Your Weekly Report on the Discord from Washington, D.C.
In Partnership with the Eris Group
Senate confirms Sessions, Price — The Senate voted last Wednesday night to confirm Jeff Sessions as Attorney General of the United States, and very early Friday morning to confirm Tom Price as Secretary of Health and Human Services. Both nominations were confirmed by a vote of 52-47 — along straight party lines except for Senator Joe Manchin (D-WV), who voted in favor of Sessions’ nomination. With the confirmation of Betsy DeVos last Tuesday, the Senate has now approved eight of President Trump’s Cabinet appointments. Seven Cabinet posts remain to be filled: Agriculture, Commerce, Energy, Housing and Urban Development, Interior, Labor, and Veterans Affairs. The Senate must also vote on cabinet-rank appointments to head the Environmental Protection Agency, the Office of Management and Budget, the Small Business Administration, and the Office of the US Trade Representative —and eventually, on nearly 1,000 lower-ranking executive branch appointments, most yet to be made.
Mnuchin vote expected Tuesday — Before leaving town very early Friday morning, the Senate voted 53-43 to move forward with the nomination of Steven T. Mnuchin to serve as Secretary of the Treasury. The Senate is scheduled to return tonight, to begin up to seven hours of debate on the nomination.
Buchanan is “very confident” in speedy tax reform — Rep. Vern Buchanan (R-FL), a member of the House Ways and Means Committee, told a Bipartisan Policy Center forum last week that he expects Congress to act before the August recess on a package of tax reforms that will simplify the tax code and lower pass-through rates, corporate rates, and individual rates. He said that the leadership is committed to lowering pass-through rates from 43% (in some states, including state tax) to 20-25%; lowering corporate rates to 20%; and lowering individual rates to a maximum of 33%.
House bill would allow alternative credit scoring models for GSE-backed loans — Reps. Ed Royce (R-CA), Kyrsten Sinema (D-AZ), and Terri Sewell (D-AL) introduced legislation last week to make it possible for Fannie Mae and Freddie Mac to consider alternative credit scoring models when deciding whether to purchase mortgages. H.R. 898, The Credit Score Competition Act, “opens up the market in a responsible manner for those qualified to buy a home and eliminates the government-backed monopoly in credit scoring,” said Rep. Royce. The House Subcommittee on Financial Institutions and Consumer Credit heard testimony in support of the bill last fall.
ABA, Washington Federal sue US over Fed dividend reduction — The American Bankers Association and Washington Federal filed suit against the federal government last Thursday, asking for the return of Federal Reserve Bank dividends that were diverted to help pay for the 2015 highway spending bill. Federal Reserve member banks are guaranteed a six percent dividend, the suit argues, while the 2015 bill cut those dividends to two percent. “By reneging on that promise and failing to pay all member bank stockholders a six percent annual dividend, the Government either breached its contracts with those banks or failed to pay just compensation for a Fifth Amendment taking,” the lawsuit alleges.
Court rules that fiduciary rule does not exceed DOL’s authority — The US District Court for the Northern District of Texas ruled last Wednesday that the Department of Labor was acting within its statutory authority when it issued its so-called fiduciary rule last year, and that it had followed appropriate rulemaking procedure. A group of plaintiffs including the US Chamber of Commerce and the American Council of Life Insurers had challenged the rule, asking the court to vacate it. While the court declined to do so, the White House issued a Presidential Memorandum two weeks ago directing the Department of Labor to conduct a new analysis of the rule, and to rescind it if the Department finds that it has harmed or is likely to harm investors.
Tarullo resigns from Federal Reserve Board, effective April 5 — Federal Reserve Board Governor Daniel K. Tarullo submitted his resignation on Friday, and plans to leave office on or around April 5. Tarullo was appointed in 2009 to an unexpired term that ends in 2022; his departure leaves three vacancies on the seven-member board. In his time at the Fed, Tarullo chaired the Board’s Committee on Supervision and Regulation. He also served as Chairman of the Financial Stability Board’s Standing Committee on Supervisory and Regulatory Cooperation.
Alvarez to retire as Fed general counsel — Earlier last week, the Federal Reserve Board announced that its longtime General Counsel, Scott G. Alvarez, will retire from the agency later this year. Alvarez has served as the Fed’s general counsel for 12 years, capping a 36-year career there. The Fed has begun a search for his successor.
House Financial Services approves oversight agenda — The House Financial Services Committee has identified Dodd-Frank, the Consumer Financial Protection Bureau, cybersecurity, capital markets, housing finance, flood insurance, monetary policy and terrorism financing as areas for oversight in this Congress, voting last Tuesday on a nine-page plan. The Committee must also reauthorize several programs whose authorization lapsed in 2016, although Congress appropriated funds for them. These include the SEC and its Office of the Inspector General; the Community Development Financial Institutions Fund; almost all programs administered by the Department of Housing and Urban Development; and the Treasury’s Office of Terrorism and Financial Intelligence and the Financial Crimes Enforcement Network (FinCEN).
CFPB, New York sue for defrauding 9/11 heroes and NFL concussion victims — The Consumer Financial Protection Bureau and the New York Attorney General announced last Tuesday that they had filed a lawsuit against RD Legal Funding, LLC, two affiliated companies, and their owner, Roni Dersovitz, for scamming victims of 9/11 and NFL concussion victims out of funds intended to cover medical costs and lost income. The agencies allege that RD Legal “used deceptive tactics to charge unlawfully high interest rates for advances on settlement and compensation funds.” The lawsuit, filed in the US District Court for the Southern District of New York, asks that all these contracts be voided, and that RD Legal return “ill-gotten revenues” and pay redress to its customers. It also asks the court to levy civil money penalties.
This Week in Washington:
Senate Committee on Banking, Housing, and Urban Affairs receives the Federal Reserve System’s semiannual report on monetary policy. Federal Reserve Board Chair Janet Yellen will be the only witness. 10:00 a.m., SD-106 Dirksen Senate Office Building.
House Financial Services Committee holds its semiannual hearing on “Monetary Policy and the State of the Economy.” Federal Reserve Board Chair Janet Yellen will be the only witness. 10:00 a.m., 2128 Rayburn House Office Building.
Senate Aging Committee holds a hearing on “Stopping Senior Scams: Developments in Financial Fraud Affecting Seniors.” The hearing will include testimony on law enforcement work to prevent these crimes, and the release of updated 2016 statistics for the Committee’s anti-fraud resource, Fighting Fraud: U.S. Senate Aging Committee Identifies Top 10 Scams Targeting Our Nation’s Seniors. 2:30 p.m., SD-562 Dirksen Senate Office Building.
House Financial Services Subcommittee on Housing and Insurance holds a hearing on “Assessing the US-E.U. Covered Agreement.” 10:00 a.m., 2128 Rayburn House Office Building.
Senate Committee on Health, Education, Labor & Pensions holds a hearing on the nomination of Andrew Puzder to serve as Secretary of Labor. 10:00 a.m., SD-430 Dirksen Senate Office Building.
Consumer Financial Protection Bureau holds a field hearing in Charleston, WV on Alternative Data. 11:00 a.m., location details to be announced.
The Ellis Insight. Jim Ellis reports on political news:
Alabama: With Sen. Jeff Sessions’ (R) now confirmed as President Trump’s Attorney General, Gov. Robert Bentley (R) wasted little time in appointing Attorney General Luther Strange (R) as the interim Senator. Mr. Strange will serve through the 2018 election and has already announced that he will run in the concurrent special election. Before the appointment, Mr. Strange said he would run in the special election even if Gov. Bentley chose a different interim Senator. The seat will again come in-cycle in 2020, at which point Strange could run for the full six-year term, assuming that he wins in ’18.
Utah: A new name surfaced for the much talked about upcoming Utah Senate race. Former GOP presidential candidate Mitt Romney said in an interview that he isn’t “closing the door” on possibly entering what was thought to be an open race. Though veteran incumbent Orrin Hatch (R) said during the 2012 campaign that he would end what will be a 42-year run in the Senate at the end of the present term, his recent comments suggest that he is considering reversing course and perhaps will seek re-election to an eighth term.
Should the Senator run, former Governor, US Ambassador to China, and presidential candidate Jon Huntsman (R), who has also expressed interest in the race, said that he would not oppose Sen. Hatch, if the latter decides to seek another term. It is presumed Mr. Romney would adopt a similar position. If Hatch retires, this primary race will immediately attract national attention, however.
CA-34: Candidate filing closed last week for the special election in the vacated downtown Los Angeles district of former Representative (and now California Attorney General) Xavier Becerra (D). The jungle primary is scheduled for April 4th, with the special general, assuming no candidate receives an absolute majority in the first vote, set for June 6th. The California Democratic Party officially endorsed Assemblyman Jimmy Gomez this week, meaning he will carry that designation on the ballot. The endorsement provides him a major boost in breaking through a 23-candidate field. Expect two Democrats to advance to the run-off.
KS-4: The 4th District Republican Committee convened late last week to choose a special election nominee to replace CIA Director Mike Pompeo (R), who resigned the congressional seat to accept President Trump’s appointment. The 126-member organization chose state Treasurer Ron Estes. He reached majority support on the second ballot, obtaining 66 of the 126 votes after scoring 58 on the first secret ballot tally. Trump Transition Team member and campaign operative Alan Cobb was second with 28 votes. Former Rep. Todd Tiahrt (R-Wichita) was a distant third. The election is April 11th. Democrats caucused over the weekend to select their nominee and are expected to back former state Treasurer Dennis McKinney.
Mr. Estes begins the special general election campaign begins as a huge favorite to win the seat. The two faced each other in the 2010 state Treasurer’s race, a contest Mr. Estes won by 17 points. In the 4th CD, Estes’ margin expanded to 25 points.
MN-8: While businessman Stewart Mills (R) considers running for a third time in 2018, as we reported two weeks ago, incumbent Rep. Rick Nolan (D-Crosby/Duluth) affirmed that he is considering entering what will be an open Governor’s race next year. The Congressman, who would almost turn 75 years of age at the time of the next election, said he would decide about whether to enter the Governor’s race in the next several months.
PA-7: Rep. Pat Meehan (R-Chadds Ford) affirmed a spokesman’s claim two weeks ago about his future political plans. Congressman Meehan will not challenge Sen. Bob Casey Jr. (D), and underscored this decision as “firm.” He was less definitive about closing the door on opposing Gov. Tom Wolf (D), however. Therefore, Mr. Meehan’s moves in terms of potentially preparing for a Governor’s race are worth observing. Hillary Clinton carried the Philadelphia suburban 7th District by just over two percentage points, even while losing the state. Therefore, should Rep. Meehan run statewide, PA-7 would become a major Democratic open seat target.
Illinois: Chris Kennedy, son of the late Sen. Robert F. Kennedy (D-NY), made his long-awaited announcement for Governor. He is entering the Democratic primary in hopes of advancing to the 2018 general election against Gov. Bruce Rauner (R). Mr. Kennedy is a developer and businessman, head of a Chicago non-profit food depository, and former chairman of the University of Illinois Board of Trustees. He will obviously bring name identification and fundraising prowess to the campaign. Kennedy will likely face a crowded March ’18 Democratic primary field that may include former Gov. Pat Quinn, and Reps. Robin Kelly (D-Matteson/Chicago) and Cheri Bustos (D-Moline).
Michigan: Detroit Health Director Abdul El-Sayed (D) resigned his position last week and simultaneously announced that he is entering the Democratic primary for Governor. Already in the race is former state Senate Minority Leader Gretchen Whitmer. Most Michigan political observers also expect Rep. Dan Kildee (D-Flint) to also become a gubernatorial candidate. For the Republicans, a battle will likely ensue between Lt. Gov. Brian Calley and Attorney General and former Congressman Bill Schuette. Gov. Rick Snyder (R) is ineligible to seek a third term. The Michigan Governor’s race is a contest that features critical national redistricting overtones.
New Jersey: Fairleigh Dickinson University’s PublicMind polling sector surveyed (1/25-29; 839 NJ registered voters; 410 self-identified Democratic voters; 275 self-identified Republican voters) the upcoming New Jersey Governor’s race and found very few respondents holding a candidate preference. For the Democrats, former Wall Street executive and ex-US Ambassador Phil Murphy tops the field with just 17% support. State Sen. Ray Lesniak is second with 7%, while Assemblyman John Wisniewski follows at 6%. For the Republicans, though the 275- member sample cell is much too low to gauge accurately, Lt. Gov. Kim Guadagno leads comedian Joe Piscopo, 18-12%. Gov. Chris Christie (R) is ineligible to seek a third term. Democrats will be favored to convert this state house.