Money Matters: This Week in Washington
This Week in Washington for June 19, 2017
By Dina Ellis and Casey Miller
THE BIG PICTURE
Majority Whip Steve Scalise (R-LA) Shot in Attack on Congressional Republicans: Washington was rocked after gunman opened fire at the Republican congressional baseball team’s practice on June 14, striking four people, including Representative Steve Scalise. The tragedy shocked Republicans and Democrats and united the parties in anguish, with Speaker Paul Ryan (R-WI) saying “for all the noise and all the fury, we are one family.”
Several congressional activities were postponed in light of the shooting, including a GOP meeting on the budget, which will likely happen this week. The congressional baseball game, which is an important event that brings together the Capitol Hill community, went on as scheduled on June 15. The Democrats continued their winning streak, with an 11-2 victory.
Senate Approves New Sanctions for Iran and Russia: On June 15, the Senate voted 98-2 for new sanctions on Iran and Russia. This includes the power of Congress to block President Trump from rolling back penalties against Russia. It is unclear whether the White House will accept the sanctions deal, as President Trump has repeatedly dismissed the idea of Russia meddling in the 2016 Presidential election. The sanctions target Iran’s ballistic missile development, support for terrorism, weapons transfers and human rights violations.
Calls for a bigger FSOC role in supervision and coordination.
Gives FSOC “the authority to appoint a lead regulator on any issue on which multiple agencies may have conflicting and overlapping regulatory jurisdiction.”
Asks that Congress reduce redundancy in regulatory regime, including consolidation.
Recommends exempting community banks with less than $10B in assets from the Volcker Rule, Basel III requirements, and possibly the Collins Amendment of Dodd-Frank (established a minimum capital floor for all institutions).
Includes significant Reforms to mortgage rules, including qualified mortgage rule
Changes Living Will requirements, including:
Changing threshold for compliance from $50B to matched revised threshold for application of enhanced prudential standards
Formalizing a change of living will process to two-year cycle
Removing FDIC from the process and make it an objective process
Recommends raising the stress testing requirements for federally insured credit unions to $50B in assets (currently at $10B).
Calls for regulatory “off-ramp” from all capital and liquidity requirements, and the Volcker rule, for institutions that agree to hold a “sufficiently high” level of capital.
Recommends CFPB Director be removable at will by President or restructured to independent commission and subject to appropriations.
Some of the recommendations can be done through regulations, without Congress. The report shows that the Treasury Department, which traditionally has little regulatory authority, is attempting to expand the scope of its authority. Federal Reserve Chair Janet Yellen called the report “complicated” but said that she was encouraged that it supports many of the regulatory pillars implemented after the financial crisis. According to Yellen, “[the report] underscores the importance of capital, liquidity, stress testing, and resolution planning and having a safe and sound banking system, which are views that I and my colleagues have long espoused.”
Financial Services Committee Ranking Member Maxine Waters
President Trump Confirms He is Under Investigation: President Trump tweeted on June 16 that he is the target of a “Witch Hunt,” saying “I am being investigated for firing the FBI Director by the man who told me to fire the FBI Director!” The tweet likely refers to Deputy Attorney General Rod Rosenstein.
ALSO ON THE HILL LAST WEEK
HOUSE FINANCIAL SERVICES COMMITTEE
Though some concessions have been made and some industry groups now support the legislation, the National Association of Home Builders opposes a provision that would phase out coverage for new construction in high-risk areas. The American Bankers Association (ABA) also urged lawmakers to delete a provision in the bills that would eliminate coverage for homes with excessive lifetime claims. In a letter, the ABA said that the elimination of that provision could lead to a foreclosure crisis.
As talks on the legislation continue in the House and the Financial Services Committee marks up their bills, Senate Banking Chairman Mike Crapo (R-ID) said that he and Ranking Member Sherrod Brown (D-OH) are close to an agreement to reauthorize the program. Senators Robert Menendez (D-NJ) and John Kennedy (R-LA), both of whom are from flood-prone states, are
SENATE BANKING COMMITTEE
Ranking Member Brown Open to Easing Regulations for Midsize Banks: Speaking at a
Group of House Republicans Urge Ways and Means Chairman Kevin Brady (R-TX) to Maintain Carried Interest Status Quo: Twenty-two Republicans, led by Rep. Richard Hudson (R-NC), sent a letter to Chairman Kevin Brady, urging him not to offset rate cut costs by increasing taxes on carried interest, which gets preferred treatment as a long-term investment. According to the letter, “changing that characterization as it relates to carried interest capital gains would arbitrarily punish investors in real estate, venture capital, private equity, and other partnerships by treating their gains differently than those of other investors.”
THIS WEEK ON THE HILL
Wednesday, June 21
House Financial Services Committee, Markup, “
- H.R. 2565, To require the use of replacement cost value in determining the premium rates for flood insurance coverage under the National Flood Insurance Act, and for other purposes. (Section-by-Section)
House Financial Services Subcommittee on Monetary Policy and Trade, Hearing,
Thursday, June 22
Senate Banking Committee, Hearing, “
The Honorable Jerome H. Powell, Member, Board of Governors of the Federal Reserve System;
The Honorable Martin J. Gruenberg, Chairman, Federal Deposit Insurance Corporation;
The Honorable J. Mark McWatters, Acting Chairman, National Credit Union Administration;
Mr. Keith A. Noreika, Acting Comptroller, Office of the Comptroller of the Currency;
Mr. Charles G. Cooper, Commissioner, Texas Department of Banking, on behalf of the Conference of State Bank Supervisors.
Senate Agriculture Committee, Hearing, “
Friday, June 23
House Financial Services Subcommittee on Terrorism and Illicit Finance, Hearing, “
Securities and Exchange Commission (SEC) to Consider New Rule for New York Stock Exchange Listings: The SEC is scheduled to decide by June 29, or at least start proceedings on, whether companies will be able to list on the New York Stock Exchange without completing a traditional initial public offering (IPO). This move would appeal to certain cash-rich startups that have ample cash such that they don’t require additional capital associated with an IPO.
Acting Comptroller of Currency Will Recuse Himself from Firm-Specific Matters: Acting head of the Office of the Comptroller of Currency (OCC) Keith Noreika will recuse himself from matters involving 80 financial institutions, law firms, and other companies that had dealings with his previous law firm, Simpson Thacher & Bartlett LLP.
Consumer Groups Ask Federal Communications Commission (FCC) to Take Action on Robocalls: Six consumer advocacy groups asked the FCC on June 12 to launch an investigation into robocalling by Navient Solutions, LLC to student loan debtors. The groups said the calls are “abusive” and that Navient is “deliberately engaged in a campaign of harassing and abusing consumers.”
Former SEC Commissioner Speaks Out on IPO Dearth: Former SEC Commissioner Paul Atkins said on June 12 that regulatory costs are a major hindrance to companies going public, noting that executives, investors, and others “all take into account the cost of doing business and regulations.” Atkins is now CEO of Patomak Global Partners, LLC. SEC Chairman Jay Clayton has said that he sees “meaningful room for improvement” in helping companies go public and making the move more attractive for businesses.
NOMINATIONS, COMINGS AND GOINGS AT THE AGENCIES
President Trump Nominates Dawn DeBerry Stump as Commissioner of Commodity Futures Trading Commission: President Trump nominated former derivatives industry lobbyist Dawn DeBerry Stump to be a Commissioner on the CFTC. Stump launched her consulting firm Stump Strategic last year. She previously worked as a senior staffer on the Senate Agriculture Committee.
OTHER NOTEWORTHY ITEMS
The announcement from FINRA follows the Commodity Futures Trading Commission’s launch of LabCFTC, which will create a hub for the agency to engage with fintech innovators, and the OCC’s developments of a new fintech charter.
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.