House panel to vote on digital asset framework in July, says McCarthy

If trouble comes when you least expect it then maybe the thing to do is to always expect it. 
- Cormac McCarthy, 1933-2023
 
Some of us in the Washington office are big fans of the author Cormac McCarthy, who died this week. Although 89 is a good run for anyone, we’ll miss him. If you’re new to his work, Doyle recommends Blood Meridian.
 
House panel to vote on digital asset framework in July, says McCarthy
House Financial Services Committee Chairman Patrick McHenry (R-NC) and House Agriculture Committee Chairman Glenn “GT” Thompson released a joint discussion draft of a statutory framework for digital assets earlier this month. At a lengthy hearing on Tuesday afternoon, witnesses told the Financial Services Committee that time was running out for the U.S. to take a leadership role in the development of a global digital assets ecosystem. The Committee also discussed draft legislation to create a regulatory structure for payment stablecoins, which began as a bipartisan effort between then-Financial Services Committee Chairwoman Maxine Waters (D-CA) and Rep. McHenry, who was the Committee’s ranking member. The draft reviewed on Tuesday is no longer a bipartisan bill, but Waters and other Democrats said they are willing to work together to pass legislation.
 
Senate Banking to mark up bipartisan legislation to claw back executive compensation after bank failures
Senate Banking Committee Chairman Sherrod Brown (D-OH) and Senator Tim Scott (R-SC), the Committee’s ranking member, have agreed on a legislative proposal to increase accountability among senior bank executives. The Recovering Executive Compensation from Unaccountable Practices (RECOUP) Act will give federal regulators more authority to remove or ban executives who failed in their oversight responsibilities; require banks to include governance and accountability standards in their bylaws; increase and strengthen penalties for wrongdoers; and allow the FDIC to claw back excessive compensation from executives of failed banks, including profits from stock sales. The Committee will take up the RECOUP Act next Wednesday, along with Senator Scott’s Fentanyl Eradication and Narcotics Deterrence (FEND) Off Fentanyl Act, a bipartisan proposal to strengthen anti-money laundering measures against the fentanyl supply chain.   
 
CFPB gets oversight
The Director of the Consumer Financial Protection Bureau, Rohit Chopra, spent two relatively cordial hours before the Senate Banking Committee on Tuesday, and just over four hours under sharp criticism from the House Financial Services Committee on Wednesday. Chopra’s semiannual report to Congress described “major progress on mandated rules covering credit reporting for survivors of human trafficking, small business lending data collection, PACE lending, and the LIBOR transition. He said the agency was focusing more of its supervisory attention on nonbank financial firms, and had shifted enforcement efforts away from small businesses and toward repeat offenders. Rep. Andy Barr (R-KY), who chaired the hearing on the House side in his capacity as Chairman of the Subcommittee on Financial Institutions and Monetary Policy, called Chopra’s leadership “McCarthyism” and said the Bureau was harming consumers and the economy at large. Rep. Roger Williams (R-TX), a member of the Financial Services Committee who also chairs the Small Business Committee, has introduced a resolution to set aside the Bureau’s Regulation B on small business lending under the Equal Credit Opportunity Act.
 
Yellen says Treasury has voiced concerns about EU corporate sustainability requirements
Tuesday morning’s House Financial Services Committee hearing, officially about Treasury’s views of state of the international financial system, ranged far and wide on topics from the debt limit to baby bonds. But Secretary of the Treasury Janet Yellen did say, in response to more than one question, that Treasury is looking carefully at the European Union’s Corporate Sustainability Reporting Directive (CSRD), scheduled to start taking effect in January 2024 for EU-based companies and for non-EU companies above a certain threshold or listed on EU exchanges. Rep. Frank Lucas (R-OK) said these rules would apply to many US businesses operating in Europe, and that they would be especially burdensome to agriculture companies. Yellen said that Treasury had already expressed concerns about the “extraterritorial scope” of these rules, and would continue to do so.
 
McHenry warns Yellen against expanding FSOC oversight of nonbank financial companies
House Financial Services Committee Chairman Patrick McHenry (R-NC) sent a strongly worded letter to Treasury Secretary Yellen this week about the Financial Stability Oversight Council’s April decision to make it easier to bring nonbank financial companies under Federal Reserve’s supervision. McHenry said the FSOC decision had abandoned the principle of “same entity, same risk, same supervision” set forth in 2019; that the decision violated due process; and that it would “set a dangerous precedent that will have consequences for the broader financial system.” McHenry was blunt about his lack of faith in the Fed’s oversight capabilities: “As we have learned from the experience of Silicon Valley Bank, oversight by the Federal Reserve is not a panacea for financial stability.” We can expect to hear more about this when Fed Chairman Jerome Powell appears before the Committee next week.

The Week Ahead

Washington offices will be closed on Monday to celebrate Juneteenth. Congress has a lot to cram in before it leaves for two weeks of recess.
 
June 20 at 10:00 a.m. Assistant Attorney General Jonathan Kanter addresses the Brookings Center on Regulation and Markets on “Promoting Competition in Banking,” with a panel discussion to follow.
 
June 21 at 10:00 a.m. Senate Committee on Banking, Housing, and Urban Affairs holds a hearing on the nominations of Philip Jefferson to be Vice Chairman, and Lisa Cook and Adriana Kugler to be Governors of the Federal Reserve Board.
 
June 21 at 10:00 a.m. House Committee on Financial Services holds its semiannual hearing on the nation’s money supply. Federal Reserve Board Chair Jerome Powell will be the only witness.
 
June 21 at 2:00 p.m. House Financial Services Subcommittee on Housing and Insurance holds a hearing on “HUD Oversight: Testimony of the HUD Inspector General.”
 
June 22 at 9:00 a.m. House Financial Services Subcommittee on Oversight and Investigations holds a hearing on “Oversight of the SEC.”
 
June 22 at 10:00 a.m. Senate Banking Committee receives the Semiannual Monetary Report to Congress from Federal Reserve Board Chair Jerome Powell.
 
June 22 at 10:00 a.m. The Securities and Exchange Commission’s Investor Advisory Committee holds an all-day meeting. The agenda includes panel discussions on private funds/markets and outbound investments in countries of concern, digital engagement practices by investment firms, and audit committee workload and transparency.
 
June 22 at 10:30 a.m. House Financial Services Subcommittee on Capital Markets holds a hearing on “Oversight of the SEC’s Division of Trading and Markets.”
 
June 22 at 2:00 p.m. House Committee on Small Business holds a hearing on “Reviewing the SBA’s Office of Advocacy Report on the Regulatory Flexibility Act.”

The Ellis Insight - Jim Ellis on political news

PRESIDENT

Robert F. Kennedy, Jr.: Robert F. Kennedy, Jr. continues to mount a challenge to President Biden, and three new Democratic primary polls were recently released, two national and one in California, providing new benchmarks. While Mr. Kennedy is not even within shouting distance of the President in any of the polls, they do, however, again largely show that the incumbent is not universally accepted within his own party.

The Issues & Insights TIPP poll (5/31-6/2; 1,230 registered voters likely to vote in a Democratic primary; online) finds President Biden topping Mr. Kennedy, 68-12%, with 4% going to author Marianne Williamson. The Suffolk University poll conducted for USA Today (6/5-9; 293 likely Democratic primary voters) projects Mr. Biden with only 58% support, while Mr. Kennedy captures 15% and Ms. Williamson 6 percent. Emerson College sampled the California electorate (6/4-7; 1,056 CA registered voters; multiple sampling techniques) and posts President Biden with a 72-17-7% advantage over Kennedy and Williamson in the Golden State primary.

While President Biden is secure for renomination, Mr. Kennedy exceeding expectations in the early states might place him in position to run on the No Labels Party ticket that may be formed in April of next year.

Vivek Ramaswamy: Media reports surfacing early in the week that Republican presidential candidate Vivek Ramaswamy was going to announce he was withdrawing from the race and endorsing former President Donald Trump at his Tuesday morning news conference in Miami proved erroneous. While Mr. Ramaswamy, who is well on his way to securing a debate podium at the first Republican presidential debate on August 23rd, did not suspend his campaign, he did become the first candidate to say he would pardon Mr. Trump if elected President. 

Francis Suarez: As has been expected for some time, Miami Mayor Francis Suarez filed a presidential committee this week with the Federal Election Commission and becomes the tenth Republican candidate. Obviously a long shot who may be positioning himself as a potential Vice Presidential pick, Mayor Suarez would be attractive to Republicans as a candidate with potential national appeal to the Hispanic community. 

National Poll: The new national Ipsos/ABC News Poll (6/9-10; 910 US registered voters with a 411 Republican over-sample) finds a plurality of Americans (48%) believing that it is right to charge former President Trump pertaining to the indictments associated with the classified document issues. 

A separate plurality cell (47%) within the same sampling universe, however, also believes the case is politically motivated. Only 37% say politics was not a factor in the indictments being brought. The remaining 16% are unsure. These numbers are within the same realm as the Ipsos/ABC poll conducted in early April after the New York indictments were brought against Mr. Trump.

New Hampshire Poll: A new National Research poll conducted for the American Greatness Super PAC (6/12-14; 500 NH likely Republican primary voters) finds former President Donald Trump gaining strength in the Granite State, while Florida Gov. Ron DeSantis drops down several points from the group’s last survey. In a surprise, New Jersey Gov. Chris Christie bolts into a third place tie with Sen. Tim Scott (R-SC) at 7% apiece. 

SENATE

California: Emerson College tested the California electorate regarding the state’s open Senate race in which the Super Tuesday March 5th qualifying election will see all but two candidates eliminated. According to the EC survey (6/4-7; 1,056 CA registered voters; multiple sampling techniques), no candidate even breaks 15% support. Rep. Adam Schiff (D-Burbank) reaches the 15% plateau, and nips Rep. Katie Porter (D-Irvine) who registers 14% support. Rep. Barbara Lee (D-Oakland) places third with 6%. The top tested Republican candidate, businessman James Bradley, claims only 4% backing.

Obviously, this poll suggests a wide open race. Among Democrats, Mr. Schiff leads Reps. Porter and Lee, 23-22-10%. Republicans and Independents are wholly undecided with 60 and 58% of both groups indicating they have not chosen a candidate. Turning to retiring incumbent Dianne Feinstein (D), 63% of those sampled believe she should resign the seat due to health considerations. Her job approval ratio within this poll was a poor 22:48% favorable to unfavorable.

Indiana: Term-limited Gov. Eric Holcomb (R) announced that he will not enter the US Senate race or run for any other office in 2024. The Governor taking a pass on the Senate race means US Rep. Jim Banks (R-Columbia City) now becomes the prohibitive favorite to win the May 7, 2024, Republican primary. He will be viewed as a lock to win the general election as the Democrats have yet to produce a competitive candidate. Incumbent Sen. Mike Braun (R) is not seeking re-election in order to run for Governor.

Wisconsin: Wisconsin Congressman Mike Gallagher (R-Green Bay), who appeared to be the Republican leadership’s top Senate candidate recruitment target, said during the week that he will not challenge Sen. Tammy Baldwin (D) next year. Mr. Gallagher is moving up the House ladder and wants to remain on that path. Some believe he will instead wait until 2028 to make a statewide move when Sen. Ron Johnson (R) is expected to retire. 

A new poll found former Milwaukee County Sheriff David Clarke leading the Republican field, though he is not an announced candidate. Rep. Gallagher was a strong second. Rep. Tom Tiffany (R-Minocqua) is testing the Senate political waters, so chances of him pursuing a statewide bid considering the Gallagher decision may increase.

HOUSE

CA-45: Yesterday, attorney Jimmy Pham became the fourth Democratic candidate to enter the 2024 congressional race hoping to challenge two-term Rep. Michelle Steel (R-Orange County) in a district that the FiveThirtyEight data organization rates as D+5. 

In addition to Mr. Pham, Garden Grove City Councilwoman Kim Nguyen, and attorneys Cheyenne Hunt and Aditya Pai are announced candidates. Community College Trustee Jay Chen, who held Rep. Steel to a 52-48% victory in 2022, is a potential re-match contender but has yet to make his 2024 political plans known. Expect this to be a top Democratic target race. The 45th is one of four California Democratic seats that a Republican represents.

OR-5: The President of the Oregon Metro Council, an elected regional government body covering three populace counties in and around the Portland area, says she will enter the 2024 Fifth District congressional race. Democrat Lynn Peterson is hoping to challenge GOP freshman incumbent Lori Chavez DeRemer (R-Happy Valley). 

The new 5th District stretches from the southern Portland suburbs, touches the eastern Salem suburbs, and then moves southeast to include the Bend area. Ms. Chavez-DeRemer defeated Democrat Jamie McLeod-Skinner, who ousted then-Rep. Kurt Schrader in the Democratic primary, by a 51-49% count in a district the FiveThirtyEight data organization rates as D+3.

Ms. Peterson will certainly have competition in the Democratic primary. Two minor Democrats have already announced while state Rep. Janelle Bynum (D-North Clackamas) and Ms. McLeod-Skinner, potentially seeking a re-match, are viewed as possible candidates.

RI-1: Lt. Gov. Sabina Matos (D), one of the top contenders from a Democratic special election field that could reach as high as 17 candidates when filing closes on June 30th, released the results of her recent Expedition Strategies internal poll. 

The survey (6/5-8; 400 RI-1 Democratic special election primary voters; live interview) sees Ms. Matos opening with a large 22-9% lead over former state Rep. Aaron Regunberg, a 2018 candidate for Lt. Governor. State Sen. Sandra Cano (D-Pawtucket) and Providence City Councilman John Goncalves trailed with 6 and 5%. No other candidate breaks 4% support.

The special Democratic primary is scheduled for September 5th, with the general election on November 7th. Rep. David Cicilline (D) resigned the seat on June 1st to accept a position with a non-profit organization. The FiveThirtyEight organization rates RI-1 as D+32, so the eventual Democratic primary winner will become the prohibitive favorite to capture the seat in November.

UT-2: Gov. Spencer Cox (R) set the special primary election to replace resigning US Rep. Chris Stewart (R-Farmington) for September 5th and the special general on November 21st. The candidate filing period has now closed. A total of 13 Republicans, three Democrats, and six minor party or Independent candidates have filed.

For the Republicans, who will be favored to hold the seat, former state House Speaker Greg Hughes, ex-state Rep. and US Senate candidate Becky Edwards, and former Republican National Committeeman Bruce Hough are official candidates, and at this point comprise the first tier. For the Democrats, the leading contender is state Sen. Kathleen Riebe (D-Cottonwood Heights).

The political parties will now call a special district convention. The delegates will nominate one candidate to advance into the special primary by majority vote. Others can still qualify for the primary through the petition signature process. 

GOVERNOR

Indiana: A former campaign manager for and longtime associate of US Ambassador to the Holy See Joe Donnelly (D) said speculation that Mr. Donnelly would return to Indiana to run for Governor next year is false. The spokesperson indicated that the Ambassador will continue to serve in his present post and not become a political candidate in 2024. 

Prior to accepting the Ambassadorship, Mr. Donnelly represented Indiana in both the House and Senate. He served three terms in the House before being elected Senator in 2012. He was defeated for re-election in 2018. There was further speculation suggesting if he would return to Indiana to run for Governor that former House Speaker Nancy Pelosi (D-CA) would be appointed as the replacement Ambassador. 

Mississippi: Early in the year, the Mississippi Democratic Party disqualified candidate Bob Hickingbottom from running for Governor in the Democratic primary saying he did not meet the petition signature requirement and because he previously ran statewide on a third party line. In late May, Mr. Hickingbottom won his court challenge to the Democrats’ ruling and was placed back on the primary ballot. 

Now, the Mississippi state Supreme Court has overturned the lower court decision and ruled that the MDP has the right to disqualify Hickingbottom. Therefore, Mr. Hickingbottom will be prohibited from running in the Democratic primary. The decision restores Public Service Commissioner Brandon Presley to unopposed status for the party nomination. Democratic leaders wanted this to give Mr. Presley the biggest advantage possible as he tries to unseat Gov. Tate Reeves (R) in the 2023 general election.

Montana: Without articulating a particular criticism against Gov. Greg Gianforte (R), state Rep. Tanner Smith (R-Lakeside) announced late this week that he will launch a Republican gubernatorial primary challenge. Gov. Gianforte, whose job approval ratings are high, does not appear to be vulnerable to a Republican primary challenger. At this point, he would also be rated as a prohibitive favorite to win a second full term in the 2024 general election. The Montana primary is scheduled for June 4, 2024.

Washington:  Public Policy Polling, surveying for the Northwest Progressive Institute (released 6/9; 773 Washington registered voters), finds Attorney General Bob Ferguson (D) leading the jungle primary with 25% support. Republican physician Robert Garcia is second with 17% backing followed by Richland School Board member Semi Bird (R) at 10 percent. Democrats Hillary Franz, the Public Lands Commissioner, and state Sen. Mark Mullett (D-Issaquah) trail with 9% and 8%, respectively.

Mr. Ferguson claims to operate his early campaign as an “exploratory committee,” but Washington has no such legal designation. Therefore, Mr. Ferguson is an announced candidate as are the others. Gov. Jay Inslee (D) is not seeking a fourth term next year. The jungle primary is scheduled for August 6, 2024. The top two finishers, regardless of political party affiliation and percentage attained, will advance into the general election.