Treasury begins “extraordinary measures” to avoid government insolvency

The Golden Apple from GrayRobinson
Written By Renee Leta

Secretary of the Treasury Janet Yellen sent another letter to Congressional leadership yesterday to describe her actions in response to US sovereign debt reaching its statutory limit. Treasury has begun a “debt issuance suspension period” for the Civil Service Retirement and Disability Fund (SCRDF) and the Postal Service Retiree Health Benefits Fund (PSRHBF) that will continue to June 5. That June 5 date is not a sure deadline, Yellen warned: “the period of time that extraordinary measures may last is subject to considerable uncertainty . . . I respectfully urge Congress to act promptly to protect the full faith and credit of the United States.”

Senate Majority Leader Chuck Schumer (D-NY) and House Democratic Leader Hakeem Jeffries (D-NY) called last week for legislation to raise the debt limit. Speaker of the House Kevin McCarthy (R-CA) and Senate Minority Leader Mitch McConnell (R-KY) have made no formal public statements about Yellen’s actions, but McConnell told reporters in Kentucky yesterday that “America must never default on its debt. It never has and never will.”

HUD proposes new AFFH rule
Yesterday the Department of Housing and Urban Development released its long-anticipated proposed rule on Affirmatively Furthering Fair Housing (AFFH) under the Fair Housing Act. The proposal would restore and build upon the 2015 AFFH rule, which was repealed by the Trump administration. It would require program participants to submit five-year Equity Plans to HUD for review and approval, similar to the Assessment of Fair Housing reports required by the 2015 rule. The proposal would require participants to incorporate fair housing goals into other planning documents, and to provide HUD with annual progress reports on their Equity Plans. The Equity Plans and the progress reports would all be available to the public online.

HUD says the proposed rule would simplify the 2015 rule’s fair housing analysis requirements, provide more transparency to the public, give HUD more power to work with program participants to improve Equity Plans, and give both HUD and the public more tools for accountability. President Biden, who directed HUD to develop a new AFFH rule during his first week in office, called the proposal “an important step forward.” Comments are due to HUD within 60 days of the notice of proposed rulemaking’s publication in the Federal Register.

Acting Comptroller outlines supervisory policy for “too big to manage” banks
In an address before the Brookings Institution earlier this week, Acting Comptroller of the Currency Michael Hsu called for a robust approach to detecting, preventing, and addressing the risk that a large, complex financial institution might become too large to manage. Effective management is not infinitely scalable, he said, and at the point at which giant banks seem unwilling or unable to address supervisory feedback, the OCC is prepared to pursue “an escalation framework” that could end with an order to divest lines of business or portfolios. The OCC would coordinate any actions with other regulators, Hsu said. He noted that Global Systemically Important Banks (G-SIBs) are already required to be “separable,” so they can quickly identify and sell off individual business units.

CFPB warns companies against deceptive “unsubscribe” offers
The Consumer Financial Protection Bureau (CFPB) continued its campaign against “dark pattern practices and other harmful tactics” that trick consumers into paying for projects or services they don’t want with a circular on “Unlawful Negative Option Marketing.” Yesterday’s circular focuses on subscription services and trial marketing programs that renew automatically, often at higher rates, unless a consumer cancels them. Last year the CFPB sued Transunion, two of its subsidiaries, and executive John Danaher for this type of deceptive marketing practices. The Bureau is partnering in this area with the Federal Trade Commission (FTC), which published a study last fall on the increase in dark patterns designed to trick consumers.

SEC seeks candidates for Small Business Capital Formation Advisory Committee
The Securities and Exchange Commission is looking for new members for its Small Business Capital Formation Advisory Committee. Established by law in 2016, the Committee meets quarterly to advise the SEC on rules, regulations, and policies as they apply to small businesses. The Committee of “not fewer than 10, and not more than 20) must include representatives of emerging companies, professional advisors, investors, minority- and women-owned small businesses, small public companies, and marketplace participants. Members serve four-year terms, at the pleasure of the Commission. Interested candidates should send a letter and their credentials to smallbusiness@sec.gov before February 18.

Seventeen new Republicans join House T&I Committee
Rep. Sam Graves (R-MO), chairman of the House Committee on Transportation & Infrastructure, announced on Tuesday that the Committee would have seventeen new Republican members in this Congress, joining eighteen returning Republicans.

​Fourteen of the seventeen are first-term members of Congress; Rep. Gooden is serving his third term, while Reps. Owens, Mann, and Yakym are all in their second terms.  


House Homeland Security Committee welcomes new Republican members
Chairman Mark Green, MD (R-TN) announced this week that the House Committee on Homeland Security would have ten new Republican members: 

Reps. LaLota, Ezell, D’Esposito, Lee, Luttrell, Strong, Brecheen, and Crane are all serving their first terms in the House.  

House Natural Resources adds seven first-term Republicans
Rep. Bruce Westerman (R-AR), chairman of the House Committee on Natural Resources, welcomed seven Republican freshmen as new panel colleagues this week:

Westerman said the Committee would address issues such as “western drought, wildfires, the Biden border crisis, government accountability, domestic energy and more.” 

The Week Ahead

Both House and Senate return to Washington next week to finish organizing the 118th Congress. No hearings have been announced on the House side. The Senate has announced only two hearings for next week, both in the Judiciary Committee. One of those, on Wednesday, is on judicial nominations. We’re wondering whether Taylor Swift might show up at the other one, scheduled for Tuesday. 

January 24 at 10:00 a.m. Senate Committee on the Judiciary holds a hearing on “That’s the Ticket: Promoting Competition and Protecting Consumers in Live Entertainment.”  

January 25 at 10:00 a.m. Securities and Exchange Commission holds an open meeting to discuss proposing a new rule to enforce prohibitions against conflicts of interest in certain securitizations, under Section 621 of Dodd-Frank.  

The Ellis Insight - Jim Ellis on political news

SENATE

Arizona: Media reports from Arizona suggest that both defeated gubernatorial candidate Kari Lake and Senate contender Blake Masters are considering entering the 2024 US Senate contest. This campaign will be unique since it features the incumbent, Kyrsten Sinema, originally elected as a Democrat running as an Independent.  
 
Democrats looked to be headed for a tough primary battle between Reps. Ruben Gallego (D-Phoenix) and Greg Stanton (D-Phoenix) until the latter man announced on Friday that he would not run statewide. Other potential Republican candidates include Pinal County Sheriff Mark Lamb and state Treasurer Kimberly Yee. This race will prove interesting since both eventual major party nominees and Sen. Sinema all would have legitimate victory scenarios in a tight three-way general election campaign. 
 
Indiana: Not backing down from a potential Republican primary race against former Governor Mitch Daniels, four-term US Rep. Jim Banks (R-Columbia City) announced this week that he will enter Indiana’s open Senate race next year.  
 
Mr. Daniels has been sending signals that he will also run for the Senate, but the Banks move means the May Republican primary will likely be the big battle to replace first-term Sen. Mike Braun (R) who is bypassing re-election to run for Governor. Other potential GOP candidates include term-limited Gov. Eric Holcomb and US Rep. Victoria Spartz (R-Noblesville), among others. 
 
Nebraska: Not yet even sworn into office, Nebraska Senate-Designate Pete Ricketts (R), who new Gov. Jim Pillen (R) last week chose to fill the vacancy that former Sen. Ben Sasse’s (R) resignation created, may already be drawing a 2024 Republican challenger.  
 
Rancher Chuck Herbster, the 2022 gubernatorial candidate who former President Trump endorsed and would lose to Mr. Pillen with then-Gov. Ricketts’ strong support, confirmed that he is considering launching a nomination challenge when the latter man first faces the voters in the May 2024 Republican primary. One reason Mr. Herbster lost the ’22 primary, however, was because several women went public with sexual harassment accusations, a controversy sure to arise again if he makes another attempt to seek public office.  
 
Regardless of Mr. Herbster’s plans, it is probable that Mr. Ricketts will face a contested primary next year. His appointment was not unanimously well received within all quarters of the Nebraska Republican Party, but he has a full year in which to build an expanded intra-party winning coalition. 

Ohio: Ohio State Sen. Matt Dolan (R-Chagrin Falls), a minority owner of the Cleveland Guardians Major League Baseball club, will return for a second consecutive US Senate contest. This time, he hopes to challenge veteran Sen. Sherrod Brown (D) in the 2024 general election.
 
In the last election, for the open seat created when Sen. Rob Portman (R) announced he would not seek a third term, Sen. Dolan competed against six opponents, losing to now-Senator J.D. Vance (R) by a 32-23% margin with former state Treasurer Josh Mandel placing second less than a point ahead of Mr. Dolan.  
 
In the current election cycle, Sen. Dolan’s chances for the party nomination appear better. If he is successful in the Republican primary, Sen. Dolan faces a difficult general election opponent in Sen. Brown even though Ohio has been moving decidedly closer to the GOP in recent elections. In 2018, Sen. Brown defeated then-US Rep. Jim Renacci (R), 53-47%.  
 
West Virginia: In a media interview at the end of last week, term-limited West Virginia Governor Jim Justice (R) confirmed that he is “seriously considering” making a US Senate run next year. Sen. Joe Manchin (D) has not committed to seeking re-election. He could retire or enter the open Governor’s race since Mr. Justice is ineligible to run for a third term. Rep. Alex Mooney (R-Charles Town) has already announced his intention to challenge Sen. Manchin. At this point, West Virginia appears as the Republicans’ top national conversion target. 

HOUSE

AZ-1: Arizona Rep. David Schweikert’s (R-Fountain Hills) 3,195-vote victory over media consultant Jevin Hodge, a percentage margin of just 50.4 – 49.6%, proved to be the twelfth closest US House result in the 2022 election cycle. Predictably, since Mr. Schweikert, plagued with an ethics controversy surrounding his handling of campaign and federal monies and who significantly under-performed in a district that the FiveThirtyEight data organization rates as R+7, will draw another serious challenge in 2024.  
 
Already, three individuals are publicly taking action or mulling challenges. Dr. Andrew Horne, a local orthodontist, has officially announced his candidacy. Mr. Hodge, the 2022 nominee, confirms that he is considering another run. Former local news anchor Marlene Galan-Woods (D), widow of the late Republican-turned-Democrat Attorney General Grant Woods, also acknowledges her potential interest in making a congressional run in the state’s new 1st CD. Count on this race developing into another major national target campaign next year. 

AZ-4: Local Phoenix area restaurant owner Kelly Cooper (R), who lost in November to Rep. Greg Stanton (D-Phoenix), 56-44% from a district that the FiveThirtyEight data organization rates only as D+1, said yesterday that he will run again in 2024. With Congressman Stanton eschewing a US Senate run, the chances are good that we will see a re-match congressional race here next year. In 2022, Mr. Cooper upset GOP establishment favorite Tanya Wheeless in the Republican primary with a 28-25% win within a field of five contenders. 

CA-30: We continue to see a chain reaction of political moves in California since Rep. Katie Porter (D-Irvine) announced her intention last week to run for the Senate. In anticipation of Rep. Adam Schiff (D-Burbank) entering the Senate contest, though he has yet to say so, we saw two credible Democratic candidates quickly announcing for what they think will be the Congressman’s open seat.  
 
Los Angeles Unified School District Board of Education Vice Chairman Nick Melvoin (D) has declared for the House seat, and immediately afterward state Assemblywoman Laura Friedman (D-Burbank) announced that she, too, will compete for Rep. Schiff’s federal position.  
 
Additionally, businessman Josh Bocanegra (D), who was originally looking to enter the US Senate race, has now decided to also compete for the Burbank anchored congressional seat. Most recently, actor Ben Savage (D), brother of actor Fred Savage, who has appeared in film and television in roles from 1989 to the present, made public his intention to enter the 30th District congressional field. Through all of this, Sen. Dianne Feinstein (D) has yet to publicly confirm her own 2024 plans, though all of these moves are based upon her expected retirement. 
 
The CA-30 seat will remain in Democratic hands, but it is likely we will see two Democrats advance to the general election from the top two jungle primary format that California has used since the 2012 election. The FiveThirtyEight data organization rates the district as D+45. 

CA-47: The whirlwind of California political activities in early anticipation of the 2024 election continues. With Rep. Katie Porter (D-Irvine) already declaring for the US Senate and three others announcing for Rep. Adam Schiff’s (D-Burbank) House seat even though he has yet to say he’s running for the Senate, we now see a state legislator, Sen. David Min (D-Irvine), also making a move.  
 
This week, Sen. Min announced his intention to compete for Rep. Porter’s open seat and will have the Congresswoman’s endorsement. Since California state Senate seats are larger than congressional districts, Sen. Min’s overlay into the current 47th CD from his 37th District state Senate seat is substantial and includes the region’s anchor city of Irvine.  
 
IN-3: Responding to four-term northern Indiana Rep. Jim Banks (R-Columbia City) announcing for the open Senate race, the first major potential US House candidate has filed an exploratory committee. State Sen. Andy Zay (R-Huntington) confirmed that he is testing the waters for a congressional run but has not made any final decision about entering the open contest. A crowded Republican field is expected in a seat where the GOP nominee will have a major advantage in the general election. The FiveThirtyEight data organization rates IN-3 as R+34. 
 
MN-2: After Navy veteran Tyler Kistner (R) ran two close but unsuccessful campaigns against Rep. Angie Craig (D-Prior Lake) in 2020 and 2022, Lexington Mayor Mike Murphy (R) recently announced that he will attempt to win the party nomination in hopes of becoming the Congresswoman’s 2024 challenger. There is little indication as to what Mr. Kistner might be thinking about a third congressional run, but him losing two consecutive races suggests that the party leaders will be looking for a new contender. 

GOVERNOR

Louisiana: It is believed that US Rep. Garret Graves (R-Baton Rouge), who was just elected to a fifth term in the House, will imminently announce his 2023 gubernatorial candidacy. With both Sen. John Kennedy (R) and Lt. Gov. Billy Nungesser (R) deciding not to run for Governor and incumbent John Bel Edwards (D) ineligible to seek a third term, the race becomes wide open.  
 
The early leader appears to be Attorney General and former Congressman Jeff Landry (R), but with the candidate filing deadline set for August 10th and the initial primary scheduled for October 14th, this race still has months to develop. Since this is an odd-year election, Rep. Graves would not have to risk his House seat in order to enter the statewide contest. 

Mississippi: A Siena College poll conducted for the Mississippi Today organization (1/8-12; 821 MS registered voters; live interview) finds first-term Governor Tate Reeves (R) holding only a four-point, 43-39%, edge over newly announced Democratic candidate Brandon Presley, a cousin to the late music legend Elvis Presley, as the February 1st candidate filing deadline fast approaches. The statewide primary is scheduled for August 8th, with a runoff on August 29th for those candidates not receiving majority support on the initial vote. 
 
Gov. Reeves polled close in the 2019 election, but in the end won a 52-47% victory over four-term Attorney General Jim Hood (D). While his job approval rating, according to the Siena poll, is 48:45% positive to negative, his personal rating is an upside down 40:48%. It is unusual to see a personal rating register more negative than in a job approval score.  
 
North Carolina: Two-term state Attorney General Josh Stein (D), who barely won re-election in 2020 with a scant 50.1 – 49.9% majority, announced his bid for Governor during the week. Gov. Roy Cooper (D) is ineligible to seek a third term in 2024, which will lead to another tight North Carolina open statewide campaign.  
 
Mr. Stein, who is the early favorite to win the Democratic nomination, will probably face Republican Lt. Gov. Mark Robinson who looks to have the inside track toward becoming the GOP standard bearer. We can expect another close statewide election in this highly competitive political state. 

LOCALITIES

Chicago: Embattled first-term Mayor Lori Lightfoot continues to see support drift away. At an event the Chicago Teachers Union sponsored to declare its support of Cook County Commissioner Brandon Johnson for Mayor, US Reps. Jonathan Jackson (D-Chicago) and Delia Ramirez (D-Chicago) also announced their endorsement of the county official. Rep. Jackson criticized Mayor Lightfoot for not keeping her 2019 campaign promises to support his endorsement of Commissioner Johnson.  
 
The congressional member endorsements were a bit surprising since polling suggests that Mayor Lightfoot’s top competitor is their colleague in the House of Representatives, Congressman Jesus “Chuy” Garcia (D-Chicago). The Mayor’s election is February 28th. If no candidate receives majority support, the top two finishers will advance to an April 4th runoff election.

Renee Leta
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