Federal banking agencies propose new Community Reinvestment Act rules
The Federal Deposit Insurance Corporation (FDIC), Federal Reserve Board, and Office of the Comptroller of the Currency (OCC) jointly released a much-anticipated proposal for changes to the implementation of the Community Reinvestment Act (CRA) yesterday. The proposal is 679 pages long, and comments are due to the agencies by August 5. Among other provisions, the proposal:
emphasizes smaller-value loans and investments that can have high impact in low- and moderate-income communities
updates CRA assessment areas to include activities associated with online and mobile banking
adopts a metrics-based approach to evaluations of retail lending and community development financing
recognizes differences in bank size and business models, and would tailor evaluations appropriately
unifies the approach of the federal regulatory agencies
The Office of the Comptroller of the Currency had adopted its own new CRA rule in 2020 without the participation of the FDIC or Federal Reserve Board, but rescinded that rule last December. Acting Comptroller Michael J. Hsu said that yesterday’s proposal “brings the three federal banking agencies back together and holds the promise of expanding access to credit for LMI communities.”
Infrastructure repair, fuel efficiency, passenger rail, and port modernization top DOT agenda
Secretary of Transportation Pete Buttigieg appeared before the Senate Committee on Commerce, Science, and Transportation on Tuesday to discuss the Administration’s FY 2023 budget request, which represents a 60 percent increase over the last Trump administration budget. The larger amount reflects the Department’s mandates under the Infrastructure Improvements and Jobs Act (IJIA); advance appropriations under the infrastructure law account for $36.8 billion of the agency’s total $142 billion request. Buttigieg said the agency’s priorities included funding to “address the crisis of deaths on America’s roadways,” and rebuild centuries-old infrastructure through RAISE discretionary grants and the Mega Grant Program; implementing aggressive new fuel efficiency standards; investing $17.9 billion on intercity passenger rail service; and investing more than $5.1 billion in supply chain improvements including port modernization, upgrades to freight-bearing roadways, and CRISI grants for freight rail. Republicans warned Buttigieg against imposing environmental restrictions on infrastructure projects that were not include in the IIJA.
Durbin urges limits to fees on credit card transactions
Twelve years after his legislation restricted fees on debit card transactions, Senate Judiciary Committee Chairman Dick Durbin (D-IL) said he believed similar restrictions should apply to credit card transactions as well. The Committee discussed the issue at a well-attended hearing on Wednesday, where representatives of the retail industry said that network rules such as “honor all cards” were as burdensome as rising interchange fees. Representatives of Visa and Mastercard said they had actually reduced fees for essential sectors of the economy during the pandemic, and face increasing competitive pressures and cybersecurity risks. Durbin acknowledged that “big banks hate the Durbin amendment like the devil hates holy water.” Ranking member Senator Charles Grassley (R-IA) said that the issue had “passionate voices on both sides.” Senator Thom Tillis (R-NC), a Committee member who is also ranking member of the Senate Banking Subcommittee on Financial Institutions and Consumer Protection, said he thought the Senate Banking Committee should look at this issue as well.
Industry is moving away from overdraft fees, witnesses tell Senate panel
The Senate Banking Subcommittee on Financial Institutions and Consumer Protection had its own hearing on bank overdraft fees on Wednesday afternoon. Subcommittee Chairman Raphael Warnock (D-GA) cited a December 2021 report from the Consumer Financial Protection Bureau that found some banks to be “deeply dependent” on revenue from overdraft fees, while Senator Thom Tillis (R-NC), the Subcommittee’s ranking member, said that competition and innovation had reduced or eliminated these fees for many bank customers. Brookings Institution Fellow Aaron Klein said that time was an essential element of reducing bank overdrafts, and movement to a real-time payment system would substantially reduce the number of overdrafts.
Fed releases plan for reducing its balance sheet
Besides announcing the expected 50-basis point increase in interest rates on Wednesday, the Federal Open Market Committee said that it would begin to reduce its holdings of Treasury securities, agency debt, and agency mortgage-backed securities on June 1. Federal Reserve Board Chairman Jerome Powell had said earlier this year that the Federal Reserve would do this, and emphasized the gradual nature of the reductions. “To ensure a smooth transition, the Committee intends to slow and then stop the decline in the size of the balance sheet when reserve balances are somewhat above the level it judges to be consistent with ample reserves,” the Board’s statement said.
Confirmations, Nominations, Departures
Rep. Antonio Delgado (D-NY) will resign his seat in the House to accept New York Governor Kathy Hochul’s appointment as the state’s Lieutenant Governor. Delgado currently chairs the House Agriculture Subcommittee on Commodity Exchanges, Energy, and Credit, and serves on the Committees on Small Business and Transportation & Infrastructure.
The Senate confirmed the nominations of Elizabeth de León Bhargava to be Assistant Secretary of Housing and Urban Development for Administration and Joshua Frost to be Assistant Secretary of the Treasury for Financial Markets.
The Week Ahead
May 10 at 10:00 am Senate Committee on Banking, Housing, and Urban Affairs receives the annual report of the Financial Stability Oversight Council from Secretary of the Treasury Janet Yellen.
May 10 at 1:00 pm House Appropriations Subcommittee on Transportation, and Housing and Urban Development, and Related Agencies hears testimony from Secretary of Transportation Pete Buttigieg on the President’s FY 2023 budget request.
May 11 at 10:00 am House Appropriations Subcommittee on Transportation, and Housing and Urban Development, and Related Agencies hears testimony from Secretary of Housing and Urban Development Marcia L. Fudge on the President’s FY 2023 budget request.
May 11 at 10:00 am House Financial Services Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets holds a hearing on “A Notch Above? Examining the Bond Rating Industry.”
May 11 at 10:00 am House Science, Space, & Technology Subcommittees on Investigations & Oversight and Research & Technology hold a joint hearing on “Securing the Digital Commons: Open Sourceware Cybersecurity.”
May 11 at 12:00 pm House Committee on Economic Disparity & Fairness in Growth holds a hearing on “Targeted Policies to Expand Local Economic Opportunities for Underserved Communities.”
May 12 at 9:30 am Senate Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies hears testimony from Secretary of Housing and Urban Development Marcia L. Fudge on the President’s FY 2023 budget request.
May 12 at 10:00 am Senate Committee on Banking, Housing, and Urban Affairs holds a hearing on “Addressing Climate Change with Energy-Efficient and Resilient Housing.”
May 12 at 10:00 am House Committee on Financial Services receives the annual report of the Financial Stability Oversight Council from Secretary of the Treasury Janet Yellen.
May 12 at 10:00 am House Committee on Agriculture holds a hearing on “Changing Market Roles: The FTX Proposal and Trends in New Clearinghouse Models.”
May 13 at 9:00 am House Financial Services Task Force on Artificial Intelligence holds a hearing on “Keeping Up with the Codes — Using AI for Regtech.”
The Ellis Insight - Jim Ellis on political news
PRIMARIES - MAY 3 RESULTS
Indiana: The Hoosier State battle in Indiana’s southeastern corner to succeed retiring Rep. Trey Hollingsworth (R-Jeffersonville) ended as many predicted. There, resigned state Sen. Erin Houchin, a former congressional aide to ex-Sen. Dan Coats (R-IN), won the Republican primary, defeating former Congressman Mike Sodrel and Bronze Star medal winner Stu Barnes-Israel, 37-26-21%.
Ms. Houchin now becomes the prohibitive favorite in the open 9th District general election. She will face educator Matthew Fyfe, who won the Democratic primary but raised and spent less than $50,000 for his primary campaign.
In the northwestern 1st District, US Air Force Reserve Lt. Colonel Jennifer-Ruth Green easily defeated former La Porte Mayor Blair Milo, 47-22%, to capture the Republican nomination. She advances to face freshman Rep. Frank Mrvan (D-Highland/Gary) who is on the ballot for a second term. The Congressman was renominated in an 86% landslide.
Ohio: Best-selling author J.D. Vance, armed with an endorsement from former President Donald Trump, won the open Ohio US Senate Republican nomination last night with a 32-24-23% victory over former state Treasurer Josh Mandel and state Sen. Matt Dolan (R-Chagrin Falls). Businessman Mike Gibbons, who spent almost $17 million of his own money on the race, finished fourth with 12%, ahead of ex-Ohio Republican Party chair Jane Timken who posted only 6% support.
For the Democrats, as expected, US Rep. Tim Ryan (D-Warren/ Youngstown) was an easy winner, capturing 70% of the Democratic vote from a turnout that was significantly lower than the party performance in the most recent 2018 midterm election. Thus, Messrs. Vance and Ryan now advance into what should be a competitive general election.
Incumbent Gov. Mike DeWine successfully won re-nomination for a second term, but with only 48% support. Had the anti-DeWine voters coalesced behind one candidate, it is now apparent that such an individual may have denied the Governor a primary victory. Former US Congressman Jim Renacci scored 28% of the vote and farmer Joe Blystone posted 22%.
For the Democrats, Dayton Mayor Nan Whaley easily defeated former Cincinnati Mayor John Cranley with 65% of the vote. Ms. Whaley carried all but eight of the state’s 88 counties, including nipping Mr. Cranley in his home county of Hamilton. Whether Mayor Whaley can force Gov. DeWine into a tight November contest remains unclear, but she exhibited strength within her party while the Governor’s performance among Republicans was disappointing.
Primary turnout can often be a harbinger of what happens in a general election. In the Buckeye State, Republicans claimed the turnout war in impressive fashion even when considering the Democratic contests were not particularly competitive. Compared to the 2018 midterm election, Republican turnout was up 28%, with over 1 million voting. Conversely, Democratic participation was down 26% from their last midterm with an aggregate turnout total of just over 510,000 voters, literally half of the GOP figure.
SENATE
North Carolina: A pair of new polls, one of which conducted for the North Carolina Chamber of Commerce, echo the findings of all other surveys released since March 22. That is, Rep. Ted Budd (R-Advance) is topping former Gov. Pat McCrory, US Rep. Mark Walker, and author Marjorie Eastman.
In the NC Chamber poll, conducted through Atlantic Polling Strategies (4/25-28; released 5/4; 534 NC likely Republican primary voters; live interview and online), Rep. Budd is holding a 45-21-9-3% advantage. Meredith College (5/25-27; 1,225 adults; 588 NC likely Republican primary voters; online) posts the Budd margin at 33-26-7-3% in the same order as above. The North Carolina primary is May 17. Rep. Budd has now led in eight consecutive polls.
Pennsylvania: Lancaster, Pennsylvania’s Franklin & Marshall College, featuring a frequent Keystone State polling entity, released their pre-primary data as a prelude to the May 17 statewide primary.
For the Democrats, the survey (4/20-5/1; 792 PA registered; 357 Democrats, 325 Republicans, and 110 independents; live interview and online) projects Lt. Gov. John Fetterman to a strong lead, 53-14-4%, over US Rep. Conor Lamb (D-Pittsburgh) and state Rep. Malcolm Kenyatta (D-Philadelphia) according to this survey.
The Republican side continues close with no candidate breaking away from the pack. The F&M results see Dr. Mehmet Oz barely leading the group with 18%, just two points ahead of former hedge fund CEO David McCormick. Trump campaign activist and 2020 congressional candidate Kathy Barnette follows with 12%, while former US Ambassador Carla Sands, and 2018 Lt. Governor nominee Jeff Bartos are well back with just 5 and 2% support, respectively.
HOUSE
NY-19: Gov. Kathy Hochul (D) this week chose US Rep. Antonio Delgado (D-Rhinebeck) as her new Lt. Governor. Mr. Delgado replaces her first choice, Lt. Gov. Brian Benjamin (D), who was indicted for bribery and forced to resign. The selection of Rep. Delgado is an interesting one in that the appointment creates another vacancy in the US House and forces an additional special election. Currently, five House seats are vacant for various reasons.
OH-7: Trump White House aide Max Miller (R), armed with the former President’s endorsement, easily won the Republican nomination since incumbent Rep. Bob Gibbs (R-Lakeville) surprisingly decided to retire after filing for re-election. Mr. Miller now becomes the heavy favorite to capture the R+14 open seat in the general election.
OH-9: In the Toledo anchored 9th District, Iraq War veteran and Trump campaign activist J.R. Majewski (R) claimed the Republican nomination in Tuesday’s election, defeating both state Rep. Craig Riedel (R-Defiance) and state Sen. Theresa Gavarone (R-Bowling Green). Mr. Majewski now advances into the general election against the Democratic US House member who has served longer than anyone in her party. Rep. Marcy Kaptur (D-Toledo) was first elected in 1982. The new 9th CD that carries a R+6 rating.
OH-11: The Cleveland area hosted the most competitive Democratic congressional primary on Tuesday. Freshman Rep. Shontel Brown (D-Warrensville Heights/Cleveland) easily turned back former state Senator and 2020 Bernie Sanders for President campaign national co-chair Nina Turner by a landslide 66-34% margin. The two ran against each other in the 2021 special election that first elected Rep. Brown.
OH-13: Staying in the northern Ohio region, the new open 13th District that looks to be playing as an even political domain will feature a battle between state Rep. Emilia Sykes (D-Akron), who was unopposed in the Democratic primary, and TV commentator and former Miss Ohio in the USA beauty pageant, Michelle Gesiotto Gilbert. The latter woman captured the party nomination against six Republican opponents as another Trump endorsed Ohio candidate. The Sykes-Gilbert contest begins as a toss-up general election campaign.
REDISTRICTING
New York: Steuben County Surrogate Court Judge Patrick McAllister, who first declared the New York congressional and state Senate maps illegal in reference to the New York constitution, now has the responsibility of drawing the new plans. He has appointed Dr. Jonathan Cervas of the Institute of Politics and Strategy at Carnegie Mellon University as the special master who will prepare the maps for judicial review. He was given a May 16 deadline to submit the plans, and the court has set May 20 as the date to finalize maps for the 2020 election cycle.
Additionally, the judge moved the date of at least the congressional and state Senate primary from June 28 to August 23. The legislature now has the opportunity of moving the races not affected by the congressional and state Senate redistricting maps to join those now scheduled for August 23. If the legislators take no action, New York will have two primary dates this year.
GOVERNOR
Florida: A new St. Pete Polls survey (5/2-3; 1,859 FL likely Democratic primary voters; online) projects that US Congressman and former Governor Charlie Crist holds a dominating lead in the Democratic primary. The ballot test result finds Mr. Crist capturing 52% of the Democratic preference vote, way ahead of state Agriculture Commissioner Nikki Fried’s 19% and state Senator Annette Taddeo’s (D-Miami) 5% support.
Georgia: Survey USA largely confirms the University of Georgia poll that found Gov. Brian Kemp (R) establishing a firm lead in his battle against former US Senator Davide Perdue who former President Donald Trump endorses.
The S-USA poll (4/22-27; 2,000 GA adults; 1,587 GA registered voters; 559 GA likely Republican primary voters; online) posts Gov. Kemp to a strong 56-31% advantage, suggesting that he would win the Republican nomination outright on May 24. Should all candidates be held under the majority mark, the top two would advance to a July 26 runoff election. The general election ballot test gave Gov. Kemp a 50-45% edge over former state House Minority Leader and 2018 gubernatorial nominee Stacey Abrams (D).
Hawaii: Former Honolulu Mayor Kirk Caldwell (D) announced yesterday that he is folding his gubernatorial campaign and will not submit documents at the June 7 candidate filing deadline. The Hawaii primary is August 13. Mr. Caldwell sites lack of fundraising and organizational support for his decision to leave the race.
Lt. Gov. Josh Green, US Rep. Kai Kahele (D-Hilo), and former First Lady Vicky Cayetano are the leading Democratic candidates. Republicans have 13 announced candidates, but the Democratic nomination will be tantamount to election in November. Gov. David Ige (D) is ineligible to seek a third term.
New York: A new Emerson College poll (5/1-3; 1,000 NY likely voters; 444 NY likely Democratic primary voters; combination interactive voice response system, text, and online) sees Gov. Kathy Hochul leading her Democratic primary opponents, Rep. Tom Suozzi (D-Glen Cove) and NYC Public Advocate Jumaane Williams, by a 45-12-7% count.
More interesting, however, is the general election survey that includes former Gov. Andrew Cuomo running as an Independent. In this scenario, 33% would support a generic Democratic candidate, 33% a generic Republican candidate, while 16% would vote for Cuomo. There is no indication that the resigned Governor will enter the race.
Pennsylvania: The above mentioned Franklin & Marshall College also released their pre-primary data for the Governor’s race. The results find state Sen. Doug Mastriano (R-Fayetteville), a retired Army Colonel, now leading the large group of Republican contenders with 20%, as ex-US Attorney Bill McSwain, and former US Rep. Lou Barletta follow with 13 and 12%. Attorney General Josh Shapiro is unopposed for the Democratic nomination. Gov. Tom Wolf (D) is ineligible to seek a third term.
Rhode Island: A Lake Research Partners survey for the Nellie Gorbea gubernatorial campaign was released (4/11-14; 600 RI likely Democratic primary voters; live interview) and the results project Rhode Island Gov. Dan McKee falling behind Secretary of State Gorbea as the candidates move toward the late September 13 Democratic primary. The ballot test posts Ms. Gorbea to a 30-24-10% edge over Gov. McKee and ex-Secretary of State Matt Brown. All other candidates fell below the 10% threshold.
Gov. McKee ascended to his position in March when then-Gov. Gina Raimondo (D) became US Commerce Secretary.