Who gets to be a bank?

The House Financial Services Subcommittee on Consumer Protection and Financial Institutions held the first of what Chairman Ed Perlmutter (D-CO) said would be multiple hearings yesterday to discuss whether and how fintech companies and other businesses that offer credit should serve customers through nontraditional charters. As technology and demographics change the way Americans use financial services, former Acting Comptroller Brian Brooks said, regulators have a duty to encourage responsible innovation while ensuring safeguards for consumers, and he sees nontraditional bank charters as the best way to do that. Other witnesses warned against mixing banking and commerce, and said that the FDIC lacks the authority it needs for adequate supervision of state-charted industrial loan companies owned by non-banks.

Senate panel looks for ways to boost travel
As Americans get vaccinated and businesses reopen, the travel and tourism industry is eager to welcome guests back to hotels, restaurants, convention centers, and other public spaces, witnesses told the Senate Commerce Subcommittee on Tourism, Trade, and Export Promotion on Tuesday. Domestic and leisure travel should rebound quickly, but U.S. Travel expects it may take up to five years for business and international travel to return to pre-pandemic levels. Steve Hill of the Las Vegas Convention and Visitors Authority called for the creation of a National Travel Infrastructure Strategy, and Tori Emerson Barnes of US Travel noted that the United States is the only one of the top 30 global destinations that doesn’t have a cabinet-level position dedicated to travel and tourism. Witnesses told the Subcommittee that while the hospitality industries urgently need more help, the most important first step is to end the pandemic.

Housing is infrastructure, says Waters
House Financial Services Committee Chairwoman Maxine Waters (D-CA) said Wednesday that she was pleased to see President Biden’s American Jobs Plan recognize that housing must be a major component of any comprehensive infrastructure proposal. Witnesses appeared before the Committee to testify on 17 bills covering a wide range of housing-related issues, including rehabilitation of public housing units, expansion of affordable housing programs, and reauthorization of the National Flood Insurance Program. Waters’ own Housing is Infrastructure Act would provide more than $237 billion in new funding, including $70 billion for repairs to public housing, $35 billion for the HOME program, $45 billion for the National Housing Trust Fund and $12 billion for the Capital Magnet Fund. Committee Republicans said that the President’s infrastructure plan was a “liberal wish list” that would eliminate jobs in the private sector while driving the national debt to catastrophic levels.

Sherman, Huizenga promise bipartisan action on LIBOR
The London Interbank Offered Rate (LIBOR) is really, truly going away in mid-2023, and federal regulators appeared before a House Financial Services subcommittee yesterday to talk about how they’re preparing and to ask for legislative intervention to smooth the transition. Dan Coates of the Federal Housing Finance Agency told the Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets that Fannie Mae, Freddie Mac, and the Federal Home Loan Banks are well prepared for the transition. Deputy Comptroller for Market Risk Policy Kevin Walsh said that more than 95% of national banks have completed a self-assessment to evaluate their readiness. The Federal Reserve, however, estimates that approximately $70 trillion in contracts are scheduled to expire after LIBOR ends, and that $10 trillion of those will be “tough legacy” contracts that don’t include alternative fallback rates. The Fed and Treasury are working with legislators on a bill that would establish a clear, uniform national framework for replacing LIBOR in those contracts, and would authorize the Treasury to provide tax relief for contract transitions. Subcommittee Chairman Brad Sherman (D-CA) and ranking member Rep. Bill Huizenga (R-MI) promised to work together on a nonpartisan solution; Sherman said he hoped to enact legislation by Halloween.

Warren calls for student debt cancellation
At Tuesday’s first hearing of the Senate Banking Subcommittee on Economic Policy, Chair Elizabeth Warren (D-MA) argued that the “pandemic pause” in student loan payments had created a “time bomb” of delayed payments that could throw millions of families over an economic cliff. She and Senator Majority Leader Chuck Schumer (D-NY) have written to President Biden to ask for an executive order that cancels student loan debt up to $50,000 per borrower, which Warren said would wipe out all student loan debt for 84% of borrowers. Support for this proposal is sharply partisan. Senator John Kennedy (R-LA), the Subcommittee’s ranking member, asked how it was fair to forgive student loan debt but not other types of dept, or to ask taxpayers who hadn’t attended college to subsidize those who had. The chief executives of Navient and the Pennsylvania Higher Education Assistance Agency (PHEAA) recommended simplification and clarification of income-based repayment programs and the Public Service Loan Forgiveness (PSLF) program.

House panel wrangles over clean energy, environmental justice
Rep. Paul Tonko, Chairman of the Energy and Commerce Subcommittee on Environment and Climate Change, called for a comprehensive strategy to address the cumulative effects of pollution and climate-related damage on frontline communities at a hearing on the proposed CLEAN Future Act and other environmental justice legislation this week. The Subcommittee’s ranking member, Rep. David McKinley (R-WV), said the legislation was part of an agenda to eliminate fossil fuels by 2035, which would leave workers and entire communities in poverty. While full Committee Chairman Frank Pallone (D-NJ) argued that environmental justice should be a bipartisan issue, ranking member Rep. Cathy McMorris Rodgers (R-WA) pointed to the human toll of abandoning industries and wiping out well-paid blue collar jobs.

DOL issues guidance on fiduciary investment advice
As the Department of Labor revises the so-called “fiduciary rule” governing advice to retirement investors, it released two documents this week to provide guidance on how federal retirement laws apply to advice about investments in plans covered by the Employee Retirement Income Security Act (ERISA). The first is “Choosing the Right Person to Give You Advice: Information for Investors in Retirement Plans and Individual Retirement Accounts,” which includes a set of questions retirement investors can ask investment advice providers to determine whether they are fiduciaries, what their fees and expenses will be, and what conflicts of interest the adviser might have. The second is a set of frequently asked questions for investment advice providers who are availing themselves of the department’s “Improving Investment Advice for Workers and Retirees” exemption, which took effect in February.

Confirmations, Nominations, Departures

The Senate confirmed Gary Gensler as Chairman of the Securities and Exchange Commission by a vote of 53 to 45.

The President will nominate Sarah Bianchi and Jayme White as deputy US Trade Representatives. Bianchi, a former aide to then-Vice President Biden, is senior managing director and head of US public policy research at Evercore ISI. White has been chief trade adviser to Senate Finance Committee Chair Ron Wyden (D-OR) since 2014.

Rep. Kevin Brady (R-TX), ranking member of the House Ways & Means Committee, announced that he will not seek reelection in 2022.

Rep. Patrick McHenry (R-NC), ranking member of the House Financial Services Committee, named Matt Hoffman as the new staff director for Financial Services Republicans.

The Week Ahead

April 20 at 10:00 a.m. Senate Committee on Banking, Housing, and Urban Affairs holds a hearing on “An Economy that Works for Everyone: Investing in Rural Communities.”

April 20 at 10:00 a.m. Senate Committee on Commerce, Science, and Transportation holds a hearing on “Strengthening the Federal Trade Commission’s Authority to Protect Consumers.” All four incumbent Commissioners will testify.

April 20 at 10:00 a.m. Senate Committee on Finance holds a hearing on “Combatting Inequality: The Tax Code and Racial, Ethnic, and Gender Disparities.”

April 20 at 10:00 a.m. House Financial Services Committee holds a markup on various bills.

April 20 at 10:00 a.m. House Committee on Small Business holds a hearing on “Update on SBA’s Pandemic Response Programs,” with testimony from the SBA Inspector General and a representative of the Government Accountability Office.

April 20 at 10:30 a.m. House Energy & Commerce Subcommittee on Energy holds a hearing on “Generating Equity: Deploying a Just and Clean Energy Future.”

April 21 at 10:00 a.m. Senate Commerce Committee holds a hearing on the nominations of Bill Nelson to serve as Administrator of NASA and Lina M. Khan to be a member of the Federal Trade Commission.

April 21 at 2:00 p.m. House Appropriations Subcommittee on the Departments of Transportation and Housing & Urban Development hears testimony from HUD Secretary Marcia Fudge on the agency’s FY 2022 budget request.

April 21 at 2:30 p.m. Senate Commerce Subcommittee on Aviation Safety, Operations, and Innovation holds a hearing on “Prepare for Takeoff: America’s Safe Return to Air Travel.”

April 22 at 10:00 a.m. Senate Banking Committee holds a hearing on “21st Century Communities: Capitalizing on Opportunities in the Clean Energy Economy.”

April 22 at 10:00 a.m. Senate Finance Committee holds a hearing on “U.S.-China Relations: Improving U.S. Competitiveness through Trade.”

April 22 at 10:00 a.m. House Oversight Subcommittee on Environment holds a hearing on “The Role of Fossil Fuel Subsidies in Preventing Action on the Climate Crisis.”

The Ellis Insight – Jim Ellis on political news

SENATE
Alaska: 2020 Independent/Democratic nominee Al Gross, who raised over $19 million for his challenge against Sen. Dan Sullivan (R), confirms that he is considering challenging Sen. Lisa Murkowski (R) next year. The new top four jungle primary system would virtually guarantee that both Sen. Murkowski and Dr. Gross would advance into the general election, so should both decide to run—Sen. Murkowski has not yet declared her intentions for 2022—we can count on a campaign lasting well over a year.

Dr. Gross lost to Sen. Sullivan, 54-41%, despite exceeding the incumbent’s fundraising totals by almost a 2:1 margin. Already announced is Republican former State Administrative Director Kelly Tshibaka.

Arizona: The Club for Growth organization released a brand new WPA Intelligence survey (4/5-6; 505 AZ likely Republican primary voters; live interview) and found Rep. Andy Biggs (R-Gilbert) leading Gov. Doug Ducey, 46-45%, in a hypothetical Republican primary US Senate poll. Gov. Ducey, however, has already said that he will not become a US Senate candidate.

Interestingly, the poll found that should ex-President Donald Trump endorse Biggs, his margin over the Governor would rise to 59-32%. Sen. Mark Kelly (D), who won the 2020 special election, will stand for a full six-year term next year.

Kentucky: Former Louisville state Representative Charles Booker, who lost the 2020 US Senate Democratic primary to party nominee Amy McGrath in a close 44-42% result, has filed an exploratory committee for purposes of assessing his chances against Sen. Rand Paul (R) in a 2022 campaign. It is expected that Mr. Booker will soon officially enter the race.

North Carolina: Former Tar Heel State Gov. Pat McCrory (R) declared his US Senate candidacy this week. Reports are emanating from the Piedmont Triad region that three-term Rep. Ted Budd (R-Advance) will also soon enter the NC Senate race.

Public Opinion Strategies just released a survey for the ex-Governor who was defeated for re-election in 2016. The poll (4/6-8; 500 NC likely Republican primary voters; live interview) found Mr. McCrory staked to a large 48-13-9% over former Rep. Mark Walker, the first candidate to announce, and Mr. Budd, respectively. The North Carolina race will be a premier national Senate campaign.

Ohio: Cleveland businessman Mike Gibbons, who dropped $2.6 million of his own money into his 2018 US Senate campaign and lost to then-Congressman Jim Renacci 47-32% in the Republican primary, announced yesterday that he will enter the growing field of 2022 open seat candidates hoping to succeed retiring Sen. Rob Portman (R).

According to an Axios news report, venture capitalist and author J.D. Vance (R) is telling associates that he will also enter the open US Senate race at an undetermined time. The move had been expected. Mr. Vance came to fame in authoring the best-selling book Hillbilly Elegy, which, as described on the cover is “A Memoir of a Family and Culture in Crisis.”

Already in the race are ex-state Treasurer and 2012 Senate nominee Josh Mandel and former Ohio Republican Party chair Jane Timken. Reps. Steve Stivers (R-Columbus), Mike Turner (R-Dayton), Bill Johnson (R-Marietta), and David Joyce (R-Russell Township) are possible entries, while Mr. Renacci, and state Senator and Cleveland Indians baseball team minority owner Matt Dolan are also potential candidates. The Democratic field appears to be winnowing down to Rep. Tim Ryan (D-Warren/Youngstown), but he has yet to formally announce his Senate campaign.

South Carolina: Two-term State Representative Krystle Matthews (D-Ladson) announced that she will challenge Sen. Tim Scott (R) next year with a goal of registering 150,000 new Democratic voters. Ms. Matthews’ is the first elected official to formally announce a challenge to the Republican Senator. Mr. Scott was originally appointed to the Senate in early 2013 after then-Sen. Jim DeMint (R) resigned. He won the 2014 special election and a full term in 2016 both with 61% of the vote. He is a heavy favorite for re-election in 2022.

Wisconsin: State Treasurer Sarah Godlewski (D), originally elected in 2018, declared this week her intention to run for the US Senate next year. She joins two other credible Democrats in the primary, Milwaukee Bucks basketball organization executive Alex Lasry, and Outagamie County Executive Tom Nelson. Sen. Ron Johnson (R) has yet to announce his political intentions for 2022. He is a retirement possibility because he originally pledged to serve only two terms when he first ran in 2010.

HOUSE
AZ-1: Attorney Tiffany Shedd, the 2020 Republican congressional nominee who held Rep. Tom O’Halleran (D-Sedona) to just over a three-point victory, will not run for Congress next year. Late this week, Ms. Shedd announced that she will enter the open Attorney General’s contest in 2022. Attorney General Mark Brnovich (R), a potential candidate for either Governor or Senator, is ineligible to seek a third term in his current position. Ms. Shedd is the first person from either party to declare for the open AG position.

CA-39: Freshman California Rep. Young Kim (R-La Habra/Fullerton) and ex-Rep. Gil Cisneros (D) had run against each other twice with both winning one time. It appears that President Biden has decided there won’t be a re-match, at least in 2022. Yesterday, the President announced that he has appointed Mr. Cisneros as Undersecretary of Defense for Personnel & Readiness. Redistricting will change the 39th CD and it is a certainty that Rep. Kim will face a highly competitive Democratic opponent next year, but that individual will now likely be someone other than Mr. Cisneros.

FL-20: As expected, Broward County Commissioner Dale Holness (D), a former Broward County Mayor, officially announced that he will enter the yet-to-be-scheduled special congressional election to replace the late Rep. Alcee Hastings (D-Delray Beach) who passed away from cancer last week after serving 28 years in the House of Representatives. At the announcement event as a show of family support was Alcee “Jody” Hastings II, the late Congressman’s son.

Also in the Democratic race is Mr. Holness’ Broward County Commission colleague, Barbara Sharief and former Palm Beach County Commissioner Priscilla Taylor. State Sen. Perry Thurston (D-Ft. Lauderdale), a former state House Minority Leader, is also expected to be a major candidate for this impending race.

MD-1: Harford County Executive Barry Glassman (R), who had been considering running for Governor or challenging US Rep. Andy Harris (R-Cockeysville) in the 2022 Republican primary, yesterday announced instead that he will run for State Comptroller. Incumbent Peter Franchot (D) is already declared gubernatorial candidate, so the Comptroller’s post will be an open race.

While no Republican has yet declared against Rep. Harris, four Democrats including 2014 gubernatorial candidate Heather Mizeur have said they will enter their congressional primary. Rep. Harris is the lone Republican in the Maryland congressional delegation and redistricting could make the 1st CD much less hospitable for him in 2022.

NV-4: High school basketball coach and former UNLV basketball player Tony Lane (R), who had a short career in the NBA, announced that he will challenge Rep. Steven Horsford (D-Las Vegas) next year. Already in the race is insurance company owner Sam Peters who placed second in the 2020 Republican primary. Rep. Horsford won a 51-46% victory last year over former state Assemblyman Jim Marchant (R).

NY-1: On the heels of Rep. Lee Zeldin (R-Shirley) announcing for Governor, Suffolk County Legislator Bridget Fleming, who placed third in a field of four Democratic primary candidates in the 2020 race though still within nine points of nomination winner Nancy Goroff, announced that she will enter the open 2022 congressional race. We can expect a large field on both sides in what can be a competitive seat though one that decidedly leans Republican.

NY-24: Democrat Dana Balter, the Upstate New York college professor who twice challenged Rep. John Katko (R-Syracuse), said this week that she will not return for a re-match in 2022. Ms. Balter raised a total of $6 million for her two congressional runs and was a competitive challenger but lost by six points even in the strong Democratic year of 2018, and then saw Rep. Katko’s victory margin increase to ten points last year. Redistricting will likely significantly change the 24th CD, but the anchor city of Syracuse will likely remain intact and part of the new district configuration.

NC-11: Since 2020 Democratic congressional nominee Moe Davis changed his mind about running again next year, several party members have declared their candidacies in hope of challenging freshman Rep. Madison Cawthorn (R-Hendersonville/Asheville). At this point, two contenders appear credible with the second, local pastor and former University of North Carolina football player Eric Gash, just this week announcing his candidacy. Already in the race in Buncombe County Commissioner and pastor Jasmine Beach-Ferrara. Also announcing during the week is Democratic Army veteran Jay Carey.

Amid controversy, Rep. Cawthorn, now the youngest member of the House, still notched a strong 54-42% election victory last November.

TX-8: House Ways and Means Committee ranking Republican Kevin Brady (R-TX) announced that he will not seek a 14th term in the House, thus opening what should remain a safe Republican post-redistricting seat. Mr. Brady was first elected to Congress in 1996 after spending three terms in the Texas House of Representatives. He averaged 81.6% of the vote over his twelve federal re-election campaigns.

VA-2:Republican state Senator Jen Kiggans announced that she will enter the Republican primary to challenge two-term Rep. Elaine Luria (D-Norfolk) in the Virginia Beach anchored seat. Like Rep. Luria, Senator Kiggans is a Navy veteran in a region that this particular military service dominates. The 2nd District is competitive, so a fresh Republican nominee such as Sen. Kiggans has the opportunity to make this race one to watch nationally.

GOVERNOR
Maryland: Former Prince Georges County Executive Rushern L. Baker III, who placed second in the 2018 Maryland Democratic gubernatorial primary, announced that he will enter the open Governor’s campaign next year. Mr. Baker lost the party nomination to former NAACP President and CEO Ben Jealous, 40-29% within a field of nine candidates.

It is also expected that Baltimore County Executive John Olszewski (D) will soon become a Democratic gubernatorial candidate. Mr. Olszewski won the 2018 County Executive Democratic primary by just 17 votes after serving in the state House of Delegates but lost a state Senate election in 2014. Gov. Hogan is ineligible to seek a third term.

Turning to the GOP side, Lt. Gov. Boyd Rutherford said he will not seek the Governorship next year. State Commerce Secretary Kelly Schulz (R), hoping to capture the Maryland Republican Party’s Larry Hogan faction, announced that she will enter the race. Former Republican National Committee chairman Michael Steele confirms that he is considering running as well.

New York: Long Island US Rep. Tom Suozzi (D-Glen Cove) said this week that he is considering challenging embattled Gov. Andrew Cuomo in the 2022 Democratic primary should the incumbent seek re-nomination. Rep. Suozzi was re-elected to a third term in the House last year with a 56-43% margin. He served two terms as Nassau County Executive but was defeated for re-election in 2009 and lost again four years later in a comeback campaign.

Virginia: Public Policy Polling surveyed the Virginia Democratic electorate in anticipation of the June 8th statewide Democratic primary. The survey (4/12-13; 526 VA likely Democratic primary voters; interactive voice response system), to no one’s surprise, finds former Gov. Terry McAuliffe holding a wide lead over the other contenders.

According to the PPP results, McAuliffe leads state Sen. Jennifer McClellan (D-Richmond), former state Delegate Jennifer Carroll Foy, Lt. Gov. Justin Fairfax, and state Delegate Lee Carter (D-Manassas), 42-8-8-7-4%, respectively.

The former Virginia chief executive and ex-Democratic National Committee chairman is the prohibitive favorite for the Democratic nomination and will begin the general election with a large polling lead over whomever the Republicans nominate in their May 8th hybrid convention process.