THE BIG PICTURE
The spread of the novel coronavirus continued to dominate headlines as officials worldwide scrambled to combat and contain the disease. Mounting fears about the outbreak were reflected in the stock market, with Wall Street suffering its worst week since the financial crisis. After facing criticism earlier in the week by some for a sluggish response to the rapidly evolving threat, the President appointed Vice President Pence to lead a task force as Coordinator, guiding the administration’s response, and convened multiple press conferences with health officials to provide updates. Congressional appropriators worked through the weekend on a multi-billion dollar emergency funding package to combat the virus in the hope a bipartisan measure could pass early this month. On Saturday, the first death attributed to Covid-19 was confirmed in Washington State, as additional cases popped up across the Pacific Northwest.
The tenth debate in the Democratic presidential primary was held on Tuesday in Charleston with seven candidates qualifying to appear on stage. Sen. Bernie Sanders, who currently leads in the polls, was the subject of a number of attacks on his past votes on gun control, electability, and views on foreign policy.
On Saturday, former Vice President Joe Biden emerged victorious in the South Carolina Democratic primary. The win was his first thus far, and could breathe new life into his campaign heading into Super Tuesday. Biden was bolstered by support among African American voters, as well as an endorsement by Rep. Jim Clyburn. Following a disappointing third place finish on Saturday billionaire Tom Steyer ended his longshot bid, acknowledging there was no path forward for his campaign. Steyer pledged to continue working on issues of environmental and economic justice. Former South Bend Mayor Pete Buttigieg followed suit on Sunday, announcing he would suspend his campaign.
Other highlights of last week include:
- The President announced on Friday that he would nominate Rep. John Ratcliffe (R-TX) to serve as the next Director of National Intelligence. Ratcliffe had previously withdrawn from consideration for the role last July after reports over embellishments on his resume came to light.
- Sen. Pat Toomey (R-PA) announced his support for Fed nominee Judy Shelton, while his fellow Banking Committee members Sen. John Kennedy (R-LA) and Sen. Richard Shelby have yet to make a final decision.
LAST WEEK ON THE HILL
HOUSE FINANCIAL SERVICES COMMITTEE
“Markup”: The full Committee held a markup of several measures, ultimately advancing seven bills intended to benefit consumers, investors, and the economy.
- H.R. 149, the Housing Fairness Act, was introduced by Rep. Al Green (D-TX), and would authorize increased funding for the Department of Housing and Urban Development’s Fair Housing Initiatives Program and make a number of reforms to the program. The bill was passed by 33-25.
- H.R. 4351, the Yes in My Backyard Act, was introduced by Rep. Denny Heck (D-WA), and would require localities that receive Community Development Block Grant funding to submit a plan to track and report on the implementation of certain land use policies that promote housing production. The bill was passed by voice vote.
- H.R. 5187, the Housing Is Infrastructure Act, was introduced by Rep. Maxine Waters (D-CA), Chairwoman of the Committee, and would authorize more than US$100B in federal spending for the nation’s affordable housing infrastructure, including public housing, supportive housing for seniors and people with disabilities, and rural and Native American housing. The bill was passed by 33-25.
- H.R. 5929, the Shareholder Political Transparency Act, was introduced by Rep. Bill Foster (D-IL), and would require public companies to disclose to both the SEC and investors the amount, date, and nature of the company’s expenditures for political activities. The bill was passed by 33-25.
- H.R. 5930, the Workforce Investment Disclosure Act, was introduced by Rep. Cindy Axne (D-IA), and would require the SEC to require public companies to disclose how they train, compensate, and otherwise manage their employees. The bill was passed by 33-25.
- H.R. 5931, the Improving FHA Support for Small Dollar Mortgages Act, a bipartisan bill introduced by Rep. Wm. Lacy Clay (D-MO) and Rep. Steve Stivers (R-OH), and would require the Federal Housing Administration to conduct a review of its policies to identify any barriers to supporting mortgages under US$70K and report to Congress within a year with a plan for removing such barriers. The bill was passed by 48-0.
- H.R. 5932, the Ensuring Chinese Debt Transparency Act, was introduced by Rep. French Hill (R-AR), and which seeks to address concerns that China is trapping developing countries in a cycle of predatory debt. The bill was passed by voice vote.
SENATE BANKING COMMITTEE
Hearing on “Surface Transportation Reauthorization: Public Transportation Stakeholders’ Perspectives”: On Tuesday, the full Committee met to focus on the reauthorization of the FAST Act, the nation’s current surface transportation bill, which is set to expire on September 30. The panel heard the perspective and priorities of key public transportation stakeholders. Chairman Mike Crapo (R-ID) highlighted the important role public transportation plays in the US economy and argued that a “long-term reauthorization bill is critical to providing the certainty and stability that transit agencies, cities, and states across the country need to make responsible transportation planning decisions.”
- Mr. Paul Skoutelas, President and Chief Executive Officer, American Public Transportation Association
- Mr. Patrick McKenna, President, American Association of State Highway Transportation Officials
- Mr. Scott Bogren, Executive Director, Community Transportation Association of America
- Mr. Ed Mortimer, Vice President, Transportation and Infrastructure, Chamber of Commerce of the United States of America
- Mr. Larry Willis, President of the Transportation Trades Department, AFL-CIO
ON THE FLOOR
House Passes Anti-Tobacco Measure: On Friday, the House voted 213-195 to pass H.R. 2339, the Reversing the Youth Tobacco Epidemic Act, which would ban tobacco flavors and impose a tax on e-cigarettes. The measure passed on a narrow margin, with Democratic leadership scrambling to drum up enough support amid concerns the bill would disproportionally target minorities.
LEGISLATION INTRODUCED AND PROPOSED
H.R. 5981: Rep. Katie Porter (D-CA) introduced H.R. 5981, the Credit Union Board Modernization Act, which would amend the Federal Credit Union Act to modify the frequency of board of directors meetings.
H.R. 6012: Rep. David Scott (D-GA) introduced H.R. 6012, which would require the Director of the Bureau of Consumer Financial Protection to establish a grant program to facilitate financial literacy programs.
S. 3323: Sen. Tina Smith (D-MN) introduced S. 3323, the Credit Union Governance Modernization Act, which would amend the Federal Credit Union Act to modernize certain processes regarding expulsion of credit union members for cause.
S. 3326: Sen. Thom Tillis (R-NC) introduced S. 3326, the Credit Union Modernization Act, which would amend the Federal Credit Union Act to remove outdated responsibilities of boards of directors of Federal credit unions.
THIS WEEK ON THE HILL
Monday, March 2
Legislation to be Considered Under Suspension of the Rules:
- H.R. 5931 - Improving FHA Support for Small Dollar Mortgages Act of 2020, as amended (Sponsored by Rep. William Lacy Clay / Financial Services Committee)
- H.R. 5003 - Fair Debt Collection Practices for Servicemembers Act, as amended (Sponsored by Rep. Madeleine Dean / Financial Services Committee)
- H.R. 5932 - Ensuring Chinese Debt Transparency Act of 2020, as amended (Sponsored by Rep. French Hill / Financial Services Committee)
- H.R. 4351 - Yes In My Backyard Act, as amended (Sponsored by Rep. Denny Heck / Financial Services Committee)
Wednesday, March 4
House Financial Services Committee (Subcommittee on National Security, International Development, and Monetary Policy) Hearing on “The Traffickers’ Roadmap: How Bad Actors Exploit Financial Systems to Facilitate the Illicit Trade in People, Animals, Drugs, and Weapons”: 10:00 AM in 2128 Rayburn House Office Building.
House Small Business Committee Hearing on “Building Blocks of Change: The Benefits of Blockchain Technology for Small Businesses”: 11:30 AM in 2360 Rayburn House Office Building.
House Financial Services Committee (Subcommittee on Housing, Community Development, and Insurance) Hearing on “Drivers of Discrimination: An Examination of Unfair Premiums, Practices, and Policies in the Auto Insurance Industry”: 2:00 PM in 2128 Rayburn House Office Building.
Thursday, March 5
Senate Banking Committee Hearing on “Threats Posed by State-Owned and State-Supported Enterprises to Public Transportation”: 10:00 AM in 538 Dirksen Senate Office Building.
Friday, March 6
House Financial Services Committee (Subcommittee on Consumer Protection and Financial Institutions) Field Hearing on “Modern-Day Redlining: the Burden on Underbanked and Excluded Communities in New York”: 10:00 AM at the Jamaica Performing Arts Center in Jamaica, New York.
FDIC Releases Quarterly Banking Profile: On Tuesday, the FDIC released its Quarterly Banking Profile, reporting that for the 5,177 commercial banks and savings institutions insured by the FDIC, aggregate net income totaled $55.2B in Q4 2019, a decline of $4.1B (6.9 percent) from a year ago. The decline in net income was led by lower net interest income and higher expenses. In a statement, Chairwoman Jelena McWilliams noted that “the banking industry reported strong results” but added “in the current economic environment, the FDIC encourages banks to maintain careful underwriting standards and prudent risk management.”
FHFA Issues RFI on FHLBank Membership: On Tuesday, the FHFA issued a Request for Input (RFI) on Federal Home Loan Bank (FHLBank) membership. The RFI, part of a holistic review of FHLBank membership, seeks public input on whether FHFA's existing regulation on FHLBank membership ensures the FHLBank System, consistent with statutory requirements, remains safe and sound, provides liquidity for housing finance through the housing and business cycle, and supports the FHLBanks' housing finance and community development mission. Director Mark Calabria said in a statement, “there is no predetermined outcome for this RFI, other than to ensure that membership rules are clear, consistently applied to all applicants, and that access to the Banks' low cost advances do not jeopardize the System's role as a key source of liquidity to support housing finance.”
Treasury Official Warns of National Security Threats Posed by Artificial Intelligence: Speaking at an event on Wednesday, Thomas Feddo, the assistant secretary of investment security at Treasury issued a warning over potential national security implications of foreign investment in U.S. startups working in the artificial intelligence and quantum computing space. Feddo cautioned that the potential of new technologies in tempered by security challenges, adding “this access risks eroding the technological leadership that the U.S. and our allies have grown accustomed to.”
SEC to Hold National Compliance Outreach Seminar for Investment Companies and Investment Advisers: On Tuesday, the SEC announced the opening of registration for its compliance outreach program’s national seminar for investment companies and investment advisers. The event is intended to help Chief Compliance Officers and other senior personnel at investment companies and investment advisory firms enhance their compliance programs for the protection of investors.
SEC to Hold Open Meeting March 4: The SEC announced that it would hold an Open Meeting on Wednesday, March 4. The Commission will consider whether to propose rule amendments that would simplify, harmonize, and improve certain aspects of the framework for exemptions from registration under the Securities Act of 1933 to promote capital formation while preserving or enhancing important investor protections.
FDIC Recognizes Four Institutions for Expanding Financial Literacy: On Monday, in recognition of America Saves Week, the FDIC highlighted four institutions for their work to expand financial education and support healthy banking relationships. The University of Wyoming Extension Community Development Education was awarded the Creative Money Smart for Adults User of the Year; First Commonwealth Bank of Indiana, Pennsylvania was recognized as the Impactful Money Smart for Adults Partnership of the Year; Haven Neighborhood Services of Los Angeles was recognized as the Impactful Money Smart for Adults Partnership of the Year; and JPMorgan Chase Bank, N.A., was awarded the Expanding Business Opportunities with Money Smart for Adults.
COMINGS AND GOINGS AT THE AGENCIES
Antonia Chion, Associate Director of SEC's Enforcement Division, to Retire: On Friday, the SEC announced that Antonia Chion, an Associate Director of the Division of Enforcement in the Home Office, is retiring after 32 years at the agency. During her three-decade tenure, Ms. Chion oversaw hundreds of enforcement investigations and actions arising from all aspects of the SEC's regulatory and enforcement programs, including numerous matters of first impression.
FinCEN Names Michael Mosier as Deputy Director and Digital Innovation Officer: The Financial Crimes Enforcement Network named Michael Mosier as its new Deputy Director and Digital Innovation Officer. As FinCEN’s first Digital Innovation Officer, Mr. Mosier will advance FinCEN’s engagement with emerging technology and financial innovation. Mr. Mosier returns to FinCEN from the cryptocurrency analytics, compliance, and investigations firm Chainalysis, where he was Chief Technical Counsel. Previously, he served as FinCEN’s Chief of Strategic Advancement.
Kelly Gibson Succeeds G. Jeffrey Boujoukos as Director of SEC's Philadelphia Office: On Thursday, the SEC announced that Kelly Gibson had been named Director of the Philadelphia Regional Office. Ms. Gibson joined the SEC in 2008 as a staff attorney in the Division of Enforcement and served most recently as Associate Regional Director of the Philadelphia office. Ms. Gibson succeeds G. Jeffrey Boujoukos, who departed the agency this month after 11 years of service.
D.C. Circuit Rules Against House Democrats on McGahn Subpoena: The DC Circuit delivered a win for President Trump on Friday, ruling 2-1 to overturn an order that would have forced former White House Counsel Don McGahn to comply with a congressional subpoena issued in connection with House Democrats’ impeachment inquiry.
OTHER NOTEWORTHY NEWS
G20 Urges Implementation of Strict Crypto Regulation: On Monday, following a weekend summit of global financial leaders in Saudi Arabia, the G20 issued a statement urging “countries to implement the recently adopted Financial Task Force (FATF) standards on virtual assets and related providers.” The group noted that they “remain vigilant to potential risks arising from financial innovations, including those risks related to financial stability, consumer and investor protection, anti-money laundering and countering the financing of terrorism as well as their macroeconomic implications, including monetary sovereignty issues.”
Group of Small Banks Signal Opposition to Libor Replacement: In a letter to Fed Vice Chairman Randal Quarles, Comptroller Joseph Otting, and FDIC Chair Jelena McWilliams, ten mid-size banks expressed their opposition to the Secured Overnight Financing Rate (SOFR) which they described as better suited for larger financial institutions. The banks argued that “a one-size-fits-all approach may not be the most appropriate” and objected to the use of “SOFR as ‘the one alternative’ index.”