Money Matters: This Week in Washington

This Week in Washington for July 8, 2019

July 08, 2019

Dina Ellis

THE BIG PICTURE

On Tuesday, House Ways and Means Committee Chairman Richard Neal escalated efforts to obtain the President’s tax returns, filing suit in federal court to enforce the Committee’s subpoena. In the complaint, the Democrats argued that the administration’s actions amounted to “an extraordinary attack on the authority of Congress to obtain information needed to conduct oversight.” Treasury Secretary Steven Mnuchin had previously refused to comply, claiming the request served no “legitimate legislative purpose.” The President’s personal attorney Jay Sekulow called the suit an “effort at presidential harassment,” and vowed to respond in court.

Following the Supreme Court’s decision last month, Commerce Secretary Wilbur Ross announced on Tuesday that while he “strongly disagree[d] with” the ruling, the administration was abandoning efforts to include a citizenship question in the 2020 census to instead focus on “a complete and accurate” process. The President cast doubt on that decision on Wednesday, after he tweeted that officials “are absolutely moving forward” with the question, and that alternate paths and options were being considered.

Other highlights of last week include:

• Michigan Representative Justin Amash announced on Thursday that he would be leaving the Republican party in a Washington Post op-ed. Rep. Amash had frequently clashed with party leadership, particularly after publicly voicing his opinion that the president had committed impeachable offenses.

• The June jobs report was released on Friday, showing that the economy had added 224,000 jobs, while the unemployment rate remained steady at 3.7%.

• Current head of the IMF, Christine Lagarde, was nominated to serve as the next president of the European Central Bank.

LAST WEEK ON THE HILL

No hearings held during recess period.

LEGISLATION INTRODUCED AND PROPOSED

H.R. 3614: Rep. Al Lawson (D-FL) introduced H.R. 3614, which would amend the Fair Credit Reporting Act to ban the use of credit information for most employment decisions.

THIS WEEK ON THE HILL

Wednesday, July 10

House Financial Services Committee Hearing on “Monetary Policy and the State of the Economy”: 10:00 AM in 2128 Rayburn House Office Building.

House Financial Services Committee (Subcommittee on Investor Protection, Entrepreneurship and Capital Markets) Hearing on “Building a Sustainable and Competitive Economy: An Examination of Proposals to Improve Environmental, Social and Governance Disclosures”: 2:00 PM in 2128 Rayburn House Office Building.

THE REGULATORS

CFTC Issues Social Media Customer Protection Advisory: On Wednesday, the CFTC issued, “There’s Nothing to Like about Scammers on Social Media,” a Customer Protection Advisory that warns customers to beware of and avoid unregistered brokers and advisers, as well as fake testimonials and so-called trading experts on social media platforms. Fraud offenders can create many online profiles or anonymous identities, and use them in a coordinated way to lure people into schemes. “As the technology utilized by consumers has evolved over time, so too have the tools that scammers use to target potential victims,” said Erica Elliott Richardson, CFTC Director of the Office of External Affairs. “We have seen scammers use social media in their attempts to exploit individuals who are interested in trading foreign currencies, binary options, digital currencies, and precious metals. The CFTC encourages consumers to fully research all potential investments and stay informed about the latest scammer tactics in order to avoid these schemes.”

SEC Staff to Host July 18 Roundtable on Periodic Reporting: On Tuesday, the SEC announced that its Division of Corporation Finance will host a roundtable on July 18, 2019 to hear from investors, issuers, and other market participants about the impact of short-termism on our capital markets and whether our reporting system, or other aspects of our regulations, should be modified to address these concerns.

SEC Celebrates LGBT Pride Month: The SEC last week concluded its month of special events in honor of Lesbian, Gay, Bisexual and Transgender (LGBT) Pride Month and renewed the agency’s commitment to workplace diversity and inclusion. Throughout the month of June, SEC staff held various events and activities to promote fellowship among coworkers while also noting the LGBT civil rights movement’s accomplishments and ongoing work. “Fifty years after the Stonewall Uprising marked a major turning point in the struggle for the civil rights of LGBT Americans, this month we celebrated the advances in equality we have witnessed for our LGBT friends and family,” said Chairman Jay Clayton. “The SEC remains a workplace that is open to America’s best and brightest, no matter your sexual orientation or gender identity.”

SEC Proposes to Align Margin Requirements for Security Futures With Requirements for Similar Financial Products: On Wednesday, the SEC announced that it had proposed to align the minimum margin required on security futures with other similar financial products. The proposal—which, if the CFTC votes in favor of, would be a joint CFTC-SEC proposal—would set the minimum margin requirement for security futures at 15 percent of the current market value of each security future. The CFTC has not yet voted on the proposal and has scheduled its vote for July 11, 2019.

Democratic Senators Call on HUD to Explain Hiring of Eric Blankenstein: In a letter to HUD Secretary Ben Carson on Monday, a group of Democratic Senators led by Sherrod Brown (D-OH), ranking member of the Senate Banking Committee, demanded answers regarding the agency’s hiring practices following the report that controversial former CFPB appointee Eric Blankenstein had been hired into the agency’s Office of General Counsel. Mr. Blankenstein was fired from the CFPB last month after inflammatory blog posts were uncovered. The Senators wrote that, “In our country, private citizens may espouse whatever views they have, even abhorrent ones. What they do not have a right to is a six-figure federal job. HUD has an important mission to ‘create strong, sustainable, inclusive communities and quality affordable homes for all.’ It needs employees that can carry out and bolster that mission, not ones that call HUD’s commitment to it into question.”

State AGs Oppose CFPB Efforts to Roll Back Overdraft Rule: A group of 25 state attorneys general led by New York’s Letitia James wrote to CFPB Director Kathy Kraninger on Monday urging her to not “roll back or limit” the regulation which limits the ability of banks to charge overdraft fees, a move they argued would be “a serious and harmful mistake.”

COMINGS AND GOINGS AT THE AGENCIES

President Announces Nominees for Fed Vacancies: On Tuesday, the President announced his plan to nominate Christopher Waller and Judy Felton to serve on the Federal Reserve board, filling two open seats.

Special Advisor Bob Ryan to Depart FHFA: On Wednesday, the FHFA announced that Bob Ryan, who has served as a Special Advisor to the Director since 2014, is leaving the agency as of July 12.

SEC Names Sagar Teotia as Chief Accountant: On Wednesday, the SEC announced that Sagar Teotia had been named the agency’s Chief Accountant. Mr. Teotia has served as Deputy Chief Accountant, leading the accounting group since 2017, and more recently was serving as the SEC’s Acting Chief Accountant. Mr. Teotia started his career at the SEC as a professional accounting fellow in the Office of the Chief Accountant from 2009 to 2011.

OTHER NOTEWORTHY ITEMS

Utah Launches Fintech Sandbox: On Tuesday, Utah launched a regulatory sandbox for financial technology companies, following the lead set by Arizona last year. Executive Director of the Utah Department of Commerce and Utah Representative Marc Roberts touted the development, and expressed excitement about “the chance it will give FinTech companies and entrepreneurs in Utah the chance to take innovative products and ideas to market without having to jump through the traditional regulatory hoops and licensing requirements which can be burdensome and costly.”

BIS Announces Fintech Innovation Hub: On Monday, the Bank for International Settlements announced the creation of its Innovation Hub, which chairman Jens Weidmann said will “enable central banks to extend their existing collaboration with a view to identifying relevant trends in technology, supporting these developments where this is consistent with their mandate, and keep[] abreast of regulatory requirements with the objective of safeguarding financial stability.”

FCA Proposes Retail Ban on Cryptocurrencies: The UK’s Financial Conduct Authority proposed rules to restrict the sale to retail clients of investment products that include cryptoassets, calling them “ill-suited” to retail consumers who cannot reliably assess the value and risks, as well as their “extreme volatility.”