Money Matters: This Week in Washington

This Week in Washington for January 13, 2020

January 13, 2020

Dina Ellis

THE BIG PICTURE

Tensions with Iran began to de-escalate, after the surprise killing of top Iranian general Qassem Soleimani and Iran’s retaliatory strike on US bases in Iraq led many to fear the situation could lead to war. The President declared on Wednesday that “Iran appears to be standing down.” The next day, the House voted on largely party lines to pass a War Powers Act Resolution, aimed at reining in the President’s power to act without congressional approval. On Friday, the President signed additional sanctions on “any individual owning, operating, trading with, or assisting sectors of the Iranian economy including construction, manufacturing, textiles, and mining.”

The impeachment trial could soon begin after House Speaker Nancy Pelosi announced on Friday that she would formally transmit the articles to the Senate and appoint managers this week, ending a standoff over how the trial would proceed. It remains to been seen whether Senate Majority Leader Mitch McConnell will permit witnesses under his preferred framework; however, earlier in the week, former National Security Advisor John Bolton indicated he would be willing to testify if subpoenaed.

Other highlights of last week include:

• The December jobs report was released, showing that the economy added 145,000 jobs as the unemployment rate remained steady at 3.5%.

• Rep. Duncan Hunter (R-CA) formally resigned from Congress, after pleading guilty to misusing campaign funds late last year.

• Prince Harry and Meghan, the Duchess of Sussex, issued a surprise statement on Wednesday, announcing their desire to step back as senior members of the royal family.

• Prosecutors reversed course, and have recommended that the President’s former National Security Advisor Mike Flynn serve up to 6 months in prison in their sentencing memo, arguing that he “has not learned his lesson” and “has behaved as though the law does not apply to him” after previously recommending he only serve probation.

LAST WEEK ON THE HILL

HOUSE FINANCIAL SERVICES COMMITTEE

No hearings held.

SENATE BANKING COMMITTEE

No hearings held.

LEGISLATION INTRODUCED AND PROPOSED

H.R. 5547: Rep. Cindy Axne (D-IA) introduced H.R. 5547, the Manufactured Housing Community Preservation Act of 2020, which would provide assistance for the acquisition and preservation of manufactured housing communities.

H.R. 5574: Rep. Roger Williams (R-TX) introduced H.R. 5574, the Preserving Small Business Lending Act of 2020, which would repeal the small business loan data collection requirement established by section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

THIS WEEK ON THE HILL

Monday, January 13

Legislation Considered Under Suspension of the Rules:

• H.R. 4302 - Homeless Assistance Act of 2019, as amended (Sponsored by Rep. Brad Sherman/Financial Services Committee)

• H.R. 4335 - 8-K Trading Gap Act of 2019, as amended (Sponsored by Rep. Carolyn Maloney/Financial Services Committee)

• H.R. 4841 - Prudential Regulators Oversight Act, as amended (Sponsored by Rep. Dean Phillips/Financial Services Committee)

• H.R. 5315 - Expanding Opportunities for MDIs Act, as amended (Sponsored by Rep. Joyce Beatty/Financial Services Committee)

• H.R. 4458 - Cybersecurity and Financial System Resilience Act of 2019, as amended (Sponsored by Rep. Patrick McHenry/Financial Services Committee)

• H.R. 2398 - Veteran HOUSE Act of 2020, as amended (Sponsored by Rep. Scott Peters/Financial Services Committee)

Tuesday, January 14

House Financial Services Committee Hearing on “On the Brink of Homelessness: How the Affordable Housing Crisis and the Gentrification of America Is Leaving Families Vulnerable”: 10:00 AM in 2128 Rayburn House Office Building.

House Financial Services Committee (Subcommittee on Consumer Protection and Financial Institutions) Hearing on “The Community Reinvestment Act: Reviewing Who Wins and Who Loses with Comptroller Ottings Proposal”: 2:00 PM in 2128 Rayburn House Office Building.

Wednesday, January 15

House Financial Services Committee (Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets) Hearing on “An Examination of the Financial Accounting Standards Board and the Public Company Accounting Oversight Board”: 2:00 PM in 2128 Rayburn House Office Building.

THE REGULATORS

SEC Investor Advisory Committee to Hold Jan. 24 Telephone Meeting: On Tuesday, the SEC’s Investor Advisory Committee (IAC) announced that it will meet telephonically on Jan. 24 at 11:30 a.m. The committee will discuss and possibly vote on recommendations on two topics: first, the SEC's proxy voting advice and Rule 14a-8 proposed rulemakings; and, second, exchange rebate tier disclosure.

SEC Office of Compliance Inspections and Examinations Announces 2020 Examination Priorities: On Tuesday, the SEC’s Office of Compliance Inspections and Examinations (OCIE) published its examination priorities, which they provide annually to enhance the transparency of its examination program and to provide insights into its risk-based approach. The priorities for 2020 include: (1) retail investors, including seniors and those saving for retirement; (2) market infrastructure; (3) information security; (4) focus areas relating to investment advisers, investment companies, broker-dealers, and municipal advisors; (5) anti-money laundering programs; (6) financial technology (fintech) and innovation, including digital assets and electronic investment advice; and (7) FINRA and MSRB.

SEC Proposes Improvements to Governance of Market Data Plans: On Wednesday, the SEC announced it was seeking comment on a proposed order to modernize the governance of National Market System plans that produce public consolidated equity market data and disseminate trade and quote data from trading venues. SEC Chairman Jay Clayton said in a statement the proposed order was an “important step in our ongoing efforts to modernize” the system and “is designed to address issues regarding the dissemination of market data that affect the efficiency and fairness of our markets.”

SEC Issues Agenda for Inaugural Meeting of the Asset Management Advisory Committee: On Thursday, the SEC released the agenda for the inaugural meeting of the Asset Management Advisory Committee, which will be held on Jan. 14, 2020, at 9 a.m. The meeting will include panels on: (1) evolution of asset management and value proposition; (2) evolution of public and private securities offerings; (3) globalization of asset management; and (4) next steps, future meeting topics, and subcommittees.

CFTC Commissioner Stump Announces Members of the Global Markets Advisory Committee’s New Subcommittee on Margin Requirements for Non-Cleared Swaps: On Friday, CFTC Commissioner Dawn Stump announced the members of the Subcommittee on Margin Requirements for Non-Cleared Swaps, a new subcommittee of the CFTC’s Global Markets Advisory Committee (GMAC). The Margin Subcommittee was established to consider issues raised by the implementation of margin requirements for non-cleared swaps, to identify challenges associated with forthcoming implementation phases, and to make recommendations via a report for the GMAC to consider in advising the Commission.

HUD Issues Improved Fair Housing Rule: On Tuesday, HUD published its proposed Affirmatively Furthering Fair Housing (AFFH) rule, which offers clearer guidance to states and local governments to help them improve affordable housing choices in their community. Secretary Carson said in a statement, “By fixing the old Affirmatively Furthering Fair Housing rule, localities now have the flexibility to devise housing plans that fit their unique needs and provide families with more housing choices within their reach.” House Financial Services Committee Chairwoman Maxine Waters (D-CA) criticized the proposed rule as “another attack on fair housing protections that will be detrimental to all people, including minorities, women, families with children, and persons with disabilities.”

CFPB Announces Membership of Taskforce on Federal Consumer Financial Law: On Thursday, the CFPB announced the members who will serve on the Taskforce on Federal Consumer Financial Law. The Taskforce will examine the existing legal and regulatory environment facing consumers and financial services providers and report to Director Kraninger its recommendations for ways to improve and strengthen consumer financial laws and regulations. The Taskforce will produce new research and legal analysis of consumer financial laws in the United States, focusing specifically on harmonizing, modernizing, and updating the federal consumer financial laws—and their implementing regulations—and identifying gaps in knowledge that should be addressed through research, ways to improve consumer understanding of markets and products, and potential conflicts or inconsistencies in existing regulations and guidance.

CFPB Announces Action Against Student Loan Debt-Relief Companies: On Thursday, the CFPB filed suit against several companies and individuals involved in offering student loan debt-relief services for allegedly obtaining consumer reports illegally, charging unlawful advance fees, and engaging in deceptive conduct.

Former NY Fed Chief Discusses Repo Market: Former New York Fed President William Dudley published a column on Monday discussing his view of what should be done to overhaul the repo market. He suggested that recent turmoil was not a “canary in the coal mine” but rather “reflects the difficulty in forecasting the demand for reserves given the changes in regulations.” He advocated for the creation of a standing repurchase-agreement facility, saying it would “address the potential problem of the Fed providing liquidity to primary dealers but primary dealers not lending the funds to other market participants that might need short-term repo financing.”

COMINGS AND GOINGS AT THE AGENCIES

SEC Names Allen Blume as Deputy Chief Financial Officer: On Friday, the SEC announced that Allen Blume had been named Deputy Chief Financial Officer in the agency’s Office of Financial Management. Mr. Blume served most recently as the Budget Director for the U.S. Department of Homeland Security.

SEC Names Mark Reinhold as Deputy Chief Human Capital Officer in the Office of Human Resources: On Friday, the SEC announced that Mark Reinhold had been named Deputy Director of the agency’s Office of Human Resources. Mr. Reinhold served most recently as the Associate Director for Employment Policy at the U.S. Office of Personnel Management.

THE COURTS

Dodd-Frank Architects Join Amicus Brief Challenging Regulation Best Interest: Former Sen. Chris Dodd (D-CT) and former Rep. Barney Frank (D-MA) joined a group of 10 former and current legislators in filing an amicus brief arguing that the SEC disregarded Congressional intent by enacting the Regulation Best Interest. The group argued, “The SEC’s rule fails to harmonize the standards for broker-dealers and investment advisers through a fiduciary rule, and is therefore at odds with the text and structure of Section 913, as well as Congress’ plan in passing it,” and there “cannot stand.”

OTHER NOTEWORTHY ITEMS

Illinois Enacts Blockchain Technology Act: Illinois has become the latest state to recognize the legality of block-chain based records after it enacted the Blockchain Technology Act, which provides that “a smart contract, record or signature may not be denied legal effect or enforceability solely because a blockchain was used to create, store or verify the smart contract, record or signature.”

California’s Governor Proposes Overhaul of State’s Financial Regulator: California Governor Gavin Newsom released as part of a budget proposal a plan to transform the state’s Department of Business Oversight into the Department of Financial Protection and Innovation (DFPI). The Department would have expanded powers to oversee fintech companies, debt collectors, credit reporting agencies, and others.

Warren Unveils Bankruptcy Plan: Presidential contender Sen. Elizabeth Warren (D-MA) released a new plan to roll back certain harmful provisions from a 2005 bankruptcy law and overhaul consumer bankruptcy rules, setting up a clash with Joe Biden who had supported the measure. In an online post she explained, “There are still serious problems with our bankruptcy laws today, thanks in large part to that bad 2005 bill,” adding, “That’s why I’m announcing my plan . . . to give Americans a better chance of getting back on their feet.”