The Golden Apple – December 4, 2020

Sorry, Santa, no emotional support reindeer 
If Santa’s flying commercial this year, he’ll have to leave the reindeer at home, or else check them as cargo. This week the Department of Transportation announced a final rule that that, for the purposes of all things aircraft-related defines service animals as “a dog that is individually trained to do work or perform tasks for the benefit of a person with a disability.” Under the final rule, “emotional support” animals are not considered to be service animals, although psychiatric service animals with appropriate documents will be treated as service animals. Airlines may require documentation up to 48 hours in advance, and may set rules about where the animals must sit and how they must be restrained. DOT said they’d received more than 15,000 comments on the proposed rule.


Like sands in an hourglass . . .  
Many clocks are ticking, to mix some metaphors. Congress and the nation face multiple deadlines in the next few weeks. The most important include:December 11: The continuing resolution funding most federal government operations expires, meaning that most federal government offices will close unless Congress approves an omnibus spending bill or another extension. ​December 11: Many pandemic-related extensions to Medicare, public health demonstration projects, and temporary assistance to needy families programs expire.​December 31: Major provisions of the Families First Coronavirus Response Act (FFCRA) and the CARES Act expire, including:​​amendments to the Family and Medical Leave Act that allow for public health emergency leave temporary assistance to states and full federal funding of extended unemployment compensation; emergency Economic Injury Disaster Loan (EIDL) grantsemergency relief for government entities and nonprofit organizationspenalty-free withdrawals from retirement funds in some circumstancesthe employee retention credit for businesses closed by COVID-19Coronavirus Relief Fund payments to state and local governmentsregulatory burden relief measures enacted to help financial institutions serve their communities, including temporary relief from troubled debt restructurings and optional temporary relief from the Current Expected Credit Losses (CECL) accounting standardadministrative extensions of moratoria on foreclosures on and evictions from properties with federally backed mortgages The House’s final adjournment date had been set for next Thursday, December 10, while the Senate is scheduled to adjourn on December 18. 


Negotiations continue around relief package
On Tuesday, a group of 11 Republican, Democratic, and Independent Senators and Representatives unveiled a bipartisan, bicameral proposal to reallocate and provide new funding for people and businesses facing losses because of COVID-19. The framework would provide an additional $160 billion to state, local, and tribal governments; another $180 billion for extended unemployment insurance; $288 billion for another round of targeted help to small businesses, including through the Paycheck Protection Program; $12 billion in support for community development financial institutions (CDFIs) and minority depository institutions (MDIs); and $25 billion in rental housing assistance. It would also offer short-term federal liability protection from lawsuits related to COVID-19. 

Senate Majority Leader Mitch McConnell (R-KY) is circulating a much smaller proposal of his own, which would provide at least $510 billion in total relief but would include nothing for state and local governments. McConnell’s framework would provide one month of supplemental unemployment benefits and $332 billion in aid to small businesses, but no rental assistance or support for CDFIs and MDIs. It would set permanent new federal limits on liability for COVID-19-related damages.

Neither proposal includes any new individual stimulus payments.


Mnuchin, Powell urge action on additional relief measures
In what’s likely to be their last formal appearances before this Congress, Treasury Secretary Steven Mnuchin and Federal Reserve Board Chairman Jerome Powell testified in front of the Senate Banking Committee and the House Financial Services Committee this week about the implementation of the CARES Act. Both expressed deep concern, if not outright alarm, about the imminent expiration dates of most of the CARES Act’s relief measures. Mnuchin defended Treasury’s request that the Fed return unused funds from its lending facilities, saying that the law requires the Fed to return that money at the end of the year, and that the facilities have served their intended purpose. Powell emphasized that the nation’s economy cannot recover completely until the public is confident that the virus is under control.


NDAA conference report filed, may face veto
House and Senate conferees have agreed to final language for the National Defense Authorization Act (NDAA) for the coming year. The bill incorporates more than a dozen financial services-related provisions, including Rep. Carolyn Maloney’s bill to require companies to disclose their owners’ identity. The House has already scheduled a vote on the conference report for next Tuesday, and the Senate is expected to vote on it next week as well. President Trump has threatened to veto the bill because it does not include a provision he sought to repeal Section 230 of the Communications Decency Act, which shields social media companies from liability for their users’ content. The President has also objected to language in the NDAA that would phase out the use of Confederate generals’ names for military bases over the next three years. 


Bill requiring Chinese firms to disclose ownership goes to President for signature
This week the House passed S. 945, the Holding Foreign Companies Accountable Act, which would require companies that trade securities on national exchanges to establish that they are not owned or controlled by a foreign government. If the Public Company Accounting Oversight Board (PCAOB) is not able inspect this company’s public accounting firm for three consecutive years, the issuer’s securities would be banned from trade on national exchanges. The bill would require firms to prepare audit reports that disclose the percentage of shares owned by the government of their home country; whether that represents a controlling interest; any information about board members who are Chinese Communist Party officials; and whether the company is chartered by the Chinese Community Party. The Senate passed this bill in May, and President Trump is expected to sign it.


Biden names economic team
President-elect Joe Biden announced his intended nominees to the major economic positions of his administration this week, starting with former Federal Reserve Board Chair Janet Yellen as his choice for Secretary of the Treasury. Neera Tanden, currently President & CEO of the Center for American Progress and previously senior adviser for health reform at the US Department of Health and Human Services, was named Director of the Office of Management and Budget. Wally Adeyemo, first chief of staff of the Consumer Financial Protection Bureau and former Deputy Director of the National Economic Council and Deputy National Security Advisor, was named Deputy Secretary of the Treasury. Biden named Cecilia Rouse, Dean of the Princeton School of Public and International Affairs and a former member of the Council of Economic Advisers, as Chair of the CEA, to be joined by Jared Bernstein and Heather Boushey as members of the Council. Brian Deese, a former Deputy Director of the National Economic Council and Deputy Director and Acting Director of OMB who was one of the architects of the auto bailout, will serve as Director of the National Economic Council. 


House Democrats and Republicans elect committee leaders
The Democratic and Republican members of the House of Representatives met this week to choose leaders for most House Committees in the 117th Congress. Among them are two longtime members of the House Financial Services Committee who will become the first African-American chairs of the Committees on Agriculture and Foreign Affairs, Reps. David Scott (D-GA) and Gregory Meeks (D-NY).Agriculture: Rep. David Scott (D-GA), Chair; Rep. GT Thompson (R-PA), Ranking MemberAppropriations: Rep. Rosa DeLauro (D-CT), Chair; Rep. Kay Granger (R-TX), Ranking MemberArmed Services: Rep. Adam Smith (D-WA), Chair; Rep. Mike Rogers (R-AL), Ranking MemberBudget: Rep. John Yarmuth (D-KY), Chair; Rep. Jason Smith (R-MO), Ranking MemberEducation & Labor: Rep Bobby Scott (D-VA), Chair; Rep. Virginia Foxx (R-NC), Ranking MemberEnergy & Commerce: Rep. Frank Pallone (D-NJ), Chair; Rep. Cathy McMorris Rodgers (R-WA), Ranking MemberFinancial Services: Rep. Maxine Waters (D-CA), Chair; Rep. Patrick McHenry (R-NC), Ranking MemberForeign Affairs: Rep. Gregory Meeks (D-NY), Chair; Rep. Michael McCaul (R-TX), Ranking MemberHomeland Security: Rep. Bennie Thompson (D-MS), ChairHouse Administration: Rep. Zoe Lofgren (D-CA), ChairJudiciary: Rep. Jerrold Nadler (D-NY), Chair; Rep. Jim Jordan (R-OH), Ranking MemberNatural Resources: Rep. Raúl Grijalva (D-AZ), Chair; Rep. Bruce Westerman (R-AR), Ranking MemberOversight & Reform: Rep. Carolyn Maloney (D-NY), Chair; Rep. James Comer (R-KY), Ranking MemberRules: Rep. Jim McGovern (D-MA), Chair Science, Space & Technology: Rep. Eddie Bernice Johnson (D-TX), Chair; Rep. Frank Lucas (R-OK), Ranking MemberSmall Business: Rep. Nydia Velázquez (D-NY), Chair; Rep. Blaine Luetkemeyer (R-MO), Ranking MemberTransportation & Infrastructure: Rep. Peter DeFazio (D-NY), Chair; Rep. Sam Graves (R-MO), Ranking MemberVeterans’ Affairs: Rep. Mark Takano (D-CA), Chair; Rep. Mike Bost (R-IL), Ranking MemberWays & Means: Rep. Richard Neal (D-MA), Chair; Rep. Kevin Brady (R-TX), Ranking MemberMore committee chairs and ranking members will be announced over the next several weeks.


House Majority Leader publishes 2021 calendar
Rep. Steny Hoyer (D-MD), the House Majority Leader, published the House calendar for 2021 this week. The 117th Congress will convene on Sunday, January 3 for swearing-in and first votes, and will remain in session that week for more organizational votes and the ratification of the Electoral College’s vote. The House will recess again from January 8 to Inauguration Day, January 20, and will resume work on the 21st. 


FSOC flags risks in wholesale funding, nonbank mortgages, CRE and cybersecurity
In its 2020 annual report released yesterday, the Financial Stability Oversight Council (FSOC) said that “risks to US financial stability remain elevated compared to last year,” mainly because of the pandemic. The report expressed particular concern about the aggregate levels of corporate debt, which were at historic highs even before the pandemic. The Council said that federal regulators should take a closer look at structural vulnerabilities within the short-term wholesale funding markets, which revealed themselves in March. Concerns about short-term funding contributed to the Council’s cautions about nonbank mortgage activity, as they encouraged state and federal regulators to do more to coordinate and strengthen oversight of nonbanks engaged in residential mortgage origination and servicing. The prolonged downturn in hotel, retail, and office segments of the commercial real estate (CRE) puts the entire industry at risk, the report said. FSOC noted that while small and mid-sized banks hold large quantities of CRE loans on their balance sheets, REITs and insurance companies are vulnerable to CRE losses as well. The rapid shift to telework and use of third-party technology service providers has raised cybersecurity risks for financial institutions, and the Council suggested that these risks might be best addressed through enhanced public-private partnerships.


SEC makes FinHub a standalone office
The Securities and Exchange Commission (SEC) announced yesterday that its Strategic Hub for Innovation and Financial Technology (FinHub) will move out of the Division of Corporation Finance, where it had been housed, to become a standalone office within the Commission. Valerie Szczepanik, who had headed FinHub within the Division of Corporation Finance, will be FinHub’s first Director, reporting directly to the SEC Chairman. FinHub has been the center for SEC policy development on technology innovations such as distributed ledger technology, digital assets, automated investment advice, digital marketplace financing, artificial intelligence and machine learning.
The Senate confirmed Christopher Waller as a member of the Board of Governors of the Federal Reserve System, on a party-line vote. Waller had been Director of Research at the Federal Reserve Bank of St. Louis. The Senate also confirmed Kyle Hauptman as a Member of the National Credit Union Administration Board, by a vote of 56-39. Hauptman had been an advisor to Sen. Tom Cotton (R-Ark.) and staff director of the Senate Banking Committee’s subcommittee on economic policy.
The House is scheduled to adjourn sine die after close of business next Thursday, December 9. Whether that happens will depend on the status of COVID-19 relief and government funding legislation.

December 9 at 10:00 a.m. Senate Committee on Commerce, Science, and Transportation holds a hearing on “The Invalidation of the EU-US Privacy Shield and the Future of Transatlantic Data Flows.”

December 9 at 10:00 a.m. Senate Finance Subcommittee on Social Security, Pensions, and Family Policy holds a hearing on “Investigating Challenges to American Retirement Security.”

December 9 at 10:00 a.m. The Securities and Exchange Commission holds an open meeting to consider a new rule and amendments to modernize the national market system (NMS) by expanding the information collected and allowing for competition among information consolidators.

December 10 at 10:00 a.m. House Oversight Subcommittee on Government Operations holds a remote hearing on “The Elements of Presidential Transitions.” 
SENATE
North Carolina:  As expected, US Rep. Mark Walker (R-Greensboro), who did not seek re-election in 2020 after the state Supreme Court re-drew the congressional district boundaries and left him with a Democratic district that Kathy Manning (D) would eventually claim, announced this week that he will run for the US Senate in 2022 in what will become a highly competitive open seat race. 
 
Sen. Richard Burr (R) has stated publicly on numerous occasions that he will not seek a fourth term. Rep. Walker was first elected in 2014 from what was a Republican district and averaged 58.1% of the vote in his three congressional elections.

 HOUSE CA-25:  After a long political overtime period that featured a very close count from beginning to end, California Rep. Mike Garcia (R-Santa Clarita) has officially been re-elected. The final count came down to just a 333 vote spread between he and state Assemblywoman Christy Smith (D-Newhall). 
 
Ms. Smith issued a statement of concession, but she has already filed a 2022 congressional campaign committee with the Federal Election Commission. Therefore, it is likely that we will see Round 3 between these two political contenders within two years. Rep. Garcia’s first win came in the May 2020 special election. His initial victory brandished a healthier 55-45% margin. The Garcia win means the Republicans now have 212 seats. 
 
FL-20:  Broward County Commissioner Barbara Sharief (D), who is ineligible to seek re-election to her local post in 2022 because of term limits, this week filed a congressional committee with the Federal Election Commission for the 20th District. 

With reapportionment likely to award Florida two new seats and redistricting to significantly change the state’s congressional district boundaries, it is likely that she will have other options for a South Florida Democratic seat rather than challenging veteran Rep. Alcee Hastings (D-Delray Beach). For now, however, it appears that we have a budding Democratic primary battle.
 
GA-5:  Though his tenure in the US House will literally be only one month long, former Atlanta City Councilman Kwanza Hall (D) defeated fellow Democrat Robert Franklin to win the special election runoff to fill the unexpired portion of the late Rep. John Lewis’ (D-Atlanta) final term in office. Mr. Hall did not enter the race for the full term. The winner of the regular election, state Sen. Nikema Williams (D-Atlanta) who is also the Georgia Democratic Party chair, will take the seat in January. 
 
Mr. Hall’s victory margin was 54-46%. Just over 22,000 people voted in the special election. Georgia law required a separate special election because the statute does not allow a congressional seat to be vacant for any longer than a certain specified period. Therefore, the state had no option but to run the special election even though the term in office would only be one month. Ms. Williams, declined to run in the special election, instead concentrating on winning the full term.
 
IA-2:  The Iowa State Canvassing Board, as expected this week, certified the election of Republican state Senator Mariannette Miller-Meeks (R-Ottumwa) as a six-vote winner in her open seat congressional battle against former state Senator and 2018 Lt. Governor nominee Rita Hart (D-Clinton County), which is not surprisingly the closest race in the nation. The final total is 196,964 to 196,958, within a record turnout from a state that saw over 1.7 million voters cast their ballots. 
 
Ms. Hart, who has lost her congressional race to Republican Mariannette Miller-Meeks by just six votes from more than 393,000 ballots cast, is now taking her case to overturn the result directly to the House of Representatives. She had the option of forcing a state judicial panel to be formed in order to review the entire counting process, but Ms. Hart will bypass the Iowa structure and ask the House Administration Committee to conduct an investigation. Eventually, this could mean a seating battle at the beginning of the next term involving the entire House.
 
LA-5:  Under Louisiana election law, all candidates in each specific race are placed onto what the state leaders term a “blanket primary” (others call it a “jungle primary”) on the general election day. If no one receives an outright majority, the top two finishers advance into a runoff election scheduled for the first Saturday in December. 
 
This weekend, two Republicans, former congressional chief of staff Luke Letlow, the first-place finisher on November 3rd with 33% of the vote, and state Rep. Lance Harris (R-Alexandria) who slipped into second place over Democrat Candy Christophe by 428 votes will do battle. 

With only two Republicans on the ballot, the GOP is assured of holding the seat from which three-term Rep. Ralph Abraham (R-Alto) is retiring. The runoff winner would represent a safe Republican district for this term with a strong chance of seeing most of the current constituency remaining intact after redistricting.
 
NY-22:  The Upstate NY-22 race has been the slowest to reach culmination with the final outcome still undetermined. At one point in the early counting, former US Rep. Claudia Tenney (R) held a lead of greater than 28,000 votes over freshman Rep. Anthony Brindisi (D-Utica), yet the race was never called. 
 
Prior to the holiday break, Ms. Tenney’s early overall advantage had dropped to just 300 votes. When counting resumed, she found herself on the outside looking in, though tabulations were still not complete. At that point, with more than 317,000 votes counted, it was Rep. Brindisi with the slightest of leads, just 13 votes with 99% reporting. 
 
Additional votes were located from one of the 22nd District counties that has now put former US Rep. Claudia Tenney (R) ahead of Rep. Anthony Brindisi (D-Utica) by a dozen-vote margin. Reports suggest there are 809 disputed ballots, while over 1,600 have been rejected as both campaigns have agreed. 
 
This is likely another race that will likely drag on through legal challenges and motions because the final result will probably result in a virtual tie. The resolution of this contest and that in IA-2 will be interesting to observe. As they reach the US House for final determination, both could take several weeks, and possibly months, to unravel as we have seen in the past when the outcomes are as close as these.
 
OH-1:  Fresh from another tough re-election victory (52-45%) in his Cincinnati anchored congressional district and with his state facing losing a district in reapportionment, veteran Rep. Steve Chabot (R-Cincinnati) yesterday announced that he will run for re-election in 2022. Ten years ago, after losing the seat for a term before winning in a 2010 re-match, the 1st District was improved for him, but it has since become a highly competitive seat. It remains to be seen how southwestern Ohio will politically evolve in the next redistricting cycle.
 
OR-1:  Dundee, OR Mayor David Russ (R) has filed a 2022 congressional committee with the Federal Election Commission to challenge five-term Rep. Suzanne Bonamici (D-Washington County/Beaverton). Since her original election in a 2012 special vote to replace resigned Rep. David Wu (D-OR), Ms. Bonamici has had little trouble securing additional terms, averaging 61.1% of the vote in her five re-election campaigns. 
 
Oregon is expected to gain a new congressional district in the coming reapportionment, so all of the state’s existing five CDs will significantly change. Dundee is a small community of just over 3,000 people located southwest of the Portland metropolitan area in Yamhill County. The presumed new 1st District will almost assuredly again be cast as safely Democratic, so this emerging race will not likely become competitive.
 
DCCC:  In a tight intra-party conference battle against California Rep. Tony Cardenas (D-Pacoima/Los Angeles) for Democratic Congressional Campaign Committee chair, New York Rep. Sean Patrick Maloney (D-Cold Spring/Peekskill) emerged victorious and will replace Rep. Cheri Bustos (D-IL) who did not seek a second term in the position in the wake of significant 2020 election losses. 

Rep. Maloney’s task is now to keep and expand a Democratic majority that could be as small as five seats in the face of political history that finds the party controlling the White House almost always losing House seats in a new President’s first midterm election.


 GOVERNOR
Minnesota:  Matt Birk, a former Center for the Minnesota Vikings NFL franchise, confirmed in a radio interview that he is considering entering the 2022 Republican gubernatorial primary to seek the party nomination to oppose first-term Gov. Tim Walz (D). Mr. Birk played eleven years for the Vikings before ending his football career with the Baltimore Ravens. Various state legislators and My Pillow company founder and CEO Mike Lindell are also testing the political waters for a gubernatorial run.
 
Ohio:  Gov. Mike DeWine (R), who was one of the most aggressive Governors in the country during the original pandemic shutdown phase, is under attack from the Republican base to the point where he may draw a serious primary challenge in two years. Former US Representative and 2018 US Senate nominee Jim Renacci (R) is said to be making moves to develop a campaign to challenge Gov. DeWine in the 2022 Republican primary. If this race materializes, it will be a serious challenge and one worth watching.
 
Oregon:  Physician Bud Pierce, who was the Republican nominee in the 2016 special gubernatorial election and lost to then-acting Gov. Kate Brown (D), 51-44%, said early this week that he will run again in 2022. The Oregon gubernatorial position will be open in two years because Gov. Brown is ineligible to seek re-election under the state’s term limit law. 
 
Rhode Island:  Rhode Island looks to be among the losing states in reapportionment, meaning its two Democratic congressional districts will be collapsed into one. Veteran Rep. Jim Langevin (D-Warwick), who was first elected in 2000, could be the odd man out in a race against Providence-based Rep. David Cicilline. Therefore, it looks as if Mr. Langevin is testing the waters for a gubernatorial campaign instead of going head-to-head with Rep. Cicilline. 

Gov. Gina Raimondo (D) is ineligible to seek a third term, meaning that we will see an open gubernatorial race in 2022, sure to be decided in a crowded September Democratic primary that can be won with only a plurality of the vote. 
 
People’s Party:  A segment of the Bernie Sanders progressive left movement has formed a new political party, the People’s Party, and they have now qualified for the ballot in an initial state. The People’s Party has obtained ballot placement in the state of Maine for the 2022 midterm elections. They are attempting to qualify in other states, so it remains to be seen how credible this movement becomes.