Money Matters: This Week in Washington
This Week in Washington for September 3, 2019
By Dina Ellis
THE BIG PICTURE
The DOJ’s Office of Inspector General released its report on former Director Jim Comey’s handling of classified information in official memos following a two-year investigation. The report concluded Comey had violated the FBI’s policies by giving a copy of his memos to a friend, and “failed to live up to” his responsibilities. The President weighed in, saying Comey had been “thoroughly disgraced.” Comey replied via Twitter, and emphasized that no evidence had been found that either he “or his attorneys released any of the classified information contained in any of the memos to members of the media” and chastised those who had called him a “liar and a leaker.”
The President’s personal assistant, Madeleine Westerhout, was abruptly fired on Thursday after indiscreet comments she made regarding the President’s children to reporters were revealed in the media. The President criticized the “hurtful” things she had said during her “bad night,” but noted that he had forgiven her.
There were a number of announcements from members of Congress last week. On Monday, Rep. Joe Kennedy (D-MA) announced that he was mulling a run for the Senate, in what would amount to a primary challenge of current Sen. Ed Markey. That same day, Rep. Sean Duffy (R-WI) announced that he would resign, citing health complications with one of his children. On Wednesday, Sen. Johnny Isakson (R-GA) announced he would resign at the end of the year due to mounting health challenges. In addition, Rep. John Shimkus (R-IL) announced on Friday that he would not run for another term.
Senator Kirsten Gillibrand (D-NY) ended her campaign for the Democratic nomination on Wednesday, saying that while “we wanted to win this race … it’s important to know when it’s not your time, and to know how you can best serve your community and country.”
Other Highlights Include:
The DNC recommended rejecting planned “virtual caucuses” in Iowa and Nevada “due to security concerns.”
LAST WEEK ON THE HILL
Congress remains in recess until September 8th.
HOUSE FINANCIAL SERVICES COMMITTEE
Chairwoman Maxine Waters Leads Bipartisan Congressional Delegation to Europe and the Middle East:Committee Chairwoman Maxine Waters (D-CA) led a bipartisan Congressional delegation trip to Cyprus, Switzerland, Germany, and Qatar, during which they met with U.S. and foreign officials. The delegation was briefed on the status of important missions and left “with a better understanding of the economic and political impacts of the growing trade war, the dynamic challenges we face from Russia and China, and the importance of international cooperation to counter criminal and terrorist financing.” The Chairwoman also noted “our servicemembers and diplomats are doing an outstanding job executing U.S. policy, but, as Members of the Financial Services Committee, we must ensure that they have the tools needed to fulfill their missions.”
Tuesday, September 3
Senate Banking Committee Subcommittee Field Hearing on
The Honorable Douglas Peterson, Nebraska Attorney General
Senator Julie Slama, State Senator, State of Nebraska
Ms. Crysta Price, Director of the Human Trafficking Institute, Creighton University
Mr. David Murray, Vice President for Product Development and Services, Financial Integrity Network
New FinCEN Division to Focus on Identifying Primary Foreign Money Laundering Threats: On Wednesday, the Financial Crimes Enforcement Network (FinCEN) announced that it had launched its Global Investigations Division (GID), which will be responsible for implementing targeted investigation strategies rooted in FinCEN’s unique authorities under the Bank Secrecy Act (BSA) to combat illicit finance threats and related crimes, both domestically and internationally. FinCEN Director Kenneth Blanco announced that Matthew Stiglitz, a former Principal Deputy Chief in the Department of Justice’s Criminal Division, will lead GID.
CFPB Releases Report on Consumer Credit Card Market: On Tuesday, the CFPB released its fourth biennial report on the state of the credit card market for the period 2017-2018. The report found that credit cards remain central to Americans’ financial lives, constituting the largest U.S. consumer lending market (measured by the number of users). It detailed that market conditions remain stable as a result of low unemployment, modest wage growth, and high consumer confidence, and noted that consumer satisfaction with credit cards remains high and debt service burdens are near the lowest level in more than a decade. The report showed that late payment and default rates have risen modestly but remain below pre-recession levels, and that since 2015, consumers have more than doubled spending with credit cards with only modest balance growth. The great majority of credit card spending results in consumers obtaining rewards, and surveys indicate rewards are the primary factor consumers consider in choosing a credit card.
CFPB Lifts Hiring Freeze: The CFPB has reportedly lifted a two-year hiring freeze and is ramping up its recruiting efforts. The move follows a 15% reduction in its workforce following departures and budget cuts during the current administration.
SEC Investor Advisory Committee to Meet on September 19: On Thursday, the SEC announced that its Investor Advisory Committee would hold a public meeting on Sept. 19. The committee will hold two panel discussions: one in the morning on methods to develop better disclosures for investors, and one in the afternoon on increased leverage and related SEC regulatory implications.
Treasury Considering Long-Term Bonds: During an interview, Secretary Steven Mnuchin revealed that the Treasury was seriously considering offering bonds with maturities of 50 to 100 years, saying, “if the conditions are right, then I would anticipate we’ll take advantage of long-term borrowing and execute on that.”
Treasury Labels Bank Providing Financial Services to Hizballah as Specially Designated Global Terrorist:On Thursday, the Treasury’s OFAC sanctioned Jammal Trust Bank SAL (Jammal Trust), a Lebanon-based financial institution that knowingly facilitates banking activities for Hizballah. “Treasury is targeting Jammal Trust Bank and its subsidiaries for brazenly enabling Hizballah’s financial activities. Corrupt financial institutions like Jammal Trust are a direct threat to the integrity of the Lebanese financial system. Jammal Trust provides support and services to Hizballah’s Executive Council and the Martyrs Foundation, which funnels money to the families of suicide bombers,” said Sigal Mandelker, Under Secretary for Terrorism and Financial Intelligence. “This action is a warning to all who provide services to this terrorist group.”
Treasury Designates Shipping Network Engaged in Ship-to-Ship Transfers with North Korean Vessels:On Friday, the Treasury’s OFAC announced North Korea-related designations of two individuals and three entities, and further identified one vessel as blocked property, continuing the implementation and enforcement of existing sanctions. This action highlights North Korea’s continued use of illicit ship-to-ship (STS) transfers to circumvent United Nations (UN) sanctions that restrict the import of petroleum products, as well as the U.S. Government’s commitment to implementing existing UN Security Council Resolutions (UNSCRs). “Treasury will implement and enforce existing US and UN sanctions on individuals, entities, and vessels involved in illicit ship-to-ship transfers with North Korean flagged vessels,” said Treasury Under Secretary Sigal Mandelker. “Shipping companies trading with North Korea are exposing themselves to significant sanctions risk, despite the deceptive practices they try to employ.”
COMINGS AND GOINGS AT THE AGENCIES
SEC Commissioner Jackson to Remain While Search for Successor Continues: SEC Commissioner Robert Jackson, one of two left-leaning members currently at the agency, announced that “although my Term here expired in June, I intend to continue to serve on the Commission rather than return to teaching for the Fall semester [at NYU]” while efforts to identify and confirm his successor continue.
OTHER NOTEWORTHY ITEMS
House Democrats Urge FSOC to Increase Regulation of Banks’ Cloud Service Providers: In a letter to the Financial Stability Oversight Council, Reps. Katie Porter (D-CA) and Nydia Velázquez (D-NY) urged the Council to designate cloud service providers as “systemically important financial market utilities.” They argued that though cloud service providers “may not process monetary transactions directly, their operational stability underpins an increasing share of banks’ central functions,” adding that “without a dedicated regulatory regime proportional and tailored to their unique structure and risks, cloud computing companies will continue to evade supervision.”
Small Banks and Credit Unions Urge Further Delay of CECL Implementation: In response to a proposal from FASB that would delay the implementation of the current expected credit losses (CECL) accounting standard for small banks and credit unions, some of those institutions are arguing for further delay, with one Iowa bank writing, “yes, it should be delayed but a better alternative would be to indefinitely defer the implementation as the complexity outweighs any benefits.”
New York Governor Signs Bill to Crack Down on Small Business Loan Abuse: On Friday, New York Governor Andrew Cuomo signed Senate Bill S6395 into law. The measure aims to prevent predatory lenders from using confessions of judgment against individuals and small businesses nationwide. In a statement, Governor Cuomo said “New York courts exist to uphold the rule of law, not to give unscrupulous creditors a means to prey on consumers.”