|FSOC calls climate change “an emerging and increasing threat to US financial stability”|
The Financial Stability Oversight Council (FSOC) published its much-anticipated Report on Climate-Related Financial Risk yesterday, making specific recommendations for action by its member agencies. While the report describes steps the financial regulators are already taking to measure and supervise climate risk, FSOC calls for the agencies to conduct scenario analyses; evaluate the need for new or revised regulations or supervisory guidance; enhance climate-related disclosures and actionable climate-related data; and build capacity and expertise. The report also called for “robust coordination” among regulators on a common agenda, and said that the regulators should at least consider standardizing data formats for climate risk disclosures for easier comparability. A four-page summary of the report is here.
CFPB demands payments system data from tech giants
The Consumer Financial Protection Bureau (CFPB) issued orders yesterday requiring information from Amazon, Apple, Facebook, Google, PayPal, and Square about how they collect, share, and monetize customer data; how they restrict user choices; and how robustly these firms are protecting customer data and privacy. “Little is known publicly about how Big Tech companies will exploit their payments platforms,” said CFPB Director Rohit Chopra. “The CFPB’s inquiry will help to inform regulators and policymakers about the future of our payments system.” He said the Bureau would be asking for public comment about this inquiry. Chopra will make his first appearances as CFPB Director before both the House Financial Services Committee and the Senate Banking Committee next week.
Senate Banking reviews sanctions
Deputy Secretary of the Treasury Wally Adeyemo appeared before the Senate Banking Committee this week to summarize the sanctions review report Treasury published on Monday. Republican members continued to push for sanctions on the Nord Stream 2 pipeline, but even Democrats were unhappy about the failure to crack down on Chinese purchases of oil from Iran. Members on both sides of the aisle voiced concern about the use of cryptocurrency to evade sanctions. Adeyemo noted that the Office of Foreign Assets Control (OFAC) had just issued sanctions compliance guidance for the virtual currency industry, and that Treasury had recently taken its first enforcement action against a crypto exchange for facilitating the use of ransomware. Senate Banking Committee Chair Sherrod Brown (D-OH) said this would be “the first in a series of ongoing conversations.”
Private equity under fire before Senate Banking
Private equity investors faced scrutiny and criticism in two Senate Banking Committee hearings this week. On Wednesday, the Subcommittee on Economic Policy held a hearing on “Protecting Companies and Communities from Private Equity Abuse,” to support consideration of Subcommittee Chair Elizabeth Warren (D-MA)’s Stop Wall Street Looting Act. Warren’s bill, which has a House companion sponsored by Reps. Marc Pocan (D-WI) and Pramila Jayapal (D-WA), would make general partners of private investment funds liable for the debt and other obligations of companies under their control, and would prohibit private investment funds from paying dividends or making layoffs for two years after they acquire a firm. It would create new protections for workers in companies acquired by private equity funds, and would require new disclosures to investors. Yesterday, the full Senate Banking Committee heard testimony from housing advocates about abuses from private equity landlords, including sharp rent increases, new fees, and aggressive pursuit of evictions. Republican Committee members noted that private equity investors own less than 2% of the nation’s single-family home rental market.
Senate Finance hearing on health insurance highlights partisan divide
The Senate Finance Committee held a hearing this week to look at the current state of health insurance coverage in the US, as Congress considers provisions in the reconciliation bill that would expand Medicare coverage and make the benefits of Medicaid expansion available in the eight states that have chosen not to expand Medicaid. Democrats emphasized the need to address the Medicaid coverage gap, while Republicans asserted that additional federal subsidies would raise costs of medical care even more. Senator Rick Scott (R-FL), testifying before the Committee, said that the US health care system currently lacked consumer choice and price transparency, and argued for limiting government’s role. Senator Raphael Warnock (D-GA), whom Committee Chairman Ron Wyden (D-OR) called “the conscience of the Senate” on this issue, said that the Build Back Better Act was an opportunity to fulfill the promise made 11 years ago by the Affordable Care Act.
Fed supervisory duties to be shared among Quarles, Brainard, Bowman
Although Randal Quarles’s term as a Governor of the Federal Reserve System continues through January 2032, his term as Vice Chair for Supervision expired last week. The Federal Reserve Board announced that the Committee on Supervision and Regulation, which Quarles had chaired, would meet “on an unchaired basis” until a new Vice Chair is appointed, and only matters with unanimous committee agreement will proceed to the Board for consideration. Governors Lael Brainard and Michelle W. Bowman are the two other members of the Committee. Quarles continues to chair the Financial Stability Board, a term that ends on December 2.
Brown asks Fed to stop deregulating until new Governors are appointed
As Vice Chair Quarles’s term ended, Senate Banking Committee Chairman Sherrod Brown wrote to Fed Chairman Jerome Powell to ask that the Fed take no “further deregulatory actions” until Congress has confirmed new Presidential appointees. “Governor Quarles’s tenure over the Fed’s supervisory and regulatory agenda has been a failure that must come to a close with the end of his Vice Chairmanship,” Brown wrote. “A new direction for financial regulation must be determined by whomever the President chooses, and Congress confirms, to critical leadership positions on the Board.” Powell’s own term as Chair expires in February 2022.
FTC warns businesses about fake reviews
The Federal Trade Commission issued a stern warning last week to businesses about using endorsements to deceive consumers. The agency has sent a Notice of Penalty Offense to more than 700 companies, alerting them to the risk of significant civil penalties if they use endorsements in ways the FTC has determined to be unfair or deceptive. The companies warned include food and beverage manufacturers, major retailers, hotels and restaurants, pharmaceutical companies, tech and media firms, and more. While the FTC emphasized that the warnings did not mean the companies were in violation, the letter reminded recipients that violations may lead to civil penalties of up to $43,792 per offense. The agency’s Endorsement Guides answer questions about disclosure and fair practices.
CFPB announces new senior management
Rohit Chopra took office as Director of the Consumer Financial Protection Bureau (CFPB) on October 8, and announced four leadership changes last week. Zixta Q. Martinez, a housing policy expert who has held a variety of positions at the Bureau since 2011, will serve as Deputy Director and oversee the Bureau’s Operations Division. Karen Andre, who was most recently Special Assistant to the President for Economic Agency Personnel, will be Associate Director for Consumer Education & External Affairs. Jan Singelmann, who was previously Senior Litigation Counsel in the CFPB’s Office of Enforcement, is leaving the Senate Banking Committee, where he served as Counsel to Chairman Sherrod Brown, to become the Bureau’s Chief of Staff. Erie Meyer, who was part of the implementation team that launched the CFPB, is returning to be its Chief Technologist.
Fed announces trading ban, enhanced disclosures for senior officials
Senior Federal Reserve officials will no longer be allowed to purchase or trade in individual securities under new rules announced yesterday. They will still be allowed to purchase diversified investment vehicles, such as mutual funds, but will have to provide 45 days’ advance notice of plans to buy or sell; obtain prior approval; and hold investments for at least one year. Purchases and sales will be prohibited altogether “during periods of heightened financial market stress.” Reserve Bank presidents will be subject to the same public disclosure rules that have applied to Federal Reserve Board members and senior staff.
|Confirmations, Nominations, Departures|
|Rep. Mike Doyle (D-PA), a 14-term member of the House who currently chairs the Energy & Commerce Subcommittee on Communications and Technology, will leave Congress at the end of next year.|
Rep. David Price (D-NC), who chairs the Transportation, Housing, and Urban Development Subcommittee of the House Appropriations Committee, announced that he will not run for reelection. Price has served in the House since 1987.
Rep. John Yarmuth (D-KY), Chairman of the House Budget Committee, announced that he will not seek a ninth term in the House of Representatives.
|The Week Ahead|
|October 26 at 9:30 a.m. Senate Committee on Finance holds a hearing on the nominations of Maria L. Pagan to be the Geneva-based Deputy US Trade Representative: Brent Neiman to be a Deputy Under Secretary of the Treasury; Joshua Frost to be an Assistant Secretary of the Treasury; and Samuel R. Bagenstos to be General Counsel of the Department of Health and Human Services.|
October 26 at 10:00 a.m. House Financial Services Subcommittee in Investor Protection, Entrepreneurship, and Capital Markets holds a hearing on “Taking Stock of ‘China, Inc.’: Examining Risks to Investors and the US Posed by Foreign Issuers in US Markets.”
October 26 at 10:00 a.m. Senate Committee on Banking, Housing, and Urban Affairs holds a hearing on the nominations of Reta Jo Lewis to be President of the Export-Import Bank and Elizabeth de Leon Bhargava to be an Assistant Secretary of Housing and Urban Development.
October 26 at 10:15 a.m. House Education & Labor Subcommittees on Workforce Protections and Civil Rights and Human Services hold a hearing on “Protecting Lives and Livelihoods: Vaccine Requirements and Employee Accommodations.”
October 27 at 10:00 a.m. House Committee on Financial Services holds a hearing on “Bringing Consumer Protection Back: A Semi-Annual Review of the Consumer Financial Protection Bureau.”
October 27 at 10:00 a.m. Senate Committee on Agriculture, Nutrition, and Forestry holds a hearing on the nomination of Rostin Behnam to be a member and Chairman of the Commodity Futures Trading Commission.
October 28 at 9:30 a.m. Senate Committee on Aging holds a hearing on how to build a stronger retirement system for all Americans, focusing on a financially secure future.
October 28 at 10:00 a.m. Senate Banking Committee holds a hearing on the Consumer Financial Protection Bureau’s Semi-Annual Report to Congress.
October 28 at 10:00 a.m. The Securities and Exchange Commission’s Asset Management Advisory Committee meets to discuss matters “relating to the Evolution of Advice and the Small Advisers and Small Funds Subcommittees, including panel discussions and potential recommendations.
|The Ellis Insight – Jim Ellis on political news|
Alabama: WPA Intelligence released an Alabama US Senate survey (10/10-12; 506 AL likely Republican primary voters) that finds US Rep. Mo Brooks (R-Huntsville) posting another major lead in his race for the GOP nomination.
According to the results, Mr. Brooks holds a commanding 55-12-5-5% advantage over former Alabama Business Council CEO Katie Britt, ex-US Ambassador to Slovenia Lynda Blanchard, and businesswoman Jessica Taylor., respectively. The lead grows to 72-13-4-2% when respondents are informed that former President Trump has endorsed Mr. Brooks.
New Hampshire: The University of New Hampshire released its regular Granite State Poll (10/14-18; 1,061 NH panel members; 979 NH likely voters; online) and found Sen. Maggie Hassan (D) in a close contest regardless of who the Republicans nominate next year. According to the UNH results, Gov. Chris Sununu (R) would lead Sen. Hassan, 45-42%, but she would top ex-Sen. Kelly Ayotte (R) by a slight 44-43% margin. The Senator holds a 47-42% edge over retired Army General Don Bolduc (R) who lost the 2020 Republican Senate primary.
Perhaps the worst news for Sen. Hassan concerns her favorability index. It drops to 38:52% favorable to unfavorable on this poll, her worst mark since the Granite Poll began tracking her in 2011.
Illinois Redistricting: Previous reports suggesting the Illinois Democratic leadership would attempt to draw a new congressional map to cost the Republicans two seats, and actually a net three when considering the state loses a district in reapportionment, proved accurate. The released map would create a 14D-3R plan in the state, meaning potential Republican incumbent pairings in the downstate region.
The map could be vulnerable to a racial gerrymandering lawsuit as well as a political action when seeing that drawing a second Hispanic seat in Chicago is numerically possible but not done.
IL-3: The new Illinois redistricting map soon likely to become law is attracting the attention of at least one former member. Ex-Rep. Dan Lipinski, who lost his battle for re-nomination to freshman Rep. Marie Newman (D-La Grange), feels the new 3rd District lines may be more favorable to him than was the former draw. Therefore, he confirms considering returning for a Democratic primary re-match.
GOP Rep. Adam Kinzinger (R-Channahon) is also placed in this district, meaning that the 2022 election cycle will likely be an interesting one in this newly configured CD.
Iowa Redistricting: After the state Senate rejected the Iowa legislative committee staff’s first redistricting plans for the congressional, state House and Senate maps, the second option has been released. In this version, former President Trump would have carried all four of the districts, but with very small margins in two of the seats. In the previous map, freshman Rep. Ashley Hinson (R-Marion) would have been defeated.
This map would give Republicans a chance to win all four seats, but also lose three of the four in strong Democratic years. Therefore, it appears representative of Iowa’s political trends and tendencies.
MD-4: Maryland Attorney General Brian Frosh (D) announced this week that he will not seek re-election in 2022. Political speculation is suggesting that US Rep. Anthony Brown (D-Bowie), a former Democratic gubernatorial nominee, will forego re-election to the House in order to enter the open Attorney General’s race. The move would create a competitive open Democratic primary for what will again become a safe Prince George’s County anchored seat in the general election.
NE-1: During the week, a California Grand Jury indicted Nebraska Rep. Jeff Fortenberry (R-Lincoln) for lying to the FBI and concealing information from federal agents in association with certain political contributions traced to a foreign citizen. This makes the 2022 political situation surrounding the Congressman’s re-election campaign murky. A Nebraska law exists that prohibits indicted individuals from running for political office. Whether this statute can be applied to a federal candidate is yet unanswered. If so, then we could see a forced open seat campaign occur in the 1st District.
NC-4: Veteran Raleigh area Congressman David Price (D) announced that he will not seek an 18th non-consecutive term in the House. Mr. Price, 81 years of age, was first elected in 1986, but lost the district in the 1994 Republican landslide. He returned two years later to re-gain his seat, and has not seriously been challenged since. Democrats will likely retain the 4th District seat under the new redistricting map, unless the plan changes as a result of Mr. Price retiring.
OH-15: Emerson College released a new survey of the OH-15 special election to be decided on November 2nd. The poll (10/14-16; 445 OH-15 likely special election voters; interactive voice response system and online) finds former Ohio Coal Association chairman Mike Carey (R) leading state Rep. Allison Russo (D-Columbus) by a 50-39% count. When self-described leaners to each candidate are added to the mix, Mr. Carey’s lead expands to 59-41%.
PA-8: Consultant Jim Bognet, the 2020 Republican nominee who held Rep. Matt Cartwright (D-Moosic/Scranton) to a 52-48% re-election victory, announced yesterday that he will return for a re-match next year. With the 8th District requiring 51,779 more people to reach the required population quota, which means redistricting could add some outlying Republicans to the seat and taking advantage of what could be a favorable Republican tide coming in 2022, Mr. Bognet feels he would have a chance to add the minimum two-plus percentage points needed to flip the seat.
PA-18: In another retirement announcement, 14-term Rep. Mike Doyle (D-Pittsburgh) declared his intention to retire after the current congressional session adjourns. His retirement makes it even more likely that the Pittsburgh area will absorb the seat loss from reapportionment that reduced the PA delegation from 18 to 17 seats. Neighboring Rep. Conor Lamb (D-Pittsburgh) leaving his seat to run for the Senate makes it logical that these seats will be part of the necessary plan to collapse the state contingent of districts.
Texas Redistricting: Maps to re-draw Texas’ congressional and state legislative districts have now passed both houses of the legislature and are headed to Gov. Greg Abbott (R) for his signature. The congressional map adds two districts, one likely for each party, and creates a district for each current incumbent. A possible swing of one seat toward the Republicans could be the net result.
Now, members and candidates are beginning to make early political moves. Rep. Lloyd Doggett (D-Austin) announced that he will run in the new Travis County 37th District, thus leaving open his current 35th CD that encompasses counties and precincts from Austin to San Antonio. Immediately, Austin City Councilman Greg Casar (D) formed an exploratory committee for the 35th. Former 25th District nominee Julie Oliver also filed a federal committee for the 37th District Democratic primary.
Previously, 15th District Rep. Vicente Gonzalez (D-McAllen) said he would run in the open Brownsville anchored District 34 if the map was passed into law. Rep. Filemon Vela (D-Brownsville) is retiring and said he would endorse Rep. Gonzalez moving into his district. Attorney and Iraq War veteran Ruben Ramirez (D) says he would run in the open 15th. Already in that race is 2020 Republican nominee Monica de la Cruz-Hernandez, who held Rep. Gonzalez to a 50-48% re-election win.
TX-24: State Rep. Michelle Beckley (D-Carrollton) announced this week that she is suspending her congressional campaign committee after seeing the new congressional redistricting map pass the legislature. Declaring the map “an extreme Republican gerrymander,” Ms. Beckley said she will not challenge freshman Rep. Beth Van Duyne (R-Irving).
Virginia Redistricting: Unable to agree upon a new congressional map, the Virginia Redistricting Commission suspended its meeting schedule on an indefinite basis. The Commission is empowered until November 8th, but it appears the deadlock will allow the state Supreme Court to draw the new map.
VA-7: State Sen. Bryce Reeves (R-Fredericksburg) became the sixth Republican to announce his candidacy for the opportunity of challenging Rep. Abigail Spanberger (D-Glen Allen) in what will be a newly constructed 7th District. The originally proposed map that failed to advance from the Virginia Redistricting Commission would have made the 7th a heavily Republican district.
The local Republican Committee is likely to call a convention to decide the nomination winner in lieu of a primary, so the crowded field will not drain party resources. Sen. Reeves is the first elected official to declare his candidacy, though 2020 nominee Del. Nick Freitas (R-Culpeper), who held Rep. Spanberger to a 51-49% re-election victory, is expected to run after he wins re-election to the state House this November.
Florida: State Sen. Annette Taddeo (D-Miami), who was former Governor Charlie Crist’s (D) running mate in the 2014 election, is now his opponent. Sen. Taddeo entered the Governor’s race this week, and will face Mr. Crist and state Agriculture Commissioner Nikki Fried in the Democratic primary. Ms. Taddeo has also run unsuccessfully for Congress in the past. She begins as an underdog for the party nomination, but hopes to construct a large enough Hispanic base to win a plurality three-way campaign.
Oklahoma: An Amber Integrated poll of the Oklahoma electorate (10/12-14; 500 OK registered voters; live interview and online panel) tested the 2022 Governor’s race featuring a likely general election pairing of Gov. Kevin Stitt (R) and state Superintendent of Public Instruction Joy Hofmeister, who switched from the Republican Party to the Democrats in order to run for Governor. According to the AI survey, Gov. Stitt opens with a 49-33% double-digit advantage.
Virginia: A trio of new VA Governor polls were released, from Fox News, the Trafalgar Group, and Monmouth University, in anticipation of the November 2nd election. The Fox Poll (10/10-13; 726 VA likely voters; live interview) actually gives former Gov. Terry McAuliffe (D) his best showing in recent weeks. The ballot test projects the ex-Governor over 50% with a lead beyond the polling margin of error: 51-46%, over Republican nominee Glenn Youngkin.
Trafalgar finds virtually the exact opposite result. The survey (10/11-13; 1,095 VA likely voters; live interview, online, and text) pushes Mr. Youngkin into the lead, only the second poll since August began to do so, by a slim 48-47% margin.
Monmouth University, carrying an A rating from the FiveThirtyEight statistical organization as their tenth best pollster in the country, released their latest Virginia ballot test numbers (10/16-19; 1,005 VA registered voters; live interview). The results show a dead heat between former Governor Terry McAuliffe and ex-hedge fund CEO Glenn Youngkin with each candidate scoring 46% support. The polling continues to provide data suggesting that the Virginia race is tight and will be decided through the eventual voter turnout model.