Happy new year?
Happy new year?
The federal fiscal year ended yesterday at midnight — mostly, sort of, except for the House side of Capitol Hill, where it remains the legislative day of September 30. Congress did pass a temporary spending bill to keep the government open until December 3. The House continues to work on its version of an infrastructure bill.
The House passed legislation to raise the debt ceiling on Wednesday by a partisan vote of219-212. Republican Adam Kinzinger (IL) voted for the extension, while Democrats Jaren Golden (ME) and Kurt Schrader (OR) voted against it, and Republican Debbie Lesko (AZ) did not vote. Senate Majority Leader Chuck Schumer (D-NY) asked for unanimous consent to a debt limit extension on the Senate floor, which Minority Leader Mitch McConnell (R-KY) blocked. The Senate will take up the House-passed legislation next week.
Yellen would support debt ceiling elimination
Appearing before the House Financial Services Committee yesterday, Secretary of the Treasury Janet Yellen said she would support legislation introduced by Rep. Bill Foster (D-IL) and Senators Brian Schatz (D-HI), Chris Van Hollen (D-MD), and Michael Bennet (D-CO) earlier this year to repeal the statutory debt ceiling. In testimony yesterday and before the Senate Banking Committee on Tuesday, Yellen said that a US default on its debt would have catastrophic effects on the US economy and on global financial stability.
IRS does not seek consumer transaction data, Yellen said
Secretary Yellen was unusually snappish at yesterday’s House Financial Services hearing in defense of an IRS proposal to require banks to report aggregate deposit inflows and outflows for customer accounts at the end of each year. Despite reports to the contrary, she said, the IRS was not asking for transaction-level data. Yellen said that they estimate a tax gap of up to $7 trillion a year, and more information about the flow of funds through deposit accounts will help the IRS flag unreported income. Since banks already provide 1099 forms on their customers’ behalf, the additional reporting burden should not be excessive, she argued, but said she was willing to discuss ways of defraying financial institutions’ costs of providing this information. Republican Senators and House members argued forcefully against the proposal, calling it an invasion of privacy that would put taxpayer data at risk. The proposal is currently part of both House and Senate reconciliation packages.
Warren will not support Powell’s renomination to the Federal Reserve
At Tuesday’s Senate Banking Committee hearing on CARES Act oversight, Senator Elizabeth Warren (D-MA) told Federal Reserve Board Chairman Jerome Powell that she will oppose his nomination to a second term in office. She said that he had weakened stress tests, eliminated Volcker Rule restrictions, and eased liquidity requirements on the largest banks in unacceptable ways. “You have acted to make our banking system less safe, and that makes you a dangerous man,” Warren said. Powell’s four-year term as Chair expires in February 2022; his term as a Governor of the Federal Reserve System continues to January 31, 2028.
House panel discusses bank consolidation, banking deserts
At a hearing on Wednesday, members of the House Financial Services Subcommittee on Consumer Protection and Financial Institutions expressed almost universal concern about the rate of consolidation in the financial services industry, and how mergers and branch closures have created “banking deserts” in both rural and urban areas. Witnesses told the panel that the need for scale had driven much of this consolidation, as banks invest in more sophisticated technology to offer new products and services and keep customer data safe. Rep. Blaine Luetkemeyer (R-MO), the Subcommittee’s ranking member, pointed to the 2010 Dodd-Frank Act as a factor in raising compliance burdens to levels impossible for smaller banks to sustain. Members on both sides of the aisle agreed on the need to reduce barriers to de novo chartering and make it easier for new banks to enter the market.
García, Warren introduce bill to slow bank mergers
Rep. Jesús “Chuy” García (D-IL) and Senator Elizabeth Warren (D-MA) introduced the Bank Merger Review Modernization Act this week to stop what they called regulators’ “rubber stamping” of bank merger applications. The bill would require all mergers to receive approval from the Consumer Financial Protection Bureau (CFPB) if any participant offers consumer products, and would allow mergers only if all institutions involved had received the highest CRA rating in two of their last three examinations. It would raise the standard for regulatory scrutiny of possible anticompetitive effects, and it would require enhanced supervision of merger participants.
Senate Commerce resumes work on data privacy
The Senate Committee on Commerce, Science, and Transportation held a hearing this week on protecting consumer data privacy, picking up on the extensive work the panel did on the subject in the last Congress. Chair Maria Cantwell (D-WA) and ranking member Senator Roger Wicker (R-MS) have re-introduced their separate legislative proposals, which differ in detail but share goals. Senator Wicker suggested that the White House appoint a senior policy official to work with him and Senator Cantwell to hammer out a bipartisan agreement, and Cantwell endorsed this idea. Both House and Senate reconciliation bills include $1 billion over ten years for the Federal Trade Commission to create a Privacy Bureau within the agency. While the Senators agreed that the FTC is critically underfunded and understaffed, Republican Committee members are reluctant to commit these funds until a federal data privacy law is in place.
Economic opportunity, international finance on House Financial Services Committee agenda for October
House Financial Services Committee Chairwoman Maxine Waters (D-CA) today announced the panel’s schedule for October, which includes appearances by SEC Chair Gary Gensler and newly confirmed Director of the Consumer Financial Protection Bureau Rohit Chopra. The full committee will hold three hearings, while the Subcommittees on Housing, Community Development, and Insurance; Oversight and Investigations; and Investor Protection, Entrepreneurship, and Capital Markets and the Task Force on Artificial Intelligence will hold one apiece. The Committee also plans to mark up pending legislation on October 21. All hearings will be in either virtual or hybrid formats.
October 5 at noon (virtual) — Full Committee holds an oversight hearing on the Securities and Exchange Commission
October 12 at noon (virtual) — Subcommittee on Housing, Community Development, and Insurance holds a hearing on the effects of exclusionary zoning
October 13 at noon (virtual) — Task Force on Artificial Intelligence holds a hearing on ethics in AI
October 14 at noon (virtual) — Subcommittee on Oversight and Investigations holds a hearing on how a cashless economy affects disadvantaged communities
October 20 at 10 a.m. (hybrid) — Full Committee holds a hearing on the state of the international financial system
October 21 at 10 a.m. (hybrid) — Full Committee holds a markup of pending legislation
October 26 at 10 a.m. (hybrid) — Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets holds a hearing on the risks presented by Chinese issuers in US markets
October 27 at 10 a.m. (hybrid) — Full Committee holds a hearing to conduct its semi-annual review of the Consumer Financial Protection Bureau
Confirmations, Nominations, Departures
The Senate confirmed Rohit Chopra as Director of the Consumer Financial Protection Bureau yesterday by a vote of 50-48. Chopra was Assistant Director and Student Loan Ombudsman at the CFPB before being appointed a member of the Federal Trade Commission in 2018.
Federal Trade Commission Chair Lina M. Khan appointed Holly Vedova as Director of the agency’s Bureau of Competition and Samuel A.A. Levine as Director of the Bureau of Consumer Protection. Both have held those positions in an acting role since June.
Rep. Karen Bass (D-CA) announced this week that she would not seek reelection to the House of Representatives, choosing instead to run for Mayor of Los Angeles.
David J. Ryder has left his position as Director of the U.S. Mint. Alison Doone is the new Acting Director.
Federal Reserve Bank of Boston President Eric Rosengren and Federal Reserve Bank of Dallas President Robert Kaplan separately announced their resignations this week.
The Week Ahead
October 5 at 9:45 a.m. Senate Committee on Banking, Housing, and Urban Affairs votes on the nominations of Brian Eddie Nelson, to be Under Secretary of the Treasury for Terrorism and Financial Crimes; Elizabeth Rosenberg to be Assistant Secretary of the Treasury for Terrorist Financing”: and Julia Ruth Gordon, David Uejio, and Solomon Jeffrey Greene to be Assistant Secretaries of Housing and Urban Development.
October 5 at noon House Committee on Financial Services holds a virtual hearing on “Oversight of the US Securities and Exchange Commission: Putting Investors and Market Integrity First.”
October 5 at 11 a.m. House Committee on Oversight and Reform holds a hearing on “Hurricane Ida and Beyond: Readiness, Recovery, and Resilience.”
October 6 at 10 a.m. Senate Committee on Commerce, Science, and Transportation holds a hearing on “Enhancing Data Security.”
October 6 at noon House Energy & Commerce Subcommittee on Communications and Technology holds a hearing on “Strengthening Our Communications Networks to Meet the Needs of Consumers.”
The Ellis Insight – Jim Ellis on political news
SENATE
Arizona: OH Predictive Insights ran a series of ballot tests for the 2022 US Senate race and tested incumbent Mark Kelly (D) against all current potential Republican opponents. The survey (9/7-12; 882 AZ registered voters; online opt-in panel) finds Sen. Kelly, who won the 2020 special election to fill the unexpired portion of the late Sen. John McCain’s (R) final term with a 51-49% margin, only posting 43 or 44% against any of the announced Republican candidates.
The GOP opponent coming closest is state Attorney General Mark Brnovich, who trails 43-39%. The Senator performs best against venture capitalist Blake Masters, leading 44-35%. Also tested were former Arizona National Guard Adjutant General Mick McGuire and businessman Jim Lamon. They both finish within seven points of Sen. Kelly.
Iowa: Iowa’s longest serving US Senator, Chuck Grassley (R), announced that he will seek re-election to an eighth Senatorial term, unprecedented for any Iowan. Mr. Grassley was first elected to the Senate on the same night that Ronald Reagan won the Presidency back in 1980. He has been in office consecutively since 1959, including his time in the state legislature and US House. Sen. Grassley, who will turn 89 years of age before the next election, said he has “a lot more to do for Iowa,” and is therefore seeking re-election.
Nevada: WPA Intelligence released a new survey of the Nevada Senate race featuring first-term incumbent Catherine Cortez Masto (D) and former state Attorney General Adam Laxalt (R). According to the WPAi survey (9/11-15; 504 NV likely voters; live interview), the GOP challenger, Mr. Laxalt, holds a slight 39-37% edge over Sen. Cortez Masto. The poll features an unusually high undecided/refused to say response of 24% considering both individuals have long political histories in the state.
Ohio: Former Ohio State Treasurer Josh Mandel continues to maintain a large lead in the open US Senate Republican primary according to a new statewide survey. WPA Intelligence went into the field during the September 20-23 period, interviewing 510 likely Republican primary voters. The results find Mr. Mandel holding a 37-13% lead over author J.D. Vance. All other contenders, including former Ohio Republican Party chair Jane Timken, fall well below the 10% double-digit mark.
HOUSE
Colorado: The congressional Colorado Independent Redistricting Commission approved a new 8-district map on an 11-1 vote, adhering to the September 28th initiative mandated deadline. The map, that appears to be a 4D-3R-1Swing partisan division, now goes to the Colorado state Supreme Court for legal approval. The high court has until December 15th to provide confirmation for the new map. The new 8th District lies to the north and northeast of Denver and becomes only a 1.3% Democratic district meaning that the new CD is in play for both parties.
Maine: Maine’s redistricting commission, which consists of ten state legislators and five appointed members, reached an agreement on a new congressional map. The main change is moving the capital region of Augusta from liberal District 1 (Rep. Chellie Pingree-D) to more conservative District 2 (Rep. Jared Golden-D). The 2nd District becomes slightly more Democratic, but former President Trump would still have carried the seat. Both houses of the Maine legislature must pass redistricting maps with 2/3 vote, so this process is far from complete.
Nebraska: Nebraska’s three congressional districts have been re-drawn, passed through the unicameral legislature, and Gov. Pete Ricketts (R) signed the completed map into law.
The new plan is similar to the previous draw. Rep. Don Bacon’s (R-Papillon/Omaha) 2nd District becomes slightly more Republican, keeps the Omaha metro area whole, and remains a competitive seat. Rep. Adrian Smith’s (R-Gering) 3rd District again stretches the width of the state, from Colorado and Wyoming all the way to Iowa and the northwestern corner of Missouri. This time the 3rd even goes so far as to border Omaha’s Douglas County.
It is likely that Nebraska will continue to send three Republicans to the US House, though Democrats will return to target Rep. Bacon in District 2.
OH-11: Former Ohio state Senator and ex-national co-chair for the Bernie Sanders for President campaign, Nina Turner, lost the Democratic special congressional election primary to Cuyahoga County Councilwoman Shontel Brown on September 14th after the former woman began the campaign as a big favorite.
Though the special general hasn’t yet occurred (November 2nd), Ms. Turner this week filed a 2022 congressional committee with the Federal Election Commission. The former state legislator said the action doesn’t mean she will run in 2022, but does give her the option of quickly launching a campaign. The Cleveland anchored seat will remain in Democratic hands regardless of who wins the next party primary.
Oregon: Oregon became the first state to complete 2020 census redistricting this week. The new congressional map creates two Portland area safe Democratic seats, for Reps. Suzanne Bonamici (D-Washington County) and Earl Blumenauer (D-Portland), and one safe Republican district for freshman Rep. Cliff Bentz (R-Ontario).
The remaining three districts all lean the Democrats’ way, but none can be considered safe. House Transportation and Infrastructure Committee chairman Peter DeFazio (D-Springfield), after only scoring 51.5% in the 2020 election, sees his district improve by about five percentage points.
On the other hand, Rep. Kurt Schrader (D-Canby) finds his 5th District splitting in half, with most of his territory forming the heart of the new 6th District. The 5th, which will now stretch to the Bend community from the Salem metro area, becomes a competitive seat, only slightly leaning toward Rep. Schrader. The new 6th CD is more Democratic but could also be competitive with a viable Republican candidate in a good GOP year.
OR-6: Just after the Oregon legislature and Governor enacted the state’s new six-district congressional map, Dundee Mayor David Russ (R), who had announced against Rep. Suzanne Bonamici (D-Washington County) in the safely Democratic 1st District, said yesterday he will switch into the new more competitive and neighboring 6th District. Like Colorado, Oregon was awarded a new district in reapportionment.
West Virginia: The first proposed West Virginia redistricting map is public. The state is losing one of its three districts, which will likely force Rep. Alex Mooney’s (R-Charles Town) mid-state 2nd District into collapse. Since parts of his seat are in each of the new districts, Rep. Mooney would have his choice of running in a Republican primary against either Reps. David McKinley (R-Wheeling) or Carol Miller (R-Huntington) if this were ultimately the adopted plan.
GOVERNOR
Arizona: OH Predictive Insights (released 9/29; 9/7-12; 882 AZ registered voters; 863 AZ likely voters; online opt-in panel) released the gubernatorial portion of their latest survey, covering both Arizona open gubernatorial primaries.
For the Democrats, Secretary of State Katie Hobbs held a 40-10-8% lead over former Nogales Mayor Marco Lopez and ex-state Rep. Aaron Lieberman. Turning to the Republicans, former Phoenix news anchor Kari Lake holds a 25-9-6-5% advantage over ex-US Rep. Matt Salmon, state Treasurer Kimberly Lee, and businessman Steve Gaynor, respectively. Former President Trump recently endorsed Ms. Lake.
Though the primary sample sizes are low, the margins are such that both Ms. Hobbs and Ms. Lake can be considered the early front runners for their respective party nominations.
Kansas: Clarity Campaign Labs, polling for the EMILY’s List organization that supports Democratic Gov. Laura Kelly, released their statewide survey, the first since Attorney General Derek Schmidt became a consensus Republican candidate. According to the poll results (9/13-15; 810 KS registered voters; interactive voice response system), Gov. Kelly’s ballot test lead over AG Schmidt is only 47-44%. We can expect this race to move into the toss-up realm.
New Jersey: Three pollsters have released September data for the New Jersey Governor’s race, and while all three find Gov. Phil Murphy (D) holding an advantage, the margin differences are large. Stockton University Polling Institute (9/17-25; 552 NJ likely voters; live interview) finds Gov. Murphy topping former state Assemblyman Jack Ciattarelli (R), 50-41%.
Monmouth University (9/16-20; 804 NJ registered voters; live interview) projects Murphy holding a larger 51-38% advantage. Finally, National Research, Inc. released their September data (9/13-16; 600 NJ likely voters; live interview) showing a much closer conclusion with the Governor holding only a 45-42% edge.
New York: New York City Public Advocate Jumaane Williams has formed a political exploratory committee to assess his chances of challenging new Gov. Kathy Hochul in next year’s statewide Democratic primary. Mr. Williams entering the race will take the primary to a competitive level and may encourage other credible Democrats to enter.
Mr. Williams and Gov. Hochul have previously opposed each other. She defeated him 53-47% in the 2018 Democratic primary for Lt. Governor. Ms. Hochul can expect a competitive 2022 Democratic primary and general election.
Oregon: Oregon State Treasurer Tobias Read (D) officially announced his gubernatorial candidacy, becoming only the third major Democrat to enter the race to succeed term-limited Democratic Governor Kate Brown. In addition to Mr. Read, state House Speaker Tina Kotek (D-Portland) and Yamhill County Commissioner Casey Kulla are in the primary race. The eventual Democratic nominee will be a heavy favorite in the 2022 general election.
Virginia: A trio of new surveys again confirm that former Gov. Terry McAuliffe (D) maintains a discernible lead over Republican Glenn Youngkin. Roanoke College (9/12-26; 603 VA likely voters; live interview) posts the Democratic advantage to be 48-41%. Monmouth University (9/22-26; 801 VA registered voters; live interview) produced a similar 48-43% McAuliffe spread.
The closest result, from Democratic pollster Global Strategy Group (9/16-20; 600 VA likely voters; live interview) sees only a three point difference, 48-45%, also in favor of the former Governor and ex-Democratic National Committee chairman.
LOCALITIES
Los Angeles: As sources predicted, California US Rep. Karen Bass (D-Los Angeles) announced this week that she is entering the open Los Angeles Mayor’s race. She will risk her Los Angeles-anchored US House seat, which now stands a good chance of being the seat collapsed since it is, to date, the only California open seat for the 2022 election.
At this point, Ms. Bass will face LA City Council President Pro Tempore Joe Buscaino, Los Angeles City Councilman and ex-state Senate President Kevin de Leon, and LA City Attorney Mike Feuer. All are Democrats, though the mayoral race is ostensibly non-partisan.
Mayor Eric Garcetti has been nominated as Ambassador to India. Upon obtaining Senate confirmation, Mayor Garcetti will resign and the City Council has the authority to appoint an interim replacement. The replacement choice could change the course of the budding campaign.