau’s authority to supervise for compliance with the Military Lending Act (MLA). Kraninger said that the Bureau needs explicit authority to conduct these compliance examinations. Rep. Andy Barr (R-KY) has already introduced the proposal in the House as H.R. 442.
CFPB wants comment on proposals for no-action letter policy, fintech product sandbox — The Director of the Consumer Financial Protection Bureau (CFPB)’s Office of Innovation said this week that the Bureau sees fintech innovations as offering great potential to serve the unbanked and underbanked, and to provide new forms of customer service. Speaking at a Cato Institute event, Paul Watkins described policy proposals that would encourage fintech innovation, and encouraged stakeholders to comment. While comments on the proposed sandbox for disclosures were due last October, the comment period for a combined proposal on No-Action Letters and the Product Sandbox remains open until February 11. The goals of all three proposals, Watkins said, are to clarify terms, make approvals more efficient, and provide adequate protection against fraud. These regulatory tools should reduce uncertainty and send signals about the types of activity the Bureau will approve.
Comptroller sees no problem with payment system access for fintech charter — Comptroller of the Currency Joseph Otting told a group of reporters this week that the question of access to the Fed’s discount window has not come up as a concern in his discussions with potential applicants for a new national bank fintech charter. Although access to the payments system is traditionally tied to deposit taking, which the fintech charter would not authorize, Otting said that fintech banks could establish correspondent banking relationships similar to those used by community banks for access. The OCC has said that it expects to issue its first fintech charter in the first quarter of this year.
Next Week in Washington:
No Congressional committee hearings are scheduled for next week, as everyone had expected to be back in their districts.
January 21 — Federal holiday in honor of Dr. Martin Luther King, Jr. Eris’s offices will be closed.
January 23 — Financial Accounting Standards Board will meet to discuss the disclosure framework for disclosure of income taxes; continuing initiatives to simplify the balance sheet classification of debt; and transition guidance for a proposed update that would allow organizations to irrevocably elect the fair value option for certain financial assets.
The Ellis Insight. Jim Ellis reports on political news:
Julian Castro: As expected, former Housing & Urban Development secretary Julian Castro (D) made his campaign for President official by announcing for the office in his hometown of San Antonio, Texas, a place where he won his only elective office as Mayor. Mr. Castro’s brother, Joaquin Castro, represents part of the city in the US House. It is clear that Mr. Castro is a long shot for the Democratic nomination who hopes to rally a constituency around the immigration issue.
Rep. Tulsi Gabbard: In a CNN interview, four-term Hawaii Rep. Tulsi Gabbard (D-Kailua) said that she will formally announce her campaign for President. Ms. Gabbard was first elected to the House in 2012 after serving in the Hawaii state House of Representatives and on the Honolulu City Council. She did not seek re-election after one term in the legislature in order to serve in Iraq with her Hawaii National Guard unit.
Sen. Kirsten Gillibrand: Yet another presidential exploratory committee has been announced. On the Late Show with Stephen Colbert, Sen. Kirsten Gillibrand (D-NY), as expected, said that she is forming a committee to study her chances of winning the Democratic presidential nomination, and eventually the White House. She becomes the seventh significant Democrat to either file an exploratory committee or officially announce or schedule a declaration of their national candidacy.
Rep. Seth Moulton: Massachusetts Rep. Seth Moulton (D-Salem) became the focal point leader of the opposition to House Speaker Nancy Pelosi once the Democrats captured the majority in the 2018 election. Though Mr. Moulton voted for Speaker Pelosi in the House roll call, his future opportunities in the chamber are not expected to be particularly plentiful.
Reports coming from New England indicate that the Congressman is scheduling meetings in neighboring New Hampshire, suggesting that he, too, may now be thinking about testing the waters for a presidential run. Rep. Moulton has also been mentioned as a potential Democratic primary opponent to Sen. Ed Markey, but such a move doesn’t appear to have any political legs at this time.
North Carolina: In what is expected to be a crowded political card lining up against first-term Sen. Thom Tillis (R), the first notable Democratic challenger indicated that he will run. Mecklenburg County Commissioner Trevor Fuller told the local Charlotte Observer newspaper that he will be a Senatorial candidate in 2020. State Sen. Jeff Jackson (D-Charlotte) is also expected to enter the race in relatively short order.
Tennessee: Gov. Bill Haslam leaves office this weekend, and speculation is continuing as to whether he will become a 2020 US Senate candidate to replace the retiring Sen. Lamar Alexander (R). Gov. Haslam reiterated that he is considering running and says he will make up his mind in “a month or so” after leaving office. No other Republican has yet to come forward to declare for the open seat, obviously waiting to see what Gov. Haslam intends.
Attorney and Iraq War veteran James Mackler, who quickly raised $1 million for the 2018 open Senate campaign but withdrew when former Gov. Phil Bredesen (D) declared his candidacy, is the only Democrat so far to officially enter the 2020 contest.
West Virginia: Sen. Joe Manchin (D) making comments that he might run for Governor in 2020 has GOP leaders watching with interest. Should he run and defeat GOP Gov. Jim Justice, a special election would be called to fill the balance of Manchin’s Senate term as opposed to the Governor filling the vacant seat via appointment.
The law does allow a short-term appointment until the special is held, but the election would quickly follow the vacancy becoming official and would be conducted in mid-2021. Republicans would be favored in an open Senate special election without Mr. Manchin on the ballot.
AZ-1: Late this week, former Flagstaff City Councilmember Eva Putsova announced that she will oppose two-term Rep. Tom O’Halleran (D-Sedona) in the 2020 Democratic primary. Ms. Putsova, a native of Slovenia, was a member of the local council for one four-year term that ended in 2018. Her challenge to the moderate House member will be from his ideological left.
CA-52: After filing an exploratory committee before Christmas to study his chances of winning the upcoming 2020 San Diego Mayor’s race, Rep. Scott Peters (D-San Diego), a former SD City Council President, has abandoned further plans to return to local government. Facing a crowded field in the 2020 jungle primary to succeed term-limited Mayor Kevin Faulconer (R), and a race that would require him to risk his congressional seat, Rep. Peters has instead announced that he will seek a fifth term in the US House next year.
CO-4: US Rep. Ken Buck (R-Windsor/Greeley) confirms that he is running to become chairman of the Colorado Republican Party. It has been a Colorado tradition that the state party chairman does not serve in an elected office, but reports indicate that Mr. Buck would eschew such a practice if he were to win the post at the state Republican convention on March 30th in order to continue serving in Congress.
NV-4: Former US Rep. Ruben Kihuen (D-Las Vegas), who retired after one term after dealing with several sexual harassment accusations, announced that he will now run for a seat on the Las Vegas City Council. Earlier he filed an exploratory to assess his chances, and obviously the initial research indicates his chances of winning are enough to launch an official political effort. Before winning his congressional seat in 2016, Mr. Kihuen served in the Nevada state Senate and Assembly.
NH-1: New Hampshire’s 1st Congressional District has defeated more incumbent House members than any CD in the United States since 2006. In an open seat situation last year, NH Executive Councilor Chris Pappas (D) defeated former police chief Eddie Edwards (R) by a healthy 54-45% margin. But, considering the competitive history of this district, one can never fully predict what the voters here will do.
Mr. Edwards confirms he is considering running again next year. Republican Party leaders, however, may prefer to look in a different direction because the 2018 nominee under-performed in terms of attracting votes and fundraising.
NC-3: With North Carolina Rep. Walter Jones (R-Farmville) confirming that he will not seek a 14th congressional term next year, the GOP open seat candidate field is already starting to develop. Both 2018 Republican candidates Phil Law, an Iraq War veteran, and Craven County Commissioner Scott Dacey confirm they are likely to run again in 2020. In the May ’18 Republican primary, Mr. Jones won re-nomination with a 43-29-28% win over Messrs. Law and Dacey.
PA-12: Yesterday, five-term Pennsylvania Rep. Tom Marino (R-Williamsport) announced that he is going to resign from the House on January 23rd to accept a position in the private sector. The 12th District is safely Republican, and the vacancy means a special election will be called likely to coincide with the state’s municipal election primary on May 21st. Republicans will be favored to hold the seat, which is the third best Republican district in Pennsylvania and the 41st most pro-Trump CD in the country. President Trump carried PA-12 with a 66-30% margin in 2016.
SC-1: In what will likely be the first of many Republican campaign announcements against freshman Rep. Joe Cunningham (D-Charleston), Beaufort County Councilman Mike Covert (R) became the initial person to become an official candidate with his public declaration this week. Also expected to run is 2018 GOP nominee Katie Arrington, a former state Representative who lost to Mr. Cunningham, 51-49%, in a major upset result.
Former Congressman and ex-Governor Mark Sanford, who lost to Arrington in last year’s Republican primary, remains noncommittal about his future political plans. This race will be considered a pure toss-up.
Kentucky: With the January 29th candidate filing deadline fast approaching for the 2019 Kentucky Governor’s campaign, a great deal of political attention is being paid to the state. Last week, US Rep. James Comer (R-Tompkinsville), who lost to current Gov. Matt Bevin (R) by just 83 votes in the 2015 Republican primary, said he would have interest in running for Governor if the incumbent decided not to run.
Since then, Gov. Bevin has made it clear that he intends to seek re-election, and now Rep. Comer appears to be changing his tune. This week, the Congressman said that he may consider challenging the Governor now that he fully understands the precarious political position encompassing Mr. Bevin.
State Rep. Robert Goforth (R-East Bernstadt) has already announced his Republican primary challenge to the Governor. The Democratic field features Attorney General Andy Beshear, former state Auditor Adam Edelin, and state House Minority Leader Rocky Adkins (D-Sandy Hook).
Louisiana: The latest Louisiana Governor’s campaign news features former US Rep. John Fleming (R) indicating that he is also considering entering the 2019 Governor’s race in order to challenge Democratic incumbent John Bel Edwards.
Dr. Fleming served four terms in the House, leaving in 2016 to run unsuccessfully for the Senate. He finished fifth in a field of 24 jungle primary candidates, failing to advance into the general election. Then-state Treasurer John Kennedy (R) eventually claimed the seat in the run-off election. Currently, Dr. Fleming is an official in the US Department of Health and Human Services.
Gov. Edwards is seeking re-election. His current challengers are US Rep. Ralph Abraham (R-Alto/Monroe) and land developer Eddie Rispone (R). Both Sen. Kennedy and Attorney General Jeff Landry (R) declined to run.
New York: The New York legislature, now that Democrats have assumed control of both legislative chambers, just passed a sweeping election procedure package. The most significant change is the elimination of the two-tiered primary system.
The Empire State is the only one in the Union that holds a federal primary and a separate nomination vote for state offices. Under this bill, the two would be unified as in all other states. Additionally, an early voting option would be added to the New York voting procedure for the first time. Gov. Andrew Cuomo (D) is expected to approve these election procedural changes.
North Dakota: Earlier in the month, former Sen. Heidi Heitkamp (D) was peppered with reporters’ questions about whether she would challenge Gov. Doug Burgum (R) in the 2020 election. While denying interest, she did indicate that an announcement would soon be forthcoming about her professional future.
This week, Ms. Heitkamp informed the North Dakota public that she has accepted a position with the CNBC Financial News Network as a regular contributor. Therefore, it is highly unlikely that she will return to North Dakota in order to challenge a first-term GOP Governor with high approval ratings.