This Week in Washington for July 17, 2017
By Dina Ellis and Casey Miller
THE BIG PICTURE
Senate Parliamentarian Issues Ruling Favorable to Republicans: Senate Republicans successfully argued before the parliamentarian that a House-passed healthcare overhaul reconciliation bill can be taken up and amended in the Senate this week.
Senate Cancels First Two Weeks of August Recess: House Will Adjourn for August Recess Unless Senate Acts on Healthcare: The Senate on July 11 announced that it will cancel the first two weeks of August recess in order to work on a healthcare bill. This is rare, as Congress doesn’t usually work during August recess. However, it is not unprecedented: in 1994, Congress worked into August recess to work on Clinton-era health reform, and in 2005, Congress came back into session during August recess to pass a relief measure related to Hurricane Katrina.
House Majority Leader Kevin McCarthy announced on July 12 that the House will break for recess as planned unless the Senate passes a healthcare bill. His announcement received significant pushback from the Freedom Caucus, which is urging GOP leadership to cancel recess in order to work on repealing Obamacare, tax reform, and a budget deal.
House to Possibly Consider Massive Spending Bill: In a GOP meeting on July 14, House Majority Leader Kevin McCarthy said that the Appropriations Committee would finish all FY18 funding bills by the end of this week. Leadership will begin a tentative whip count to see whether lawmakers will vote for the package before August recess.
The Appropriations Committee on July 13 passed a funding bill for the Treasury Department and SEC that includes several provisions of the Financial CHOICE Act that the House passed last month, including an overhaul of the bankruptcy code tailored to financial institutions.
House Passes National Defense Authorization Act (NDAA): The House overwhelmingly passed on July 14 a $696.5 billion defense policy bill that goes far beyond President Trump’s budget request. The NDAA broadly outlines policy and spending rules for the Pentagon and military agencies.
FBI Director Nominee Christopher Wray Vows to be Independent: Christopher Wray testified before the Senate Judiciary Committee that he will remain independent of any pressure as FBI Director. Wray stated, “If I am given the honor of leading this agency, I will never allow the FBI’s work to be driven by anything other than the facts, the law, and the impartial pursuit of justice.”
ALSO LAST WEEK ON THE HILL
Senator Lindsey Graham (R-SC) Supports New Nominee for Export-Import Bank: Speaking in an interview on July 13, Senator Lindsey Graham said that he will try to get the White House to nominate someone other than former Rep. Scott Garrett (R-NJ) as President of the Export-Import Bank. While in Congress, Garrett strongly opposed the Bank and worked to close it.
National Association of Manufacturers President Jay Timmons also
HOUSE FINANCIAL SERVICES COMMITTEE
Democrats Renew Efforts on Trump Russia Ties: Ranking Member Maxine Waters and a group of Democrats have filed a “resolution of inquiry” that demands U.S. Treasury Secretary Steven Mnuchin to produce all documents in his possession “relating to President Trump's financial connections to Russia, certain illegal financial schemes, and related information.” The resolution must be considered on the House floor within 14 legislative days, unless the Committee calls for a markup.
- Mr. David C. Knoch, President, 1st Global
- Mr. Mark Halloran, Senior Director, Head of Industry and Regulatory Strategy, Transamerica
- Mr. Jerome Lombard, President, Private Client Group, Janney Montgomery Scott LLC
- Ms. Cristina B. Martin Firvida, Director, Financial Security and Consumer Affairs, AARP
- Dr. Douglas Holtz-Eakin, President, American Action Forum
- Mr. Robert Fisher, President and Chief Executive Officer, Tioga State Bank, on behalf of the Independent Community Bankers of America
- Mr. Rick Nichols, President and Chief Executive Officer, River Region Credit Union, on behalf of the Heartland Credit Union Association
- Mr. Scott B. Astrada, Director of Federal Advocacy, Center for Responsible Lending
- Professor J.W. Verret, Senior Affiliated Scholar, Associate Professor, George Mason University School of Law
The hearing examined the following legislative proposals:
SENATE BANKING COMMITTEE
Regarding the so-called Volcker Rule, which prohibits proprietary trading, Yellen said that Congress may want to consider appointing a lead regulator to implement the Rule. Currently, the Rule is overseen by five agencies.
Who Will be Next Federal Reserve Chairman? Senate Banking Committee Chairman said on July 13 that National Economic Council Director Gary Cohn would be a good choice to replace Janet Yellen and lead the Federal Reserve. In an interview, Crapo said that Cohn has “got the skill set and clearly he understand the issues.” Senator Sherrod Brown (D-OH), Ranking Member of the Committee, said that he would like to see current Fed Chair Janet Yellen renominated.
Cohn is the leading candidate to replace Yellen. House Financial Services Chairman Jeb Hensarling (R-TX) has expressed support for Cohn, but also offered the name of another candidate: John Taylor of Stanford University.
THIS WEEK ON THE HILL
Tuesday, July 18
House Financial Services Capital Markets, Securities, and Investment Subcommittee, Hearing, “
House Financial Services Terrorism and Illicit Finance Subcommittee, Hearing, “
Senate Banking Committee,
Mr. J. Paul Compton, Jr., of Alabama, to be General Counsel, U.S. Department of Housing and Urban Development;
Ms. Anna M. Farias, to be Assistant Secretary for Fair Housing and Equal Opportunity, U.S. Department of Housing and Urban Development;
Mr. Neal J. Rackleff, to be Assistant Secretary for Community Planning and Development, U.S. Department of Housing and Urban Development;
Mr. Richard Ashooh, to be Assistant Secretary for Export Administration, U.S. Department of Commerce;
Ms. Elizabeth Erin Walsh, to be Assistant Secretary for Global Markets and Director General of the United States and Foreign Commercial Service, U.S. Department of Commerce; and
Mr. Christopher Campbell, to be Assistant Secretary for Financial Institutions, U.S. Department of the Treasury.
Wednesday, July 19
House Financial Services Oversight and Investigations Subcommittee, Hearing, “
House Financial Services Monetary Policy and Trade Subcommittee, Hearing, “
Thursday, July 20
Senate Banking Committee, Hearing, “
Ms. Brenda Hughes, Senior Vice President and Director of Mortgage and Retail Lending, First Federal Savings Bank of Twin Falls, on behalf of the American Bankers Association (ABA);
Mr. Tim Mislansky, Senior Vice President and Chief Lending Officer, Wright-Patt Credit Union and President, myCUmortgage,LLC, on behalf of the Credit Union National Association (CUNA);
Mr. Jack E. Hopkins, President and CEO, CorTrust Bank, N.A., on behalf of the Independent Community Bankers of America (ICBA);
Mr. Charles M. Purvis, President and CEO, Coastal Federal Credit Union, on behalf of the National Association of Federally-Insured Credit Unions (NAFCU);
Mr. Wes Hunt, President, Homestar Financial Corporation, on behalf of the Community Mortgage Lenders of America (CMLA); and
Mr. Bill Giambrone, President and CEO, Platinum Home Mortgage and President, Community Home Lenders Association (CHLA).
Comptroller of the Currency Keith Noreika sent a letter to the CFPB raising concerns regarding the expose of financial institutions to “potential ruinous liability” that would force settlement of “unmeritorious claims to mitigate the significant costs and risks associated with class-action lawsuits.” CFPB Director Richard Cordray responded and challenged Noreika’s claim, and pointed out that the Office of the Comptroller of the Currency did not previously raise concerns about the rule, despite having more than a year to do so. When defendants make the same argument that Director Cordray is making – e.g. the practice has been ongoing and you haven’t said anything was wrong – the CFPB routinely discards that argument, known as estoppel.
Consolidated Audit Trail Faces Setback: The SEC is reviewing how exchanges will pay for the gigantic database that would make it easier to catch cheaters and trace the causes of crashes in the U.S. stock market. The database, known as the Consolidated Audit Trail, is to be paid for with fees from brokers, banks, and other traders. The SEC is looking into the matter after groups such as OTC Markets Group and the Securities Industry and Financial Markets Association put increasing pressure on the agency to review the Consolidated Audit Trail.
NOMINATIONS, COMINGS AND GOINGS AT THE AGENCIES
Neomi Rao confirmed as Administrator of the Office of Management and Budget’s (OMB) Office of Information and Regulatory Affairs: Neomi Rao, currently a George Mason University law professor, was confirmed by a vote of 54-41 to serve as President Trump’s regulatory czar. She will oversee most federal rulemaking.
Randal Quarles Nominated to serve as Vice Chair for Supervision at Federal Reserve: The White House announced that President Trump will nominate Randal Quarles to the Federal Reserve Board. Quarles currently runs private investment firm Cynosure Group. He was previously a partner at private equity firm the Carlyle Group, and served as Undersecretary of the Treasury for George W. Bush. Senate Banking Committee Ranking Member Sherrod Brown
Russ Behnam Nominated as CFTC Commissioner: Russ Behnam, currently serving as Senior Counsel to Agriculture Committee Ranking Member Debbie Stabenow (D-MI), has been nominated as a CFTC Commissioner. Two Republican nominees, Dawn Stump and Brian Quintenz, are awaiting confirmation, as is Acting Chairman J. Christopher Giancarlo as head of the agency. Commissioner Sharon Bowen has announced plans to step down from her post.
Federal Deposit Insurance Corporation (FDIC) Nominee Withdraws Name: Jim Clinger has withdrawn his name from consideration for Chairman of the FDIC. Clinger cited family issues as his reason for withdrawing.
OTHER NOTEWORTHY ITEMS
British-American Business Council Gives Recommendations for Free Trade: In a set of recommendations for conversations on a U.S.-U.K. free trade agreement, the British-American Business Council said that the countries should look into uniting their financial services industries “under one regulatory umbrella” and developing a new mechanism for resolving investment disputes.
Consulting Firm Milliman Says Private Flood Insurance Cheaper: According to a
On another note related to flood insurance, House Financial Services Committee Chairman Jeb Hensarling is expected to drop his controversial proposal to phase out National Flood Insurance Program coverage for new construction in areas at high risk of flooding.
Paul Hastings’ Government Relations team is monitoring these issues. We help our clients craft strategies to address federal legislative and regulatory matters. Please reach out to us if your organization needs assistance with congressional or regulatory relations.