This Week in Washington for July 30, 2018
By Dina Ellis
President Trump held meetings with top European Union officials this week, including European Commission President Jean-Claude Juncker and EU Trade Commissioner Cecilia Malmström, to discuss trade disputes. The summit marked a de-escalation in tensions that some feared could lead to a trade war. The leaders reached an agreement on several issues – with the EU pledging to import more U.S. soybeans and natural gas, and President Trump announcing that he will not enact the tariffs on automobiles he had previously threatened. The leaders announced that no new tariffs will be enacted while negotiations are ongoing. President Trump heralded the meeting as opening a “new phase” of relations, and announced they had also agreed to work towards zero tariffs on non-auto goods, echoing the Obama-era trade initiative, the Transatlantic Trade and Investment Partnership.
Republican Reps. Mark Meadows (NC) and Jim Jordan (OH), both members of the conservative House Freedom Caucus, filed articles of impeachment against Deputy Attorney General Rod Rosenstein late on Wednesday, citing dereliction of duty for failing to appoint a second special counsel to investigate the FBI and his failure to turn over documents related to the Russia investigation. House Speaker Paul Ryan (R-WI) disagreed with the move, saying he did not “think we should be cavalier with this process or th[at] term.” Later in the week, Rep. Meadows seemed to walk back his impeachment push, saying he hoped his dispute with the Deputy AG could be resolved through other means.
President Trump will not host Russian President Vladimir Putin at the White House this fall, instead pushing their next meeting to 2019. National Security Advisor John Bolton announced that the President preferred to wait until the investigation into Russian interference in the 2016 election, which the President has characterized as a “witch hunt” is over.
Other highlights of last week include:
The House voted 359-54 to pass the US$717B 2019 National Defense Authorization Act, which includes provisions that would modernize the Committee on Foreign Investment in the U.S. (CFIUS) and limit transfer of F-35 fighter jets to Turkey.
The Senate confirmed Robert Wilkie to be the next Veterans Affairs Secretary by a 86-9 vote on Monday. Mr. Wilkie had previously served as undersecretary of Defense for personnel and readiness.
On Monday, press secretary Sarah Sanders floated the idea that the Trump administration may revoke the security clearances of some Obama-era intelligence officials, claiming that they had “politicized” and “monetized” their public service.
In a letter last week, Representative Jim Jordan (R-OH) announced his intention to run for House Speaker. Rep. Jordan has been in the headlines recently, with an investigation into whether he was aware of sexual harassment that occurred during to his tenure as a coach of the wrestling team at Ohio State currently ongoing.
LAST WEEK ON THE HILL
HOUSE FINANCIAL SERVICES COMMITTEE
H.R. 1511, the “Homeless Children and Youth Act of 2017”
H.R. 2069, the “Fostering Stable Housing Opportunities Act of 2017”
H.R. 2570, the “Mortgage Fairness Act of 2017”
H.R. 3626, the “Bank Service Company Examination Coordination Act of 2017”
H.R. 5036, the “Financial Technology Protection Act”
H.R. 5059, the “State Insurance Regulation Preservation Act”
H.R. 6332, the “Improving Strategies to Counter Weapons Proliferation Act”
SENATE BANKING COMMITTEE
Hearing on “Nominations”: On Tuesday, the Committee conducted a hearing on the following nominations:
Mr. Elad L. Roisman, of Maine, to be a Member of the Securities and Exchange Commission;
Mr. Michael R. Bright, of the District of Columbia, to be President of the Government National Mortgage Association;
Ms. Rae Oliver, of Virginia, to be Inspector General, U.S. Department of Housing and Urban Development; and
Dr. Dino Falaschetti, of Montana, to be Director, Office of Financial Research, U.S. Department of the Treasury.
OTHER COMMITTEE HEARINGS
Andrew Smith, director of the FTC’s Bureau of Consumer Protection
Jason Oxman, CEO of the Electronic Transactions Association
Lauren Saunders, associate director of the National Consumer Law Center
ON THE FLOOR
McConnell Sets Vote on Flood Insurance: On Wednesday, the House voted 366-52 to pass a four month extension of the National Flood Insurance Program through November 30. With a Tuesday deadline looming on the program’s expiration, Majority Leader Mitch McConnell set a vote in the Senate for early this week.
THIS WEEK ON THE HILL
No hearings scheduled during recess period.
CFTC Responds to Vatican Criticism of Derivatives: CFTC Chairman Giancarlo and Chief Economist Bruce Tuckman penned a letter in defense of derivatives in response to the Bollettino published by the Vatican’s Congregation for the Doctrine of the Faith and Dicastery for Promoting Integral Human Development on May 17, 2018, titled “Oeconomicae et Pecuniariae Quaestiones: Considerations for an Ethical Discernment Regarding Some Aspects of the Present Economic Financial System.” Giancarlo and Tuckman address derivatives broadly, as well as the specific criticism of credit default swaps contained within the Vatican’s Bollettino.
CFTC Proposes Rule Update for U.S. Markets in Security Futures Products: The CFTC unanimously approved a proposal to update a rule impacting exchanges that list security futures products (SFPs). The proposal has the potential to provide greater liquidity in SFP trading, which would facilitate risk management for entities using SFPs. Specifically, the proposed CFTC SFP Rule will increase the default level of equity SFP position limits to 25,000 (100-share) contracts, from 13,500 (100-share) contracts; and modify the criteria for setting a higher level of position limits and position accountability levels.
CFTC Issues Proposal to Streamline Regulations for Swap Dealers: On Tuesday, the CFTC issued a proposal approved unanimously by the Commission to reduce unnecessary burdens on registrants and market participants by simplifying overly complex notification provisions, thereby reducing certain intricate and prescriptive requirements that have been found to provide little or no benefit.
FHFA Announces Decision to Stop Credit Score Initiative: On Monday, the FHFA announced that the Agency will not make a decision in 2018 about updating the credit score model used by Fannie Mae and Freddie Mac as previously announced and, instead, is shifting its focus to implementation of Section 310 of the Economic Growth, Regulatory Relief, and Consumer Protection Act. “After careful evaluation, we have determined that proceeding with efforts to reach a decision based on our Conservatorship Scorecard Initiative process and timetable would be duplicative of, and in some respects inconsistent with, the work we are mandated to do under Section 310 of the Act,” said FHFA Director Melvin L. Watt. “In light of that, we are communicating to Congress that we are transferring our full efforts to working with the Enterprises to implement the steps required under Section 310.”
SEC Proposes Rules to Simplify and Streamline Disclosures in Certain Registered Debt Offerings: The SEC voted Tuesday to propose rule amendments to simplify and streamline the financial disclosure requirements applicable to registered debt offerings for guarantors and issuers of guaranteed securities, as well as for affiliates whose securities collateralize a registrant’s securities. Chairman Clayton explained, “the proposed rules are intended to make the disclosures easier for investors to understand and to encourage these offerings to be conducted on a SEC-registered basis.”
COMINGS AND GOINGS AT THE AGENCIES
Regional Director of the SEC’s Denver Regional Office Stepping Down: Julie Lutz, the Regional Director of the SEC’s Denver Regional Office, will leave the agency at the end of this month after more than 40 years of service. Ms. Lutz has served at the helm of the SEC’s Denver office since November 2013, overseeing the agency’s enforcement and examinations in a seven-state region.
Fannie Mae CEO Timothy Mayopoulos to Step Down: Fannie Mae CEO Timothy Mayopoulos is leaving after six years, it was announced this week.
Vice Chairman for Supervision Randal K. Quarles Sworn in For Second Term: Vice Chairman for Supervision Randal K. Quarles was sworn in for his second term as a member of the Board of Governors of the Federal Reserve System on Monday. Vice Chairman Quarles has served as a member of the Board of Governors since taking office on October 13, 2017, to fill an unexpired term. He was confirmed to his second term by the United States Senate on July 17, 2018. His term as a Board member ends on January 31, 2032, and his term as Vice Chairman for Supervision ends on October 13, 2021.
Kristin Snyder Named Deputy Director of OCIE: The SEC announced on Tuesday that Kristin Snyder will succeed the retiring Jane Jarcho as Deputy Director of the agency’s Office of Compliance Inspections and Examinations (OCIE). Ms. Snyder has been with the SEC for 15 years.
Elizabeth Baird and Christian Sabella Named Deputy Directors of the SEC’s Division of Trading and Markets: The SEC announced that Elizabeth Baird and Christian Sabella have been named Deputy Directors in the Division of Trading and Markets. Ms. Baird joins the SEC from Morgan, Lewis & Bockius LLP. Mr. Sabella has been an Associate Director in the division’s Office of Clearance and Settlement since 2015.
OTHER NOTEWORTHY ITEMS
General Data Protection Regulation Enforcement Cases Likely in the Year Ahead: In an interview, Europe’s Justice Commissioner Věra Jourová expressed her view that there likely will be enforcement actions related to Europe’s new privacy regulations this year, saying “My prediction is that there will be enforcement actions already this year. I don’t know concrete cases, but the data protection authorities are working very hard. They are aware of their power and responsibility.”
Department of Education Proposes Stricter Standard for Student Fraud Claims: In a rollback of Obama-era rules, the Department of Education issued a proposal on Wednesday to rewrite the “borrower defense to repayment rules,” curbing the amount of relief the government provides to borrowers filing fraud claims. Education Secretary Betsy DeVos said the new proposal would hold “institutions, rather than hardworking taxpayers, accountable for making whole those students who were harmed by an institution’s deceptive practices.”