Money Matters: This Week in Washington

This Week in Washington for October 29, 2018

October 29, 2018

Dina Ellis


A series of pipe bombs sent to prominent Democratic figures and a news organization had the nation on edge for much of last week, raising fears of violence in an increasingly politically polarized electorate. The devices were mailed to former President Obama, Vice President Biden, Secretary Clinton, and CNN’s New York City office in addition to other elected officials, members of past administrations, and celebrities. The packages were intercepted and fortunately no one was injured. President Trump called for the country “to unify,” but later in the week drew criticism for a tweet he sent that seemed to question the legitimacy of the threat, and lamenting “this ‘bomb’ stuff” was dulling “momentum” going into the midterms. On Friday, police arrested a suspect, Cesar Sayoc, and seized his van in Florida.

Following the murder of U.S. based Saudi journalist Jamal Khashoggi in Turkey, Secretary of State Mike Pompeo announced plans to revoke the visas of 21 Saudi officials tied to the killing. President Trump criticized the Saudis, saying “they had the worst cover up ever,” but continued to oppose calls for ending arms sales agreements with the country as punishment. The President told reporters that he would leave the question of sanctions to Congress, and hoped that a bipartisan agreement could be reached on the issue.

A tragedy unfolded on Saturday morning when a gunman opened fire at Tree of Life synagogue in Pittsburgh, killing at least 11 and injuring others, including four police officers. The suspect, Robert Bowers, was taken into custody at the scene. The shooting is being investigated as a hate crime, as Mr. Bowers described the Jewish people as the “enemy of white people.”

Other highlights of last week include:

  • Retired Justice Sandra Day O’Connor revealed that she had been diagnosed with the beginning stages of dementia, and would withdraw from public life. Justice O’Connor, the first female to serve on the Court, was nominated by President Reagan in 1981, and retired in 2006.

  • Senate Judiciary Chairman Chuck Grassley (R-IA) referred Michael Avenatti and his client, Kavanaugh accuser, Julie Swetnick to the DOJ for criminal investigation. Sen. Grassley alleges that they made “materially false” statements to the Committee.

  • On Monday, the President announced a plan to cut off aid to countries associated with the caravan of migrants, including Guatemala, Honduras, and El Salvador.

  • In a letter to Democratic leadership, progressive activists urged top Democrats to demand the release of President Trump’s tax returns if they regain power in November.


The House and Senate remain in recess through the midterm elections.

Senate Banking Committee

The Committee announced its hearing schedule for November.

  • November 14, 2018: Full Committee Hearing on “Oversight of Pilot Programs at Fannie Mae and Freddie Mac.”

  • November 15, 2018: Full Committee Hearing on “The Semiannual Testimony on the Federal Reserve’s Supervision and Regulation of the Financial System.”

  • November 29, 2018: Full Committee Hearing on “Combating Money Laundering and Other Forms of Illicit Finance: Regulator and Law Enforcement Perspectives on Reform.”

House Financial Services Committee

Financial Services Committee Chairman Jeb Hensarling (R-TX) announced that on November 14, Federal Reserve Vice Chairman for Supervision Governor Randal Quarles will appear before the full committee to provide semi-annual testimony on the efforts, activities, objectives, and plans of the Federal Reserve with respect to the conduct of supervision and regulation of depository institution holding companies and other financial firms supervised by the Federal Reserve.


Treasury Designates Singapore-Based Targets for Laundering Money in Support of North Korea: Treasury’s Office of Foreign Assets Control on Thursday announced North Korea-related designations of two entities and one individual, continuing the implementation of existing sanctions. In a related action, the U.S. Department of Justice unsealed criminal charges against the same individual, Tan Wee Beng. The actions highlight North Korea’s continued illicit use of the financial system to circumvent sanctions, as well as the U.S. Government’s commitment to safeguard the international financial system and implement existing UN Security Council resolutions. Treasury Secretary Steven Mnuchin said, “Governments, financial institutions, and other companies worldwide need to be on high alert to these types of schemes. The U.S. government will not overlook these deceptive practices.”

Agencies Announce Availability of 2017 Small Business, Small Farm, and Community Development Lending Data: The three federal banking agency members of the Federal Financial Institutions Examination Council with Community Reinvestment Act responsibilities today announced the availability of data on small business, small farm, and community development lending reported by certain commercial banks and savings associations, pursuant to the CRA. The agencies releasing the data are the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency.

Fed’s Clarida Sees Room for Growth in Job Market: Federal Reserve Vice Chairman Richard Clarida said in a speech at the Peterson Institute for International Economics that he feels the job market has additional capacity for growth without excessive inflation, adding that “even with today’s very low unemployment rate, the labor market might not be as tight — and inflationary pressures not as strong — as I once would have thought.”

CFPB Announces Plan to Change Payday Lending Rule in January: The CFPB released an announcement on Friday saying that “the Bureau expects to issue proposed rules in January 2019 that will reconsider the Bureau’s rule regarding Payday, Vehicle Title, and Certain High-Cost Installment Loans and address the rule’s compliance date [which is August 2019].” The Rule, which would require lenders to determine upfront whether consumers could afford to repay their loans, among other provisions, was a signature initiative of former Director Richard Cordray. When announced, he described it as intended to “put a stop to the payday debt traps that have plagued communities.” Acting Director Mick Mulvaney noted they plan to leave the “payments provisions” in place, and only amend the “ability-to-repay provisions.”

SEC Suspends Trading in Company for Making False Cryptocurrency-Related Claims about SEC Regulation and Registration: On Monday, the SEC suspended trading in the securities of a company amid questions surrounding its statements about partnering with a claimed SEC-qualified custodian for use with cryptocurrency transactions and a purportedly registered public offering of preferred stock. “The SEC does not endorse or qualify custodians for cryptocurrency, and investors should use vigilance when considering an investment in an initial coin offering,” said Robert A. Cohen, Chief of the SEC Enforcement Division’s Cyber Unit.

SEC to Consider Obama-Era Mining Reporting Proposal: The SEC is set to consider finalizing a proposal to revise the property disclosure requirements for mining registrants that was first published in 2016. The proposed revisions are intended to provide investors with a more comprehensive understanding of a registrant’s mining properties, which should help them make more informed investment decisions. The proposed revisions would also modernize the Commission’s disclosure requirements and policies for mining properties by aligning them with current industry and global regulatory practices and standards.

SEC Commissioner Downplays Importance of Year End Stats: Speaking at a conference on Friday, SEC Commissioner Hester Peirce said there is too much emphasis on year end numbers, and that focusing on them leads to misplaced priorities. She explained that “we should resist the distraction and concentrate our resources in areas where we can make a real difference.”

FDIC May Reconsider Ban on Bank Small-Dollar Lending: FDIC Chairman Jelena McWilliams told reporters that the agency plans to seek comments “soon” on a proposal to amend or withdraw a 15-year old bulletin which discouraged banks from entering the small-dollar loan market. Chairman McWilliams questioned “Have we done more damage than good?” in pushing such small-dollar loans to unregulated payday lenders, and indicated that would be an area of study in the near future.

FDIC to Create Office of Innovation: On Wednesday, FDIC Chairman Jelena McWilliams revealed that the agency had plans to set up an office of innovation to encourage banks to develop new methods of delivering products and services. She noted that the agency “would benefit from an office of innovation that kind of takes a holistic look at how we regulate technology in banking,” adding, “I smile every time someone says ‘fintech’ because technology in banking is not new. Banks have been on the cutting edge of innovation since their founding.” However she noted that for several years, regulations have discouraged banks from innovating and said she would like the innovation office to consider how to bring innovation back inside the sector.

FDIC Announces that Share of U.S. Households without a Bank Account Continues to Drop: For the third consecutive survey period, the number of U.S. households without a bank account fell, according to the results of the 2017 biennial National Survey of Unbanked and Underbanked Households released on Tuesday by the FDIC. The percentage of U.S. households that were unbanked in 2017 the most recent year of the survey, was 6.5 percent, the lowest rate recorded since the FDIC began conducting the survey in 2009. It was down from 7.0 percent in 2015, and down significantly from a high of 8.2 percent in 2011. The unbanked numbers for 2017 equate to 14.1 million adults in 8.4 million households not having a checking or savings account.


State Regulators Sue to Block Fintech Charters: The Conference of State Bank Supervisors filed suit in federal court on Thursday to block the Office of the Comptroller of the Currency from issuing special purpose fintech charters, arguing that the OCC is acting outside of its mandate. The complaint marks a renewed effort on the part of the CSBS, as a previous suit was dismissed after being labeled “premature” in April. The suit echoes a similar action brought by New York State Department of Financial Services, and its leader Superintendent Maria Vullo who praised the CSBS saying, “the [fintech charter] proposal threatens to create an entirely new federal regulatory regime, threatening state sovereignty, community banking, and strong state consumer protection laws.”


State AGs Call for CFPB to Examine Military Lending Act Compliance: Thirty-three state attorneys general have written a letter to Acting Director Mick Mulvaney, calling on the CFPB to ensure that lenders are compliant with the requirements set forth in the Military Lending Act, intended to protect members of the military from predatory lending practices. Acting Director Mulvaney has recently expressed the view that the CFPB should not supervise compliance with the MLA since the Dodd-Frank Act did not explicitly instruct the agency to do so. However, the AGs argued that eliminating MLA examinations “would result in significant added costs on servicemembers without providing examined entities meaningful regulatory relief.”

DOL Announces Proposal to Help Small Businesses Strengthen Retirement: The U.S. Department of Labor on Monday announced a Notice of Proposed Rulemaking to help small businesses strengthen retirement security in America. The proposed rule would make it easier for small businesses to offer retirement savings plans to their workers through Association Retirement Plans, which would allow small businesses to band together to offer 401(k) plans to their employees.

HUD Announces Plan to Share Housing Information with Israel: On Monday, HUD Deputy Secretary Pam Patenaude and Yitzhak Cohen, Israel’s deputy finance minister, signed a memorandum of cooperation in Jerusalem. The memo is “intended to establish joint cooperation in the field of housing and community development, and open channels for exchanging information on administrative, policy, and technical expertise.”

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