Money Matters: This Week in Washington
This Week in Washington for June 11, 2018
By Dina Ellis
THE BIG PICTURE
President Trump flexed his pardon power last week, deciding to commute the sentence of Alice Johnson after being lobbied by Kim Kardashian. Ms. Johnson had been serving a life sentence since 1996 for a non-violent drug crime. The President has floated a number of names of individuals in recent days that he is considering for pardons, including Muhammad Ali. He also tweeted last week that he has “the absolute right to PARDON myself,” a claim that has sparked debate among legal scholars.
In a 7-2 decision, the Supreme Court ruled in favor of a Colorado baker, Jack Phillips, who had refused to create a custom cake for a same-sex couple. The ruling was narrow, declining to engage with the broader issues in play. Justice Anthony Kennedy wrote for the majority and said that the Colorado Civil Rights Commission had violated Mr. Phillips’ rights by showing “hostility” to his beliefs. However, the opinion also affirmed that gay individuals “cannot be treated as social outcasts or as inferior in dignity and worth.”
The President revived the NFL national anthem controversy this week by canceling the White House event planned to celebrate the Philadelphia Eagles’ Super Bowl victory, citing low attendance and claiming “[the Eagles] disagree with their President because he insists that they proudly stand for the national anthem.” Although no player from the Eagles had kneeled or remained in the locker room for the national anthem during the regular or post-season, the President decided instead to rebrand the event as a celebration of America, with the United States Marine Band and United States Army Chorus performing. President Trump’s statement drew criticism from many Eagles players and the mayor of Philadelphia.
Primaries were held in several states, including some key races in California. Democrats managed to avoid a lockout in several key California districts, despite fears that a crowded field of candidates would result in two Republicans advancing to the general election given the state’s top-two jungle primary system. Senator Dianne Feinstein (D-CA) will face Democratic State Senator Kevin de Leon, a progressive challenger, in the general election. In Alabama, Republican Rep. Martha Roby has been forced into a primary runoff against Bobby Bright to be held July 17th, after failing to garner the majority of votes in the 2nd District.
Other highlights of last week include:
Special Counsel Robert Mueller unveiled new obstruction of justice charges against Paul Manafort and indicted his associate Konstantin Kilimnick. The charges relate to Mr. Manafort and Mr. Kilimnick’s alleged efforts to tamper with witnesses.
Senate Majority Leader Mitch McConnell formally announced his plan to cancel three weeks of the August recess, citing the “historic obstruction” by Democrats as his reason. He intends to continue work on approving nominees and appropriations bills during that time. Sen. McConnell also announced this week that he plans to ask Sen. John Cornyn (R-TX), to stay on the leadership team after his tenure as whip ends this year due to term limits.
On his way to the G7 summit in Canada, President Trump told reporters that “Russia should be in this meeting. Why are we having a meeting without Russia being in the meeting?” Russia was expelled from the group in 2014 following the invasion and annexation of Crimea from Ukraine.
LAST WEEK ON THE HILL
HOUSE FINANCIAL SERVICES COMMITTEE
Mr. Steve Berg, Vice President, Programs and Policy, National Alliance to End Homelessness
Ms. Barbara Duffield, Executive Director, SchoolHouse Connection
Ms. Kat Lilley, Deputy Executive Director, Family Promise of Colorado Springs
Ms. Millie Rounsville, Chief Executive Officer, Northwest Wisconsin Community Services Agency
Hearing entitled “
Mr. Steven G. Day, President, American Land Title Association
Mr. Richard Hunt, President and Chief Executive Officer, Consumer Bankers Association
Ms. Kate (Larson) Prochaska, Director, Center for Capital Markets Competitiveness, U.S. Chamber of Commerce
Mr. Hilary O. Shelton, Director, NAACP Washington Bureau, Senior Vice President, Advocacy and Policy, National Association for the Advancement of Colored People
Mr. Elmer K. Whitaker, Chief Executive Officer, Whitaker Bank Corporation of Kentucky
- H.R. 3861, the Federal Insurance Office Reform Act of 2017” passed 36-21.
- H.R. 4557, the “Reforming Disaster Recovery Act of 2017” passed 53-3.
- H.R. 5054, the “Small Company Disclosure Simplification Act of 2018” passed 32-23.
- H.R. 5756, to require the Securities and Exchange Commission to adjust certain resubmission thresholds for shareholder proposals passed 34-22.
- H.R. 5783, the “Cooperate with Law Enforcement Agencies and Watch Act of 2018” passed 55-0.
- H.R. 5877, the “Main Street Growth Act” passed 56-0.
SENATE APPROPRIATIONS COMMITTEE
The Honorable J. Christopher Giancarlo, Chairman, U.S. Commodity Futures Trading Commission
The Honorable Jay Clayton, Chairman, U.S. Securities and Exchange Commission
THIS WEEK ON THE HILL
Tuesday, June 12
Senate Banking Committee hearing to consider “
The Honorable Richard Clarida, of Connecticut, to be a Member and Vice Chairman of the Board of Governors of the Federal Reserve System
Ms. Michelle Bowman, of Kansas, to be a Member of the Board of Governors of the Federal Reserve System
Wednesday, June 13
House Financial Services Committee hearing entitled “
House Financial Services Committee (Capital Markets, Securities, and Investment Subcommittee) hearing entitled “
Thursday, June 14
Senate Banking Committee hearing entitled “
CFTC Votes on De Minimis Exception Proposal: On Monday, the CFTC voted 2-1 to maintain a US$8B threshold exemption for swap dealings, instead of dropping to US$3B at the end of 2019. Chairman Giancarlo explained the decision saying, “the drop in the threshold would pose unnecessary burdens for nonfinancial companies that engage in relatively small levels of swap dealing to manage business risk for themselves and their customers.”
Federal Reserve Set to Release Stress Test Results This Month: The Fed announced that results from the latest supervisory stress tests conducted as part of the Dodd-Frank Act will be released on Thursday, June 21, and the results from the related Comprehensive Capital Analysis and Review (CCAR) will be released on Thursday, June 28.
SEC Modernizes the Delivery of Fund Reports and Seeks Public Feedback on Improving Fund Disclosure: On Monday, the SEC voted to improve the experience of investors who invest in mutual funds, ETFs and other investment funds. In three related releases, the Commission provided a new, optional “notice and access” method for delivering fund shareholder reports, invited investors and others to share their views on improving fund disclosure and sought feedback on the fees that intermediaries charge for delivering fund reports. Chairman Jay Clayton said in a statement, “The new rule significantly modernizes delivery options for fund information while preserving the right of fund investors to receive information in paper form as they do today. I look forward to public feedback on next steps, and encourage everyone with an interest in fund disclosure—especially Main Street investors—to give us their ideas on how to improve the design, delivery and content of fund disclosures.” The changes will go into effect in January 2021.
CFPB Acting Director Mick Mulvaney Disbands Consumer Advisory Board: This week Acting Director Mick Mulvaney terminated all members of the Consumer Advisory Board, a group of 25 consumer advocates and community leaders the director was required to meet with twice annually. Anthony Welcher, the CFPB’s Associate Director for External Affairs said they were “streamlining some of the way the boards operate.” The move drew sharp criticism from many Democrats, with Sen. Sherrod Brown (D-OH) criticizing the move by saying “Mulvaney has proven once again he would rather cozy up with payday lenders and industry insiders than listen to consumer advocates who want to make sure hardworking Americans are not cheated by financial scams.”
Treasury Sanctions Violent Colombian Cocaine Trafficking Organization: Treasury’s Office of Foreign Assets Control identified the Rincon Castillo drug trafficking organization, its nefarious leader Colombian drug trafficker Pedro Rincon Castillo, and a key Colombian criminal associate Horacio de Jesus Triana Romero as significant foreign narcotics traffickers pursuant to the Foreign Narcotics Kingpin Designation Act. “Treasury is taking action to shut off the flow of Colombian cocaine proceeds through the Rincon Castillo drug trafficking organization’s elaborate network of emerald mines and other seemingly legitimate enterprises. The United States is committed to combating cartels engaged in cocaine trafficking and the violent networks they have cultivated to launder dirty money and transport these dangerous drugs,” said Sigal Mandelker, Under Secretary for Terrorism and Financial Intelligence.
COMINGS AND GOINGS AT THE AGENCIES
Jelena McWilliams Sworn In As FDIC Chair: On Tuesday, Jelena McWilliams was sworn in as the chair of the FDIC, succeeding Martin Gruenberg.
SEC Names Valerie A. Szczepanik Senior Advisor for Digital Assets and Innovation: On Monday, the SEC announced that Valerie A. Szczepanik had been named Associate Director of the Division of Corporation Finance and Senior Advisor for Digital Assets and Innovation for Division Director Bill Hinman. This is a newly created advisory position, and Ms. Szczepanik will coordinate efforts across all SEC Divisions and Offices regarding the application of U.S. securities laws to emerging digital asset technologies and innovations, including Initial Coin Offerings and cryptocurrencies.
SEC Names Sarah ten Siethoff Associate Director in the Division of Investment Management’s Rulemaking Office: Sarah ten Siethoff has been named the Associate Director for the SEC’s Division of Investment Management’s Rulemaking Office. As Associate Director, Ms. ten Siethoff will develop recommendations for rulemaking and other policy initiatives relating to funds and investment advisers under the federal securities laws. She has been a member of the Division in a variety of positions since 2008, serving most recently as Deputy Associate Director in the Rulemaking Office.
Steve Dreyer Expected to Be Named Head of Treasury’s Federal Insurance Office: Steve Dreyer is widely expected to be appointed the head of Treasury’s Federal Insurance Office, which was created following the passage of Dodd-Frank in 2010. Mr. Dreyer would succeed President Obama’s appointee, Michael McRaith. Mr. Dreyer has worked at the credit rating agency S&P for the last 30 years.
Shahira Knight Leaving White House: Shahira Knight, who served as deputy director of the National Economic Council, is leaving the White House and joining the banking and lobbying group the Clearing House. Ms. Knight played a key role in shepherding the Tax Cuts and Jobs Act through Congress.
Treasury’s Drew Maloney Heading to Private Equity Trade Group: Treasury’s assistant secretary for legislative affairs, Drew Maloney, is headed to the private sector, joining the American Investment Council. Mr. Maloney was very involved behind the scenes on the recent tax cuts and banking deregulation bills.
OCC Hires New Deputy Chief Counsels: The Office of the Comptroller of the Currency announced the selection of Bao Nguyen and Ted Dowd to serve as Deputy Chief Counsels. In making this announcement, the OCC is expanding the number of Deputy Chief Counsels from two to three to better distribute management responsibilities within the department.
The Supreme Court Upholds Bankruptcy Protections for Debtors: In a unanimous ruling released on Monday in Lamar, Archer & Cofrin, LLP v. R. Scott Appling, the Court resolved a circuit split on the dischargeability of debts which were obtained via fraudulent statements, in what was a debtor-friendly interpretation of the U.S. Bankruptcy Code. Justice Sonia Sotomayor wrote the opinion explaining, “If a given statement did not actually serve as evidence of ability to pay, the creditor’s explanation will not suffice to bar discharge. But if the creditor proves materiality and reliance, it will be clear the statement was one ‘respecting the debtor’s financial condition.’”
FTC Files Suit to Stop Robocaller: The FTC filed a complaint in the U.S. District Court for the Central District of California against James Christiano, who they allege through his dialing firm Teleweb, made roughly a billion robocalls a year. The FTC is seeking to stop the calls in addition to an award of civil penalties.
OTHER NOTEWORTHY NEWS
Senator Ron Wyden (D-OR) Announces Hold on Treasury Nominees Over Document Dispute: Senator Ron Wyden (D-OR) who serves as Ranking Member on the Senate Financial Committee announced that he will block nominees to the Treasury until the department hands over documents he has requested related to Russia and Michael Cohen, in a statement that accused the department of “stonewalling” the Senator said “the administration needs to learn that cooperating with Congressional oversight isn't optional—it's a constitutional obligation.” The nomination of Isabel Patelunas to serve as assistant Treasury secretary for intelligence and analysis, Justin Muzinich to serve as deputy Treasury secretary, and Michael Faulkender to serve as assistant Treasury secretary for economic policy are all pending and subject to Sen. Wyden’s hold.
New Democrat Coalition's Housing Task Force Releases Report: On Wednesday, the New Democrat Coalition’s Housing Task Force, formed in March 2017, released its preliminary findings—namely that new construction is the best way to address the housing affordability and homelessness problem. Co-Chair Rep. Denny Heck (D-WA) told reporters that, “We need to build millions more housing units, that's the simple fact of the matter.” The findings also noted that “the number of units available to households with very-low or extremely-low income is in outright decline.”
Colorado Enacts Strict Disclosure Law for Data Breaches: On Tuesday, Colorado Governor John Hickenlooper signed House Bill 1128 into law, which will require businesses and government entities to contact people within 30 days of a data breach. Companies will be required to notify the Colorado AG if the number of affected individuals exceeds 500 and will be required to tell credit reporting agencies if the number affected is in excess of 1000.