Recess was nice while it lasted

Recess was nice while it lasted, but the DC office is unusually crowded for a Friday afternoon in July as we prepare for the three weeks between now and the August recess.
 
Things will start with a bang on Monday morning, when Federal Reserve Board Vice Chair for Supervision Michael Barr is expected to unveil the Fed’s proposal for new capital requirements, specifically targeting the largest banks. Up the street at exactly the same time, Federal Reserve Bank of San Francisco President Mary Daly will be talking about monetary policy and bank supervision at the Brookings Institution.
 
Trade issues will also be on the agenda next week, with House hearings on supply chain issues and the risks facing US businesses operating in China. The House Financial Services Committee and its subcommittees take direct aim at the unintended effects of environmental, social, and governance policies on investors, consumers, and homebuyers, with four separate hearings scheduled on Wednesday, Thursday, and Friday. Work on the budget continues, of course, with the federal government’s water regulators testifying on their fiscal requests on Thursday. And the House Rules Committee will take up the National Defense Authorization Act (NDAA) on Tuesday afternoon, with more than 1,400 amendments submitted; floor debate will begin once the Committee approves a rule.
 
You’ll find a full list of what we’ll be watching toward the end of this email. As always, please let us know if there’s anything you’re specifically interested in. 
 
Yellen meets with US businesses in China 
Secretary of the Treasury Janet Yellen is in China today, meeting with Chinese officials but also sitting down for a roundtable with representatives of US businesses operating in the PRC. Yellen acknowledged concerns they’d been hearing, especially about recent “punitive actions” against US firms. She said the Administration was still evaluating the effects of new export controls, and called for “a shift toward market reforms” that would benefit China’s “enormous and growing middle class . . . who are eager to consume American goods and services.” When it comes to US-China trade, she said, “we seek to diversify, not decouple.” The House Committee on the Strategic Competition between the United States and the Chinese Communist Party will hold its own hearing on the dangers facing US businesses in China next Thursday night, in prime time.
 
Federal regulators issue joint guidance for commercial real estate workouts
As many economic indicators remain strong or even improving, regulators and markets remain anxious about commercial real estate (CRE). Last week the Federal Reserve Board, Federal Deposit Insurance Corporation (FDIC), National Credit Union Administration (NCUA), and Office of the Comptroller of the Currency (OCC) issued a final joint policy statement that calls for lenders “to work prudently and constructively with creditworthy borrowers during times of financial stress.”
 
Federal Reserve announces first participants in FedNow
Fifty-seven financial institutions and service providers will be the first users of the Federal Reserve’s FedNow service, scheduled to launch later this month. FedNow is the much-anticipated instant payments infrastructure, currently in the final testing stages. The first group of users includes 41 financial institutions that will participate as senders, receivers, and/or correspondents; 15 service providers that will process transactions; and the US Treasury. The Fed says its goal is “a robust network aimed at reaching all 10,000 U.S. financial institutions.”

The Week Ahead

July 10 – 13 The Federal Housing Finance Agency (FHFA) hosts Velocity TechSprint, a team-based problem-solving event that will bring together experts and practitioners to propose technology solutions that reduce mortgage costs and delivery times while creating a more inclusive and transparent process. The event is in-person, but a virtual observer track is available to the public, culminating in a “Demo Day” on July 13.
 
July 10 at 10:00 a.m. Federal Reserve Board Vice Chair for Supervision Michael Barr speaks on bank capital at the Bipartisan Policy Center.
 
July 10 at 10:30 a.m. Federal Reserve Bank of San Francisco President Mary Daly discusses monetary policy and bank supervision at the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institute.
 
July 10 at 2:30 p.m. House Committee on Ways and Means holds a field hearing in Kimball, MN on “Trade in America — Agriculture and Critical Supply Chains.”
 
July 11 at 12:00 noon House Committee on Rules considers the rule for floor debate on H.R. 2670, the National Defense Authorization Act for FY 2024.
 
July 11 at 2:30 p.m. Senate Banking Subcommittee on Housing, Transportation, and Community Development holds a hearing on “Exploiting the American Dream: How Abusive Land Contracts Prey on Vulnerable Homebuyers.”
 
July 12 at 10:00 a.m. House Committee on Financial Services holds a hearing on “Protecting Investor Interests: Examining Environmental and Social Policy in Financial Regulation.”
 
July 12 at 2:30 p.m. Senate Banking Subcommittee on Economic Policy holds a hearing on “Bank Mergers and the Economic Impacts of Consolidation.”
 
July 13 at 10:00 a.m. House Financial Services Committee on Capital Markets holds a hearing on “Reforming the Proxy Process to Safeguard Investor Interests.”
 
July 13 at 10:00 a.m. House Homeland Security Subcommittee on Emergency Management and Technology holds a hearing on “The Future of FEMA.” Federal Emergency Management Administrator Criswell will be the only witness.
 
July 13 at 10:00 a.m. House Committee on the Judiciary holds a hearing on “Oversight of the Federal Trade Commission.” Chair Lina Khan will be the only witness.
 
July 13 at 2:00 p.m. House Financial Services Subcommittee on Oversight and Investigations holds a hearing on “Oversight of the Proxy Advisory Industry.”
 
July 13 at 2:00 p.m. House Transportation & Infrastructure Subcommittee on Water Resources and Environment holds a hearing on “Review of FY 2024 Budget Request: Agency Perspectives,” with testimony from officials from the EPA, International Boundary and Water Commission, USDA, NOAA, and the Agency for Toxic Substances and Disease Registry.
 
July 13 at 7:00 p.m. House Select Committee on the Strategic Competition between the United States and the Chinese Communist Party holds a hearing on “Risky Business: Growing Peril for American Companies in China.”
 
July 14 at 9:00 a.m. House Financial Services Subcommittee on Housing and Insurance holds a hearing on “How Mandates Like ESG Distort Markets and Drive Up Costs for Insurance and Housing.”

The Ellis Insight - Jim Ellis on political news

SENATE

Maine: Two-term Maine Sen. Angus King, who is elected as an Independent but caucuses with the Democrats, announced that he will seek a third term next year. It was expected that Sen. King, who will be 80 years of age at the next election and is a cancer survivor, would run again. Before his original election to the Senate in 2012, Mr. King served two terms as Maine’s Governor. The Senator is a prohibitive favorite to win reelection next year.

Michigan: Former Congressman Mike Rogers (R), who served in the House from 2001 to the beginning of 2015 and chaired the House Intelligence Committee for four years, is reportedly considering entering the open US Senate race. 

While Democratic Rep. Elissa Slotkin (D-Lansing) is the early favorite for the party nomination and to win the seat, Mr. Rogers would probably be the strongest candidate the GOP could field and certainly puts the open seat in play. Other potential Republican candidates are businessman John Tuttle and former US Rep. Peter Meijer. The only announced significant GOP contender is Michigan Board of Education member Nikki Snyder.

While Rep. Slotkin is favored in the Democratic primary, she does have credible opposition. Michigan Board of Education President Pamela Pugh is in the race along with former state Representative Leslie Love and attorney Jacquise Purifoy. Actor Hill Harper is also expected to soon announce his candidacy.

New Jersey: Roselle Park Mayor Joe Signorello ended his long shot Democratic primary challenge to Sen. Bob Menendez, and instead says he will enter the 7th District congressional race against GOP Rep. Tom Kean, Jr. (R-Westfield). This, despite his city of Roselle Park lying wholly in Rep. Donald Payne’s (D-Newark) 10th District. Already in the 7th District Democratic primary is Working Families Party state director Sue Altman. 

Rep. Kean unseated then-Rep. Tom Malinowski (D) 51-49% last November. The NJ-7 race is expected to be a major Democratic challenge opportunity race. Mr. Malinowski, who recently joined the McCain Institute for International Leadership, is unlikely to seek a rematch. State Senate President Nick Scutari is a potential Democratic candidate in this district.

Ohio: The Ohio Senate race will be one of the premier 2024 electoral contests and is considered a must-win for Republicans. Sen. Sherrod Brown (D) seeks a fourth term, but this may be his toughest campaign because the state has shifted considerably to the right since he was last on the ballot in 2018. 

East Carolina University recently polled the state (6/21-24; 805 OH registered voters; interactive voice response system & online), and their results find Sen. Brown locked in a tight race no matter who becomes the Republican nominee. While slightly leading against all three tested Republicans, he is nowhere near 50% in any configuration.

State Sen. Matt Dolan (R-Chagrin Falls), a minority owner of the Cleveland Guardians Major League Baseball club, fares best against Sen. Brown, trailing only 45-44%. Businessman Bernie Moreno, despite not having universal name identification, is behind 46-42%. Secretary of State Frank LaRose, who is soon expected to become a Senate candidate, would come within 44-42% of Sen. Brown. In the Republican primary, Mr. LaRose holds a slight 17-14-7% lead over Sen. Dolan and Mr. Moreno.

HOUSE

AZ-6: Last month, businessman Jack O’Donnell declared his congressional candidacy in the Democratic primary hoping to challenge freshman Rep. Juan Ciscomani (R-Tucson). Now, Mr. O’Donnell has already ended his fledgling campaign. He was an underdog even in the primary with former state Senator and 2022 congressional nominee Kirsten Engel already in the race. Rep. Ciscomani defeated Ms. Engel by 5,505 votes last November, and we can expect another close race in this politically marginal southeast Arizona district.

CO-8: The 8th District of Colorado is the new seat the state gained in national reapportionment and was designed as a politically marginal domain that stretches from the northern Denver suburbs to the city of Greeley. It performed as such last November, as now-Rep. Yadira Caraveo (D-Thornton) scored a close 48.4 - 47.7% victory from a voter pool that exceeded 236,000 individuals. 

The losing candidate, state Sen. Barbara Kirkmeyer (R-Weld County), is likely to seek a rematch. One candidate who just announced that she will not run again is Thornton Mayor Jan Kulmann. She placed second to Ms. Kirkmeyer in the 2022 Republican primary. The 8th District is sure to host another hotly contested congressional campaign in 2024.

IL-12: Former state Senator and 2022 Illinois Republican gubernatorial nominee Darren Bailey announced at a major holiday gathering that he will launch a primary challenge opposite five-term Rep. Mike Bost (R-Murphysboro/Carbondale), the current chairman of the House Veterans Affairs Committee. 

The move is surprising in that Rep. Bost is just as conservative as Mr. Bailey, so there will be little with which to draw contrast at least in terms of public policy. Because Illinois is so heavily gerrymandered, the 12th CD is one of only three solidly Republican seats in the state. Therefore, the lone political threat to Rep. Bost comes in the GOP primary. Expect the Congressman to win renomination and reelection next year. The Illinois primary is early, scheduled for March 19, 2024.

IL-17: Former state Rep. Dan Brady (R), who represented a central Illinois seat in the state legislature for 20 years before running unsuccessfully for Secretary of State last November, is reportedly close to launching a congressional campaign against freshman Democratic US Rep. Eric Sorensen (D-Moline).

On the gerrymandered Illinois congressional map, the 17th appears to be the most competitive seat in the state. In November, Republican Esther Joy King held Mr. Sorensen to a 52-48% victory in a district that the FiveThirtyEight data organization rates as D+4. 

The seat is shaped almost like a capital C, beginning in Rockford, and then swinging west to the Quad Cities area, before moving southeast and east through Galesburg and Peoria before ending in Bloomington. Rep. Sorensen will be favored for reelection, but this district could become highly competitive.

MI-7: Former state Senator and ex-Ingham County Commissioner Curtis Hertel (D), who just left his position as Legislative Affairs director to Gov. Gretchen Whitmer (D), filed a congressional committee with the Federal Election Commission. He was expected to enter the race and does so with Gov. Whitmer’s endorsement. 

Mr. Hertel is the first official candidate for what will be a hotly contested open seat both in the Democratic primary and general election. Three-term incumbent Elissa Slotkin (D-Lansing) is running for the Senate. Former state Senator and 2022 Republican congressional nominee Tom Barrett is expected to return. The FiveThirtyEight data organization rates MI-7 as R+4, but Dave’s Redistricting App calculates the partisan lean in the Democrats’ favor, 49.30D – 47.88R.

NE-2: Last November, Nebraska state Senator Tony Vargas (D-Omaha) held Rep. Don Bacon (R-Papillion) to a 51.3 – 48.7% reelection victory. This week, as expected, Mr. Vargas announced that he will return for a rematch in 2024. Nebraska’s 2nd Congressional District is a swing seat that the FiveThirtyEight data organization rates as R+3, while Dave’s Redistricting App calculates the partisan lean at 50.1R – 47.1D. 

The 2nd also figures prominently in the presidential race. Nebraska is one of two states, Maine being the other, where the congressional districts carry their own electoral vote. In 2020, the 2nd broke with the state and awarded its electoral vote to President Biden as he carried the district with a 52-46% margin, or some 22,000+ votes. 

We can expect heavy campaigning here for all races. In addition to the presidential and congressional campaigns, both US Senate seats will be on the ballot. While Sens. Deb Fischer (R) and Pete Ricketts (R) are secure for reelection, this district will be relatively tight even for them.

New Mexico: The New Mexico Supreme Court ruled unanimously during the week that the Republicans’ political gerrymandering lawsuit can move forward against the state. 

Reflecting upon the US Supreme Court’s recent ruling on the North Carolina judicial role in redistricting, the state high court is in much stronger position to review the 2021 congressional and state legislative maps as political gerrymanders. For example, the congressional plan eliminated the state’s lone Republican seat in the current draw. Whether the map will be invalidated is yet to be determined, but the high court wholly agreed that the case has merit to continue.

NY-17: One of the strangest situations that occurred in the 2022 election cycle was first-term Westchester County Rep. Mondaire Jones (D) leaving his upstate seat to seek reelection in an open New York City district. In a way, he was pushed out when then-Democratic Congressional Campaign Committee (DCCC) chairman Sean Patrick Maloney decided to seek reelection in Jones’ 17th District. The move was controversial and certainly contributed to Maloney losing a close general election to Republican Mike Lawler. 

This week, Mr. Jones announced that he will return to the 17th District and attempt to regain the seat he initially won in 2020. This will be a top national congressional campaign. Though Rep. Lawler is the incumbent, the general election will be challenging for him in a district that the FiveThirtyEight data organization rates as D+7, while Dave’s Redistricting App calculates the partisan lean at 56.4D – 41.3R.

GOVERNOR

Washington:  Former Congressman and ex-King County Sheriff Dave Reichert (R), who served in the House from 2005 to the beginning of 2019, has filed documents to create a campaign committee for the open Governor’s office. 

Mr. Reichert has looked at statewide office before but has not run. His chances of qualifying for the general election in the jungle primary would be good since he would likely corral the votes of what should be a united Republican Party behind him. In the general election, however, probably opposite Attorney General Bob Ferguson (D), he would be a distinct underdog. This will be an open race because Gov. Jay Inslee (D) chose not to seek reelection to a fourth term.