Money Matters: This Week in Washington

This Week in Washington for April 8, 2019

April 09, 2019

Dina Ellis

THE BIG PICTURE

House Democrats ramped up their oversight efforts last week. On Wednesday, the House Judiciary Committee authorized Chairman Jerry Nadler (D-NY) to issue a subpoena for Special Counsel Robert Mueller’s full report and any underlying materials. While Rep. Nadler hasn’t yet indicated when, or if, he plans to issue the subpoena, the move marks an escalation between House Democrats and Attorney General William Barr who has withheld the report while he redacts sensitive information. The Committee also authorized subpoenas for documents and testimony to former White House officials including Reince Priebus, Don McGahn, Steve Bannon, and Hope Hicks.

House Ways and Means Committee Chairman Richard Neal (D-MA) sent a formal request to the IRS to obtain six years of the President’s personal and business tax returns. Democrats have long sought copies of the returns, which the President has resisted releasing since the campaign citing an ongoing audit. In response to the request, the President’s attorneys indicated he was willing to fight the request all the way to the Supreme Court.

Former Vice President Joe Biden came under fire last week as stories surfaced in the media regarding his penchant for physical contact and lack of awareness of personal space. House Speaker Nancy Pelosi (D-CA) said she doesn’t consider the allegations disqualifying for his potential 2020 bid, but noted “he has to understand the world we’re in now.” While in a video released Wednesday he acknowledged that “social norms are changing” and pledged to be “more mindful about respecting personal space,” later in the week he defended himself by saying, “I’m not sorry for anything that I have ever done.”

Department of Homeland Security Secretary Kirstjen Nielsen resigned her position on Sunday evening. The President announced via Twitter that “Kevin McAleenan, the current U.S. Customs and Border Protection Commissioner, will become Acting Secretary.”

Other highlights of last week include:

• Rep. Tim Ryan (D-OH) announced his bid for the presidency on Thursday, joining a crowded field of candidates seeking to face President Trump in 2020.

• Another potential contender, Sen. Michael Bennet (D-CO) announced he had been diagnosed with early stage prostate cancer, but would still be interested in pursuing a run if he were deemed cancer-free.

• Former Treasury Department official David Malpass was chosen as the next president of the World Bank, effective this Tuesday.

LAST WEEK ON THE HILL

HOUSE FINANCIAL SERVICES COMMITTEE

Hearing on “The Fair Housing Act: Reviewing Efforts to Eliminate Discrimination and Promote Opportunity in Housing”: On Tuesday, the full Committee met to examine the state of fair housing in America, including evolving issues in the digitization of the housing market and HUD’s enforcement of the Fair Housing Act under Secretary Carson. The Committee also considered draft legislative proposals to address these issues, including (1) H.R. __, the “Restoring Fair Housing Protections Eliminated by HUD Act of 2018”; (2) H.R. 5, the “Equality Act of 2019”; (3) H.R. 149, The “Veterans, Women, Families with Children, Race, and Persons with Disabilities Housing Fairness Act of 2019”; and (4) H.R. __, the “Sexual Harassment Awareness and Prevention Act of 2018.”

• Debby Goldberg, Vice President, Housing Policy and Special Projects, National Fair Housing Alliance

• Cashauna Hill, Executive Director, Greater New Orleans Fair Housing Action Center

• Kierra Johnson, Deputy Executive Director, National LGBTQ Task Force

• Skylar Olsen, Director of Economic Research & Outreach, Zillow Group

• Salim Furth, Ph.D., Senior Research Fellow, Mercatus Center, George Mason University

Hearing on “The Affordable Housing Crisis in Rural America: Assessing the Federal Response”: On Tuesday, the Subcommittee on Housing, Community Development and Insurance held a hearing to examine the affordable housing challenges in rural communities, including homelessness, rental housing, and homeownership. In particular, this hearing focused on the issue of prepayment and maturation of Section 515 Rural Rental Housing Loans and Section 514 Farm Labor Housing Loans. The Committee considered several draft legislative proposals to address aspects of these programs that put rural residents at risk of displacement, including (1) H.R. __, the “Strategy for Rural Housing Preservation Act of 2019”; (2) H.R. __, the “RHV_12”; (3) H.R. __, the “Rural Housing Preservation Act of 2019”; (4) H.R. __, the “VAWA Protections for Rural Women Act of 2019”; (5) H.R. __, the “Panett_09”.

• Gideon Anders, Senior Staff Attorney, National Housing Law Project

• Stan Keasling, President, National Rural Housing Coalition

• David Lipsetz, Chief Executive Officer, Housing Assistance Council

• Andres Saavedra, Senior Program Officer, Rural Local Initiatives Support Corporation

• Tanya Eastwood, President, Council for Affordable and Rural Housing

Hearing on “Putting Investors First: Reviewing Proposals to Hold Executives Accountable”: On Wednesday, the Subcommittee on Investor Protection, Entrepreneurship and Capital Markets held a hearing to examine six draft legislative proposals that are designed to hold public company executives accountable to both investors and the general public. The proposals included (1) H.R. __: Insider Trading Prohibition Act (Himes); (2) H.R. __: Investor Choice Act of 2019 (Foster); (3) H.R. __: 8-K Trading Gap Act of 2019 (Maloney); (4) H.R. __: A bill to require the SEC to complete rulemaking required by section 10D of the Securities Exchange Act of 1934; (5) H.R. __: A bill to require the SEC to complete rulemaking required by section 14(i) of the Securities Exchange Act of 1934; (6) H.R. __: A bill to amend the Securities and Exchange Act of 1934 to amend the definition of whistleblower (Green).

• John Coffee, Adolf A. Berle Professor of Law, Director of the Center on Corporate Governance at Columbia Law School

• Melanie Lubin, Maryland Securities Commissioner, on behalf of the North American Securities Administrators Association, Inc (NASAA)

• Remington A. Gregg, Counsel for Civil Justice and Consumer Rights, Public Citizen

• Tom Quaadman, Executive Vice President, U.S. Chamber Center for Capital Markets Competitiveness, Chamber of Commerce of the United States of America

SENATE BANKING COMMITTEE

Hearing on “The Application of Environmental, Social, and Governance Principles in Investing and the Role of Asset Managers, Proxy Advisors, and Other Intermediaries”: On Tuesday, the Committee held a hearing to better understand the growth of environmental, social, and governance, or ESG, investing principles. In his opening remarks, Ranking Member Sherrod Brown (D-OH) urged the adoption of the SEC Investor Advisory Committee’s recommendation regarding disclosures of human capital management.

• The Honorable Phil Gramm, Former United States Senator

• Mr. James R. Copland, Senior Fellow and Director of Legal Policy, Manhattan Institute

• Mr. John Streur, President and Chief Executive Officer, Calvert Research and Management

SENATE AGRICULTURE COMMITTEE

Hearing on “Nomination of Heath Tarbert”: On Monday, the Committee held a hearing to vote on the nomination of Treasury official Heath Tarbert to serve as Chairman of the CFTC. In a unanimous voice vote, he was advanced to the full Senate for a final vote where he is widely expected to be confirmed.

SENATE COMMERCE COMMITTEE

“Executive Session”: On Wednesday, the Committee met in Executive Session to consider several pieces of legislation, including the bipartisan Telephone Robocall Abuse Criminal Enforcement and Deterrence (TRACED) Act. The measure, which was introduced earlier this year by Senators Jim Thune (R-SD) and Ed Markey (D-MA) would boost the FCC’s ability to crack down on robocalls. The Committee voted unanimously to advance the bill to the full Senate.

ON THE FLOOR

Rules Change: Senate Majority Leader Mitch McConnell decided to “go nuclear” on Wednesday, and change the rules governing the amount of time dedicated to floor debate in an effort to speed up the confirmation process for nominees. An effort to change the rules through a standing order failed to meet the required 60-vote threshold on Tuesday, leading to McConnell’s decision on Wednesday.

Violence Against Women Act: On Thursday, the House voted to reauthorize the Violence Against Women Act by a vote of 263-158. The reauthorization also included a provision that would end the so-called “boyfriend loophole” in the Act, by expanding the definition of “intimate partners” and including language “preventing anybody convicted of a misdemeanor crime of stalking from obtaining a gun.”

Yemen Resolution: Despite a veto threat from the President, the House passed a resolution which would end U.S. military support for the war in Yemen by a vote of 247-175. Rep. Ro Khanna (D-CA) who championed the measure explained that his motivation for the bill was “very simple” as he didn’t “want to see 14 million Yemenis starve to death.”

Senate Confirms FHFA Nominee: On Tuesday, Senate Majority Leader Mitch McConnell filed cloture on the nomination of Mark Calabria, to lead the Federal Housing Finance Agency. On Thursday, the Senate voted 52-44 to confirm Mr. Calabria, who previously worked for Vice President Mike Pence as his chief economist, to a 5-year term. Treasury Secretary Steven Mnuchin released a statement saying “Mark will be an effective leader of the FHFA and a critical partner in carrying out President Trump’s federal housing finance reform agenda.”

LEGISLATION INTRODUCED AND PROPOSED

Data Breach Liability: On Wednesday, Sen. Elizabeth Warren (D-MA) introduced the “Corporate Executive Accountability Act,” which would establish criminal liability for negligent executive officers of major corporations for data breaches and privacy violations that affect at least 1% of the US, or an individual state’s, population. “Corporations don’t make decisions, people do, but for far too long, CEOs of giant corporations that break the law have been able to walk away, while consumers who are harmed are left picking up the pieces,” Warren said.

Ending Youth Homelessness: On Monday, Representatives Steve Stivers (R-OH) and Dave Loebsack (D-IA) reintroduced H.R. 2001, the bipartisan Homeless Children and Youth Act (HYCA), to help ensure that children have access to the services they need to escape poverty. “No kid should ever be without a home, and it is unacceptable that our government forces them to attempt to navigate bureaucracy instead of giving them the assistance they need,” Stivers said. “This bill will help bring these children out of the shadows [and] help policymakers better understand the scope of youth homelessness.”

THIS WEEK ON THE HILL

Tuesday, April 9

House Financial Services Committee (Subcommittee on Consumer Protection and Financial Institutions) Hearing on “The Community Reinvestment Act: Assessing the Law’s Impact on Discrimination and Redlining”: 10:00 AM in 2128 Rayburn House Office Building.

House Financial Services Committee Hearing on “The Annual Testimony of the Secretary of the Treasury on the State of the International Financial System”: 2:00 PM in 2128 Rayburn House Office Building.

Wednesday, April 10

House Financial Services Committee Hearing on “Holding Megabanks Accountable: A Review of Global Systemically Important Banks 10 years after the Financial Crisis”: 9:00 AM in 2128 Rayburn House Office Building.

THE REGULATORS

Federal Reserve Announces Open Board Meeting: On Monday, the Federal Reserve announced that they will hold an open board meeting on Monday, April 8 to consider proposed rules on prudential standards for foreign banking organizations and resolution plan requirements for foreign and domestic banking organizations.

SEC’s FinHub Releases Framework for ‘Investment Contract’ Analysis of Digital Assets: On Wednesday, the SEC’s FinHub published a framework for analyzing whether a digital asset is offered and sold as an investment contract, and, therefore, is a security. They indicated the framework was not intended to be an exhaustive overview of the law, but rather, an analytical tool to aid market participants in assessing whether the federal securities laws apply to the offer, sale, or resale of a particular digital asset. They also stressed that the framework represents Staff views and is not a rule, regulation, or statement of the Commission.

Agencies Propose Rule to Limit Impact of Large Bank Failures: On Tuesday, the Federal Reserve, FDIC, and OCC proposed a rule to limit the interconnectedness of large banking organizations and reduce the impact from failure of the largest banking organizations. The proposal would complement other measures that the banking agencies have taken to limit interconnectedness among large banking organizations. The proposal would require such banking organizations to hold additional capital against substantial holdings of “total loss-absorbing capacity,” TLAC debt, and also require the holding companies of global systemically important bank holding companies to report publicly their TLAC debt.

Treasury Sanctions Companies Operating in the Oil Sector of the Venezuelan Economy and Transporting Oil to Cuba: On Friday, Treasury’s Office of Foreign Assets Control (OFAC) designated two companies operating in the oil sector of the Venezuelan economy. Additionally, OFAC identified one vessel, which transported oil from Venezuela to Cuba, as blocked property that is owned by one of these companies. “Cuba has been an underlying force fueling Venezuela’s descent into crisis. Treasury is taking action against vessels and entities transporting oil, providing a lifeline to keep the illegitimate Maduro regime afloat,” said Treasury Secretary Steven Mnuchin.

CFTC Staff Provides Further Brexit-Related Market Certainty: On Friday, the CFTC’s Divisions of Swap Dealer and Intermediary Oversight (DSIO), Market Oversight (DMO), and Clearing and Risk (DCR) announced they will grant no-action relief to provide greater certainty to the global marketplace in connection with the anticipated withdrawal of the UK from the European Union with or without a ratified withdrawal agreement. CFTC Chairman J. Christopher Giancarlo noted that “At a time of heightened market uncertainty caused by Brexit, this Commission has worked over the past several weeks to bring clarity to participants in global derivatives markets,” adding that this move is “another important step to bring certainty to the global derivatives markets.”

FHFA Authorizes Payments to Housing Trust Fund and Capital Magnet Fund: On Wednesday, FHFA Acting Director Joseph Otting announced that he had authorized the disbursement of Fannie Mae and Freddie Mac’s affordable housing allocations for 2018 to the U.S. Department of Housing and Urban Development for the National Housing Trust Fund of US$244.86M and to the Department of the Treasury for the Capital Magnet Fund of US$131.84M.

FDIC Releases Podcasts Chronicling 2008 Financial Crisis: On Thursday, the FDIC released a series of podcasts featuring discussions about Crisis and Response: An FDIC History, 2008–2013, the agency’s study of the banking and financial crisis. The agency hopes that the series will give listeners a unique behind-the-scenes perspective on the crisis, as FDIC officials share their insights into the agency’s decision-making strategies and actions.

FDIC Hosts Webinar for Financial Capability Month: On Monday, the FDIC announced that in recognition of Financial Capability Month, the FDIC will host a webinar on April 17 to help organizations learn how to use Money Smart tools. The webinar will explain the benefits of joining the FDIC’s Money Smart Alliance, a free resource to help organizations learn new approaches and strategies on how to use Money Smart tools.

COMINGS AND GOINGS AT THE AGENCIES

Allison Lee Nominated for Vacant SEC Seat: On Tuesday, the President announced he will nominate Allison Lee to serve as an SEC commissioner, filling one of the agency’s open Democratic seats left by the departure of Kara Stein at the end of her term in January. Her nomination had reportedly been under consideration for months, and on Monday Senate Dems had urged the administration to fill agency vacancies such as this one.

Federal Reserve Board Governor Nominated for Community Bank Role: On Tuesday, the President announced the nomination of Michelle Bowman to serve as the Federal Reserve’s Community Bank Representative for a 14-year term. Ms. Bowman already serves as a governor at the Fed.

Herman Cain Expected to Be Nominated for Open Fed Seat: It was reported that the President intends to nominate Herman Cain, who previously ran for the 2012 Republican presidential nomination, for a seat on the Federal Reserve Board. The prospect of a Cain nomination was dismissed by Senator Mitt Romney (R-UT) who said, “If Herman Cain were on the Fed, you’d know the interest rate would soon be 9-9-9” a reference to the economic plan Mr. Cain touted during his campaign.

Jovita Carranza Tapped to Head Small Business Administration: On Friday, President Trump announced he plans to nominate Jovita Carranza, who currently serves as U.S. treasurer, to head the Small Business Administration. If confirmed, Ms. Carranza will succeed the outgoing Linda McMahon. Treasury Secretary Steven Mnuchin praised the choice, describing her as “exceptionally qualified.”

OTHER NOTEWORTHY ITEMS

Rep. Maxine Waters Rebuffs Concerns over Changes to Loan Loss Accounting Standard: Speaking at the American Bankers Association conference on Tuesday, House Financial Services Committee Chairwoman remarked that she has no concern over the current expected credit losses (CECL) standard, despite banks complaints that it will negatively impact their ability to lend, saying “it’s not on my radar.”

EU Developing New Regulations for Cryptocurrencies: Valdis Dombrovskis, the European Commissioner in charge of financial stability, financial services and capital markets, revealed that officials have begun laying the foundation for regulation on crypto assets, saying that since most do not fall under existing law, investors are exposed to “substantial risks.” He noted that they were exploring the possibility of a common approach, to avoid fragmentation at the national level.

WTO Forecast Says Tariffs Will Slow Growth in 2019: A report released by the WTO on Tuesday cited increased uncertainty due to trade tensions and tariffs as the likely source of slowed growth this year. WTO Director-General Roberto Azevêdo said, “With trade tensions running high, no one should be surprised by this outlook. Trade cannot play its full role in driving growth when we see such high levels of uncertainty.”