THE GOLDEN APPLE: Your report on the latest discord from The Eris Group
October 5, 2018

Senate to confirm Kavanaugh tomorrow — With this afternoon’s statements from Senators Susan Collins (R-ME) and Joe Manchin (D-WV), it looks all but certain that the Senate will vote tomorrow to confirm the nomination of Brett Kavanaugh to serve as an Associate Justice of the Supreme Court. The Court, like all Federal government offices, is closed on Monday for the Columbus Day holiday (Eris is too), but Kavanaugh could be seated as early as Tuesday.
Tailoring for mid-sized banks a priority, Quarles says — Representatives of the federal banking agencies appeared before the Senate Banking Committee on Tuesday to discuss the implementation of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA), which everyone’s still calling S. 2155, because no one knows how to pronounce EGRRCPA. Federal Reserve Board Vice Chairman Randal Quarles said that their top priority is implementing the “tailoring” requirements for enhanced supervisory procedures for banks smaller than $250 billion in assets, and they expect to propose rules before the end of the year. FDIC Chairman Jelena McWilliams said that in addition to EGRRCPA changes, the agency is looking at broad issues around brokered deposits, and will seek comments on this before the end of the year. NCUA Chairman Mark McWatters asked Congress to expand the fields of membership for all credit unions to include residents of unserved and underserved communities. Committee members grilled Comptroller of the Currency Joseph Otting about the progress of enforcement actions against Wells Fargo, and Otting said that the OCC was not satisfied with Wells Fargo’s compliance to date.
Regulations needed for Opportunity Zones, witnesses tell Senate Small Business Committee — The Senate Small Business Committee heard testimony on Wednesday about how additional changes to the tax code can expand opportunities for small businesses. While witnesses representing small businesses called for the temporary changes to the tax code to be made permanent, and noted the need for alignment of 1099 forms, the hearing’s big takeaway was the need for regulations to implement the new tax law’s Opportunity Zones for underserved areas, and the need to develop metrics to measure their success. While the House passed its “Tax Reform 2.0” package last week, which would make those tax changes permanent, the Senate is not expected to act on substantive tax changes until next year.
Sanders, Sherman introduce bill to break up giant banks — Senator Bernie Sanders (I-VT) and Rep. Brad Sherman (D-CA) introduced the “Too Big to Fail, Too Big to Exist Act” on both sides of Capitol Hill this week. The bill would require the breakup of any bank with total exposure equal to more than 3% of the nation’s GDP, a figure that currently applies to JPMorgan Chase, Citigroup, Wells Fargo, Goldman Sachs, Bank of America, and Morgan Stanley. These institutions would be given two years to restructure, under Federal Reserve supervision, until they were no longer that size. The bill would also require insurance companies with more than $50 billion in assets to report total exposure to federal financial regulators.
Van Hollen, Whitehouse ask GAO to probe money laundering through real estate — Senators Chris Van Hollen (D-MD) and Sheldon Whitehouse (D-RI) wrote to the GAO this week to ask it to study whether anti-money laundering laws are too weak to prevent criminal activity through the real estate sector. “Residential real estate markets currently have fewer AML protections than lending financial institutions, presenting increased risk of access by foreign and domestic criminal organizations,” the Senators wrote. The real estate industry is exempt from Bank Secrecy Act requirements, they noted, and FinCEN’s Customer Due Diligence rule generally does not apply to the real estate industry. The Senators asked for a report on the information gathered through the temporary application of geographic targeting orders (GTOs) to title insurance companies, which began in January 2016. They planned to ask regulators about this at a Senate Banking Committee hearing yesterday, but that hearing was postponed and has not yet been rescheduled.
Fed seeks path to 24/7 real-time settlement — Noting “a growing gap in the transaction capabilities we need . . . and the underlying settlement capabilities,” Federal Reserve Board Governor Lael Brainard said Wednesday that the Fed sees “clear benefits” in moving to a system of 24/7 payment-by-payment interbank settlement in real-time, or RTGS. Central banks in Australia and Europe have already implemented these systems, or are close to doing so. The Fed published a Request for Comments on actions the Fed could take to facilitate this—specifically, on development of a service for real-time interbank settlements 24x7x365, or the creation of a liquidity management tool that would enable transfers between Federal Reserve accounts 24x7x365. Comments are due to the Fed by December 12.
The FDIC wants to communicate — The Federal Deposit Insurance Corporation (FDIC) began the week with a Request for Information about how it can improve its communications with banks, consumers, and other stakeholders. Specifically, the FDIC wants to know how banks prefer to get information about new policies and other updates, and how the FDIC can make information easier to receive and find in general. Later in the week, FDIC Chairman Jelena McWilliams announced a new agency effort “to be accessible, understandable, and responsive” to its stakeholders. The “Trust through Transparency” initiative incorporates a new section on the FDIC’s website that publishes performance metrics, such as turnaround times for examinations and bank charter applications, call center usage and response times, and data on the status of supervisory and assessment appeals. The agency invites stakeholders to submit feedback via email to  
Virtual currency is 9.4% of money exchanges/transmissions — The Conference of State Bank Supervisors released its first Money Services Businesses Industry Report this week, a compilation of 2017 data from state-licensed money transmitters, payment services, virtual currency and other businesses. The study found that the industry overall handled $1.24 trillion in 2017, with the ten largest companies handling 74% of that total. Foreign transfers accounted for 22% of all money transmission in the US, and — perhaps most surprising — virtual currency comprised 9.4% of the industry, with $110.8 billion exchanged and $6.2 billion transmitted.
IGs cite cybersecurity, IT security, and crisis readiness as challenges for regulators — The Inspectors General of the financial regulatory agencies, including the Treasury Department, FDIC, FHFA, CFTC, HUD, Federal Reserve Board, CFPB, NCUA, and SEC published its annual report last week on “Top Management and Performance Challenges Facing Regulatory Organizations,” as required by Dodd-Frank. Most of the challenges identified had to do with coordinating infrastructure security and resilience, not only within the agencies but among the supervised institutions as well. Oversight of financial institution cybersecurity was the most frequently identified challenge, encompassing risks to the systems and information at the institutions, their third-party service providers, and the regulatory organizations. Sharing threat information between and among agencies and financial institutions is another top challenge, and the study called for a “whole of government approach.” The study cited new challenges posed by the use of more than 1,000 virtual currencies, which “may lend themselves to money laundering, financial and other crimes.”
Institutional investors ask SEC for rulemaking on ESG disclosure — Dozens of institutional investment groups and other interested parties, including CalPERS and several state treasurers, wrote to the SEC this week to ask for rulemaking on environmental, social, and governance (ESG) disclosure. The petition, drafted by law professors from Osgoode Hall in Canada and the University of Pennsylvania, calls for a comprehensive framework for standardizing the disclosure of certain ESG aspects of each public-reporting company’s operations. The letter notes a number of pending petitions on similar subjects, such as human capital management, climate, human rights, gender pay ratios, and political spending, which “suggest, in aggregate, that it is time for the SEC to bring coherence to this area.”

Next Week in Washington:
Eris’s offices will be closed on Monday, October 8, for the Columbus Day holiday. The House is officially in session next week, but has no hearings scheduled.
October 10 at 10:00 a.m.
Senate Committee on Commerce, Science, and Transportation continues its hearings on consumer data privacy: “Examining Lessons from the European Union’s General Data Protection Regulation and the California Consumer Privacy Act.” Witnesses include Dr. Andrea Jelinek, Chair of the European Data Protection Board, and Mr. Alastair McTaggart, Board Chair of Californians for Data Privacy.
October 11 at 10:00 a.m.    
Senate Committee on Banking, Housing, and Urban Affairs holds a hearing on “Exploring the Cryptocurrency and Blockchain Ecosystem.” Witnesses include Dr. Nouriel Roubini of the NYU Stern School of Business and Peter Van Valkenburgh, Research Director of the Coin Center. 

The Ellis Insight. Jim Ellis reports on political news: 
California:  Apparently US Senate challenger Kevin de Leon (D) does not believe he is going to unseat Sen. Dianne Feinstein (D) next month. Trailing in all polling by double-digit margins, though Sen. Feinstein never gets close to 50%, Mr. de Leon is already looking toward his next political race. According to California Fair Political Practices Commission filings, the LA state Senator has already formed a committee to run for Lt. Governor . . . in 2026. Assuming that the next Governor serves a full eight years, 2026 is the next time the Lt. Governor’s post will likely be open.
Florida:  After a period where Sen. Bill Nelson (D) had seemingly pulled away from Gov. Rick Scott (R), we now see three polls forecasting the pair returning to basic tied status. Mason-Dixon Polling & Research, a frequent Florida pollster, released their latest data (9/24-27; 815 FL registered voters) and it found Sen. Nelson’s lead dissipating to one point, at 47-46%. Likewise, Strategic Research Associates of Austin, TX, finds a similar reading. According to their polling results (9/17-30; 800 FL likely voters), Sen. Nelson’s one-point edge is confirmed, 44-43%. The Fox News Florida poll (see below) also reports a similar result.
Missouri:  A pair of surveys were released midweek, and each major party candidate was projected to be holding a slight lead. The CNN/SSRS survey (9/25-29; 756 MO likely voters) finds Sen. Claire McCaskill (D) topping Attorney General Josh Hawley (R) by three percentage points, 47-44%. But, Remington Research, polling for the Missouri Scout political blog, sees Mr. Hawley holding an equivalent small edge, 48-46%. 
Interestingly, in the aforementioned CNN poll, Ms. McCaskill’s lead drops to one percentage point, 43-42%, when the universe is expanded to include registered voters (increasing the sample size to 906). And, splitting the difference, the Fox News Missouri poll (see below) projects the two candidates to be locked in a flat tie. 
New Jersey:  A new poll shows the closest Garden State spread in this election cycle, but it was quickly twice contradicted. Stockton University went into the field (9/19-27; 531 adult NJ residents screened as likely voters) and finds Sen. Bob Menendez (D) running ahead of former pharmaceutical company CEO Bob Hugin by only a 45-43% margin. 

But, Fairleigh Dickinson University (9/26-30; 508 NJ likely voters) projects Sen. Menendez to be holding a 43-37% advantage, but with an upside-down favorability index of 35:53%. Quinnipiac University publicized their large sample poll (9/25-10/2; 1,058 NJ likely voters), and they show a relatively similar reading, but significantly better for Menendez, 53-42%.
North Dakota:  A new NBC North Dakota News/Strategic Research Associates survey (released 10/1; 650 ND likely voters) finds at-large Rep. Kevin Cramer (R-Bismarck) now taking a ten-point, 51-41%, lead over Sen. Heidi Heitkamp (D). The principle reason for the larger lead is the Brett Kavanaugh Supreme Court nomination. According to this research, North Dakota voters support the judicial nominee by a 60-27% count. 
West Virginia:  A week after Attorney General Patrick Morrisey (R) released his internal 1892 organization survey that showed him tied with Sen. Joe Manchin (D), a new statewide media poll from Gray Television station WSAZ TV in Huntington (Strategic Research Associates; 9/17-26; 650 WV likely voters) finds the Democratic incumbent leading, 46-38%. This, despite President Trump scoring a job approval rating of 62:34% favorable to unfavorable.
Fox Polls:  Fox News, polling through the Anderson Robbins survey research firm (D) and Shaw & Company (R), released new data for six US Senate campaigns. The only two with clear advantages for one candidate came from North Dakota, where Republican challenger Kevin Cramer has a 53-41% lead over Sen. Heidi Heitkamp (D); and from Tennessee, which finds Tennessee Rep. Marsha Blackburn (R-Brentwood) leading former Gov. Phil Bredesen (D), 48-43%.
The remainder are all clearly within the polling margin of error: Rep. Kyrsten Sinema (D-Phoenix) leading Rep. Martha McSally (R-Tucson) in the Arizona race, 47-45%; Sen. Bill Nelson (D) edging Gov. Rick Scott (R), 47-46%, in Florida; Indiana Sen. Joe Donnelly (D) posting a two-point lead over businessman Mike Braun (R), 43-41%; and, Missouri Sen. Claire McCaskill (D) and Attorney General Josh Hawley (R) tied at 43%, apiece.
AZ-8:  Rep. Debbie Lesko (R-Peoria) won her special election to replace resigned Rep. Trent Franks (R) earlier this year, and the final result proved to be a close 52-48% result over physician Hiral Tipirneni (D). Now the pair are again squaring off in the regular election. A new Lake Research Partners survey for the Tipirneni Campaign (9/24-26; 400 AZ-8 likely voters) finds Rep. Lesko only holding a 48-44% ballot test lead. In Lake’s August poll (8/7-13; 400 AZ-8 likely voters) the new Congresswoman’s advantage was 49-40%.
CA-22:  Rep. Devin Nunes (R-Tulare) has come under national attack during this congressional session in his role as chairman of the House Select Committee on Intelligence. To politically protect himself the Congressman has raised over $5 million for his re-election, and the related spending is paying dividends. After closer polling surfaced earlier in the year, a new Survey USA poll (9/20-25; 800 CA-22 registered voters; 582 likely voters) finds Rep. Nunes expanding his lead over attorney Andrew Janz (D) to 55-41%.
CA-45:  After a series of polls posted Democratic challenger Katie Porter to consistent single-digit leads in the polling margin of error’s outer edge, a new Democratic Global Strategy Group survey (9/20-23; 400 CA-45 likely voters) finds her race against Rep. Mimi Walters (R-Irvine) tightening again, this time to a one-point margin. According to the GBA results, Ms. Porter leads Rep. Walters, 48-47%. Obviously, this race is one of the Democrats’ seven targets and we can expect the contest to remain a toss-up all the way to Election Day in a district that was once safely Republican.
CO-6:  Rep. Mike Coffman (R-Aurora) has won three elections in an eastern Denver suburban district designed to defeat him. Iraq War veteran and attorney Jason Crow (D) has been found leading Rep. Coffman beyond the polling margin of error in several polls. Reports suggest that the National Republican Congressional Committee (NRCC) has also cancelled their television ad reservations, which is another indicative sign that the published polls are within the accuracy realm. 
Late in the week, Rep. Coffman released data countering the aforementioned news in the guise of an internal Tarrance Group survey (9/11-13; 400 CO-6 registered voters). According to this information, the spread between Messrs. Crow and Coffman is only 42-40%.
IL-4:  Recently, an independent committee began raising money to promote Cook County Commissioner Jesus “Chuy” Garcia for Mayor of Chicago, now that incumbent Rahm Emanuel (D) has announced his retirement. Mr. Garcia was not dissuading the group from continuing, suggesting that he might make another run for the office even though he is about to be elected to Congress. Now saying that he will represent the people who are about to elect him to the US House, Mr. Garcia announced he will not become a mayoral candidate in 2019.
KS-3:  Recently, stories have abounded that the national Republican/conservative/ right-of-center organizations had jettisoned three incumbents: Reps. Mike Bishop (R-MI), Mike Coffman (R-CO), and Kevin Yoder (R-KS). All three have now responded with polling data showing them either ahead or back within the margin of error. We can again expect to see all three campaigns receive significant amounts of help in the last month.
Mr. Yoder is the latest to respond. His campaign released current data from Remington Research (9/18-20; 610 KS-3 likely voters) that finds the Congressman regaining the lead over his Democratic opponent, Sharice Davids. According to the findings, Mr. Yoder’s margin is 43-40%.
MN-2:  In the last election cycle, the prevailing political wisdom uniformly proclaimed that healthcare executive Angie Craig (D) was a virtual lock to defeat then-radio talk show host, Jason Lewis (R). In the end, Mr. Lewis scored a two-point victory. This year, most polling again shows Ms. Craig leading the race – and the Siena College/New York Times survey has her ahead well beyond the polling margin of error -- but a new WPA Intelligence study is detecting the opposite conclusion. According to a very recent WPA poll (9/29-10/1; 412 MN-2 likely voters), Rep. Lewis has re-claimed a three-point lead, 46-43%. 
MT-AL:  Rep. Greg Gianforte (R-Bozeman) won a 2017 special election to succeed then-Rep. Ryan Zinke (R) after the latter man was appointed as Interior Secretary. Now a Benenson Strategy Group poll (9/6-16; 950 MT likely voters) finds the new Congressman’s re-election effort approaching the toss-up realm. Their new poll gives Gianforte only a 46-45% edge over former state Rep. Kathleen Williams (D), who is reporting to have raised more than $2.1 million in the quarter just ended. 
NH-1:  New Hampshire’s 1st District has been the most swing seat in the country. The electorate here has defeated the sitting incumbent in every election since 2010, inclusive. Now, as an open seat, the New Hampshire-based American Research Group (9/21-26; 400 NH-1 registered voters) reports ballot test data that gives the new Democratic nominee a 22-point lead. According to this poll, Executive Councilor Chris Pappas (D) leads former South Hampton Police Chief Eddie Edwards (R) by a whopping 55-33% margin. 
Late this week, OnMessage released their polling numbers for the eastern Granite State district. According to them (9/25-27; 400 NH-1 likely voters), it is Edwards who leads the race, and by a 42-40% count. The diversity obviously shows that at least one of the pollsters is way off. The 1st District is one of the most defined swing districts in the country. The electorate here has defeated the incumbent five of the last six election years, more than any district in the country. More data will have to be examined here before a clear pattern can be predicted. Rep. Carol Shea-Porter (D-Rochester) is retiring.
TX-31:  The Tarrance Group, polling for Rep. John Carter’s (R-Georgetown) campaign, finds the veteran Congressman posting a 21-point lead over his Democratic opponent, Afghan War veteran and author M.J. Hegar. The Tarrance data gives Mr. Carter a surprisingly large 54-33% lead. 
Alaska:  The nation’s lone Independent Governor might lose if a new Alaska Survey Research poll is accurate. The study (9/21-25; 500 AK certain and very likely voters) finds Republican former state Senator Mike Dunleavy leading ex-US Senator Mark Begich (D) and Gov. Bill Walker (I), 44-29-23%, respectively, in the three-way contest.
Dispelling the idea that Walker fares better in a two-way, this poll finds that he would lose to both Dunleavy and Begich in one-on-one races. Against Dunleavy alone, Walker would lose, 54-41%. If Mr. Begich were his only opponent, the Governor would trail 46-40%.
New York:  The Working Families Party has voted to rescind its party’s gubernatorial nomination for actress Cynthia Nixon and Lt. Governor candidate Jumaane Williams and instead award it to Gov. Andrew Cuomo (D) and Lt. Gov. Kathy Hochul (D). The pair formally accepted the nomination on Thursday evening. Doing so eliminates any challenge from the Governor’s left, meaning he will now fall into a two-way race with Republican nominee Marc Molinaro, the Duchess County Executive. Such a contest assures a Cuomo re-election on November 6th. 
Oklahoma:  Despite Oklahoma being one of the strongest Republican states in the nation, the current open Governor’s campaign is highly competitive. With education, budget, and tax issues controversial and major points of concern in the state, the electorate is becoming more competitive. A new Right Strategy Group survey (9/25-26; 1,058 OK likely voters) finds mortgage banker Kevin Stitt (R) and former Attorney General Drew Edmondson (D) locked in a single-digit battle. According to this latest polling study, Mr. Stitt’s advantage is 47-43%. Yet, in the other seven Oklahoma statewide offices Republicans enjoy their typical double-digit leads.

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