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

March 22, 2019

The House and Senate were in recess this week, so things were quieter than usual around here—but that was only because everyone was preparing for next week. March is going out like a lion.
Waters schedules multi-bill markup — House Financial Services Committee Chairwoman Maxine Waters announced that the Committee will take up five bills next Tuesday afternoon: a new draft of her Consumers First Act, which would roll back the changes made at the Consumer Financial Protection Bureau by then-Acting Director Mick Mulvaney; a new draft of her Ending Homelessness Act; a new draft of H.R. 389, the Kleptocracy Assets Recovery Rewards Act, submitted by Rep. Stephen Lynch (D-MA); a new draft of Rep. Ed Perlmutter (D-CO)’s H.R. 1595, the SAFE Banking Act of 2019, which would create a safe harbor for financial institutions that provide services to legal cannabis businesses; and a new draft of Rep. Sean Casten (D-IL)’s H.R. 1815, the SEC Disclosure Effectiveness Testing Act, which would require additional testing of the forms required by Regulation Best Interest. Reps. Patrick McHenry (R-NC) and Blaine Luetkemeyer (R-MO), the ranking members of the full committee and the Subcommittee on Consumer Protection and Financial Institutions, have asked for a delay on the markup of H.R. 1595, “until the Committee has a better understanding of the full range of consequences that enacting such legislation may trigger.”
State regulators defend role in data privacy — As the Senate works on a federal data privacy standard, the nation’s state bank regulators told the leaders of the Senate Banking Committee that federal legislation “must be a federal floor, not a ceiling.” In a letter to Senators Mike Crapo (R-ID) and Sherrod Brown (D-OH), Conference of State Bank Supervisors (CSBS) President and CEO John Ryan argued that since the states have played a leadership role in developing and enforcing privacy standards to date, states must retain the authority “to establish more stringent consumer protections and to act quickly as novel threats emerge.”
SEC proposes reforms to registration and offering processes for BDCs and closed-end funds — In conjunction with last year’s Small Business Credit Availability Act and Economic Growth, Regulatory Relief, and Consumer Protection Act, the Securities and Exchange Commission (SEC) has proposed changes that would streamline the registration process for business development companies (BDCs) and eligible funds; allow BDCs and closed-end funds to use the same communications and prospectus delivery rules that apply to operating companies; and harmonize the disclosure and regulatory framework for these funds with that of operating companies. The proposal is open for comment for 60 days after its publication in the Federal Register.
SEC finalizes new streamlined disclosure rules — The SEC voted Wednesday to adopt amendments that update and simplify disclosure requirements for public companies, investment advisers, and investment companies, as mandated by the FAST Act. Among other changes, the new rule will allow registrants to omit confidential information from most exhibits without filing a request for confidential treatment; eliminate the risk factor examples listed in the disclosure requirement, while revising the description of property requirement to emphasize the materiality threshold; and require data tagging on the cover page of certain filings and the use of hyperlinks for information available on EDGAR. The data-tagging requirements are subject to a three-year phase in, and the provision on treatment of confidential information takes effect immediately. All other changes take effect 30 days after publication in the Federal Register.
CFPB announces changes to advisory committees, seeks applicants — Consumer Financial Protection Bureau (CFPB) Director Kathy Kraninger announced this week that she would be making enhancements to the Bureau’s four advisory committees, based on feedback gathered during her three-month listening tours. The Bureau’s advisory committees are the Consumer Advisory Board (CAB), the Academic Research Council (ARC), the Community Bank Advisory Board (CBAB), and the Credit Union Advisory Council (CUAC). Beginning next year, the three financial institution committees will expand their focus to broad policy matters and meet three times a year instead of twice a year. The Academic Research Council will meet separately, twice a year. Membership terms will be extended to two years, with members serving staggered terms. Half the members currently serving will have their terms extended after the scheduled expiration date of September 2019. The Bureau is soliciting applications for all four committees between now and May 5. 
President says he will nominate Stephen Moore to Federal Reserve Board — President Trump announced on Twitter this afternoon that he will nominate Stephen Moore to one of the vacant positions on the Federal Reserve Board. Moore, whose own Twitter bio describes him first as “Trumponomics author,” was President of the Club for Growth and Chief Economist of the Heritage Foundation. He has been vocal in his opposition to recent Federal Reserve rate increases. Moore holds an M.A. in economics from George Mason University.
Next Week in Washington:
March 26        House Financial Services Subcommittee on Oversight and Investigations holds a hearing on “The Administration of Disaster Recovery Funds in the Wake of Hurricanes Harvey, Irma, and Maria.” 10:00 a.m., 2128 Rayburn House Office Building.
March 26        House Committee on Small Business holds a hearing on “Cleared for Take-off? Implementation of the Small Business Runway Extension Act.” 10:00 a.m., 2360 Rayburn House Office Building.
March 26        House Committee on Transportation and Infrastructure holds a hearing on “The Cost of Doing Nothing: Why Investment in Our Nation’s Airports Matters.” 10:00 a.m., HVC 210, Capitol Visitors’ Center.
March 26        Senate Banking Committee holds the first of two hearings on the Chairman’s Housing Reform Outline, with testimony from Sue Ansel on behalf of the National Multifamily Housing Council; Edward J. DeMarco, President of the Housing Policy Council; Greg Ugalde, Chairman of the National Association of Home Builders; Mark M. Zandi, Chief Economist of Moody’s; Hillary O. Shelton, Washington Bureau Director and SVP for Advocacy and Policy, NAACP; and Professor Adam Levitin of Georgetown University Law Center. 10:00 a.m., SD-538 Dirksen Senate Office Building.
March 26        House Financial Services Committee holds a markup of the Ending Homelessness Act; H.R. 389, the Kleptocracy Asset Recovery Rewards Act; H.R. 1500, the Consumers First Act; H.R. 1595, the SAFE Banking Act; and H.R. 1815, the SEC Disclosure Effectiveness Testing Act. 2:00 p.m., 2128 Rayburn House Office Building.
March 26        House Oversight Subcommittee on Economic and Consumer Policy holds a hearing on improving data security at consumer reporting agencies. 2:00 p.m., 2154 Rayburn House Office Building.
March 26        Senate Commerce Subcommittee on Manufacturing, Trade, and Consumer Protection holds a hearing on “Small Business Perspectives on a Federal Data Privacy Framework.” 2:30 p.m., SD-562 Dirksen Senate Office Building.
March 27        House Ways and Means Committee holds a hearing on “The 2017 Tax Law and Who it Left Behind.” 10:00 a.m., 1100 Longworth House Office Building.
March 27        Senate Banking Committee holds the second of two hearings on the Chairman’s Housing Reform Outline, with testimony from Michael Bright, President and CEO of The Structured Finance Industry Group; Robert D. Broeksmit, President and CEO, Mortgage Bankers Association; Lindsey Johnson, President, U.S. Mortgage Insurers; Vince Malta, President Elect, National Association of Realtors; Carrie Hunt, Executive Vice President of Government Affairs and General Counsel, National Association of Federally-Insured Credit Unions; and Michael D. Calhoun, President, Center for Responsible Lending. 10:00 a.m., SD-538 Dirksen Senate Office Building.
March 27        House Committee on Small Business holds a hearing on “Unlocking Small Business Retirement Security.” 11:30 a.m., 2360 Rayburn House Office Building.
March 27        Senate Appropriations Committee holds a hearing to examine the budget requests of the CFTC and the SEC. 2:30 p.m., SD-192 Dirksen Senate Office Building.
March 27        Senate Committee on Small Business and Entrepreneurship will mark up S.771, to require cyber certification for small business development center counselors; S.772, to require an annual report on SBA cybersecurity; and an original bill to repeal the sunset for collateral requirements for SBA disaster loans. 2:30 p.m., SR-428A Russell Senate Office Building.
The Ellis Insight. Jim Ellis reports on political news: 
Andrew Gillum:  Former Tallahassee Mayor Andrew Gillum, who came very close to winning the 2018 Florida Governor’s race, has decided not to run for President. Right after his statewide loss, support was mounting for him to enter the national campaign, similar to how Democrats began coalescing around ex-Rep. Beto O’Rourke (D-TX). Instead, Mr. Gillum says he is going to devote his time to an aggressive voter registration project in his home state of Florida in an attempt to help Democrats win more elections there.
Beto O’Rourke:  Former Texas Congressman Beto O’Rourke just eclipsed Sen. Bernie Sanders’ record one-day post-announcement fundraising haul. Back in February, Sen. Sanders raised $5.9 million in the 24-hour period after he became an official candidate. Late last week, Mr. O’Rourke officially announced his candidacy and brought in $6.1 million in the first full day of his new campaign. 
It appears evident that the former Congressman will be able to continue the torrid fundraising pace he engendered in his unsuccessful US Senate race where he attracted over $80 million in contributions for his Lone Star State contest.
CNN Poll:  A new CNN national presidential poll (conducted by SSRS; 3/14-17; 1,003 US adults; 456 Democratic likely primary voters; 448 Republican likely primary voters) reports similar results to other recent surveys. According to this data, former Vice President Joe Biden carries a 28-20% lead over Sen. Bernie Sanders (I-VT) with Sen. Kamala Harris (D-CA) and former US Rep. Beto O’Rourke (D-TX) placing third and fourth with 12 and 11%, respectively. No other candidate reaches double-digits, which is also highly consistent with other publicly released data.
The fact that no one, including Mr. Biden, ever breaks 30% in a national poll suggests that this race could become wide open. Sen. Harris and ex-Rep. O’Rourke showing increased strength as time passes would be key to turning this contest into a free-for-all.
Iowa Poll:  A new Public Policy Polling company Iowa Democratic presidential caucus poll (3/14-16; 678 IA likely Democratic Caucus participants) finds former Vice President Joe Biden posting a relatively strong 29-15% lead over Sen. Bernie Sanders (I-VT). The Iowa Caucus is the first voting stop on the Democratic nomination calendar and is scheduled for February 3, 2020.
PPP forecasts all other candidates in single-digits with Sen. Elizabeth Warren (D-MA) attracting 8%, ex-Rep. Beto O’Rourke (D-TX) at 7%, Sen. Kamala Harris (D-CA) tallying 6%, Sen. Amy Klobuchar (D-MN) registering 5%, and New Jersey Sen. Cory Booker drawing 4% support. 
Michigan Poll:  Emerson College polled a Michigan Democratic primary sample and finds a similar result to the aforementioned Iowa data. According to their survey (3/7-10; 743 MI registered voters; 317 MI likely Democratic presidential primary voters) former Vice President Joe Biden holds a healthy 40-23% lead over Sen. Bernie Sanders (I-VT). Here, however, two other candidates break into double-digits: Sen. Kamala Harris (D-CA) at 12% and Massachusetts Sen. Elizabeth Warren following with 11% support. All others are in low single digits. Ex-Rep. Beto O’Rourke (D-TX) was not tested in this poll.
Wisconsin Poll:  Emerson College also conducted a survey of the Wisconsin Democratic electorate, the first reported study since ex-Rep. Beto O’Rourke (D-TX) joined the field of candidates. According to the small-sample poll (3/15-17; 324 WI likely Democratic primary voters) Sen. Bernie Sanders (I/D-VT) opens with a large lead over former Vice President Joe Biden and the rest of the field. Here, Sen. Sanders captures 39% of the Democratic vote as compared to only 24% for Mr. Biden, a much different conclusion than reached in Iowa and Michigan. 
Massachusetts Sen. Elizabeth Warren may have hit her highest number of any poll so far in the early cycle. She posted 14% for third place. Mr. O’Rourke was next with 6%. Neighboring Sen. Amy Klobuchar (D-MN) recorded a disappointing 4%. 
The general election sample (3/15-17; 775 WI likely voters) pits President Trump individually against the Democratic field. Though the President trails in virtually all settings, he is within the polling margin of error against everyone but Mr. Biden. When paired with the former Vice President, Mr. Trump trails 51-44%. Sen. Sanders leads him by just two percentage points, 48-46%. Sen. Elizabeth Warren (D-MA) is up by a larger 52-48%, while Beto O’Rourke is staked to a 51-49% edge. The President breaks even with both Sens. Kamala Harris (D-CA) and Amy Klobuchar (D-MN). 
Colorado:  National Democrats were unsuccessful in recruiting their top Senatorial prospect to challenge incumbent Republican Cory Gardner when ex-Gov. John Hickenlooper decided to enter the presidential campaign. At this point their two top contenders appear to be former state House Speaker Andrew Romanoff who has lost races for both the US Senate and House, and ex-state Sen. Mike Johnston who finished a distant third in the 2018 gubernatorial primary.
This week, reports began surfacing that the Democratic Senatorial Campaign Committee leadership is attempting to recruit former US Attorney John Walsh, who served in the Obama Administration. Mr. Walsh confirms that he is considering the Senate campaign. Sen. Gardner is viewed as vulnerable because of Colorado’s leftward shift in recent elections. 
Michigan:  The previously mentioned Emerson College Poll (3/7-10; 743 MI registered voters) likely provided first-term Michigan Sen. Gary Peters (D) with a surprise. According to their new survey, John James, a Republican manufacturing company owner and retired Army Ranger, has already pulled to within one point of Sen. Peters, 44-43%. Early signs suggest that this could become a top tier Senate race.
AZ-8:  Already, Arizona Rep. Debbie Lesko (R-Peoria) has won two elections for the House, one in a special election, and the other in the regular 2018 cycle. Both times she defeated physician Hiral Tipirneni in campaigns that were closer than previous voter history would have typically projected. 

Now, a new candidate is emerging. Earlier this week, former Litchfield Park City Councilman Bob Musselwhite (D) said he plans to challenge Rep. Lesko next year. It is unclear if Dr. Tipirneni will make a third attempt, but publicly stated she is not ruling out challenging Rep. David Schweikert (R-Fountain Hills/Scottsdale) in the adjacent 6th CD. 
HI-2:  Ever since Hawaii Rep. Tulsi Gabbard (D-Kailua) announced for President, things have not gone well for her at home. Soon after her presidential move, state Sen. Kai Kahele (D-Hilo) announced for her congressional seat. Should Ms. Gabbard not fare well in the presidential race she will now face a serious re-nomination challenge in the Democratic primary.
During this period, Democratic former Governor Ben Cayetano announced his endorsement of Sen. Kahele. Previously, two other Democratic ex-Governors, Neil Abercrombie and John Waihee, also endorsed the challenger. Rep. Gabbard has consistently absorbed attacks from both the left and right. She also created major controversy when she met with Syrian dictator Bashar Hafez al-Assad. 
IN-5:  Former state Sen. Mike Delph (R), who had previously contemplated several runs for US Senate but then lost his seat in the state legislature last November, is reportedly considering either a primary challenge to Rep. Susan Brooks (R-Carmel) or entering an open seat contest. Speculation is brisk that Rep. Brooks may challenge Attorney General Curtis Hill (R) in the GOP primary or if the seat is open. Mr. Hill faces sexual harassment accusations and disciplinary proceedings but has not resigned.
NJ-5:  Investment banker Frank Pallotta (R) says he is going to soon form a congressional exploratory committee comprised of “industry leaders and experts” to help him assess his chances of unseating two-term Rep. Josh Gottheimer (D-Wycoff) next year. The 5th District has typically performed as a Republican seat until 2016, so the GOP looking to target this district is realistic, especially if they have a candidate with financial wherewithal. 
NY-15:  As predicted in the New York Post last week, New York City Councilman Ritchie Torres has indeed announced his intention to challenge veteran Rep. Jose Serrano (D-Bronx) in next year’s Democratic primary. This, like other budding New York City Democratic primary challenges, must be taken seriously. NY-15 is one of the safest Democratic districts in the country. Mr. Serrano, 75 years of age, was first elected to the House in 1990, after serving in the NY state Assembly since 1975. Mr. Torres, 31, was first elected to the City Council in 2013.
NY-22:  New York ex-Rep. Claudia Tenney (R), who lost her seat in November after one term, says she is looking at all future political options including attempting to force a re-match with freshman Rep. Anthony Brindisi (D-Utica). The 2018 campaign was bitter and ended in a close 50.0-48.3% Brindisi victory. 

NY-22 is now the second strongest Trump seat that a Democrat holds. The President carried the seat 55-39% suggesting that Ms. Tenney needs to strengthen her appeal among Republicans. Broome County District Attorney Stephen Cornwell has already announced his candidacy, so if Ms. Tenney decides to make a return appearance, she will likely have GOP primary opposition.
TX-10:  One of the surprise results last November was veteran Rep. Michael McCaul (R-Austin) winning re-election with only a 51-47% victory margin against under-funded opponent, Michael Siegel. Soon after the election, Mr. Siegel announced that he would seek a re-match, but now it looks like he will have to fight for the Democratic nomination. Early this week, Dell Medical School assistant professor Pritesh Gandhi announced that he, too, will run to challenge Rep. McCaul. 
Indiana:  Former Indiana Health Commissioner and congressional candidate Woody Myers (D) is reportedly considering entering the Governor’s race. Democrats struck out in trying to recruit defeated Sen. Joe Donnelly to challenge Gov. Eric Holcomb (R), so they are in need of a candidate to oppose the first term incumbent. Indiana went hard for President Trump (57-38%) and with Sen. Mike Braun (R) unseating Mr. Donnelly in 2018, recruiting a viable Democratic gubernatorial challenger is no easy task.
West Virginia:  Before the 2016 election there was much public speculation about whether Sen. Joe Manchin (D) would run to re-claim his former job as West Virginia’s Governor. He, of course, didn’t and businessman Jim Justice won the position as a Democrat but then changed parties less than a year after winning the general election. Now, Gov. Justice is seeking re-election as a Republican.
This week, more rumors began to surface that Sen. Manchin is again apparently weighing the option of running for Governor, this time because he strongly opposes Gov. Justice. This could be the start of another long political song and dance that becomes a false alarm, but clearly Sen. Manchin would be the best candidates the Democrats could field.
On the other hand, he will be under enormous national political pressure from the Democratic establishment to remain in the Senate. West Virginia requires special elections to fill Senate vacancies, so the chances of Republicans picking up the seat in an open contest would be quite high if Mr. Manchin were to be elected Governor.
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