Capital rules, merger analysis, stablecoins, and climate risk top Barr’s concerns

. . . And we’re back.
Greetings from a quiet Washington, DC, where flags are flying at half-staff for the late Queen Elizabeth II of England. Dwight D. Eisenhower was President when Queen Elizabeth was coronated; her reign comprised the service of fifteen prime ministers, beginning with Winston Churchill and ending with Liz Truss, who took office just this week. She saw history, and she was history.

Capital rules, merger analysis, stablecoins, and climate risk top Barr’s concerns
Michael S. Barr, Vice Chair of the Federal Reserve Board, gave his first major policy speech this week at the Brookings Institution and laid out his priorities for “making the financial system safer and fairer.” Capital standards were fundamental to safety and soundness, he said, and needed to evolve in response to new risks, with tiering to reflect the differences in systemic importance. Barr said he was asking Fed staff to look “holistically at our capital tools,” which will help them consider adjustments to the supplementary leverage ratio, countercyclical capital buffers, and stress testing. Barr is also looking at the Fed’s policies for reviewing bank mergers, to see “where we can do better” in balancing a merger’s effects on competition and access to financial services. He called on Congress to pass legislation to create a regulatory framework for stablecoins, and said that the Fed would be working with the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) to provide guidance to large banks on measuring, monitoring, and managing risks related to climate change.

Crypto investors need disclosures, says Gensler
In a speech for the Practicing Law Institute yesterday, Securities and Exchange Commission Chair Gary Gensler reiterated the agency’s positions that “the vast majority” of crypto tokens are securities, and are therefore subject to disclosure requirements and registration “where appropriate.” Therefore, Gensler said, “many crypto intermediaries are transacting in securities and have to register with the SEC in some capacity.” They meet the regulatory criteria for being an exchange, serve as brokers, and often provide lending functions for a return. “If you fall into any of these buckets, come in, talk to us, and register.” The SEC announced today that it is establishing a separate Office of Crypto Assets within its Division of Corporation Finance’s Disclosure Review Program, along with an Office of Industrial Applications and Services that will govern disclosures by non-pharma, non-biotech, and non-medicinal product companies currently assigned to the Office of Life Sciences.

House Oversight panel hears testimony on postal delivery problems
Although the US Postal Service has been critically important to Americans during the COVID-19 pandemic, mail theft is spiking and service standards have dropped, witnesses told the House Oversight Subcommittee on Government Operations at a hearing in Philadelphia on Wednesday. Workforce shortages are one part of the problem; a USPS District Manager described the Postal Service’s “aggressive” hiring efforts, which include more than 20 regional job fairs a month. The president of the Postal Police Officers Association, however, told the Subcommittee that the Postal Inspection Service had begun to “defund” the uniformed Postal Police Force, and an Assistant Inspector General reported failures to keep “arrow keys,” used to open blue collection boxes, secure. Subcommittee Chair Gerry Connolly (D-VA) said that given recent “once-in-a-generation legislation” to put the US Postal Service on a secure financial footing, it was incumbent upon Congress to “make sure Postal Service leadership is prepared and poised to take the reins.”

DOT opens applications for rail project grants
Last week the Department of Transportation published its Notice of Funding Opportunity (NOFO) for the Consolidated Rail Infrastructure and Safety Improvements (CRISI) Program, intended to expand and improve intercity freight and passenger rail. Under the bipartisan infrastructure law, more than $1.4 billion in funding is available for these projects, with applications due by December 1. DOT is conducting a webinar next Thursday to discuss best practices for funding applications, and provide information about how DOT evaluates these applications.

The Week Ahead

September 13 at 10:00 a.m. Senate Committee on Banking, Housing, and Urban Affairs holds a hearing on “New Consumer Financial Products and the Impacts to Workers.”

September 14 at 10:00 a.m. House Committee on Financial Services holds a hearing on “When Banks Leave: The Impacts of De-Risking on the Caribbean and Strategies for Ensuring Financial Access.”

September 14 at 10:00 a.m. Senate Committee on the Environment and Public Works holds a hearing on the nomination of Shailen P. Bhatt to be Administrator of the Federal Highway Administration.

September 14 at 3:30 p.m. Senate Judiciary Subcommittee on Privacy, Technology, and the Law holds a hearing on “Protecting Americans’ Private Information from Hostile Foreign Powers.”

September 15 at 10:00 a.m. Senate Banking Committee holds a hearing on oversight of the US Securities & Exchange Commission. SEC Chair Gary Gensler will be the only witness.

The Ellis Insight - Jim Ellis on political news

PRIMARY RESULTS

Massachusetts: Voters in the Bay State of Massachusetts went to the polls to choose nominees this week but, for the most part, they stared at a ballot filled with unopposed candidates.

In the Governor’s race, Attorney General Maura Healey was virtually unopposed in the Democratic primary. She captured 85.5% of the vote opposite state Sen. Sonia Chang-Diaz (D-Boston) who had previously withdrawn from the statewide race. On the Republican side, former state Representative and 2018 GOP US Senate nominee Geoff Diehl claimed the party’s gubernatorial nomination with just under 56% of the vote. Ms. Healey now becomes the prohibitive favorite to succeed retiring Republican Gov. Charlie Baker who chose not to seek a third term in office.

All nine Democratic US House incumbents were unopposed or renomination, and each is a heavy favorite to win the succeeding general election. On the turnout front, it appears that by an almost 2:1 ratio, more Democrats participated in yesterday’s election than did Republicans.

SENATE

North Carolina: Public Policy Polling released their new North Carolina survey (8/29-30; 601 NC voters) and consistent with all of the research studies we’ve seen here since July, the results are within the polling margin of error. In this particular survey, PPP finds former state Supreme Court Chief Justice Cheri Beasley (D) edging US Rep. Ted Budd (R-Advance), 42-41%. There does appear to be a slight Democratic skew here. With the party polarization breaking virtually evenly, and Mr. Budd having a slight advantage within the Independent sector, one would surmise that he would have a small lead.

Since mid to late July, four NC Senate polls have been released. All show the margins within 0 to 4 points, with Ms. Beasley leading in three of the four. This is typical for North Carolina polling. Since there is also a general undercount of the Republican vote in typical Tar Heel State surveys, it is reasonable to believe that Mr. Budd may have the slight edge. It is clear, however, that we are headed for yet another tight finish in a North Carolina statewide race.

Washington: After a strong showing in the Washington jungle primary on August 2nd when Sen. Patty Murray (D) placed first with a 52-34% spread over veterans’ advocate and former nurse Tiffany Smiley (R), a new Trafalgar Group survey finds a surprisingly close general election count. The Trafalgar survey (8/30-9/1; 1,087 WA likely general election voters; multiple sampling techniques) yields a ballot test with a Murray advantage of only 49-46%, the closest result we have seen since the primary.

The previous post primary survey came from McLaughlin & Associates, like Trafalgar, a Republican pollster (8/15-17; 500 WA general election likely voters; live interview & text). This ballot test featured a similar, but slightly stronger margin for Sen. Murray. The result broke 49-43%, just beyond the polling margin of error. A succeeding poll, from Public Policy Polling (9/6; -7; 620 WA voters; live interview & text) sees a different political landscape. The PPP results project Sen. Murray to a 48-39% advantage.

The McLaughlin poll found the respondents believing the country is on the wrong track by a major 24:68% margin, but President Biden’s favorability index was 48:51% favorable to unfavorable, one of his better marks in the country. Sen. Murray remains the favorite in this election.

HOUSE

FL-15: While the open seat in the Hillsborough-Polk Counties region carries the number 15, it is actually the new 28th district that the state was awarded in reapportionment. The seat rates a R+7 classification from the FiveThirtyEight data organization, while the Dave’s Redistricting App statisticians calculate the partisan lean as 51.2R – 46.6D. Therefore, the GOP candidate should have a slight edge in the general election campaign.

Democratic pollster GQR Research conducted a survey of the new 15th CD (8/24-29; 400 FL-15 likely general election voters; live interview) and finds a polling result consistent with the aforementioned statistical projections. The GQR ballot test gives Republican former Florida Secretary of State Laurel Lee a 47-44% edge over former television newscaster and two-time congressional nominee Alan Cohn (D).

NH-1: The University of New Hampshire released their latest Granite State Poll (8/25-29; 1,993 NH online panel members; 419 NH-1 likely Republican primary voters; online) and, like the Remington Research Group survey concluded eight days earlier, sees a dead heat in the 1st Congressional District’s Republican primary. The UNH survey finds 2020 congressional nominee Matt Mowers holding a slight 26-24% edge over former Trump White House aide Karoline Leavitt with former news reporter Gail Huff Brown, the wife of ex-Sen. Scott Brown (R-MA), trailing at 16%.

The Remington ballot test (8/14-17; 462 NH-1 likely voters; live interview & text) saw a 21-21% tie between Mr. Mowers and Ms. Leavitt with Ms. Brown attracting just 9% support. Clearly, the September 13th primary will feature a very close finish. The winner will then immediately move into a competitive race with second-term Rep. Chris Pappas (D-Manchester) in a district that has defeated more incumbents than any other seat in the nation since 2004.

NH-2: The University of New Hampshire’s Granite State Poll also tested the competitive western NH 2nd District (8/25-29; 1,993 NH online panel members; 469 NH-2 likely Republican primary voters; online) and projects that former Hillsborough County Treasurer Robert Burns holds a 32-18% advantage over Keene Mayor George Hansel. The winner will then advance into a competitive race against five-term Rep. Annie Kuster (D-Hopkinton/Concord) in November.

NY-10: State Assemblywoman Yuh Line-Nioh (D-Manhattan) placed second to winner Dan Goldman in the hotly contested open Democratic primary for the new 10th District in the June 28th election, but she did claim the ballot line for the Working Families Party. This means she could have advanced into the general election under that party banner. Late this week, however, the Assemblywoman announced she would not pursue a third party bid, thus virtually guaranteeing Mr. Goldman the November election.

In this crowded Democratic primary, both Mr. Goldman and Ms. Line-Nioh finished ahead of US Rep. Mondaire Jones (D-Westchester County), who decided to seek re-election in this district instead of the Upstate 17th or 18th.

NC-13: The new North Carolina 13th Congressional District has something for everyone. The city of Fayetteville and south Raleigh suburbs tend to vote more liberal, while Johnston County’s conservatives neutralize those votes, thus making the district basically even from a partisan perspective. Therefore, it’s not surprising to see polling go back and forth.

Previously, we reported on two August polls, one from RMG Research and the other from Public Policy Polling, and now we see another new survey from the Democratic firm Global Strategy Group (8/29-9/1; 500 NC-13 likely general election voters; live interview). RMG found Republican Bo Hines leading 44-39%; PPP saw Hines and state Sen. Wiley Nickel (D-Raleigh) tied at 40-40%; GSG now posts Mr. Nickel to a 44-40% edge. Obviously, this is a toss-up campaign.

OR-5: When centrist Rep. Kurt Schrader (D-Canby) lost his Democratic primary election to attorney and former California local elected official Jamie McLeod-Skinner, the race in the competitive new 5th District took a major turn. A recently released survey from Republican pollster Clout Research (8/15-18; 410 OR-5 likely general election voters; live interview) finds businesswoman and local former Mayor Lori Chavez-DeRemer (R) opening up a significant lead over Ms. McLeod-Skinner, with a 44-34% spread.

The only other poll released here, one from the Democratic firm Public Policy Polling in early June, also found Ms. DeRemer with an edge, but only one-point, 42-41%. With the available information, it appears that Republicans could well be positioned to see a future upset victory here in November.

OR-6: Another surprising Oregon Clout Research poll (8/14-19; 409 OR-6 likely general election voters; live interview) finds Republican Mike Erickson posting a lead over state Rep. Andrea Salinas (D-Lake Oswego). Though this district is considerably more Democratic than the neighboring 5th CD, D+7 according to the FiveThirtyEight data organization, Mr. Erickson holds a 43-34% advantage over Ms. Salinas according to the Clout results.

Predictably, the Democrats quickly countered with their own survey, but this data is even older than the Clout poll. During the August 10-14 period, GBAO Research conducted a live interview survey of 500 OR-6 likely voters. They, however, only posted Ms. Salinas to a rather unimpressive 48-45% count. The region’s aforementioned Democratic vote history would suggest a bigger margin, which is likely why the Democrats did not release this poll until they needed to respond.

WA-3: When Rep. Jaime Herrera Beutler (R-Battle Ground/Vancouver) failed to qualify for the general election, it appeared that the 3rd District general election contest would become more competitive. A new Democratic Expedition Strategies survey (8/25-30; 400 WA-3 likely general election voters; live interview) sees Democratic finalist Marie Glusenkamp Perez coaxing a 47-45% slight lead over Republican finalist Joe Kent.

The latter man carried an early Donald Trump endorsement to propel him over Rep. Beutler who was one of the ten House Republicans to vote for the former President’s impeachment. Ms. Perez, originally not expected to be a finalist or a strong candidate, now finds herself in a highly competitive position.

GOVERNOR

Minnesota: While early polling suggested a close race between first-term Gov. Tim Walz (D) and former state Sen. Scott Jensen (R), a new survey finds the incumbent pulling away and now possessing a large lead. The Survey USA poll (8/30-9/4; 562 MN likely general election voters) projects Gov. Walz to be currently holding a 51-33% advantage.

New York: Republican firms, The Trafalgar Group and Insider Advantage, teamed to produce a New York gubernatorial survey (8/31-9/1; 1,019 NY likely general election voters; multiple sampling techniques). Their ballot test yielded Gov. Kathy Hochul (D) and US Rep. Lee Zeldin’s (R) closest result to date. The Trafalgar/IA responses posted the Governor to a 48-43% edge. The most recent previous poll, from Survey USA (8/17-21; 1,200 NY adults; 1,046 registered voters; 715 likely NY Governor election voters; online) found a 51-33% spread in Gov. Hochul’s favor.

Wisconsin: While the Minnesota Governor’s race is becoming definitive, the neighboring Wisconsin battle appears to be getting even closer. For the second time, a polling firm found Gov. Tony Evers (D) and businessman Tim Michels (R) to be deadlocked in a flat tie.

The Trafalgar Group (8/22-25; 1,091 WI general election voters; multiple sampling techniques) projects the two candidates each pulling a 48% support factor in the contest’s most recently released survey. This result is identical to the previously reported OnMessage firm’s data derived during the same polling period (8/22-24; 600 WI likely general election voters; live interview).

STATES

Michigan: At literally the last minute to make a ballot-related decision, the Michigan state Supreme Court overruled the State Board of Elections that previously disqualified an abortion rights ballot proposition and one dealing with the elections code. The BoE struck both because they did not meet technical requirements. Both initiatives are believed to be key Democratic assets to spur the party’s base turnout.