All Federal Reserve, all the time
All Federal Reserve, all the time
Fed watchers were busy this week. Chairman Jay Powell appeared before the Senate Banking Committee on Tuesday for a hearing on his nomination to a second term. It was generally cordial, but Senators on both sides of the aisle are alarmed about inflation, and pressed Powell about the Fed’s plans to address rising prices. Powell noted that the Fed’s tools to fight inflation work only on the demand side — that is, reducing the demand for goods by raising interest rates — but said that he still expects much of the supply-side influences to improve once the COVID-19 pandemic ends.
In response to questions from Republican Senators, Powell said that the Fed will release its much-anticipated report on the feasibility of a central bank digital currency (CBDC) within the next few weeks, but it will be more of a request for public comment than a set of policy proposals. Powell agreed with Senator Pat Toomey (R-PA), the Committee’s ranking member, that he saw no reason to create individual CBDC accounts at the Fed for private citizens, as some have suggested. He also said he saw nothing that would preclude private stablecoins from coexisting with a CBDC.
Republicans voiced concern about what they called the Fed’s “mission creep,” a perceived shift in focus from the Fed’s dual mission of price stability and maximum employment toward social issues such as climate change and economic justice. Federal Reserve Board Governor and Vice Chair nominee Lael Brainard faced even sharper questions about this at her confirmation hearing on Thursday, particularly about the Fed’s plans to incorporate climate risk into its stress testing of large banks. Brainard said that the Fed’s supervisory guidance simply asked banks to measure, monitor, and manage their risks, and that what had been described as climate-related stress testing was only a scenario analysis similar to others the Fed asks banks to conduct.
President taps Sarah Bloom Raskin for Fed supervision post
Late yesterday, President Biden announced that he would nominate Sarah Bloom Raskin to be the Federal Reserve Board’s Vice Chair for Supervision, and Lisa Cook and Philip Jefferson to serve as Governors. Sarah Bloom Raskin is a veteran regulator who served as Maryland Commissioner of Financial Regulation before her appointment to the Federal Reserve Board in 2014. She left the Fed to become Deputy Secretary of the Treasury, a position she held until the end of the Obama administration.
Lisa Cook is a Professor of Economics and International Relations at Michigan State University who served on the Council of Economic Advisers under President Obama; she has held visiting appointments at the Federal Reserve Banks of New York, Chicago, Minneapolis, and Philadelphia, and currently serves on the Academic Advisory Council of the Federal Reserve Bank of Chicago. Philip Jefferson currently serves as Vice President for Academic Affairs and Dean of Faculty at Davidson College, where he is also a Professor of Economics. A former economist at the Federal Reserve Board, he chaired the Economics department at Swarthmore College and has also held visiting appointments at the Federal Reserve Bank of New York.
Raskin’s nomination already promises to be controversial. At this week’s Powell and Brainard confirmation hearings, Senator Pat Toomey warned against nominating regulators who would advance political agendas, without mentioning Raskin by name. After yesterday’s announcement, he issued a statement saying explicitly that he had “serious concerns” that Raskin “would abuse the Fed’s narrow statutory mandates on monetary policy and banking supervision to have the central bank actively engaged in capital allocation.”
Congress must act before Fannie and Freddie's conservatorships end, Thompson says
Yesterday’s Senate Banking Committee hearing was also a confirmation hearing for the Federal Housing Finance Agency’s Acting Director Sandra Thompson, who has been nominated to fill that role on a permanent basis. Thompson is an eight-year veteran of FHFA, and was the agency’s Deputy Director for the Division of Mission and Goals before becoming Acting Director last June. Senator Pat Toomey criticized her record since then, saying she had not prioritized ending Fannie Mae and Freddie Mac’s conservatorships, as required by the Housing and Economic Recovery Act of 2008. Thompson said that these conservatorships cannot end until Congress legislates an “end state” for the GSEs, unless Congress wants the GSEs to emerge from conservatorship without any structural changes. She promised to position the GSEs to leave conservatorship as quickly as possible. Senate Banking Committee Chairman Sherrod Brown (D-OH) said that he thought the Committee had been moving toward consensus on housing finance reform before the pandemic, and he wants to resume this work.
Work begins on WRDA 2022
Congress has passed a bipartisan Water Resources Development Act (WRDA) every two years since 2014, and the leadership of the House Transportation Committee made it clear this week that they plan to continue this tradition in 2022. The Subcommittee on Water Resources and Environment heard from the Assistant Secretary of the Army for Civil Works and the Chief of Engineers and Commanding General of the Army Corps of Engineers at a hearing Wednesday on the Administration’s priorities for this year’s bill. They received reports on 14 different projects authorized by previous WRDAs, including coastal storm risk management studies for Monroe County, Pinellas County, and Okaloosa County, Florida. Last year’s Infrastructure Investment and Jobs Act provided $17.1 billion to the Army Corps of Engineers to address its backlog of projects.
What do electric vehicles mean for rural America?
US automakers and dealers are “all in” on the transition to electric vehicles, witnesses told the House Agriculture Committee on Wednesday, and the Committee spent four hours wrestling with the questions of what means for farmers and residents of rural America. Representatives of General Motors, the National Automotive Dealers Association, major energy suppliers, the UAW, and the National Association of Convenience Stores all said they expect a fairly speedy transition to electric vehicles, but urged Congress to set policies for and facilitate the distribution of electricity that will be required for charging these vehicles. Other witnesses argued that while electric vehicles will be a major factor in reducing carbon emissions, internal combustion engines will and should remain part of America’s transportation network. A representative of the Renewable Fuels Association told the panel that its members are well on the way to producing zero-carbon corn ethanol, and an energy expert warned that heightened demand for batteries will further stress global supply chains for critical minerals, making it likely that the price of battery power will rise rather than fall.
Confirmations, Nominations, Departures
Democrat Sheila Cheriflus-McCormick was elected to represent Florida’s 20th congressional district, completing the term of the late Rep. Alcee Hastings (D-FL).
Rep. Trey Hollingsworth (R-IN), who sponsored a Constitutional amendment to limit House members to four terms, announced this week that he will leave Congress when his third term ends in December. He is a member of the House Financial Services Committee.
Rep. John Katko (R-NY) announced that he will not seek a fifth term in office. Katko serves as ranking member of the House Committee on Homeland Security, and has been an active member of the House Committee on Transportation and Infrastructure.
Rep. Ed Perlmutter (D-CO) announced that he will retire from the House at the end of this term, his seventh. A member of the New Democrat Coalition, Perlmutter chairs the House Financial Services Subcommittee on Consumer Protection and Financial Institutions.
Federal Reserve Board Vice Chair Richard Clarida resigned from the Board today. He had served as a Board member and Vice Chair since October 2018.
The Week Ahead
Monday, January 17 is the federal holiday in honor of Dr. Martin Luther King, Jr. The Senate was scheduled to be out of town next week, but Majority Leader Chuck Schumer (D-NY) is keeping them in Washington to work on voting rights legislation. It’s a regular work week for the House.
January 19 at 10:00 a.m. House Committee on Small Business holds a hearing on “The Power, Peril, and Promise of the Creative Economy.”
January 19 at 10:00 a.m. House Financial Services Subcommittee on Oversight & Investigations holds a hearing on “Ensuring Equitable Delivery of Disaster Benefits to Vulnerable Communities and Peoples: An Examination of GAO’s Findings of the CDBG Program.”
January 20 at 10:00 a.m. House Financial Services Subcommittee on Housing, Community Development, and Insurance holds a hearing on “Ending Homelessness:
Addressing Local Challenges in Housing the Most Vulnerable.”
January 20 at 10:30 a.m. House Energy & Commerce Subcommittee on Oversight and Investigations holds a hearing on “Cleaning Up Cryptocurrency: The Energy Impact of Blockchains.”
The Ellis Insight - Jim Ellis on political news
SENATE
New Hampshire: State Senate President Chuck Morse (R-Salem), who is serving his eighth two-year term, announced over the weekend that he will enter the 2022 US Senate race in hopes of opposing first-term Sen. Maggie Hassan (D) in the general election. Londonderry Town Manager Kevin Smith (R) is also expected to enter the Senate race later this week. Already in the GOP contest is 2020 Senate candidate Don Bolduc, a retired US Army general.
North Carolina: Two Tar Heel State Republican primary US Senate polls were released almost simultaneously, with both finding former Gov. Pat McCrory holding the edge over US Rep. Ted Budd (R-Advance). The ex-state chief executive’s advantage is not what one would expect for a well-known party leader before his own partisan electorate, however. The McCrory campaign released their Strategic Partners Solutions survey (1/5; 800 NC likely Republican primary voters) that gives their candidate a 30-21-8% lead over Rep. Budd and former US Rep. Mark Walker.
The Civitas Institute’s latest Cygnal statewide poll (1/7-9; 600 NC likely Republican primary voters) found the McCrory edge to be only 24-19%. Pushing the 48% who said they were undecided for a decision and adding those preferences to the total actually finds Rep. Budd pulling into a small lead, 34-33%, when accounting for those who have “definitely” and “probably” made up their minds.
Ohio: WPA Intelligence (1/3-6; 513 OH likely Republican primary voters; live interview) again finds former state Treasurer and 2012 US Senate nominee Josh Mandel leading the Republican primary field. This time, his advantage is 26-15-14-10% over ex-OH Republican Party chair Jane Timken, businessman Mike Gibbons, and author J.D. Vance.
Another recent poll, from Moore Information for the Timken campaign (1/3; 1,000 OH likely Republican primary voters; interactive voice response system), finds Mr. Mandel leading Ms. Timken by just an 18-16% clip. Both surveys, however, find businessman Gibbons, who ran for the Senate in 2018 and finished second in that year’s Republican primary, moving up to 14% in both polls while author J.D. Vance has lost support, dropping to 10 and 8%, respectively.
South Dakota: South Dakota Sen. John Thune (R), the Senate Minority Whip who had been weighing family considerations in light of seeking a fourth term, announced that he will run for re-election. Sen. Thune was first elected to the Senate in 2004 after serving three terms in the House from his state’s at-large congressional district.
Washington: The statewide Washington Crosscut.Elway poll was released earlier in the week (12/26-28; 400 WA registered voters; live interview and text) and it finds a tightening US Senate race between five-term Senator Patty Murray (D) and Republican Tiffany Smiley, a veterans advocate and motivational speaker. According to the survey, Sen. Murray’s lead has dropped to just 42-39% from a polling sample that rated the economy as the greatest area of concern, the first time in eight years that a Washington cell sample cast the national issue in such a manner.
A previous poll, from Public Policy Polling (11/10-11; 909 WA likely voters; text and online), found the Senator’s advantage to be 50-37%.
Wisconsin: Saying that he wants to ‘continue to fight for freedom in the public realm,’ Wisconsin Sen. Ron Johnson (R) formally announced that he will stand for election to a third term in the Autumn. Sen. Johnson had been coy about his 2022 plans, especially in light of his promise made twelve years ago that he would only serve two terms.
On the Democratic side, Lt. Gov. Mandela Barnes released a new ALG Research poll (12/8-16; 842 WI likely Democratic primary voters; live interview and text) that finds the statewide official posting a big lead for his party nomination. According to the ballot test results, Mr. Barnes would lead Milwaukee Bucks Senior Vice President Alex Lasry, state Treasurer Sarah Godlewski, and Outagamie County Executive Tom Nelson, 40-11-10-8%, respectively.
HOUSE
CA-22: Gov. Gavin Newsom (D) has scheduled a special election to fill the remainder of former Rep. Devin Nunes (R-Tulare) term. The Congressman formally resigned the seat on January 3rd.
The CA-22 special election will be held April 5th, with a June 7th runoff if no one obtains majority support in the initial election. The candidate filing deadline is February 10th. This will be an interesting election in that the winner will likely serve only the balance of this year as redistricting split the current 22nd District into multiple pieces leaving very few viable options for election to a full term in November.
CO-3: State Sen. Don Coram (R-Montrose), who finds himself without a Senate district in which to run on the new redistricting map, announced that he will challenge freshman US Rep. Lauren Boebert (R-Silt) in this year’s Republican primary. Rep. Boebert quickly labeled Sen. Coram as a “super woke social liberal,” to which the latter retorted, “I have no idea what that means.” The Congresswoman will be a clear favorite in the June 28th Republican primary. The Colorado candidate filing deadline is March 15th.
CO-7: Colorado US Rep. Ed Perlmutter (D-Arvada) announced that he will not seek a ninth term in the House later this year. Prior to his election to Congress, Mr. Perlmutter served eight years in the state Senate. He announced his gubernatorial candidacy in the 2018 election cycle, but withdrew before the filing period concluded and instead ran for re-election.
The Colorado Independent Redistricting Commission changed the 7th District in the Republicans’ favor meaning that Mr. Perlmutter, still favored to retain his seat, would have seen a much more competitive general election in addition to representing much more rural territory toward the Centennial State’s central region. The open 7th District will begin with a Lean Democratic rating, but an open race could evolve into a highly competitive political situation.
FL-20: Democrat Sheila Cherfilus-McCormick, as expected, easily defeated Republican Jason Mariner last night in a district that gave President Biden a 77-22% majority in 2020. Ms. Cherfilus-McCormick scored a 79-20% victory with more than 55,000 people voting and she will now serve the balance of the late Rep. Alcee Hastings’ (D-Delray Beach) final term.
Winning the special Democratic primary over Broward County Commissioner Dale Holness by just five votes, Rep-Elect Cherfilus-McCormick can expect a highly competitive Democratic primary challenge from Mr. Holness who has already said he will challenge the new incumbent in the regular 2022 primary election. This Florida Democratic win brings the party to their full compliment of 222 House members. Republicans, due to former Rep. Devin Nunes’ (R-CA) resignation, recede to 212.
FL-28: Retired US Rep. Dennis Ross (R-Lakeland), who chose not to seek re-election in 2018 after serving four terms, confirms that he is considering launching a political comeback if the state’s new 28th District is placed in central Florida as expected. Florida may be the final state to complete redistricting.
The state’s population growth pattern and the preliminary released congressional draft maps clearly suggest that the new district will land in former Rep. Ross’ area. We can expect the seat to at least lean Republican, thus yielding a crowded GOP primary. The Florida candidate filing deadline is not until June 17th for the August 23rd statewide primary.
IN-9: Indiana US Rep. Trey Hollingsworth (R-Jeffersonville), who originally limited himself to serving four terms, will leave the House after three. Mr. Hollingsworth, first elected in 2016 after moving to Indiana from Tennessee, announced yesterday that he will not seek re-election.
He becomes the 12th Republican to retire in this election cycle in addition to California Rep. Devin Nunes (R-Tulare) resigning. Overall, the Hoosier State seat is the 46th open House district nationally when tabulating retiring Democratic and Republican incumbents, reapportionment transfer seats, and those created through the various redistricting processes. The southeastern Indiana 9th District is rated as safe Republican.
North Carolina Redistricting: The special three-judge panel considering the North Carolina redistricting challenge unanimously rejected the plaintiffs’ argument that the congressional and state legislative maps are politically gerrymandered. The panel was comprised of two Republican judges and one Democrat.
With the plaintiffs pledging to appeal the ruling to the state Supreme Court, we can expect the legal maneuverings to continue. The seven-member Supreme Court will have several of its members facing recusal motions because of their ties to the plaintiffs or state legislative leaders, thus making the future proceedings more intriguing. The court also installed a March 4th candidate filing deadline for the delayed May 17th statewide primary.
OH-9: Ohio redistricting was not kind to veteran Rep. Marcy Kaptur (D-Toledo), as her western state 9th District western moves from a 59-40% Biden CD to one that Donald Trump carried 51-47%. The partisan swing is largely due to the removal of the Cleveland precincts from the district.
During the week, state Rep. Craig Riedel (R-Defiance) announced that he will enter the expanding Republican primary field that already includes state Sen. Theresa Gavarone (R-Bowling Green), attorney and former Miss Ohio Madison Gesiotto Gilbert, and Afghan War veteran J.R. Majewski. Candidate filing closes February 2nd for the May 3rd primary election.
WV-2: Rep. Alex Mooney (R-Charles Town) just released his internal Public Opinion Strategies poll (1/4-6; 400 likely WV Republican primary voters; live interview) that counters a previously publicized National Research survey. The POS data finds Rep. Mooney leading fellow Rep. David McKinley (R-Wheeling), 45-32%, in their paired incumbent Republican primary battle for the state’s new 2nd District that covers central West Virginia all the way to Pennsylvania.
Late this week, Rep. McKinley released his own mid-December internal survey that paints a different picture. The McKinley poll, from Meeting Street Insights (12/13-15; 400 WV-2 likely Republican primary voters; live interview) shows a 40-34% lead for their client.
Even this latter data, however, shows movement for Rep. Mooney. In October, a National Research survey found the McKinley advantage to be 44-29%.
GOVERNOR
Michigan: The Glengariff Group, polling for the Detroit News and WDIV Channel 4 News (1/3-7; 600 MI voters; live interview), finds Gov. Gretchen Whitmer (D) posting strong leads against all potential Republican challengers. The individual coming closest is former Detroit Police Chief James Craig (R), who trails the Governor 49-39% on the ballot test question. Governor Whitmer recorded a 48:40% personal favorability rating.
Mr. Craig’s polling, however, shows something different. According to his new internal ARW Strategies study (1/4-6; 800 MI likely general election voters), Mr. Craig and Gov. Whitmer are tied at 46%. Polling margin of error could account for the discrepancy. It is expected that this will be a hotly contested national gubernatorial campaign.
STATES
Ohio: The Ohio State Supreme Court, on a divided 4-3 vote with the Republican Chief Justice voting with the three Democratic members, invalidated the Ohio Redistricting Commission’s state House and Senate maps for reasons of political gerrymandering.
The Commission comprises elected officials whose produced maps require the Ohio legislature’s approval, but now must redraw the map with greater attention to statewide voter history percentages. The Court took no action on the new congressional map, but that challenge remains alive.