The clock ticks . . .

Hey, remember H.R. 5860? Or actually, Public Law 118-15, because Congress passed it on September 30 to keep the federal government running until November 17. That’s seven days from now. The House adjourned for the weekend yesterday after postponing a vote on the appropriations bill for Financial Services and General Government; earlier this week, they postponed an already-rescheduled vote on the appropriations bill for the Departments of Transportation and Housing and Urban Development. The Speaker of the House may be new, but the party he oversees remains divided — in both cases, leadership pulled the bills because of anticipated “no” votes from House Republicans.

FHFA to develop mission statement, propose new rules, study structure of the Home Loan Banks
The Federal Housing Finance Agency (FHFA) released its much-anticipated report on “FHLBank System at 100: Focusing on the Future” this week, distilling months of roundtables into a 117-page look at the Federal Home Loan Bank System’s history, current operations, and recommendations for reform. As the report notes, most major changes would require congressional action; the FHFA plans to propose statutory changes, “in some instances after conducting additional analyses,” on issues such as minimum contributions for the Affordable Housing Program, eligible collateral for credit unions and CDFI members, the “grandfather provision,” and restrictions on setting executive pay. In the meantime, however, the FHFA plans to update and clarify the FHLBank System’s mission statement to reflect its core objectives; encourage better coordination among the FHLBanks, the Federal Reserve Banks, and members’ primary federal regulators; impose new mission-related requirements on the FHLBanks; encourage the FHLBanks to find areas of collaboration and consolidation of shared functions; and evaluate the optimal size and composition of FHLBank boards. A fact sheet summarizing the report is here.

Are federal regulators using international standards to advance political agendas?
Rep. Andy Barr (R-KY), Chairman of the House Financial Services Subcommittee on Financial Institutions and Monetary Policy, thinks so. At a hearing on Tuesday, Barr noted that the proposed federal regulations on climate-related financial risk “align remarkably closely to those being pushed by the global governance bodies, as well as by the Biden Administration.” Barr decried the opacity of the Basel Committee on Bank Supervision, the Financial Stability Board, and the Network of Greening the Financial System, and said that these groups had “more influence on and information about goals, intentions, and plans of U.S. regulatory agencies” than Congress does. Two of the hearing’s witnesses, Bryan Bashur of Americans for Tax Reform and Professor Christina Skinner from the Wharton School, urged Congress to pass legislation that would require US regulators to turn over minutes from these meetings as a condition of their participation, and to generally exert more authority over federal regulators' rulemaking and supervisory activity. Rep. Barry Loudermilk (R-GA) has introduced a couple of bills to address this; the full Committee approved one of these bills, HR 4823, on a party-line vote in July.

New DOE efficiency standards will choke small businesses, say witnesses
The House Small Business Committee heard testimony on Wednesday from representatives of small businesses in industries that will need to comply with new energy efficiency standards proposed by the Department of Energy (DOE). The Energy Conservation and Policy Act (EPCA) of 1975 requires DOE to set these standards for about 60 different consumer products, and to reevaluate the standards every six years. DOE’s rulemaking in this area has been especially intense over the last two years, since the Department is under a consent order to remedy failures to evaluate these standards during the previous administration. Witnesses representing homebuilders and appliance manufacturers told the Small Business Committee that they will not be able to keep up with the pace of anticipated changes, and that the DOE has not been responsive to their feedback.

CFPB seeks to supervise, regulate large nonbank payment services
This week the Consumer Financial Protection Bureau (CFPB) proposed a sweeping new rule that would define a market for digital consumer payment applications and bring large “providers of funds transfer and wallet functionalities through digital applications” under the Bureau’s supervisory authority. CFPB Director Rohit Chopra said the rule would “crack down on one avenue for regulatory arbitrage” by implementing the Bureau’s authority under the Consumer Financial Protection Act. Specifically, the rule seeks to enforce compliance with the funds transfer, privacy, and other consumer protection laws that apply to banks and credit unions. Comments on the Notice of Proposed Rulemaking are due to the CFPB on January 8, 2024.

Manchin, Hagerty ask SEC to postpone climate disclosure rule
In a letter to Securities and Exchange Commission Chair Gary Gensler yesterday, Senators Joe Manchin (D-WV) and Bill Hagerty (R-TN) asked the SEC to postpone final action and seek additional public comment on its proposed rule on Enhancement and Standardization of Climate-Related Disclosures for Investors. “Putting aside the substantive issues underlying this rulemaking,” the senators wrote, “recent developments should compel the SEC to solicit further public feedback.” Specifically, they said that California’s enactment of new climate risk disclosure requirements last month would subject thousands of businesses to both the SEC rule and the California statute. “Key differences between the two approaches raise significant compliance questions that the SEC should thoroughly review.” The only way to do that, the senators wrote, would be to reopen the climate disclosure proposal for further comment. They also urged the SEC to drop its proposed Scope 3 disclosure requirements from the proposal altogether.

Confirmations, Nominations, Departures

Sen. Joe Manchin (D-WV) announced this week that he will not seek reelection to a fourth term in the Senate. He is the sixth senator — five Democrats and one Republican — to announce plans to retire at the end of next year. (A seventh senator, Ben Sasse (R-NE), resigned at the beginning of this year).

Rep. Derek Kilmer (D-WA) announced yesterday that his sixth term in the House of Representatives, will be his last. Kilmer is ranking member of the House Administration Subcommittee on Modernization and serves on the Appropriations Committee.

Rep. Brad Wenstrup (R-OH) announced yesterday that he will not run for a seventh term in Congress. Wenstrup currently serves on the Permanent Select Committee on Intelligence and the Committee on Ways & Means. 

The Week Ahead

Congress’ agreement to fund the federal government will expire on Friday, November 17, unless legislators vote to extend it.
 
November 14 at 10:00 a.m. Senate Committee on Banking, Housing, and Urban Affairs holds a hearing on “Oversight of Financial Regulators: Protecting Main Street, Not Wall Street.”
 
November 14 at 10:00 a.m. House Judiciary Subcommittee on the Administrative State, Regulatory Reform, and Antitrust holds a hearing on “Oversight of the Department of Justice’s Antitrust Division.”
 
November 14 at 10:00 a.m. House Committee on Financial Services marks up 11 bills related to national security.
 
November 15 at 10:00 a.m. House Committee on Financial Services holds a hearing on “Oversight of Prudential Regulators.”
 
November 15 at 2:00 p.m. House Financial Services Subcommittee on Digital Assets, Financial Technology, and Inclusion holds a hearing on “Crypto Crime in Context: Breaking Down the Illicit Activity in Digital Assets.”
 
November 15 at 2:30 p.m. Joint Economic Committee holds a hearing on “Aging Americans and a Waning Workforce: Demographic Drivers of Our Deficit.”

The Ellis Insight - Jim Ellis on political news

PRESIDENT

Siena College/NYT Poll: Siena College and the New York Times teamed to conduct recent polls for six key swing states during the 10/22 to 11/3 period. The six domains are: Arizona, Georgia, Michigan, Nevada, Pennsylvania, and Wisconsin. The tested Republicans against President Biden were former President Donald Trump, Florida Gov. Ron DeSantis, and ex-UN Ambassador Nikki Haley. In all instances, with the exception of Mr. Trump in Wisconsin, the named Republican would poll ahead of President Biden. 

Of the three Republicans, Ms. Haley performs the strongest against the President. Her best number, +14, comes among Wisconsin likely voters. Mr. Trump’s best state is Nevada (+11); Mr. DeSantis tops President Biden by five percentage points among Arizona registered voters; Mr. Biden’s best performance comes against Mr. Trump in Wisconsin (+2).

Emerson College, reporting on a new series of swing state polls that basically confirms the previously released New York Times/Siena College survey results, also finds Mr. Trump pulling ahead of President Biden. 

The survey series (10/30-11/4; 4,303 AZ, GA, MI, NV, PA, WI registered and likely voters; multiple sampling techniques) sees Mr. Trump topping the President in Arizona (+2), Georgia (+8), Nevada (+7 registered; +3 likely), Pennsylvania (+4), and Wisconsin (+1). Mr. Biden would lead in Michigan (+2). These results are basically the same as the NYT/Siena College conclusions, except that Biden led in Wisconsin and trailed in Michigan. 

The two series confirms that Mr. Trump would be in good position to unseat President Biden if the election were held during the current period. The Democrats certainly have time to right their political ship, and if Mr. Trump is convicted in any of his criminal cases that might be adjudicated before the election, the tables could quickly turn. 

Minnesota: Ruling on a 14th Amendment lawsuit attempting to bar former President Trump from the ballot saying he incited an insurrection, the Minnesota State Supreme Court ruled this week that he will be placed on the Republican primary ballot. The high court left open, however, the possibility to hear another lawsuit for the general election should Mr. Trump win the Republican presidential nomination. Similar lawsuits are alive in Colorado and Michigan. 

In dismissing the challenge, Minnesota Chief Justice Natalie Hudson wrote that the Republican primary is, “an internal party election to serve internal party purposes . . . [a]nd there is no statute that prohibits a major political party from placing on the presidential nomination primary ballot, or sending delegates to the national convention supporting, a candidate who is ineligible to hold office.” 

The plaintiffs indicated they are disappointed with the ruling but underscored that the state Supreme Court has left the door open for a perhaps different ruling later in the cycle relating to the general election. 

SENATE

California: The University of California at Berkeley’s Institute for Governmental Studies (IGS) released their latest Golden State survey (10/24-30; 6,342 CA registered voters; 4,506 CA likely March 5 primary voters; online) finding U.S. Rep. Katie Porter (D-Irvine) eclipsing U.S. Rep. Adam Schiff (D-Burbank) by a scant 17-16% plurality within the large all-party field. 

While the 17% support number represents no gain for Porter when compared to the IGS August study, it does show Schiff losing four percentage points within the same time period. Among self-identified Democratic respondents, the two are tied at 26% apiece.

Former professional baseball star Steve Garvey (R), has increased his position now that he is an announced candidate. He finished third in the IGS poll with 10% support. The race is close enough that if Garvey can coalesce the GOP support around his candidacy (a total of 21% chose a Republican candidate), he could secure a general election ballot position. Among Republican respondents, Garvey receives 27% support as compared to 13 and 12% for candidates James Bradley and Eric Early. 

The Golden State, like Louisiana and Washington, employs an all-party jungle primary system. In California, all candidates are placed on the March 5 ballot, and the top two finishers, regardless of party affiliation or primary percentage attained, qualify for the general election. Democrats are favored to hold the late Sen. Dianne Feinstein’s (D) seat that appointed Sen. Laphonza Butler (D) now holds, but whether a Republican qualifies for the general election or two Democrats advance from the primary, remains to be seen.

Michigan: Former one-term Congressman Peter Meijer (R), defeated for renomination in 2022, announced that he will join the open Michigan U.S. Senate field. The move had been expected for weeks but is curious, nonetheless. It is hard to see a victory path for Rep. Meijer since he couldn’t get enough conservative support to defeat his ’22 GOP challenger, John Gibbs. The latter man would then go onto lose the 2022 general election to now-freshman Rep. Hillary Scholten (D-Grand Rapids). 

The top Republican contenders for the party’s Senate nomination are former U.S. Rep. Mike Rogers and retired Detroit Police Chief James Craig. It is possible that Mr. Meijer’s entry could help Mr. Rogers since Messrs. Craig and Meijer will likely both appeal to the more centrist element of the Republican voter base. If so, this will help Mr. Rogers unite the conservatives behind his candidacy and propel him to the nomination. 

Whoever wins the Republican primary will almost assuredly face Rep. Elissa Slotkin (D-Lansing) in the general election. Sen. Debbie Stabenow (D) is retiring after four terms. The Democrats will be rated as at least slight favorites to hold the open Michigan Senate seat.

West Virginia: Ending months of speculation about West Virginia Senator Joe Manchin’s (D) reelection plans, the veteran politician announced yesterday that he will not seek a third full term next year. The move is not particularly surprising. Sen. Manchin’s approval ratings have turned upside-down; West Virginia now has more registered Republicans than Democrats, and he faced a difficult reelection campaign against the state’s two-term Governor, Jim Justice (R). 

Sen. Manchin now becomes the seventh incumbent not to seek reelection and fifth Democrat. Republicans converting this seat, a strong likelihood since the Democrats have a sparse political bench and no clear heir apparent to Sen. Manchin, would bring both parties to 50-50 status as the two sides battle for majority control in next year’s election.

HOUSE

AR-3: Arkansas state Senator Clint Penzo (R-Springdale) announced he will challenge seven-term Congressman Steve Womack (R-Rogers). During his tenure in the House, Mr. Womack served briefly as chairman of the House Budget Committee. 

Immediately, in a show of support, Sen. Tom Cotton (R), Gov. Sarah Huckabee Sanders (R), and U.S. Rep. Rick Crawford (R-Jonesboro) announced their endorsements of the incumbent. It remains to be seen if this challenge becomes a serious effort. The Arkansas primary is scheduled for Super Tuesday, March 5, 2024.

MN-3: Minnesota US Rep. Dean Phillips (D-Plymouth) has raised hackles within the Democratic Party establishment with his late national challenge to President Biden. Immediately upon his announcement, Democratic National Committee member Ron Harris declared his primary opposition to Mr. Phillips. Late this week, state Senator Kelly Morrison (D-Deephaven) announced that she, too, will oppose Rep. Phillips for renomination in his congressional district. 

This battle will most likely be settled in the Democratic Party’s convention. Typically, primaries are not held after the delegates select their candidate, because the contenders endorse the convention winner. We can expect a contentious Democratic convention to happen within two months of the scheduled Democratic primary on August 13, 2024. In the meantime, Rep. Phillips is continuing with his presidential campaign.

RI-1: Former Biden and Obama White House aide Gabe Amo won the special general election to replace resigned Rep. David Cicilline (D-Providence). He virtually assured himself of the seat when he clinched the September 5 special Democratic primary. Mr. Amo easily scored a 64-36% victory over Republican Gerry Leonard in Tuesday’s special general election. He will now be sworn into the House and serve the balance of the current term. 

The Amo victory will return the Democrats to their full 213-member complement in the House. The next special election, in UT-2, will be held on November 21. Republican Celeste Maloy is favored to hold resigned Rep. Chris Stewart’s (R-Farmington) seat. Should she win, the House will be restored to its post-regular election division of 222R-213D.

GOVERNOR

Kentucky and Mississippi: Governors Andy Beshear (D) and Tate Reeves (R) in Kentucky and Mississippi were reelected to new four-year terms on Tuesday with similar victory margins. Polling in the two states suggested a closer result for both incumbents, but each was favored to win. In 2022, 55 of the 56 U.S. Senators and Governors who ran for reelection won. In the U.S. House elections, 98.1% of incumbents who ran for reelection were successful. This week, we saw two more incumbent Governors win again. 

STATES

Ohio: Ohio voters on Tuesday night, largely on a relatively consistent 55-45% majority, passed ballot measures adding abortion rights to the state constitution and legalizing the possession and use of marijuana. Moves are already underway in the Legislature to begin determining the parameters for legal marijuana and how much the state will tax it as a product and regulate its use.

Virginia: With the support of a new court-imposed legislative map that gave Democrats a higher number of safer seats than Republicans, Virginia voters elected Democratic majorities in both houses of the Legislature. Democrats will now have at least 21 of 40 seats in the Virginia state Senate and 51 of 100 in the House of Delegates. The party division margin differences yield no change in the Senate, while Democrats converted at least three seats in the House. 

LOCALITIES

Houston: State Sen. John Whitmire (D-Houston) and U.S. Rep. Sheila Jackson Lee (D-Houston) advanced to a December 9 runoff election to determine the city’s next mayor. Mr. Whitmire placed first in the field of five candidates with 42.5% of the vote. Ms. Jackson Lee finished a strong second at 35.7%. Polling finds Sen. Whitmire, the state’s second longest-serving state legislator, as the early leader for the secondary vote. 

Incumbent Mayor Sylvester Turner (D) is ineligible to seek a third term. After Tuesday’s vote, Mr. Turner announced his support for Rep. Jackson Lee.

New York City: Yusef Salaam, one of the “Central Park 5” who was falsely accused of raping a woman in Central Park in 1989 and wrongly imprisoned for seven years before being exonerated, was elected on Tuesday night to an open seat on the New York City Council. His election became a foregone conclusion when he won the Democratic primary in late June.

In the Bronx, Republican Kristy Marmorato defeated incumbent Democratic Councilwoman Marjorie Velázquez to become the first member of the GOP to represent the Bronx on the New York City Council in 20 years. Ms. Marmorato unseated Councilwoman Velázquez by a 53-47% margin to cap her stunning victory.

Suffolk County, NY: While the prevailing analyses suggest that the Republicans had a poor electoral night on Tuesday, one place where their numbers improved was on Long Island, NY. It is confirmed that Republican Ed Romaine defeated Democrat Dave Calone to win the Suffolk County Executive position. Coupled with Nassau County Executive Bruce Blakeman, this gives the Republicans full control of the Long Island local governments for the first time in decades. 

In an interview with the New York Post, former Sen. Al D’Amato (R) described the results and winning all the Island’s congressional seats in 2022, as “a political earthquake.”