THE BIG PICTURE
A bipartisan group of 17 legislators met to begin hashing out the details of a government funding bill last week. While House Appropriations Chair Nita Lowey told reporters that “everything is on the table.” Speaker Nancy Pelosi indicated that any agreement would not include funding for the President’s priority – a wall on the southern border. President Trump, for his part, hinted strongly that regardless of congressional action, he planned to declare a state of emergency to secure funding for the wall, saying, “There’s a good chance we’ll have to do that.”
On Friday, the administration announced it was withdrawing from the 1987 Intermediate-range Nuclear Forces (INF) Treaty with Russia. President Trump noted that “for arms control to effectively contribute to national security, all parties must faithfully implement their obligations.” Following the decision, Russian President Vladimir Putin announced a “symmetrical” response.
Virginia Governor Ralph Northam came under fire on Friday after his medical school yearbook photo showing two men dressed in black face and KKK robes surfaced. On Saturday, Mr. Northam refused calls to step down, claiming that “I believe then and believe now that I am not either of the people in that photo.”
On Monday, House Speaker Nancy Pelosi formally invited the president to deliver his State of the Union address on February 5th. The Democrats have selected Stacey Abrams, who narrowly lost the race for governor last year in Georgia, to give their response.
Other highlights of last week include:
- Cory Booker announced his bid for the presidency, joining an increasingly crowded field of candidates seeking to unseat the President.
- The jobs report was released on Friday, showing that the economy added 304,000 jobs in January, while the unemployment rate ticked up slightly from 3.9 to 4%.
- The Democrats’ annual retreat, which was set to take place February 13-15 in Leesburg, Virginia, was postponed, as the timing conflicted with the deadline to fund the government created by the continuing resolution.
- A CBO report revealed that the partial government shutdown cost the U.S. economy roughly US$3B that won’t be recovered, noting that the effects on individual businesses and workers were significant, as they may “never recoup that lost income.”
LAST WEEK ON THE HILL
HOUSE FINANCIAL SERVICES COMMITTEE
Committee Organizational Meeting: On Wednesday, the Committee met to consider the following measures: 1) a resolution to adopt the rules for the Committee on Financial Services for the 116th Congress; and 2) resolutions appointing Majority and Minority members to subcommittees. In remarks, Committee Chair Maxine Waters (D-CA) welcomed the new members, and noted that with “a new Congress and a new Democratic Majority, there will be a new agenda for this Committee, focused on fairness and policies to benefit consumers, investors, small businesses and our economy.” While a proposed amendment by Rep. Andy Barr (R-KY) that would have prevented Rep. Water’s ability to issue subpoenas under “exigent circumstances” without 48-hours’ notice failed, an additional amendment passed that will require Rep. Waters to provide Republicans a full copy of proposed subpoenas.
SENATE BANKING COMMITTEE
Committee Agenda: Committee Chairman Mike Crapo (R-ID) outlined his plans for the committee’s agenda for the 116th Congress, saying in a press release that “the Committee will continue to identify and move bipartisan legislative solutions that promote economic growth; build a record for legislative action on the collection, use and protection of personally identifiable information by financial regulators and financial companies; advance presidentially-appointed nominees; and ensure federal agencies implement the Economic Growth, Regulatory Relief and Consumer Protection Act (EGRRCPA), Foreign Investment Risk Review Modernization Act (FIRRMA), and the Countering America’s Adversaries Through Sanctions Act (CAATSA) consistent with congressional intent.”
ON THE FLOOR
House Passes Three Bipartisan Financial Services Bills: On Monday, the House passed three pieces of financial services legislation with bipartisan support:
- H.R. 624: The Promoting Transparent Standards for Corporate Insiders Act, a bipartisan bill that protects ‘Mom and Pop’ investors from the harmful effects of illegal insider trading and helps the Securities and Exchange Commission (SEC) better understand how to prevent illicit activity.
- H.R. 502: FIND Trafficking Act, a bill which directs the Government Accountability Office (GAO) to report on the use of virtual currencies and online marketplaces in sex and drug trafficking.
- H.R. 56: The Financial Technology Protection Act, which would establish an Independent Financial Technology Task Force with the goal of improving coordination between the private and public sectors to research and develop legislative and regulatory proposals to decrease terrorist and illicit use of new financial technologies, including digital currencies.
Anti-Shutdown Resolution Fails: A symbolic resolution which expressed that “government shutdowns are detrimental to the nation and should not occur,” failed to garner the needed 2/3 of votes to pass under suspension of the rules on Wednesday. The resolution, sponsored by Freshman Rep. Jennifer Wexton (D-VA), originally contained language blaming the President for the 35-day partial government shutdown. Even after those lines were removed, however, Republicans were not supportive, and House Freedom Caucus Chair Mark Meadows dismissed the bill as a “political stunt.”
Resolution to Help Americans Affected by Shutdown: On Tuesday, the House passed H.Res. 77, a resolution to encourage financial institutions, consumer reporting agencies, and other entities to do what they can to help consumers, including federal employees, contractors, small businesses, and other individuals affected by the partial government shutdown.
Syria Amendment: In a rebuke to the President, the Senate voted 68-23 on Thursday to pass an amendment that warned against “precipitous withdrawal" from Syria as part of a broader Mideast policy bill.
LEGISLATION INTRODUCED AND PROPOSED
Senate Banking Chair Releases Outline for Housing Finance Reform Legislation: Senate Banking Committee Chair Mike Crapo (R-ID) released a three-page outline for housing finance reform legislation on Friday. He described his priorities as establishing “stronger levels of taxpayer protection,” preserving “the 30-year fixed rate mortgage,” increasing “competition among mortgage guarantors,” and promoting “access to affordable housing.” The outline proposes privatizing Fannie Mae and Freddie Mac, changing the structure of the Federal Housing Finance Agency, and establishing a new Market Access Fund to support affordable housing.
THIS WEEK ON THE HILL
Wednesday, February 6
Senate Banking Committee: Executive Session to vote on Committee Budget Resolution, Rules of Procedure, Subcommittee Membership, and Jurisdiction for the 116th Congress - 9:45 AM in 538 Dirksen Senate Office Building.
Federal Reserve Leaves Interest Rates Unchanged: Following the meeting of the Federal Open Markets Committee on Wednesday, the Fed announced a pause on interest rate hikes, saying it had decided to maintain the target range for the federal funds rate at 2-1/4 to 2-1/2 percent. Despite this, future rate increases were not ruled out, as the Committee noted “in light of global economic and financial developments and muted inflation pressures,” it will be patient as it “determines what future adjustments to the target range for the federal funds rate may be appropriate.”
Federal Reserve Board to Host Public Research Conference on Stress Testing Framework in July: The Federal Reserve announced plans to host a public research conference on its stress testing framework on July 9th. The conference will bring together academics, regulators, bankers, and other stakeholders to discuss the transparency and effectiveness of the Board’s stress tests and how the stress tests can remain a dynamic and useful tool of large bank supervision. “A transparent and robust dialogue will benefit all stakeholders of the stress testing regime,” said Vice Chairman for Supervision Randal K. Quarles.
Treasury Sanctions Venezuela’s State-Owned Oil Company: On Monday, the Treasury’s Office of Foreign Assets Control (OFAC) announced sanctions against Venezuela’s state-owned oil company, Petroleos de Venezuela, S.A. (PdVSA), in a move intended to increase pressure on President Nicolás Maduro to surrender power. “The United States is holding accountable those responsible for Venezuela’s tragic decline, and will continue to use the full suite of its diplomatic and economic tools to support Interim President Juan Guaidó, the National Assembly, and the Venezuelan people’s efforts to restore their democracy,” said Secretary of the Treasury Steven T. Mnuchin. “Today’s designation of PdVSA will help prevent further diverting of Venezuela’s assets by Maduro and preserve these assets for the people of Venezuela.”
Former FTC Official Skeptical About Broad Rulemaking Power for Agency: Speaking at a conference on Friday, former FTC Acting Chair Maureen Ohlhausen voiced skepticism about giving the FTC wider rulemaking powers under federal privacy legislation, saying, “I think Congress should make some of the harder decisions there and then give the FTC maybe a little bit more authority to ... fill in some of the details, but not just wide-open rulemaking authority because I think that could be a challenge for the agency to wield.”
Fed Governor Gives Speech on Community Reinvestment Act: Federal Reserve Governor Lael Brainard delivered a speech on “Strengthening the Community Reinvestment Act: What Are We Learning?” at a symposium in Philadelphia on Friday. In her remarks, she discussed her view that the federal banking agencies should be working together on CRA reforms, not pursuing separate paths. The OCC broke from the Fed and FDIC last year, publishing proposed revisions. She also noted that modernization of local “assessment areas” should “keep in focus the goal of encouraging banks to seek out opportunities in underserved areas.”
HUD Announces Oversight Plan for New York City Housing Authority: On Thursday, HUD Secretary Ben Carson announced an agreement with the City of New York and the New York City Housing Authority (NYCHA) to “provide a new roadmap forward for NYCHA that will address the longstanding issues at the housing authority’s properties.” As part of the agreement, the City committed to US$2.2B in funding over the next 10 years to address issues, while HUD will continue to provide funding to NYCHA. The agreement also establishes a federal monitor selected by HUD and the SDNY with input from the City. Earlier in the week, House Financial Services Chair Rep. Maxine Waters (D-CA) warned against any proposal that would place the NYCHA into receivership, calling it “a drastic measure that is more likely to exacerbate the existing problems.”
Regulators Publish Text of Final Flood Insurance Rule: The FDIC and OCC have signed off on the rule, which still needs to be approved by the Federal Reserve, National Credit Union Administration, and Farm Credit Administration. The rule requires regulated lending institutions to accept “private flood insurance” defined in accordance with the Biggert-Waters Flood Insurance Reform Act of 2012. In addition, the rule permits regulated lending institutions to exercise discretion to accept flood insurance policies issued by private insurers that do not meet the statutory and regulatory definition of private flood insurance, provided the policies meet certain conditions.
COMINGS AND GOINGS AT THE AGENCIES
SEC Names Manisha Kimmel as Senior Policy Advisor to the Chairman on the Consolidated Audit Trail: The SEC announced on Tuesday that Manisha Kimmel will serve as Senior Policy Advisor for Regulatory Reporting to Chairman Jay Clayton. In this new role, Ms. Kimmel will coordinate the SEC’s oversight of the self-regulatory organizations’ (SROs) creation and implementation of the Consolidated Audit Trail (CAT). Ms. Kimmel joins the SEC from Refinitiv, where she served as Head of Regulatory and Compliance, Wealth Management.
Regional Director of SEC’s Fort Worth Regional Office Departs Agency: On Monday, the SEC announced that Shamoil T. Shipchandler, Director of the Fort Worth Regional Office, left the agency on Friday, January 25.
Todd Harper Nominated for Seat on NCUA Board: On Friday, the President announced his nomination of Todd Harper for a vacant Democratic seat on the NCUA board. Mr. Harper previously headed the NCUA’s public and congressional affairs office.
Former Special Assistant to the President Appointed to FHFA: The FHFA appointed John Roscoe, who previously served as a special assistant to the President in the White House Office of Presidential Personnel, as chief of staff at the agency.
Herman Cain under Consideration for Federal Reserve Seat: Herman Cain, the former pizza company exec and 2012 Republican presidential candidate, is reportedly under consideration for one of the vacant Federal Reserve Board seats.
OTHER NOTEWORTHY ITEMS
Top Democrats Call for Documents on Russia Sanctions: House Financial Services Chair Maxine Waters (D-CA), Intelligence Chairman Adam Schiff (D-CA), and Foreign Affairs Chairman Eliot Engel (D-NY) demanded that Treasury Secretary Steven Mnuchin produce documents related to the decision to delist Russian companies with close ties to Putin ally Oleg Deripaska, saying the decision was “unusual” and the deal allowed Mr. Deripaska to maintain “significant influence, if not de facto control.”