This Week in Washington for March 25, 2019
By Dina Ellis
THE BIG PICTURE
Late on Friday afternoon the long-anticipated report from Special Counsel Robert Mueller’s Russia investigation was delivered to Attorney General William Barr, ending his nearly two year probe into potential collusion during the 2016 election. Over the weekend, the Attorney General reviewed the findings and prepared a summary of “principle conclusions.” In his summary, he noted that while the Special Counsel’s report found there was no collusion, on the issue of obstruction of justice it “does not conclude that the President committed a crime, it also does not exonerate him.” The President embraced a different interpretation of the findings, tweeting “No Collusion, No Obstruction, Complete and Total EXONERATION.” House Democrats were quick to renew their calls for full transparency and the public release of the full report in order to bolster “public faith in our democratic institutions and the rule of law.”
The President renewed his public grievance with the late Senator John McCain during a press spray in the Oval Office with Brazilian President Jair Bolsonaro, saying “I was never a fan of John McCain and I never will be.” The next day during an event focused on manufacturing in Ohio, he noted that he had not received a thank you, for giving “him the kind of funeral that he wanted.”
On Friday, the President sparked confusion when he announced via Twitter that “it was announced today by the U.S. Treasury that additional large scale Sanctions” would be imposed on North Korea, but that “I have today ordered the withdrawal of those additional Sanctions!” It was later clarified that an additional set of sanctions had been contemplated, but not yet announced, and the President had decided against taking action.
Other highlights of last week include:
On Thursday, the President announced that the U.S. will recognize Israeli control of the Golan Heights.
On Tuesday, the President announced the nomination of former airline pilot Steve Dickson to serve as the administrator of the Federal Aviation Administration.
LAST WEEK ON THE HILL
All was quiet on the Hill during recess period.
LEGISLATION INTRODUCED AND PROPOSED
Freedom Financing Act: On Thursday, Senators Kevin Cramer (R-ND) and John Kennedy (R-LA) introduced the Freedom Financing Act, which would ensure large financial institutions cannot deny service to certain constitutionally-protected industries that are fully compliant with all laws and statutes. “A small number of banks controlling most of the financial sector could effectively illegalize legal commerce by refusing to finance certain industries or process certain transactions,” Cramer said in a statement. “Look no further than pro-Second Amendment industries where such discrimination has already occurred. Big banks should not be the arbiters of constitutionality.”
THIS WEEK ON THE HILL
Tuesday, March 26
House Financial Services Committee (Subcommittee on Oversight and Investigations) Hearing on “
House Financial Services Committee “
HR ___, the Ending Homelessness Act (Waters)
HR 389, Kleptocracy Asset Recovery Rewards Act (Lynch/Budd)
HR 1500, the Consumers First Act (Waters)
HR 1595, the SAFE Banking Act (Perlmutter/Heck/Stivers/Davidson)
HR 1815, the SEC Disclosure Effectiveness Testing Act (Casten)
Senate Banking Committee Hearing on “
Wednesday, March 27
Senate Banking Committee Hearing on “
House Small Business Committee Hearing on “
Senate Appropriations Committee (Financial Services and General Government Subcommittee) Hearing on “
SEC Adopts Rules to Implement FAST Act Mandate to Modernize and Simplify Disclosure: On Wednesday, the SEC voted to adopt amendments to modernize and simplify disclosure requirements for public companies, investment advisers, and investment companies. The amendments, which were mandated by the Fixing America’s Surface Transportation (FAST) Act, will, among other things, increase flexibility in the discussion of historical periods in Management’s Discussion and Analysis, allow companies to redact confidential information from most exhibits without filing a confidential treatment request, and incorporate technology to improve access to information on the cover page of certain filings.
SEC Commissioner Discusses Regulations for Shareholder Advisers: On Monday, SEC Commissioner Elad Roisman discussed his view that any additional regulations on shareholder advisory firms should proceed slowly. He acknowledged that while “it is incumbent upon [asset managers] to use their services responsibly” he “recognize[s] that proxy advisory firms provide services that their clients greatly value” and therefore any additional regulation should be thoroughly contemplated before being enacted.
Treasury Announces New Set of Sanctions Related to Iran: On Friday, Treasury’s Office of Foreign Assets Control together with the U.S. Department of State, designated 14 individuals and 17 entities in connection with Iran’s Organization of Defensive Innovation and Research (SPND), which has provided support to designated Iranian defense entities and whose key personnel played a central role in the Iranian regime’s past nuclear weapons effort. Treasury Secretary Steven Mnuchin said in a statement “The United States will continue applying maximum pressure to the Iranian regime, using all economic tools to prevent Iran from developing weapons of mass destruction.”
Treasury Announces Sanctions Against Venezuela’s Development Bank: On Friday, Treasury’s Office of Foreign Assets Control designated Banco de Desarrollo Economico y Social de Venezuela, or BANDES, pursuant to E.O. 13850, as amended, for operating in the financial sector of the Venezuelan economy. “The willingness of Maduro’s inner-circle to exploit Venezuela’s institutions knows no bounds. Regime insiders have transformed BANDES and its subsidiaries into vehicles to move funds abroad in an attempt to prop up Maduro. Maduro and his enablers have distorted the original purpose of the bank, which was founded to help the economic and social well-being of the Venezuelan people, as part of a desperate attempt to hold onto power,” said Treasury Secretary Steven Mnuchin.
Federal Reserve Signals No Further Rate Hikes in 2019: Following the meeting of the Federal Open Market Committee on Wednesday, the Fed announced that the Committee had decided to maintain the target range for the federal funds rate at 2-1/4 to 2-1/2 percent. In light of global economic and financial developments and muted inflation pressures, the Committee noted that it will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.
Federal Reserve Announces Members of Fraud Definitions Work Group: The Federal Reserve announced the members of its Fraud Definitions Work Group, the latest initiative to advance its strategy for improving the U.S. payment system. Over the course of the next year, the 22-member group will work collaboratively with Federal Reserve leaders to formulate recommendations for improving the quality and consistency of automated clearing house (ACH), wire, and check fraud data.
Federal Reserve Board Publishes Report on Debit Card Transactions: On Thursday, the Federal Reserve published a report on debit card transactions in 2017, including information on volume and value, interchange fee revenue, certain issuer costs, and fraud losses. The report is the fifth in a series published every two years pursuant to section 920 of the Electronic Fund Transfer Act.
Federal Reserve System Publishes Annual Financial Statements: On Friday, the Federal Reserve Board released its 2018 combined annual audited financial statements. The Federal Reserve Bank’s 2018 earnings were approximately US$63.1B, representing a decrease of US$17.6B from 2017. Total Reserve Bank assets as of December 31, 2018, were approximately US$4.1T, a decrease of US$392.1B from the previous year.
New York Fed Launches Fintech Advisory Group: On Friday, the Federal Reserve Bank of New York launched a 10-member “Fintech Advisory Group” with the goal of “provid[ing] the New York Fed with a more complete picture of the rapidly evolving fintech landscape.” The group will function as a “high-level platform to establish clear points of contact with senior representatives and thought leaders from the financial technology industry and consumer organizations.”
Former CFTC Chair Calls for Agency-Level Action on Cryptocurrencies: Timothy Massad, who served as Chair of the CFTC from 2014-2017, published a report on Monday in which he argued that absent “an Enron-type incident,” and subsequent public outcry, Congress is unlikely to be in a rush to craft legislation regulating cryptocurrencies. He recommended that Treasury or the Financial Stability Oversight Council issue a report to clarify regulation and provide recommendations to legislators, saying “FSOC is well-suited to the task, and its involvement could draw bipartisan support.”
CFPB Releases Report on 2018 Administration of the Fair Debt Collection Practices Act: On Wednesday, the CFPB released its annual report to Congress on the administration of the Fair Debt Collection Practices Act. The report highlights the continued efforts by the Bureau and the Federal Trade Commission (FTC) to stop unlawful debt collection practices, including vigorous law enforcement, education and public outreach, and policy initiatives. The Bureau highlighted that it handled approximately 81,500 debt collection complaints related to first-party (creditors collecting on their own debts) and third-party collections, and engaged in six public enforcement actions arising from alleged FDCPA violations including one action that resulted in an $800,000 civil penalty.
Later in the week, Director Kraninger announced that the agency would release a proposed update to the FDCPA, issuing a “Notice of Proposed Rulemaking [that] will address such issues as communication practices and consumer disclosures.”
CFPB Announces Enhancements to Advisory Committees and Opening of Member Applications: On Thursday, the CFPB announced enhancements to its advisory committee charters following Director Kathy Kraninger’s listening tour. “I’ve seen firsthand how the Bureau benefits from the valuable input provided by committee members. I have also seen how the joint committee meeting is resulting in members sharpening their ideas by engaging in a thorough dialogue,” said Director Kraninger. Additionally, the Bureau announced that it will begin accepting applications for members to serve on its advisory committees.
FDIC Announces Meeting of Advisory Committee on Community Banking: The FDIC announced on Thursday that it will hold a meeting of the Advisory Committee on Community Banking on Thursday, March 28. During the meeting, FDIC senior staff will discuss efforts regarding de novo institutions, community bank technical assistance efforts, the 2017 FDIC National Survey of Unbanked and Underbanked Households, and various supervisory policy issues.
COMINGS AND GOINGS AT THE AGENCIES
President Trump Offers Stephen Moore Seat on Fed Board: On Friday, the President reportedly offered economist Stephen Moore a seat on the Federal Reserve Board. Mr. Moore, who previously advised the campaign and currently serves as a visiting fellow at the Heritage Foundation, argued in a recent op-ed that the Federal Reserve is “a threat to growth.” Mr. Moore is believed to be undergoing the standard background check and vetting process.
Allison Lee Reportedly the Top Contender for Open SEC Seat: It is rumored that the President will nominate Allison Lee to fill the Democratic seat at the SEC left vacant by Kara Stein, who left the agency in January.
Donald Layton to Retire as CEO of Freddie Mac: On Thursday, Freddie Mac announced that current CEO Donald Layton will retire effective July 1, and that the Board of Directors has appointed David Brickman to succeed him. Mr. Brickman indicated that he would focus on three main areas – “driving innovation, supporting affordable housing and serving our customers.”
SEC Names Justin Jeffries Associate Regional Director for Enforcement in Atlanta Office: On Monday, the SEC announced that Justin Jeffries has been named the Associate Regional Director for enforcement in the Atlanta Regional Office. Mr. Jeffries joined the SEC’s Division of Enforcement as a staff attorney in 2010 and was promoted to Assistant Regional Director in 2017.
Trade Official Departing White House: On Friday, it was revealed that Clete Williams, a senior White House official involved in trade talks with China, is set to leave the administration for a position in the private sector.
Kratsios Appointed as Chief Technology Officer: On Thursday, the President announced he had nominated his technology adviser, Michael Kratsios, to serve as chief technology officer. Mr. Kratsios previously held various roles in finance and venture capital.
Supreme Court Rules that Foreclosure Firms are not Classified as Debt Collectors: On Wednesday, the Supreme Court ruled unanimously that companies performing nonjudicial foreclosures are not classified as “debt collectors” under the Fair Debt Collection Practices Act. “We believe that the statute exempts entities engaged in no more than the ‘enforcement of security interests’ from the lion’s share of its prohibitions,” wrote Justice Stephen Breyer, adding that “we must enforce the statute that Congress enacted.”
OTHER NOTEWORTHY ITEMS
New Jersey Bans Cashless Stores and Restaurants: Last week New Jersey Governor Phil Murphy signed into law a ban on cashless stores and restaurants, joining Massachusetts and the city of Philadelphia in outlawing the practice. “Many people don’t have access to consumer credit and any effort by retail establishments to ban the use of cash is discriminatory towards those people,” New Jersey Assemblyman Paul Moriarty said.
State AGs Threaten Legal Action over CFPB Payday Rule: On Monday, over 20 Democratic State AGs warned the CFPB that they would “consider taking legal action” if the agency continues to delay the implementation of the payday lending rule, because any delay would “leave the citizens of our states unprotected from many types of exploitative loans and could embolden lenders who would seek to circumvent the laws of those states with strong protections against such loans.”