The Golden Apple – December 17, 2021

Farewell to 2021 
The year is drawing to a close, and Washington is settling down for a short winter’s nap. The House of Representatives has left town for the holidays. The Senate is still in session, voting on nominations, but has pushed consideration of the President’s Build Back Better Act to 2022. It’s eerily warm out, but we’re hanging our stockings anyway, and wishing all of you a safe and happy holiday season.
Are stablecoins destabilizing? 
Tuesday’s Senate Banking Committee hearing on stablecoins was more partisan and less friendly than last week’s House Financial Services Committee session on the topic. Senate Banking Committee Chairman Sherrod Brown (D-OH) compared stablecoins to the synthetic financial instruments he blames for the 2008 financial crisis. Senator Pat Toomey (R-PA), the Committee’s ranking member, said that stablecoins could speed up payments, especially cross-border transfers; reduce costs, including remittances; and help fight money laundering and terrorism financing because of their “immutable and transparent transaction records.” He said he would support creating a regulatory framework for stablecoins that did not stifle innovation, and laid out a set of guidelines for tailoring stablecoin regulations to their specific uses.
FSOC will consider rules for stablecoins if Congress does not act  
In its 2021 annual report, published today, the Financial Stability Oversight Council (FSOC) said that state federal regulators should continue to monitor“ risks to the financial system posed by new and emerging uses of digital assets,” and directed regulators to examine the recommendations in the President’s Working Group’s November Report on Stablecoins. The Council’s press release said it would “be prepared to consider steps available” to address risks “in the event comprehensive legislation is not enacted.” FSOC’s report also called for better data and measurement tools to assess climate risk; said that market participants should “act with urgency” to complete their transition away from LIBOR; and instructed regulators to keep monitoring cybersecurity risks, “especially in light of new risks posed by the pandemic, ransomware incidents, and supply chain attacks.”
Senate Banking Democrats call for permanent reauthorization of CDBG-DR  
The Senate Committee on Banking, Housing, and Urban Affairs held a short hearing on Wednesday to discuss the permanent reauthorization of the Community Development Block Grant-Disaster Recovery program, which has provided more than $95 billion in disaster relief since 1993 but has been renewed only from one year to the next. Senators Brian Schatz (D-HI), Susan Collins (R-ME), Todd Young (R-IN), Chris Van Hollen (D-MD), and Jon Tester (D-MT) have introduced the Reforming Disaster Recovery Act of 2021 (S. 2471) to permanently authorize and improve the CDBG-DR program. Witnesses told the Committee that permanent reauthorization would make it easier for state and local emergency management services to plan, and would eliminate the need to promulgate new rules with every temporary reauthorization. Ranking member Senator Pat Toomey (R-PA) said that the CDBG-DR program was duplicative and unnecessary, supplementing funds that could and should be provided by state and local governments.
Senate Commerce on the Airline Payroll Support Program: “It worked.”
The Senate Committee on Commerce, Science, and Transportation heard testimony from the CEOs of the four largest US airlines this week about the implementation of the Payroll Support Program (PSP), which provided grants and loans to support the airline industry during the pandemic. The PSP was part of the CARES Act, and has been reauthorized twice. Gary Kelly, CEO of Southwest Airlines, said he could summarize the program in two words: “It worked.” Committee Chair Maria Cantwell (D-WA) called the PSP a historic investment that had saved hundreds of thousands of jobs in the aviation sector, not only among the airlines but also among their vendors and related businesses. US airline capacity has returned to about 87% of pre-pandemic levels, and witnesses told the Committee that shortages of skilled workers, especially pilots, might slow down further recovery.
CFPB to look more closely at “buy now, pay later” after Senators urge scrutiny 
The Consumer Financial Protection Bureau (CFPB) has issued orders to five companies offering “buy now, pay later” services, asking for detailed information to address the Bureau’s concerns about consumer debt accumulation, regulatory arbitrage, and data harvesting. Orders went to Affirm, Afterpay, Klarna, PayPal, and Zip. CFPB Director Rohit Chopra said the Bureau wanted to “report to the public about industry practices and risks.” The orders followed a letter to the CFPB sent earlier this week by Senator Jack Reed (D-RI) and five of his colleagues on the Senate Banking Committee, including Chairman Sherrod Brown (D-OH), urging the agency to review “buy now, pay later” (BNPL) products and take steps to protect consumers where necessary.
SEC proposes new rules on security-based swaps, money market funds, share repurchase disclosures 
The Securities and Exchange Commission (SEC) is asking for comments on three proposed sets of amendments to rules that govern stock buyback disclosures (Form SR)liquidity requirements for money market funds, and security-based swap transactions. The proposed rule on security-based swaps would prohibit fraudulent, deceptive, or manipulative conduct in connection with all transactions in security-based swaps; prohibit personnel of an SBS Entity from taking any action to coerce, mislead or otherwise interfere with the SBS Entity’s chief compliance officer; and require immediate disclosure of any security-based swap position that exceeds the threshold amount set by Rule 10B-1. Senate Banking Committee Chairman Sherrod Brown (D-OH) applauded the changes, particularly the proposed new rules on stock buyback disclosures.
DOJ extends comment period on revisions to bank merger guidelines 
The Antitrust Division of the Department of Justice announced this afternoon that it will continue to seek public comments until February 15, 2022, on whether and how to revise its 1995 Bank Merger Competitive Review Guidelines. The division said that it wants additional comments “to ensure that the Banking Guidelines reflect current economic realities and empirical learning, ensure Americans have choices among financial institutions, and guard against the accumulation of market power.” The announcement follows a public dispute among members of the Federal Deposit Insurance Corporation’s board of directors over whether to seek comment on how regulators assess bank mergers. Republican members of the Senate Banking Committee wrote to President Biden yesterday asking him to rebuke CFPB Director Rohit Chopra and former FDIC Chairman Martin J. Gruenberg over that disagreement, saying they were trying to politicize and independent agency. 
Confirmations, Nominations, Departures
President Biden nominated Sandra L. Thompson to be Director of the Federal Housing Finance Agency (FHFA). Thompson has served as Acting Director since June.

The Senate confirmed Rostin Behnam as Chairman of the Commodity Futures Trading Commission. Behnam has served as a Commissioner since September 2017, and as Acting Chairman since January of this year.

Rep. Alan Lowenthal (D-CA) will leave Congress next year after his fourth term. He chairs the Natural Resources Subcommittee on Energy and Mineral Resources, and also serves on the House Transportation & Infrastructure Committee.
The Week Ahead
The Senate will return on January 3; the House will be back on January 10. GrayRobinson’s offices will be closed on December 24 and December 31, and The Golden Apple will take a break until January 7, 2022.
The Ellis Insight – Jim Ellis on political news
Alabama: The McLaughlin & Associates polling firm returned data that finds former Business Council of Alabama President and CEO Katie Britt pulling to within single digits of Rep. Mo Brooks (R-Huntsville) for the Republican nomination to succeed retiring Sen. Richard Shelby (R). According to the polling results (12/6-9; 500 AL likely Republican primary voters; live interview), Rep. Brooks holds a 31-26-17% lead over Ms. Britt, a former chief of staff to Sen. Shelby, and business owner and military veteran Mike Durant, respectively. Before November, Rep. Brooks enjoyed leads of greater than 23 points in statewide polling.
In Alabama, winning the Republican nomination will be tantamount to election in November. Only one Democrat has announced, former Brighton Mayor Brandaun Dean who does not factor to be a strong general election candidate. The Alabama primary is May 24th, with a runoff scheduled for June 21st if none of the candidates reach the 50% mark in the first election.
North Carolina: Former Tar Heel State Congressman and current US Senate candidate Mark Walker (R), who did not seek re-election in 2020 because the court-ordered redistricting tore his previous 6th District into several parts making his region unattainable for any Republican, is not yet committing to change races and run in the new 7th Congressional District. Many people on the right, including former President Donald Trump, are reportedly urging Mr. Walker to leave the Senate race and return to the House. The newly created CD-7 in the Greensboro area is winnable for Mr. Walker. So far, the Congressman is staying put.
On the Democratic side, state Sen. Jeff Jackson (D-Charlotte), who had raised more money than any other candidate competing for the party nomination, announced that he is withdrawing his candidacy. The move will allow Democrats to coalesce around former state Supreme Court Chief Justice Cheri Beasley, who is leading in the published nomination election polling. Allowing the party to unite behind one candidate early will certainly help them set the stage for the general election.
Late last week, the state Supreme Court postponed the December 17th candidate filing indefinitely and moved the North Carolina primary from the early March 8th date to May 17th to allow the appointed three-judge panel more time to consider the redistricting litigation pertaining to the newly enacted congressional plan.
Pennsylvania: The first Pennsylvania Senate poll since television host Dr. Mehmet Oz (R) announced he would run for the open Senate seat has been published. Data for Progress surveyed the state (12/3-5; 581 PA likely voters; online and text) and found Lt. Gov. John Fetterman (D) holding a surprisingly small 44-42% edge over Dr. Oz. This was the only ballot result DfP released and it is unclear if they tested any other candidates. One reason for his strong showing is Dr. Oz spending $3.6 million on a media blitz introducing his Senate campaign.

CA-12: Quelling rumors that she might not seek re-election to the House, Speaker Nancy Pelosi (D-CA) announced that she will again file as a candidate from her San Francisco anchored district. The California filing deadline is March 11th for the June 7th primary election. 

The Speaker’s seat is not expected to greatly change in redistricting. Her 12th CD, which basically covers most of the city and county of San Francisco, needs to shed only 10,660 people so her district will remain largely intact for the coming decade. She will be running for a 19th term, and expects another easy run for re-election.
CA-22: Believing that California Gov. Gavin Newsom (D) will schedule a special election in the Central Valley district from which Rep. Devin Nunes (R-Tulare) will be resigning at the end of the year, two prominent Fresno area Republican office holders, state Sen. Andreas Borgeas (R-Fresno) and Fresno County Supervisor Nathan Magsig (R), both say they will run for the vacant House district.
There may not be an election, however, and this seat could greatly change in redistricting. In a similar timed 2020 situation when then-Rep. Duncan Hunter (R) resigned his safe Republican seat, Gov. Newsom found a way to not call a special election, therefore leaving the 50th District constituency unrepresented for the entire year. He may do the same with the 22nd District. 

The California Citizens Redistricting Commission members also could now use the Nunes resignation to make the 22nd more favorable for Democrats under the new map that remains in the drafting stage.
CA-47: Veteran California Congressman Alan Lowenthal (D-Long Beach) announced yesterday that he will not seek re-election next year, becoming the 18th Democratic incumbent to either retire or run for another office. 

It was possible at the start of redistricting that Mr. Lowenthal’s 47th District, a compact seat that touches both Los Angeles and Orange County, could be eliminated in the new re-draw. Though preserved in the first draft, Rep. Lowenthal departing could change the California Citizens Redistricting Commission members’ plans for the Los Angeles/Orange County region. Reapportionment has reduced the California delegation from 53 to 52 members.
 In a typical pattern for eight-term Colorado Rep. Douglas Lamborn (R-Colorado Springs), serious Republican primary opposition is forming. Late this week, state Rep. Dave Williams (R-Colorado Springs) announced that he will challenge Rep. Lamborn, but with a different theme. He is claiming the Congressman is corrupt. 

Since his first election in 2006, Rep. Lamborn has defended himself against significant primary opposition in six of his seven re-election campaigns. The only exception came in his most recent election, 2020.

Colorado’s 5th District is self-contained within El Paso County, and is safely Republican. Therefore, the Republican primary will be the main focus of competition in this newly constructed congressional district.
IA-1: Non-profit organization executive and attorney Mike Mbanza (D) declared his congressional candidacy hoping to challenge freshman Rep. Mariannette Miller-Meeks (R-Ottumwa) in the 2022 general election. Also in the Democratic primary is state Rep. Christina Bohannan (D-Iowa City). 

Rep. Miller-Meeks won her initial election in the state’s 2nd District by a mere six votes. Her 2020 opponent, former state Senator Rita Hart (D), has already said she will not return for a re-match. The new redistricted 1st is a competitive district, so we can expect another hard fought campaign in the southeastern Iowa region.
MD-4: Public Policy Polling surveyed the Democratic field for Maryland’s open 4th Congressional District in light of incumbent Anthony Brown (D-Bowie) leaving the Prince Georges County anchored seat to run for state Attorney General. 

PPP’s polling (12/8-9; 403 MD-4 likely Democratic primary voters) found Prince Georges County State’s Attorney Glenn Ivey opening up a large lead. Mr. Ivey pulled 31% support as compared to 8% for former Delegate Angela Angel and 5% for State House Democratic Caucus chairman Jazz Lewis. Candidate filing concludes on February 22nd for the June 28th Maryland nomination election.
Mississippi Redistricting: The Joint Congressional Redistricting Committee passed a new four-district map and sent it to the state House and Senate for final approval. The plan leaves in tact the core centers of the state’s individual congressional districts that will again likely return a 3R-1D delegation to Washington.
Rep. Bennie Thompson’s (D-Bolton) 2nd District will again encompass almost all of the state’s western border on the Mississippi River, including the Delta region. The 2nd needed an influx of 65,829 people to meet the state’s per district population quota of 740,320 individuals. All three of the other seats, those of Reps. Trent Kelly (R-Saltillo/Tupelo), Michael Guest (R-Brandon), and Steven Palazzo (R-Biloxi), needed to shed population, the most coming from the latter member’s District 4, a total of 37,196 residents.
New Mexico Redistricting: The New Mexico House and Senate sent Gov. Michelle Lujan Grisham (D) a new congressional map that intends to give the Democrats a delegation sweep of the state’s three federal districts. Rep. Yvette Herrell’s (R-Alamogordo) 2nd District was made more Democratic in order to maximize the map at 3D-0R, but in doing so weakened the 3rd District of freshman Rep. Teresa Leger Fernandez (D-Santa Fe).
The new 3rd, historically the state’s northern district, would now move down the state’s eastern border to annex some Republican territory from the current 2nd District. NM-2 would gain, for the first time, a share of Albuquerque, and drops from a 58-40% Biden 2020 district to a 53.7% Democratic base district according to the Dave’s Redistricting App statistical calculations. 

While Rep. Fernandez would certainly be favored for re-election, in a strong Republican year with a good candidate, this district could become highly competitive. Rep. Herrell’s seat moves a net 17 points toward the Democrats from 55-43% Trump to a Democratic base of 51.9% and will also be highly competitive next year.
VA-10: State Sen. Bryce Reeves (R-Spotsylvania) who is an announced candidate in the 7th District against Rep. Abigail Spanberger (D-Glen Allen), declared over the weekend that he is switching to the new 10th District to oppose Rep. Jennifer Wexton (D-Leesburg). The new redistricting map, which the state Supreme Court will likely approve, completely changes the 7th CD from a central Virginia seat that begins in the Richmond suburbs to a northern Virginia district anchored in Prince William County. 

Rep. Spanberger represents no part of the new 7th, while Mr. Reeves currently has the city of Fredericksburg in state Senate district. His home in Spotsylvania County, however, was placed in the Wexton district.
Wisconsin Redistricting: It is possible the Wisconsin state Supreme Court will rule on the redistricting maps sometime in February. Their first directive instructed the parties to submit “least change maps,” that would keep the current footprint in tact. This was a positive development for Republicans who have a 5R-3D advantage in the congressional delegation and control both houses of the legislature. 

This week, the political parties submitted their desired maps. The court set January 18th for oral arguments. The Supreme Court is drawing the map because Gov. Tony Evers (D) vetoed the legislature’s maps for the congressional delegation and the state legislature. The legislative bodies then failed to override his action.
Minnesota: Survey USA tested first-term Minnesota Gov. Tim Walz (D) against a series of six potential Republican opponents (12/2-6; 675 MN adults; 591 MN registered voters; 506 MN likely general election voters; live interview) and the incumbent fares consistently well against all. The Governor’s support factor ranges between 47 and 48%, with his Republican opponents scoring between 31 and 36 percent.
The individual faring best is Lexington Mayor Mike Murphy at 47-36%, while the weakest potential Republican nominee, physician Neil Shah, records a 48-31% deficit. The Minnesota primary isn’t until August 9th, but most nomination contests are settled in a party convention that will be held over the May 13-14 period.
Nevada: A new survey was just released of the Nevada Governor’s race showing a tight contest brewing. ALG Research (12/1-7; 800 NV likely general election voters; online) finds Gov. Steve Sisolak (D) slightly leading former US Senator Dean Heller (R), 47-44%. Clark County Sheriff Joe Lombardo (R) comes in at virtually the same level, trailing 47-45%. 

The poll results differ somewhat from OnMessage, Inc.’s findings from their Nov. 16-18 study (600 NV likely general election voters) that saw Mr. Heller holding a 49-43% advantage over Gov. Sisolak, while Sheriff Lombardo posted an even larger lead at 51-41%. Compared, the polls tell us this early Governor’s race is headed to toss-up status.