THE GOLDEN APPLE: Your report on the latest discord from The Eris Group
August 24, 2018
How’s your August going? We’re still keeping an eye on things in Washington, but even with the Senate in, it’s been fairly quiet—at least in our block. The Golden Apple will take next week off, but return with much more news on September 7.
We extend our deepest sympathies to Senator John McCain (R-AZ) and his family, who announced the end of the Senator’s treatment for brain cancer today. Senator McCain has been a powerful voice on Capitol Hill for 35 years, and it is hard to imagine the Senate without him. Fair winds and following seas, sir.
Senate Banking approves nominations to BCFP, SEC, Ginnie Mae, OFR — The Senate Committee on Banking, Housing, and Urban Affairs voted yesterday to approve the nominations of Kathleen Kraninger as Director of the Bureau of Consumer Financial Protection; Kimberly Reed as President of the Export-Import Bank; Elad Roisman as a member of the Securities and Exchange Commission; Rae Oliver Davis as Inspector General of the Department of Housing and Urban Development; and Dr. Dino Falaschetti as Director of the Treasury’s Office of Financial Research. The Committee voted unanimously to approve the nomination of Ms. Reed, and approved the nominations of Mr. Roisman, Mr. Bright, Ms. Davis, and Dr. Falaschetti by voice vote. Ms. Kraninger’s nomination passed on a party-line vote of 13-12, over the vocal objection of Committee Democrats.
CBO updates cost estimates of housing reform models — The Congressional Budget Office has published a new report that updates the estimated costs of housing finance reform. Under the current system, the CBO projects that Fannie Mae and Freddie Mac will guarantee almost $12 trillion in mortgage-backed securities over the next ten years, at a cost to the federal government of about $19 billion. The CBO looked at four reform models: ranging from replacing the GSEs with a single, fully federal agency; creating a hybrid public-private market that sets capital requirements for private guarantors; creating a market with the government as guarantor of last resort; and creating a market that is almost entirely private. Reducing taxpayers’ exposure to credit risk would raise costs to borrowers, the report note, and some form of government intervention might be necessary to stabilize the market in case of crisis.
FDIC reports record bank income for second quarter — FDIC-insured financial institutions earned aggregate net income of $60.2 billion in the second quarter of 2018, an increase of more than 25 percent from the second quarter of 2017. More than 70 percent of reporting institutions saw year-over-year growth, and the percentage of unprofitable banks declined to 3.8 percent of the industry. The FDIC attributed the growth to higher net operating revenue and the lower effective tax rate. FDIC Chairman Jelena McWilliams warned, however, that banks face “heightened exposure to interest-rate, liquidity, and credit risks.”
SEC votes to simplify reporting requirements — Last week the Securities and Exchange Commission voted to adopt amendments to certain dislosure requirements that would eliminate redundant and duplicative requirements; requirements that overlap with GAAP, International Financial Reporting Standards, or other SEC requirements; requirements that have become obsolete; and requirements that have been superseded by recent legislation. The amendments are part of the implementation of the FAST Act, which required the SEC to eliminate provisions of Regulation S-K deemed duplicative, outdated, or unnecessary. The changes take effect 30 days from publication in the Federal Register.
SEC offers rehearings on administrative law proceedings — The Securities and Exchange Commission issued an order this week to resume proceedings before administrative law judges appointed by the Commission, and offered new hearings to all cases that were pending at the time of the Supreme Court’s ruling in Lucia v. SEC. That case challenged the SEC’s method of appointing administrative law judges; the SEC changed its process, and this week’s order reaffirmed the appointments of the five current administrative law judges. More than 120 cases are eligible for rehearing under the order.
Banking agencies issue interim rules on expanded examination cycles — The Federal Reserve, FDIC, and OCC issued a joint interim final rule to expand the on-site examination cycle to 18 months for qualifying insured banks, and branches and agencies of foreign banks, with assets of less than $3 billion. The change was part of the Economic Growth, Regulatory Relief, and Consumer Protection Act. The interim rules will take effect immediately, and are open for comment for 60 days.
OCC will seek comment on CRA reform next week — The Office of the Comptroller of the Currency plans to publish a request for public comment on changes to Community Reinvestment Act enforcement next week, American Banker reported today. The Treasury Department published recommendations for CRA reform in April. Regulators had said that they hoped to take joint action on rule changes, but it appears that the OCC will be the first to start the process.
HUD files housing discrimination complaint against Facebook — The Department of Housing and Urban Development filed a complaint against Facebook last Friday for violations of the Fair Housing Act. The complaint alleges that Facebook’s targeting tools enable landlords and other advertisers of housing-related services to discriminate based on gender, disability, parental status, religion, national origin, race, and color. Facebook’s advertising services allow vendors to target ads by zip code, gender, stated interests, and language preferences, and “invite advertisers to express unlawful preferences by suggesting discriminatory options.”
Business Roundtable CEOs express immigration concerns — Sixty CEO members of the Business Roundtable signed a letter to DHS Secretary Kirstjen Nielsen this week to voice “serious concern” about changes in immigration policy that are “causing considerable anxiety” to employees and threatening to disrupt business operations. Policy changes have led to inconsistent immigration decisions, uncertainty about required information, revoked status for spouses, and the announcement that the US Customs and Immigration Service will start removal proceedings on legal immigrants if their application to change or extend status is denied, even if they have complied with immigration laws. “[I]nconsistent immigration policies are unfair and discourage talented and highly skilled individuals from pursuing career opportunities in the United States,” the CEOs wrote. “[F]ew will move their family and settle in a new country if, at any time and without notice, the government can force their immediate departure—often without explanation.”
Next Week in Washington:
The House is out next week, but the Senate will convene on Monday afternoon to start considering a slate of nominations that includes Richard Clarida as Vice Chairman and member of the Federal Reserve Board.
The Ellis Insight. Jim Ellis reports on political news:
The August 21st primaries featured several key nomination races.
Wyoming Sen. John Barrasso defeated self-funding Republican primary challenger Dave Dodson in a landslide 65-28%, and becomes the prohibitive favorite to win a third term in November.
In the close Governor’s primary, state Treasurer Mark Gordon defeated billionaire mutual fund founder and national Republican donor Foster Friess and attorney Harriet Hageman, 33-26-21%, to capture the open GOP nomination. Mr. Gordon will now oppose former state Rep. Mary Throne (D-Cheyenne), who was an easy winner in the Democratic primary. Republican Gov. Matt Mead is ineligible to seek a third term.
In Alaska, ex-state Sen. Mike Dunleavy easily defeated former Lt. Gov. Mead Treadwell to win the Republican gubernatorial nomination. He now enters into a three-way general election that features Independent Gov. Bill Walker and former US Senator Mark Begich, who was unopposed for the Democratic nomination. Early polling suggests that Gov. Walker is in danger of losing the general election, as he trails both major party nominees.
Arizona: Regular Arizona pollster OH Predictive Insights for ABC News 15 in Phoenix and the Data Orbital firm just released new surveys. According to the Predictive Republican primary study (8/14-15; 578 AZ likely Republican primary voters and Independents who will choose a GOP primary ballot), Rep. Martha McSally (R-Tucson) now holds a 47-27-13% lead over former state Sen. Kelli Ward and ex-Maricopa County Sheriff Joe Arpaio. The Data Orbital poll (8/21-22; 600 AZ likely GOP primary voters via live phone interviews; 40% already reporting to have cast an early vote), taken a week later, finds Rep. McSally in an even stronger ballot test position, 48-22-18%, over Ms. Ward and former Sheriff Arpaio.
The Republican primary occurs next Tuesday, August 28th. The winner faces Rep. Kyrsten Sinema (D-Phoenix) who is the prohibitive favorite to win the Democratic primary. Sen. Jeff Flake (R) chose not to seek a second term.
Minnesota: Suffolk University, polling for the St. Cloud Times newspaper (8/17-20; 500 MN likely voters), finds Sens. Amy Klobuchar (D) and Tina Smith (D) leading in their respective 2018 US Senate races.
It is no surprise that Sen. Klobuchar has a 54-34% lead over state Rep. Jim Newberger (R-Becker) according to the Suffolk results. The Klobuchar race is not expected to be competitive. But appointed Sen. Tina Smith is likely to fall into a tough campaign against state Sen. Karin Housley (R-St. Croix Valley). The Suffolk numbers on this race find Sen. Smith holding a 44-37% edge, which is relatively consistent with an Emerson College Polling survey (8/8-11; 500 MN likely voters) that found her lead only to be 32-28%.
Missouri: A new WPA Intelligence survey (8/12-14; 501 MO likely voters) posts Attorney General Josh Hawley (R) to his strongest lead over Sen. Claire McCaskill (D) since a Gravis Marketing survey found him trending seven points ahead back in May. According to WPA, the first-term AG has opened a 48-41% advantage over the two-term incumbent Senator. This is a major increase since WPA’s mid-July poll that found Mr. Hawley ahead just 43-42%.
New Jersey: Quinnipiac University just released their latest New Jersey poll (8/15-20; 908 NJ registered voters) and find Sen. Bob Menendez (D) leading his Republican opponent, former pharmaceutical CEO Bob Hugin (R), by only a 43-37% margin with a job approval index of 40:47% favorable to unfavorable, and a poor 29:47% personal approval ratio. Still, Republicans tend to over-poll in New Jersey, so despite his negative image, Sen. Menendez remains the favorite for re-election.
New Mexico: A week after former Governor and Libertarian Party presidential nominee agreed to run for the New Mexico Senate seat on the minor party ticket, a new poll already shows him bypassing the Republican nominee and into second place. According to Emerson College Polling (8/17-18; 500 NM registered voters), Sen. Martin Heinrich (D) would have 39% support in the three-way race. Mr. Johnson is second with 21%, and Republican nominee Mick Rich, a state Labor Commission member, drops to third place with just 11% backing.
Texas: NBC News/Marist College released their latest Texas study (8/12-16; 970 TX adults) and find Sen. Ted Cruz (R) leading Rep. Beto O’Rourke (D-El Paso), 49-45%, which is slightly closer than most polls have indicated. But the sampling universe is of adults, and not even Texas registered voters. Therefore, it is probable that, among registered and likely voters, the Senator’s standing is stronger.
Wisconsin: A new statewide Wisconsin survey from Marquette Law School, which is a regular Badger State pollster, finds surprising results in the US Senate race. According to their latest release (8/15-19; 800 WI registered voters; 601 likely voters), Sen. Tammy Baldwin (D) tops new Republican nominee Leah Vukmir, a Brookfield state Senator, by only a 49-47% count within the likely voter segment.
CA-50: Rep. Duncan Hunter (R-Alpine) and his wife were indicted on federal misuse of campaign funds charges, and now his previously safe re-election is in jeopardy. Under California’s top-two primary law, no political party is guaranteed a nomination slot in the general election. Therefore, the Republican Party, in this case, has no standing or ability to remove the Congressman’s name from the ballot.
The party’s only option is to move forward with Hunter and try to win the election with a tainted candidate. The other general election qualifier is Democrat Ammar Campa-Najjar. Mr. Hunter placed first in the six-person primary with 47.4% of the vote. Mr. Campa-Najjar was second with 17.6%. President Trump carried the 50th District, 55-40%, in 2016, and Rep. Hunter has averaged 64.4% of the vote since his original election in 2008.
FL-5: Florida is another state that hosts a primary this coming Tuesday, and it appears that freshman Rep. Al Lawson (D-Tallahassee) is in prime position to win re-nomination in his east-west district that contains both Jacksonville and Tallahassee. The University of Northern Florida conducted a Democratic primary poll (8/17-19; 402 FL-5 likely Democratic primary voters) and finds Rep. Lawson leading former Jacksonville Mayor Alvin Brown (D), 47-29%, despite Duval County (J’ville) holding 58% of the district’s population. Mr. Brown is running ahead in Duval, 47-29%, but Rep. Lawson swamps him in the remainder of the district, 68-10%.
FL-27: Former Health & Human Services secretary and ex-University of Miami president Donna Shalala just released her own internal Bendixen & Amandi International consulting firm poll (8/10-16; 700 FL-27 Democratic registered voters) that projects her holding a 36-18-10-9-2% advantage, over state Rep. David Richardon (D-Miami), non-profit group executive Matt Haggman, Miami Beach City Commissioner Kristen Rosen Gonzalez, and College Academic Advisor Michael Hepburn, respectively. She leads in all published polls.
NV-4: A new Moore Information poll for the Cresent Hardy campaign (R) finds the race falling into a dead heat in the open 4th District. According to Moore (8/4-7; 400 NV-4 likely voters), the two candidates are tied at 41-41%. Responding to Mr. Hardy’s study, ex-Rep. Steven Horsford (D) publicized his own Global Strategy Group survey conducted back in July (7/17-22; 500 NV-4 likely voters) that gave him a 42-32% lead.
Arizona: Phoenix-based pollster OH Predictive Insights is back with a new poll, this time covering the Arizona Democratic gubernatorial primary. According to their data (8/14-15; 589 AZ Democratic primary likely voters), Arizona State University professor David Garcia holds a 40-25% lead over state Sen. Steve Farley (D-Tucson). The results are relatively consistent with other previous polls, though very few have been placed in the public domain. The Arizona primary is next Tuesday, August 28th. The Democratic winner will face Gov. Doug Ducey (R) in the general election.
Connecticut: Two Connecticut universities released their own survey data about the upcoming open Governor’s race, and each arrives at rather different conclusions. New Haven’s Quinnipiac University (8/16-21; 1,029 CT registered voters) sees Democratic nominee Ned Lamont opening up a substantial lead over Republican businessman Bob Stefanowski (46-33%). But, Fairfield’s Sacred Heart University (8/16-21; 502 CT likely voters), in a survey taken during the same period but with a smaller but more refined sampling universe, sees Stefanowski closing to only a 41-37% deficit. The Connecticut race is expected to be close, just as the last two Nutmeg State gubernatorial contests have been. Two-term Gov. Dan Malloy (D) is not seeking a third term.
Florida: The topsy-turvy Florida Governor’s race has thrown us one more curve ball. A new St. Pete Polls survey (8/18-19; 2,202 FL likely Democratic primary voters through an automated telephone system) now detects yet another Democratic candidate making a move. This time, it’s Tallahassee Mayor Andrew Gillum. According to the new data, former US Rep. Gwen Graham continues to hold first place, but with a shrinking advantage (27-25-21-14%) over Miami Beach Mayor Philip Levine, Mr. Gillum, and billionaire Jeff Greene. Additionally, Mr. Gillum is the beneficiary of $3.5 million in new independent spending from a coalition of five liberal groups, which could help him to further close the gap before voters cast their final ballots on August 28th. In St. Pete’s late-July survey, he attracted only 12% support.
Billionaire Jeff Greene (D), who has spent $25 million of his own money on the Governor’s campaign, has reportedly cancelled has last statewide television buy just as the primary is approaching on August 28th. Clearly, Mr. Greene sees no path to victory for himself, which renders further spending a waste.
The move could help Mr. Levine. Clearly leading the race before Greene got in—the latter man’s support seemed to be coming from Levine’s constituency, thus allowing former Rep. Gwen Graham to snatch first place in most polling—Levine has been gaining at the end to make the race very close. Greene effectively conceding could drive some of those votes back to Levine and possibly change Tuesday’s outcome.
Kansas: Independent gubernatorial candidate Greg Orman, who is now trying to portray himself as a centrist after running from the left when he opposed Sen. Pat Roberts (R) in 2014, has officially qualified for the general election ballot. Mr. Orman has submitted the proper number of valid petition signatures necessary to securing a ballot position. He joins a three-way race with Secretary of State Kris Kobach (R) and state Sen. Laura Kelly (D-Topeka), the two major party nominees. Democrats are challenging the validity of certain signatures, understanding that Orman’s presence on the ballot makes it more difficult for Ms. Kelly to score an upset win.
Minnesota: The aforementioned Suffolk University poll (see Minnesota Senate above) also tested the new Governor’s race between US Rep. Tim Walz (D-Mankato) and Hennepin County Commissioner Jeff Johnson (R). The Suffolk numbers actually see Mr. Johnson in a slightly improving position when compared to the immediate post-primary polls. The new Suffolk data gives Mr. Walz a 46-41% edge. Just before the state primary, Emerson College Polling (8/8-11; 500 MN likely voters) found Walz leading Johnson, 40-33%.
New Hampshire: A new University of New Hampshire Granite State Poll was just released (8/2-19; 501 NH adults; 389 NH registered voters), and it finds Gov. Chris Sununu (R) in strong position to secure a second two-year term. The results project the Governor holding a 48-32% advantage over former state Sen. Molly Kelly (D-Harrisville), who is favored to defeat ex-Portsmouth Mayor Steve Marchand in the September 11th Democratic primary. The Governor’s favorability index is a rock solid 61:21% positive to negative.
New Mexico: The Emerson College Polling group who surveyed the New Mexico Senate race (see New Mexico Senate above) also tested the open Governor’s race. In a contest featuring two-thirds of the congressional delegation fighting to replace retiring Gov. Susana Martinez (R), Albuquerque Rep. Michelle Lujan Grisham is holding only a small 42-40% edge over Rep. Steve Pearce (R-Hobbs). Though the contest has, heretofore, been rated as Lean Dem, further polling such as this could move the race quickly into the toss-up column.
South Carolina: The Tarrance Group, polling for Gov. Henry McMaster (R), released the results of their latest survey for the incumbent’s campaign. According to their data (8/6-9; 605 SC likely voters), Gov. McMaster holds a 52-41% advantage over wealthy state Rep. James Smith (D-Columbia). The poll was released in response to a Democratic Garin Hart Yang Research survey that was briefly in the public domain but has sense been pulled. Without having any methodology information to quote, the ballot test was reported as a tight 47-43% in the Governor’s favor.
Texas: Following the Texas Senate report above, NBC/Marist also tested the Governor’s race between incumbent Greg Abbott (R) and former Dallas County Sheriff Lupe Valdez (D). Remembering the poll tests adults and is not even segmented into a registered voters cell, the numbers break 56-35% for Abbott. It is likely a registered voters and/or likely voters segment would provide the Governor with an even stronger lead.
Wisconsin: The Marquette Law School also produced gubernatorial numbers for their statewide Wisconsin poll (see Wisconsin Senate above). According to the results, Gov. Scott Walker (R) and Superintendent of Public Instruction Tony Evers (D) would fall into a 46-46% tie. This is a better standing for Walker than the Public Policy Polling survey taken within the same time segment (8/15-16; 596 WI likely voters) that finds Mr. Evers holding a 49-44% advantage. Both polls indicate that this Governor’s campaign will be close, which is not surprising for a Wisconsin statewide election.