The Golden Apple – July 16, 2021

Senate plans to vote on infrastructure next week
Senate Majority Leader Chuck Schumer said yesterday that he wants the Senate to start voting next Wednesday on a $579 billion infrastructure package. He also wants agreement from Senate Democrats by Wednesday on how to move forward with the $3.5 trillion budget agreement that he, Senate Banking Committee Chairman Bernie Sanders (D-VT), and Senator Mark Warner (D-VA) announced on Tuesday. Republicans would prefer not to link the two pieces of legislation, and Senator Mitt Romney (R-UT), one of the Republican infrastructure negotiators, has said he won’t vote on infrastructure until they’ve agreed on language.Waters introduces sweeping housing package
House Financial Services Committee Chairwoman Maxine Waters (D-CA) introduced three bills yesterday that she said would end homelessness, support first-generation homebuyers, and treat housing as infrastructure. The Housing is Infrastructure Act would commit more than $600 billion to support the creation and preservation of affordable and accessible housing, equitable community development, and expanded homeownership opportunities. The Ending Homelessness Act, cosponsored by Reps. Emanuel Cleaver (D-MO) and Ritchie Torres (D-NY), would expand the Housing Choice Voucher program and make it a federal entitlement; appropriate $10 billion for the Housing Trust Fund and McKinney-Vento grants to build permanent affordable housing for the homeless; and permanently authorize the US Interagency Council on Homelessness. The Downpayment Toward Equity Act of 2021, cosponsored by Reps. Al Green (D-TX), Ayanna Pressley (D-MA), Jesús “Chuy” Garcia (D-IL), Cindy Axne (D-IA), and Sylvia Garcia (D-TX), would provide direct financial assistance for first-generation, first-time homebuyers.Powell worries more about cyber risk than inflation
The Chairman of the Federal Reserve Board made his semiannual appearances before the House Financial Services Committee and Senate Banking Committee this week, and members on both sides of the Hill had many questions about whether and when the Federal Reserve will move to counteract inflationary pressures in the economy. The always-unflappable Jerome Powell acknowledged that prices had risen higher, and for a more extended period of time, than the Fed had expected, but said that the FOMC would be meeting in two weeks to discuss whether to start tapering down its market activities, which is a separate decision from whether to raise interest rates. Powell said the Fed would not raise interest rates while unemployment rates remain high, especially for those at the lowest income levels. In response to a question from Senator Jon Ossoff (D-GA), Powell said that he worries most about cyber risk: the Fed knows how to address bad lending and bad management, but the financial system has not yet suffered a significant cyber disruption, and fighting off attacks “is an ongoing race.”Powell calls for regulatory structure for money market funds, stable coins
At yesterday’s Senate Banking Committee hearing, Federal Reserve Board Chairman Jerome Powell called for federal regulatory structures for both money market funds and stable coins. While private capital can absorb losses, Powell said, some aspects of the nonbank financial system need structure and regulations. He noted that money market funds “had to be bailed out twice” during the acute phase of pandemic crisis, and that the Treasury market had lost functionality as well. The Fed is looking carefully at whether the Treasury market needs structural changes. Since the market treats stable coins as an alternative to bank deposits, Powell said, the regulatory system should treat them that way as well.Bipartisan support emerges for a second Powell term – with one exception
Jerome Powell’s term as Chairman of the Federal Reserve Board expires in February 2022, but at this week’s hearings, both Democratic and Republican legislators said they thought President Biden should nominate him to a second term. Theoretically, Powell could remain on the Board even if he is not renominated as Chairman; because Governors of the Federal Reserve System are appointed to 14-year terms, Powell’s term as a Board member extends to 2028. The one exception to the praise for Chairman Powell was Senator Elizabeth Warren (D-MA), who was sharply critical of the Fed’s 2019 changes to the “living will” requirements for the nation’s largest banks and of the changes to the so-called Volcker rule.Regulators seek comment on guidance for banks’ third-party relationships
The FDIC, the Federal Reserve, and the Office of the Comptroller of the Currency (OCC) are asking for public comment on their proposed guidance to help banks manage the risks associated with third-party service providers, including fintech companies. Banks that use third parties to provide products and services are responsible for making sure that those companies operate in a safe and sound manner and comply with all applicable laws. The industry had asked the federal banking agencies to coordinate their guidance; the proposal is similar to standards that have been in place at the OCC since 2013. Comments are due to the agencies within 60 days.
Confirmations, Nominations, Departures
Yesterday the Senate voted 72-27 to confirm J. Nellie Liang’s nomination to be Under Secretary of the Treasury for Domestic Finance, a position that has been vacant since 2014. Liang spent most of her career at the Federal Reserve Board, where she was founding director of the Division of Financial Stability.

The Federal Reserve Bank of New York has named Dianne Dobbeck head of its Supervision Group. She had been head of the bank’s Supervisory Policy and Strategy Function within the Supervision Group.

Securities and Exchange Commission Chairman Gary Gensler has named Corey Klemmer as Corporation Finance Counsel, Adam Large as Trading and Markets Counsel, Mika Morse as Climate Counsel, Sirimal Mukerjee as Investment Management Counsel, and Sai Rao as Trading and Markets Counsel. These appointments complete Gensler’s policy staff, headed by Policy Director Heather Slavkin Corzo.
The Week Ahead
July 20 at 10:00 a.m. House Committee on Financial Services holds a hearing on “Building Back a Better, More Equitable Housing Infrastructure for America: Oversight of the Department of Housing and Urban Development.”
 
July 20 at 10:00 a.m. Senate Committee on Banking, Finance, and Urban Affairs holds a hearing on “21st Century Communities: Climate Change, Resilience, and Reinsurance.”
 
July 20 at 10:30 a.m. House Committee on Energy & Commerce holds a hearing on “Stopping Digital Thieves: The Growing Threat of Ransomware.”
 
July 20 at 2:00 p.m. House Foreign Affairs Subcommittees on Asia, the Pacific, Central Asia, and Nonproliferation, and Europe, Energy, the Environment, and Cyber hold a hearing on “U.S.-European Cooperation on China and the Broader Indo-Pacific.”
 
July 20 at 2:30 p.m. Senate Banking Subcommittee on Housing, Transportation, and Community Development holds a hearing on “Safe at Home: Preserving and Improving Federally Assisted Housing.”
 
July 21 at 10:00 a.m. House Financial Services Subcommittee on Consumer Protection holds a hearing on “Banking the Unbanked: Exploring Private and Public Efforts to Expand Access to the Financial System.”
 
July 21 at 10:00 a.m. Senate Committee on Environment and Public Works holds a hearing on “Addressing Cybersecurity Vulnerabilities Facing Our Nation’s Physical Infrastructure.”
 
July 21 at 2:00 p.m. House Financial Services Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets holds a hearing on “Bond Rating Agencies: Examining the ‘Nationally Recognized’ Statistical Rating Organizations.”
 
July 22 at 10:00 a.m. Senate Banking Subcommittee on Securities, Insurance, and Investment holds a hearing on “Examining Frameworks to Address Future Pandemic Risk.”
The Ellis Insight – Jim Ellis on political news
Senate 
Alaska: The Alaska Republican State Central Committee, on a 58-17 vote, endorsed former State Administration Commissioner Kelly Tshibaka (R) as their 2022 US Senate nominee over incumbent GOP Sen. Lisa Murkowski (R). The Senator has had primary trouble before. You will remember she lost her re-nomination campaign in 2010, only to win the seat in the general as a write-in candidate. She was easily re-nominated and re-elected in 2016.
 
This year, however, advancing to the general election will likely not be in doubt for either Murkowski or Tshibaka due to the state’s electorate passing a 2020 ballot proposition that allows four candidates to advance from a jungle primary. This means we can expect to see a campaign with as many as four contenders in the 2022 November election that will very likely include two major Republicans.
 
Arizona: Investor Blake Masters, as expected, just became the fourth significant Republican to enter the 2022 Senate race against freshman Sen. Mark Kelly (D). It is reported that Mr. Masters will have backing from a $10 million independent expenditure that billionaire Peter Thiel will largely finance. Mr. Masters, a close associate of Mr. Thiel, will join Attorney General Mark Brnovich, solar energy company CEO Jim Lamon, and retired Air Force Major General Mick McGuire as announced Republican candidates. 
 
Arkansas: Jake Bequette is a former defensive lineman for the University of Arkansas Razorbacks football team who had a cup of coffee with the New England Patriots of the NFL. After leaving football, Mr. Bequette joined the US military and became an Army Ranger. This week, saying he is a “God-fearing Christian conservative who is 100 percent pro-life and pro-police,” Mr. Bequette announced that he would enter the Republican primary against two-term Sen. John Boozman (R). 

Also in the GOP primary is 2018 gubernatorial candidate Jan Morgan, pastor Heath Loftis, and corporate analyst Michael Deel. Sen. Boozman is a heavy favorite for re-nomination and re-election.
 
Iowa: Sen. Chuck Grassley (R), who was elected to the Senate the same night that Ronald Reagan became President, indicated over the weekend that he will announce his 2022 political plans prior to November 1st. Because he will be 89 years of age at the time of the next election, many believed early that he would retire. The sentiment has now swayed squarely toward Sen. Grassley seeking re-election, however, but the campaign won’t be a certainty until he makes a formal announcement in the Autumn.
 
On the heels of Sen. Grassley’s announcement, Minden City Councilman and physician Glenn Hurst (D) declared his candidacy for the Democratic Senate nomination. Previously, only former Crawford County Supervisor Dave Muhlbauer had officially entered the Democratic race. State Sen. Jim Carlin (R-Sioux City) is the only individual declaring to date in the GOP primary.

House
FL-7: Former DeBary City Commissioner Erika Benfield late this week announced that she will enter the large Republican primary field vying for the opportunity of challenging central Florida Rep. Stephanie Murphy (D-Winter Park). While the Congresswoman doesn’t appear particularly vulnerable in her current district, her political hopeful challengers are betting that redistricting will make the 7th Dist3rict considerably more Republican. It remains to be seen if such will prove true. If the district remains favorable to Rep. Murphy, expect some of the announced contenders to withdraw.
 
GA-6: Two-term Georgia Rep. Lucy McBath (D-Marietta) has already drawn a crowd of Republicans vying for the opportunity of taking back what was previously a safe Republican district. The latest to enter are former state Ethics Commission chairman Jake Evans and ex-state Rep. Meagan Hanson, the latter of whom is the first of the candidates who has won a previous election. 
 
The group may face a much more difficult battle against Rep. McBath than what currently appears before then, however. It is probable that the Republican legislature will draw a map that gives McBath a more Democratic district at the expense of neighboring freshman Rep. Carolyn Bourdeaux (D-Suwanee). Of the two Atlanta metro districts that flipped to the Democrats in consecutive elections, Ms. Bourdeaux’s 7th District appears to be the easier for Republicans to re-capture.
 
IA-3: Two-term Iowa Rep. Cindy Axne (D-Des Moines), who has won both of her elections with less than 50% of the vote, drew another Republican opponent yesterday. State Sen. Zach Nunn (R-Altoona), an Iraq War veteran, announced that he will enter the Republican primary with the goal of challenging Rep. Axne in the general election. For the GOP nomination, Sen. Nunn so far faces former state Rep. Mary Ann Hanusa and financial planner Nicole Hasso
 
MT-2: Even though Montana’s new 2nd Congressional District will not be drawn for several months, we’ve already seen individuals in both parties come forward to declare their candidacies. Now, former President Donald Trump has weighed in on the yet-to-be-defined campaign. 

Mr. Trump is pledging his support behind the man he originally appointed US Interior Secretary, former US Rep. Ryan Zinke (R). Mr. Zinke was first elected to the at-large House seat in 2014 and was re-elected two years later. Just after his 2016 election as President, Mr. Trump then made Rep. Zinke Secretary of the Interior. He served two years in the Trump cabinet.
 
NE-2: State Senator Tony Vargas, a Democrat who represents a major portion of the city of Omaha in the non-partisan unicameral legislature, announced that he will enter his party’s 2022 primary to compete for the opportunity of challenging three-term Rep. Don Bacon (R-Papillion/ Omaha). Last week, 2020 US Senate candidate Alisha Shelton (D) declared her 2nd District congressional candidacy. The 2018 and 2020 Democratic nominee, Kara Eastman who came within two and five points, respectively, of upsetting the Congressman, has already said that she will not return for a third attempt.

NY-22: Former Congressman Anthony Brindisi (D-Utica), who previously said he would not return for a re-match with Rep. Claudia Tenney (R-New Hartford) after losing to her by 109 votes in the 2020 election, declared his intention to run for a judgeship that carries a 14-year term. Though the office he seeks is titled a state Supreme Court Judge post, in New York this judicial level is equivalent to district or circuit courts in most other places.

OH-11: Cuyahoga County Councilmember and County Democratic Party chair Shontel Brown is making major strides in the special election to replace Housing & Urban Development Secretary Marcia Fudge in her vacated US House district. According to a Normington Petts survey for the Brown campaign (7/5-8; 400 OH-11 likely Democratic special primary election voters; live interview), former state Sen. Nina Turner now leads Ms. Brown by only a 43-36% margin as the candidates turn toward an August 3rd primary election. The remaining 11 Democratic candidates split a total of 7% preference. Previously, Ms. Turner held a 42-10% edge.
 
Late in the week, the Free Beacon released the results of their survey (TargetPoint; 7/8-10; 300 OH-11 likely special primary voters; live interview) that shows both Ms. Turner and Ms. Brown capturing 33% support apiece when adding the respondents who lean to each candidate. The initial ballot test also found the two tied, but with a 28% support factor apiece. 

With recent endorsements from Hillary Clinton, House Majority Whip Jim Clyburn (D-SC), 2018 Ohio gubernatorial nominee Richard Cordray, and the Congressional Black Caucus, it appears Ms. Brown is gaining serious momentum with less than three weeks remaining in the primary cycle. Winning the Democratic nomination in the 11th District is tantamount to clinching the seat in November.

OR-5: Former two-term Happy Valley Mayor Lori Chavez-DeRemer (R) formally announced her congressional candidacy this week, joining 2020 GOP congressional nominee Amy Ryan Courser, and businessman and Army veteran Nate Sandvig as Republican congressional candidates. It is clear there is increased interest in challenging Rep. Kurt Schrader (D-Canby/Salem) because the 5th is one of the Oregon districts that could become more Republican as the state gains a new congressional seat. In 2020, Mr. Schrader was re-elected to a seventh term with a relatively close 52-45% victory margin.

PA-18: Seeing 14-term Pennsylvania Rep. Mike Doyle (D-Pittsburgh) raising only $58,000 in the second quarter coupled with just $21,000 in the first quarter leads the Daily Kos Elections site authors to speculate that the Congressman may not seek re-election in 2022. 

Rep. Doyle’s 2020 Democratic primary opponent, law professor Jerry Dickinson, returns for a re-match though he received only 33% of the vote in the previous primary. Mr. Dickinson, however, has already raised $211,000 for his next campaign. Regardless of whether Rep. Doyle seeks re-election, the Pittsburgh anchored congressional seat will remain firmly under Democratic Party control.

Governor
Alaska: Independent Bill Walker was elected Alaska’s Governor in 2014 on an Independent/Democratic ticket but did not seek a second term in 2018 in the face of very poor approval ratings. Mr. Walker now says he is considering returning to the political arena next year because he believes he would fare well under the state’s new top-four primary system. Gov. Mike Dunleavy (R) is expected to run for re-election. Former state Rep. Les Gara (D) has filed a gubernatorial exploratory committee. Should Mr. Walker run, a competitive three-way general election will become a likelihood.
 
California: A California district judge ruled during the week that Gov. Gavin Newsom (D) will not appear on the ballot with a party label for the coming September 14th recall election. The judge said that the Newsom campaign failed to file a party designation within seven days of the recall petition being filed as California recall election law requires. He also said petitioning to do so sixteen months after the fact was too late to request a reversal of their decision to ignore responding to the recall filing. 
 
The ruling likely won’t have a great effect upon the recall election outcome, however. The first ballot question will ask whether Gavin Newsom should be recalled from the office of Governor, while the second question allows voters to choose a replacement should the subject be recalled. Under California law, the recall subject is not eligible to run in the replacement election. Therefore, the party label not appearing with Newsom in his stand-alone recall question is likely inconsequential to the voters’ decision to support or oppose removal from office.
 
Texas: On the heels of Gov. Greg Abbott’s (R) campaign reporting that over $18.7 million had been raised in the previous quarter and that the entity holds a whopping $55 million cash-on-hand figure to start the incumbent’s bid for a third term, the Abbott for Governor campaign also released the results of a small-sample internal June Public Opinion Strategies poll (6/14-17; 446 TX likely Republican primary voters; live interview) that gives Mr. Abbott a huge lead. 
 
The POS survey finds the Governor recording a 69-13-3% margin spread over former state Republican Party chairman and ex-Florida Congressman Allen West, and former Dallas area state Senator Don Huffines, respectively. The poll also found a 3% support figure for Texas Agriculture Commissioner Sid Miller, but he has since decided to run for re-election and will not enter the Republican gubernatorial campaign.

Virginia: Largely confirming the results of two released June polls, the Trafalgar Group (7/8-10; 1,104 VA likely voters; combination live interview and online) arrived at a similar conclusion in early July. The previous surveys came from WPA Intelligence (6/2-6; 508 VA likely voters; live interview; McAuliffe, 48-46%) and JMC Analytics (6/9-12; 550 VA likely voters; live interview; McAuliffe, 46-42%). 

The Trafalgar ballot question totals project former Gov. Terry McAuliffe (D) leading businessman and former hedge fund CEO Glenn Youngkin (R) likewise by a two-point margin, 47-45%. This cumulative data suggests that the 2021 Virginia statewide race begins in surprisingly tight fashion.