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THE GOLDEN APPLE: Your report on the latest discord from The Eris Group
September 7, 2018
 
“For the good old American life: For the money, for the glory, and for the fun... mostly for the money.” — Burt Reynolds, Smokey and the Bandit (1977)
Rest in peace, sir.
 
Hensarling, Delaney unveil GSE reform bill — House Financial Services Committee Chairman Jeb Hensarling (R-TX) began yesterday’s hearing on GSE reform with the announcement that he and Rep. John Delaney (D-MD) had drafted a bipartisan plan to reshape the housing finance system. Hensarling called the proposal “a grand bargain” that would codify an explicit government MBS guarantee, coupled with an accountable and effective affordability program, in exchange for placing the taxpayer in a loss position only in catastrophic situations, diffusing the credit risk beyond the two GSEs, and creating market competition. Delaney said that it would stabilize the housing finance market, preserve the 30-year fixed rate mortgage, create a pathway for a meaningful increase in capital allocated to affordable housing, preserve the consumer protections embedded in Dodd-Frank, and preserve the GSEs’ model for multifamily housing finance. Yesterday marked the 10-year anniversary of the government takeover of Freddie Mac and Fannie Mae.
 
Senate confirms Clarida to Fed, Roisman to SEC — Last week the Senate confirmed Richard Clarida as Vice Chairman of the Federal Reserve Board by a vote of 69-26, and confirmed him by separate vote to serve on the Board until February 1, 2022. The Senate voted 85-14 on Wednesday to confirm Elad Roisman as a member of the Securities and Exchange Commission, for a term expiring in June 2023. Roisman’s confirmation brings the commission to its full complement of five members; Democratic Commissioner Kara Stein’s term expires in January 2019.
 
Luetkemeyer introduces legislation on data security — Rep. Blaine Luetkemeyer (R-MO), Chairman of the House Financial Services Subcommittee on Financial Institutions and Consumer Credit, introduced a bill today to preempt state data breach notification requirements for financial institutions with a single federal standard. The bill would also direct state insurance regulators to set data security safeguards that mirror the federal standards.
 
Witnesses call for incentives for multifamily development — Witnesses representing the private sector and the Urban Institute told the House Financial Services Subcommittee on Housing and Insurance this week that regulatory burden relief measures could be helpful, but would not be enough on their own to boost much-needed development of multifamily housing, especially for low and moderate-income residents. Tuesday’s hearing was intended to explore the composition of regulatory costs on development projects, which average 32.1% of development costs. Witnesses agreed that these costs are burdensome, and that changing and conflicting building requirements can obstruct development, but said it was more important to preserve programs such as community development block grants, HUD’s HOME program, and low-income housing tax credits. Committee members on both sides of the aisle shared concerns about the acute and growing shortage of affordable multifamily housing, particularly in rural areas, and Subcommittee Chairman Sean Duffy (R-WI) said he hoped Tuesday’s hearing would begin the conversation about solutions.
 
Agencies extend comment period for Volcker Rule changes — The Federal Reserve Board, FDIC, OCC, SEC and CFTC announced on Tuesday that proposed changes to the Volcker rule will remain open for comment until October 17. This is a 30-day extension of the 60-day comment period that began on July 17. The proposed changes are intended to simplify and tailor compliance requirements for the general prohibition on banking entities from engaging in proprietary trading and from owning or controlling hedge funds or private equity funds.
 
OCC seeks comment on CRA modernization — The Office of the Comptroller of the Currency released an advance notice of proposed rulemaking (ANPR) last week to ask for comments on reforming the regulatory framework for the Community Reinvestment Act. The OCC specifically wants comments on ways to improve regulations intended to increase lending and services to low- and moderate-income people and LMI areas; how to clarify and whether to expand the activities eligible for CRA credit; how to define and use assessment areas; what metric-based thresholds for CRA ratings might look like; and how to make CRA evaluations more transparent, more timely, less costly, and less burdensome. The ANPR is open for comment for 75 days after its publication in the Federal Register
 
Bureau of Consumer Financial Protection issues rules to implement HMDA changes — Last week the Bureau of Consumer Financial Protection issued an interpretive and procedural rule to implement the sections of the Economic Growth, Regulatory Reform, and Consumer Protection Act intended to relieve the regulatory burden of HMDA requirements on smaller depository institutions. The rule clarifies how the law’s partial exemptions apply to insured financial institutions, and what counts toward the thresholds for the partial exemptions. The Bureau plans to incorporate these interpretations into Regulation C through a notice-and-comment period at some point in the future.
 
Luetkemeyer hosts roundtable on CECL rule — Rep. Blaine Luetkemeyer (R-MO) invited representatives of the banking industry, the Financial Accounting Standards Board (FASB), and the federal banking agencies to discuss FASB’s Current Expected Credit Loss (CECL) rule at a meeting on Tuesday. Luetkemeyer has urged FASB to reconsider the rule, which will make banks reserve against expected future losses; Luetkemeyer says this will increase costs to banks, and may reduce their ability to provide services. “I will continue to urge FASB to reconsider the rule and urge the regulators to provide clarity on how they will examine for this rule,” he said.
 
Kea, Murton named to leadership positions at FDIC — FDIC Chairman Jelena McWilliams announced on Tuesday that she has appointed Arleas Upton Kea to serve as the Deputy to the Chairman and Chief Operating Officer (COO), and Arthur J. Murton to serve as the Deputy to the Chairman for Policy. Both are longtime veterans of the FDIC. Kea joined the FDIC as a staff attorney in 1985, was named Ombudsman in 1996, and has served as director of the Division of Administration since 1999. Murton, who joined the FDIC in 1986 as a financial economist, was the first director of the agency’s Division of Insurance, and has served since 2013 as director of the Office of Complex Financial Institutions.

 
Next Week in Washington:
 
September 12           Senate Committee on Banking, Housing, and Urban Affairs holds a hearing on “Countering Russia: Assessing New Tools.” 10:00 a.m., SD-538 Dirksen Senate Office Building.
 
September 13           Senate Banking Committee holds a hearing on implementation of the Economic Growth, Regulatory Relief, and Consumer Protection Act, with testimony from Comptroller of the Currency Joseph H. Otting, Federal Reserve Vice Chairman Randal K. Quarles, FDIC Chairman Jelena McWilliams, and NCUA Chairman J. Mark McWatters. 10:00 a.m., SD-538 Dirksen Senate Office Building.
 
September 13           Senate Committee on Commerce, Science, and Transportation holds a hearing on “Transportation of Tomorrow: Emerging Technologies that Will Move America.” 10:00 a.m., SD-538 Dirksen Senate Office Building.

 
The Ellis Insight. Jim Ellis reports on political news: 

Primary Results
 
In another surprising primary finish, ten-term Rep. Mike Capuano (D-Somerville) was soundly upended in this week’s Massachusetts Democratic primary. At-large Boston City Councilwoman Ayanna Pressley, uniting the minority coalition in what is the state’s only majority minority district, defeated the long-term incumbent, 59-41%, far beyond what any published poll was suggesting.
 
Though data had not been available for most of August, the latest surveys found Rep. Capuano leading but never with majority support. This signaled weakness within the incumbent’s base, but nothing like the margin that materialized in what proved to be a typical primary turnout election. Ms. Pressley will now be an easy winner in the general election in what is a safely Democratic seat.
 
The open 3rd District Democratic primary that featured ten candidates vying to succeed retiring Rep. Niki Tsongas (D-Lowell), is still not decided. Only 52 votes separate former congressional chief of staff and businesswoman Lori Trahan and ex-Boston mayoral chief of staff Dan Koh, as the results are surely headed for a recount. An undisclosed number of provisional ballots also remain to be counted. We can expect the recount process to drag on for several days. The eventual winner faces Republican businessman Rick Green in the general election.
 
Delaware Sen. Tom Carper (D) was easily re-nominated with 65% of the vote against Democratic socialist Kerri Harris in a September 6th Democratic primary that drew media attention but no real competition. The Senator will now easily defeat Sussex County Councilman Rob Arlett (R) in the general election to win a fourth term.
 
Senate
 
Arizona:  Arizona Gov. Doug Ducey (R) appointed former Sen. Jon Kyl (R) to replace the late Sen. John McCain (R). Mr. Kyl served as a US Senator from 1995-2013 after originally winning election to the House in 1986. He promises to serve at least to the end of this year, “but probably more.” Mr. Kyl says he will not be a candidate in the 2020 special election.
 
California:  A new Problosky Research poll (8/29-9/2; 900 CA registered voters) finds Sen. Dianne Feinstein (D) leading fellow Democrat Kevin de Leon, a Los Angeles state Senator and former state Senate President, by a tepid 37-29% count. Sen. Feinstein has never been over 50% in any poll, placed first in the state’s jungle primary with only 44%, but retains a huge advantage in campaign resources and personal familiarity.
 
Florida:  The new St. Pete Polls survey (8/29-30; 1,755 FL likely voters via automated response system) finds Sen. Bill Nelson (D) and Gov. Rick Scott (R) in a flat 47-47% tie, as does the latest Quinnipiac University most recent Florida poll (8/30-9/3; 785 FL registered voters). The Q-Poll finds the two candidates tied at 49%, apiece. We can expect this race to poll close all the way to Election Day.
 
Indiana:  NBC/Marist College released their new Indiana survey (8/26-29; 955 IN adults; 816 IN registered voters; 576 IN likely voters) and found a much tighter race than in the last published poll. According to NBC/Marist, Sen. Joe Donnelly (D) holds a 43-41% lead in the registered voter segment, which increases to 44-41% when the small likely voters cell is isolated.

Sen. Donnelly boasts a good job approval rating, however, 46:31% positive to negative. The numbers also tell us that the outside attacks against Republican nominee Mike Braun have taken their toll. His approval rating is a lower 38:31%. President Trump’s job approval in Vice President Pence’s home state is 46:47%.
 
Missouri:  NBC News/Marist College polled the Missouri Senate race (8/25-28; 930 MO adults; 774 MO registered voters), and like all other results we’ve seen in this contest, the ballot test is close. According to these results, Sen. Claire McCaskill (D) leads Attorney General Josh Hawley (R), 44-40-5-3% with the Libertarian and Green Party candidates obtaining the latter two figures. If the contest were only between McCaskill and Hawley, the two candidates would fall into a 47-47% tie. The culmination of data again suggests that this Senate race remains in the toss-up category.
 
Ohio:  The Ohio Senate race has not gotten much national attention, which suits incumbent Sherrod Brown (D) just fine. A new Change Research survey for the liberal Innovation Ohio think tank (8/31-9/4; 822 OH likely voters), however, finds the two-term Democratic incumbent leading US Rep. Jim Renacci (R-Wadsworth) by only a 46-42% clip, much closer than the conventional political wisdom suggests.
 
West Virginia:  Last week, Harper Polling released a survey showing Attorney General Patrick Morrisey (R) closing to within a 47-41% spread. Now, Research America (formerly Repass Research) has released their new survey (8/16-26; 404 WV likely voters from each of the state’s 55 counties) suggesting a slightly different cut, but in the same range as Harper. According to Research America, the Manchin lead is 46-38%.
 
House
 
FL-7:  A St. Pete Polls survey conducted shortly after the Florida primary (8/30; 435 FL-7 likely voters) finds state Rep. Mike Miller (R-Winter Park) trailing freshman Rep. Stephanie Murphy (D-Winter Park) by only a slight 47-46% deficit. The 7th District is politically marginal. Rep. Murphy unseated veteran Rep. John Mica (R) here in 2016, and defends her seat as an incumbent for the first time.

Mr. Miller was first elected to the state House of Representatives in 2014. The Congresswoman is still favored to win this election, but the electorate here is split, so this poll may well be accurate. More data will be needed to obtain a complete picture.
 
MI-6:  A Global Strategy Group poll for the Matt Longjohn (D) campaign (8/24-29; 500 MI-6 likely voters) finds 16-term Rep. Fred Upton (R-St. Joseph) ahead in his current re-election race, but his margin is competitive. According to the GSG survey, Rep. Upton’s advantage is 47-41%. The 6th District is relatively marginal, so this type of spread isn’t especially surprising. In this current 6th District configuration (since 2012, inclusive), Rep. Upton has averaged 57.7% of the vote.
 
MN-2:  In late July, CNN unleashed a series of negative stories about freshman Rep. Jason Lewis (R-Woodbury), recounting many unflattering comments he made while a Minneapolis radio talk show host. According to a mid-August WPA Intelligence survey that was just released, the negative attack hasn’t changed the race a great deal. In 2016, he and Democrat Angie Craig were in toss-up mode throughout the election with Mr. Lewis eventually prevailing 47-45%. The WPA poll (8/18-21; 400 MN-2 likely voters) finds Rep. Lewis leading the re-match with Ms. Craig, 46-45%.
 
MO-2:  The 2nd District of Missouri, heretofore believed to be safe for three-term Rep. Ann Wagner (R-Ballwin/St. Louis County), now is moving into the competitive realm and presumably featuring a highly spirited campaign. According to an Expedition Strategies survey (8/23-26; 402 MO-2 registered voters) Democratic challenger Cort VanOstran has actually taken a 43-41% lead over Rep. Wagner. The Congresswoman has just under $3 million in her campaign account, so she certainly has the resources to reverse this trend.
 
NY-19:  Upstate New York’s 19th District is viewed as a toss-up for this election cycle as freshman Rep. John Faso (R-Kinderhook), a Republican former gubernatorial nominee, defends the seat he first won in 2016. According to a Siena University survey (8/20-26; 501 NY-19 likely voters), Rep. Faso leads attorney Antonio Delgado (D), 45-40%.

The good news for the Congressman is that he looks to possess growth room with Republicans (76% support; Delgado has 81% among Democrats) and those 55 years and older, a polling segment in which the two candidates are tied. There is a major gender gap here, however. Rep. Faso enjoys a 21% advantage among men, but is behind nine points among females.
 
NC-2:  A couple of weeks ago, a story broke in the Raleigh area that North Carolina Congressman George Holding (R-Raleigh) sent a fundraising appeal to his donors indicating that his internal polling found him tracking behind his challenger, former state Rep. Linda Coleman (D), presumably to energize his donor base.

This week, the Coleman Campaign released their own internal Greenberg Quinlan Rosner Research poll (8/23-27; 401 NC-2 likely voters) that seemed to confirm the Congressman’s reported polling numbers. The GQR data posts their candidate to a 45-44% edge over Rep. Holding.
 
Governor
 
Alaska:  The three-way race among Gov. Bill Walker, the nation’s lone Independent state chief executive, former US Senator Mark Begich (D), and ex-state Senator Mike Dunleavy (R) became official early this week. Though Walker supporters, including the state AFL-CIO, have been urging Mr. Begich to drop out of the race seeing that polls are uniformly finding Mr. Dunleavy would win a three-way race, he refused to do so.

The adverse split is occurring because Democrats and left-of-center voters are split between Gov. Walker and Mr. Begich, thus allowing the Republican base to push Mr. Dunleavy toward plurality support. In 2014, Mr. Walker and then-Democratic nominee Byron Mallot unified their ticket (Mallot agreed to run as Lt. Governor), which led to unseating then-Gov. Sean Parnell (R).
 
Florida:  Quinnipiac University immediately went into the field after the Florida primary and found a predictably close budding gubernatorial contest. According to their latest survey (8/30-9/3; 785 FL registered voters), Tallahassee Mayor Andrew Gillum (D) holds a slight 50-47% lead over Rep. Ron DeSantis (R-Palm Coast/Daytona Beach).
 
Kansas:  A Public Policy Polling survey for the Kansas Education Association (8/24-26; 877 KS likely voters) finds Republican Secretary of State Kris Kobach leading state Sen. Laura Kelly (D-Topeka) by a slight 39-38% margin with Independent Greg Orman pulling 9 percent. Mr. Kobach denied Gov. Jeff Colyer (R) re-nomination in early August by just 361 votes, statewide.

 

 
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