THE BIG PICTURE
The first public hearings were held in the impeachment inquiry, giving the American public a chance to hear directly from the officials involved. On Wednesday, Deputy Undersecretary of State George Kent and current acting Ambassador to Ukraine Bill Taylor appeared before the Committee, fielding questions regarding the President’s actions vis-à-vis the decision to withhold military aid. On Friday, the former Ambassador to Ukraine Marie Yovanovitch gave emotional testimony over the circumstances surrounding her firing. President Trump found himself drawn into the hearing in real time as his tweets criticizing Yovanovitch were read aloud by Rep. Adam Schiff, who characterized them as “witness intimidation.” Another round of hearings are set to take place this week, as House Democrats continue to lay the foundation of a case for impeachment.
On Thursday, former Massachusetts Governor Deval Patrick made a late-entry into the 2020 presidential race; launching his campaign for the Democratic nomination. Patrick had previously declined to mount a campaign, citing the “cruelty of our elections process.” Earlier in the week, former South Carolina Governor Mark Sanford ended his longshot bid to defeat President Trump in the Republican primary.
On Friday, the President’s former adviser, Roger Stone, was found guilty on five felony counts of lying to investigators, one count of obstructing a congressional investigation, and one count of witness tampering. The charges stemmed from former Special Counsel Robert Mueller’s Russia probe.
Other highlights of last week include:
- Congressional leaders and the White House are close to finalizing an agreement over a stopgap measure to continue funding the government through December 20th.
- The D.C. Circuit declined the President’s request for a rehearing of its decision to allow House Democrats to subpoena his accounting firm for his tax returns. The President’s legal team is preparing to appeal the issue to the Supreme Court.
- House Speaker Nancy Pelosi told reporters that a deal between the House and the White House over the USMCA trade deal was “imminent,” paving the way for a final vote.
- Following a statewide recanvass which failed to significantly change the vote count, Kentucky Governor Matt Bevin conceded to his Democratic challenger, Andy Beshear.
- Rep. Pete King (R-NY) announced he would not seek another term after serving 28 years in the House, saying, “it is time to end the weekly commute and be home in Seaford.”
LAST WEEK ON THE HILL
HOUSE FINANCIAL SERVICES COMMITTEE
Hearing on “How America Leads Abroad: An Examination of Multilateral Development Institutions”: On Wednesday, the full Committee held a hearing to examine Treasury’s request for Congressional authorization for two separate general capital increases for the World Bank Group. The hearing explored America’s role in advancing international development in the furtherance of broader national security and global stability aims. The witnesses addressed areas of development successes and shortcomings within these institutions and American-led reform opportunities.
- Charles Kenny, Senior Fellow, Center for Global Development
- Nadia Daar, Head of Washington DC Office, Oxfam International
- Jolie Schwarz, Policy Director, Bank Information Center
- Matthew McGuire, Vice Chairman, CapZone Impact Investments
- Eli Whitney Debevoise II, Partner, Arnold & Porter
- Matthew Haarsager, Deputy Assistant Secretary for International Development Finance and Policy, U.S. Department of the Treasury
“Mark-Up”: On Wednesday and Thursday, the Committee met to mark-up nine pieces of legislation intended to help veterans experiencing homelessness, protect servicemembers from harassment by debt collectors, and prevent predatory debt collection practices to help consumers and small businesses. The Committee ultimately voted to advance eight measures to the full House for consideration.
- H.R. 5021: The Ending Debt Collection Harassment Act of 2019, a bill by Representative Ayanna Pressley (D-MA), passed the Committee by a vote of 31-23.
- H.R. 5013: The Small Business Fair Debt Collection Protection Act, a bill by Representative Al Lawson (D-FL), passed the Committee by a vote of 31-23.
- H.R. 5003: The Fair Debt Collection Practices for Servicemembers Act, a bill by Representative Madeleine Dean (D-PA), passed the Committee by a unanimous vote of 54-0.
- H.R. 5001: The Non-Judicial Foreclosure Debt Collection Clarification Act, a bill by Representative Wm. Lacy Clay (D-MO), passed the Committee by a vote of 31-23.
- H.R. 4403: The Stop Debt Collection Abuse Act, a bill by Representative Emanuel Cleaver (D-MO), passed the Committee by a unanimous vote of 54-0.
- H.R. 3948: The Debt Collection Practices Harmonization Act, a bill by Representative Gregory Meeks (D-NY), passed the Committee by a vote of 31-23.
- H.R. 3490: The Small Business Lending Fairness Act, a bill by Representative Nydia Velázquez (D-NY), passed the Committee by a vote of 31-23.
- H.R. 2398: to amend the United States Housing Act of 1937 and Title 38, United States Code, to expand eligibility for the HUD-VASH program, to direct the Secretary of Veterans Affairs to submit annual reports to the Committees on Veterans' Affairs of the Senate and House of Representatives regarding homeless veterans, a bill by Representative Scott Peters (D-CA), passed the Committee by a unanimous vote of 54-0.
SENATE BANKING COMMITTEE
No hearings held.
Joint Economic Committee Hearing on “The Economic Outlook with Federal Reserve Chairman Jerome H. Powell”: On Wednesday, the Committee held its annual hearing with the Chair of the Federal Reserve’s Board of Governors on the current state of the economy and the potential challenges ahead. During his testimony, the Chairman issued a warning about rising federal debt levels, which could “restrain private investment and, thereby, reduce productivity and overall economic growth.” Powell also discussed current interagency efforts to revamp the Community Reinvestment Act, sounding more bullish than the OCC’s Joseph Otting in saying “we haven’t quite gotten there yet, but we’re going to keep trying.” He also expressed his view that, “to shut down the shale industry” as part of a ban on fracking “would probably not be a good thing for the economy,” and affirmed his view that the economy is in a strong position and that negative interest rates would not be appropriate in the U.S.
- The Hon. Jerome Powell, Chair, Board of Governors of the Federal Reserve System
House Budget Committee Hearing on “The Economic Outlook: The View from the Federal Reserve”: On Thursday, the full Committee held a hearing to examine the nation’s economic outlook from the point of view of the Federal Reserve. During his testimony, Fed Chair Jerome Powell told the Committee that the Federal Reserve could introduce its payment system sooner than the anticipated 5-year timeline, saying it is a “very high priority” and “we're thinking three or four, if we want to do it right.” In response to questioning, he shared his view that there aren’t any financial bubbles currently threatening the economy, saying the economic “expansion is notable for the absence of parts of the economy that are really hot,” adding that he feels it is “on a sustainable footing.” Powell also said he felt the Fed had the repo market “under control,” but is “prepared to continue to learn and adjust” following recent turmoil.
- The Hon. Jerome Powell, Chair, Board of Governors of the Federal Reserve System
ON THE FLOOR
House Passes 10-Year Reauthorization of the Export-Import Bank: On Friday, the House voted 235-184 to pass H.R. 4863, the United States Export Finance Agency Act of 2019, which would reauthorize the U.S. Export-Import Bank through September 30, 2029 as well as rebrand the bank as the “U.S. Export Finance Agency.” The measure would raise the annual financing limit to US$175B from US$135B by 2026, and block support of China’s armed forces and intelligence services. The bill is not likely to become law, as Senate Majority Leader Mitch McConnell has announced that he won’t take up the bill; preferring instead to extend the Export-Import Bank as part of the continuing resolution. The White House released a statement saying even if it were passed, the President would veto, instead favoring a “bipartisan, bicameral approach.”
LEGISLATION INTRODUCED AND PROPOSED
H.R. 5034: Rep. Steve Cohen (D-TN) introduced H.R. 5034, which would amend the Fair Debt Collection Practices Act to prohibit debt collectors from collecting, or attempting to collect, on a debt of a consumer with respect to which the statute of limitations has expired.
H.R. 5044: Rep. Mike Bost (R-IL) introduced H.R. 5044, which would grant a Congressional Gold Medal, collectively, to the men and women of the United States Armed Forces and Merchant Marine, as well as citizen and non-citizen civilians who served honorably with the U.S. military, who were surrendered, captured, or abandoned to become prisoners of war (POWs) of Imperial Japan throughout the Japanese Empire in the Pacific Theater of World War II from December 7, 1941 to September 2, 1945.
H.R. 5050: Rep. Chuy Garcia (D-IL) introduced H.R. 5050, which would amend the Truth in Lending Act to extend the consumer credit protections provided to members of the Armed Forces and their dependents under title 10, United States Code.
H.R. 5051: Rep. Anthony Gonzalez (R-OH) introduced H.R. 5051, which would increase transparency and accountability with respect to World Bank lending for China.
H.R. 5072: Rep. Alexandria Ocasio-Cortez (D-NY) introduced H.R. 5072, which would create an equitable and stable rental housing market.
H.Res. 695: Rep. Mark DeSaulnier (D-CA) introduced H.Res. 695, which would provide for consideration of the bill (H.R. 4863) to promote the competitiveness of the United States, to reform and reauthorize the United States Export Finance Agency.
Green New Deal for Public Housing Act: Sen. Bernie Sanders (I-VT) and Rep. Alexandria Ocasio-Cortez (D-NY) introduced the “Green New Deal for Public Housing Act,” which would invest up to US$180B over ten years in sustainable retrofits that include all needed repairs, vastly improved health, safety and comfort, and eliminate carbon emissions in federal public housing. The legislation also provides funding to electrify all buildings, add solar panels, and secure renewable energy sources for all public housing energy needs.
THIS WEEK ON THE HILL
Tuesday, November 19
House Financial Services Committee Hearing on “America for Sale? An Examination of the Practices of Private Funds”: 10:00 AM in 2128 Rayburn House Office Building.
Wednesday, Month Day
House Financial Services Committee (Subcommittee on Consumer Protection and Financial Institutions) Hearing on “An Examination of Regulators’ Efforts to Preserve and Promote Minority Depository Institutions”: 10:00 AM in 2128 Rayburn House Office Building.
House Financial Services Committee (Subcommittee on Housing, Community Development, and Insurance) Hearing on “Safe and Decent? Examining the Current State of Residents’ Health and Safety in HUD Housing”: 2:00 PM in 2128 Rayburn House Office Building.
Senate Banking Committee Hearing on “Nominations”: 10:00 AM in 538 Dirksen Senate Office Building.
Thursday, Month Day
House Financial Services Committee (Task Force on Financial Technology) Hearing on “Banking on Your Data: the Role of Big Data in Financial Services”: 9:30 AM in 2128 Rayburn House Office Building.
Federal Reserve Releases Financial Stability Report: On Friday, the Federal Reserve released its Financial Stability Report, which detailed the Board’s assessment on the resilience of the U.S. financial system. The report highlighted several vulnerabilities, including: asset valuations, borrowing by businesses and households, leverage in the financial sector, and funding risk. The report also discussed the effect of global stablecoins on financial stability, noting that stablecoins “could become a new medium of exchange” but, “if poorly designed and unregulated, could negatively affect financial ability.” The report warned that during prolonged periods with a low interest rate, “the profitability of banks, insurers, and other financial intermediaries could come under stress and spur reach-for-yield behavior, thereby increasing the vulnerability of the financial sector to subsequent shocks.”
Federal Reserve Vice Chairman Discusses Review of Fed’s Monetary Policy Strategy: Speaking at a conference on Thursday, Fed Vice Chair Richard Clarida discussed the Fed’s review of its monetary policy strategy, tools, and communication practices. He noted that the existing framework, which has been in place since 2012, has served the Fed well and has enabled the bank to achieve and sustain its statutorily assigned goals of maximum employment and price stability. He noted, however, the importance of maintaining an open mind as the Fed assesses current practices and considers ideas that could potentially enhance its ability to deliver on its goals.
CFTC Chairman Urges U.S. to Lead on Cryptocurrency: Speaking at a conference on Tuesday, CFTC Chairman Heath Tarbert expressed his view that “America needs to lead” in the digital asset and blockchain arena. He explained that other countries are beginning to make inroads in this space, and that, “as a regulator, I want to at least create an environment where innovation can flourish, and whatever risks there are, we're able to mitigate those.”
CFTC Commissioner Behnam Announces Members of the Market Risk Advisory Committee’s New Climate-Related Market Risk Subcommittee: On Thursday, CFTC Commissioner Rostin Behnam announced the members of the new Climate-Related Market Risk Subcommittee of the CFTC’s Market Risk Advisory Committee. Bob Litterman, founding partner and Risk Committee Chairman of Kepos Capital, will chair the 35-member Climate Subcommittee, which is comprised of experts from financial markets, the banking and insurance sectors, as well as the agricultural and energy markets, data and intelligence service providers, the environmental and sustainability public interest sector, and academic disciplines singularly focused on climate change, adaptation, public policy, and finance.
CFTC to Hold an Open Commission Meeting on November 25: The CFTC announced that the CFTC will hold an open meeting on Monday, November 25 to consider the following: (1) Final Rules: Amendments to Part 4: Registration and Compliance Requirements for Commodity Pool Operators and Commodity Trading Advisors, Amendments to Rules 4.5 and 4.27 (Updating Exclusions and Adding Reporting Relief), (2) Proposed Rule: Amendments to Swap Clearing Requirement Exemptions under Part 50.
CFPB Issues Interpretive Rule on Screening and Training Requirements for Mortgage Loan Originators: On Friday, the CFPB issued an interpretive rule clarifying screening and training requirements for financial institutions which employ loan originators with temporary authority. The interpretive rule clarifies that the employer is not required to conduct the screening and ensure the training of loan originators with temporary authority. The state will perform the screening and training as part of its review of the individual’s application for a state loan originator license.
CFPB Releases Financial Well-Being Report with State-By-State Comparisons: On Wednesday, the CFPB issued a report with state-by-state comparisons of financial well-being scores. The scores are based on Bureau analysis of the Financial Industry Regulatory Authority Foundation’s 2018 National Financial Capability Study. The report shows that the average financial well-being scores for all adults (ages 18 and older) in the United States ranged from a low of 50 in Mississippi to a high of 54 in California, the District of Columbia, and Hawaii. The report also examines financial well-being by age groups. The average financial well-being score for younger and middle age adults (ages 18 to 61) in the United States was 49 in 2018. During this same period, the financial well-being score for older adults (ages 62 and older) was 62.
FDIC Releases Three Reports Analyzing Growth of Nonbank Lending: On Thursday, the FDIC released a multi-part analysis of changes in the U.S. banking system since the 1950s, especially changes occurring since the financial crisis in 2008. These analyses address the shift in some lending from banks to nonbanks; how corporate borrowing has moved between banks and capital markets; and the migration of some home mortgage origination and servicing from banks to nonbanks.
Carried Interest Tax Rules Expected in 2020: Speaking at an event on Wednesday, David Kautter, Treasury’s assistant secretary for tax policy, indicated the agency was planning to issue regulations governing how hedge fund managers can claim tax breaks related to the carried interest exemption included in the 2017 tax reform bill.
COMINGS AND GOINGS AT THE AGENCIES
Marie-Louise Huth Named Chief Counsel in SEC’s Division of Economic and Risk Analysis: On Wednesday, the SEC announced that Marie-Louise Huth had been named as Chief Counsel for the Division of Economic and Risk Analysis. Ms. Huth has been with the SEC in various roles since 2012, most recently serving as the Assistant General Counsel for Investment Management and Administrative Law within the Office of the General Counsel.
OTHER NOTEWORTHY ITEMS
FCA to Mirror SEC in Extending No Action Letter in the Case of Brexit: Following the SEC’s announcement that it would extend its ‘no action letter’, which addresses the potential conflict between US regulation and MiFID II, until 3 July 2023, the UK’s Financial Conduct Authority announced that it would follow suit, announcing that “during the remainder of the current period and the extended period of the no-action relief, broker- dealers subject to the US regime may receive payments for unbundled research from firms subject to MiFID II or equivalent rules of EU member states without being considered an investment adviser under US law. This will also apply to UK firms in the event of EU withdrawal, before or during the extended period.”
NYDFS Announces Plan to Streamline Disclosure Processes for Legal Counsel and Independent Auditors: On Thursday, New York’s Superintendent of Financial Services Linda Lacewell announced a proposal to streamline the procedures regarding disclosure of confidential supervisory information to legal counsel and independent auditors under New York’s Banking Law. Currently, regulated entities must receive prior written approval from DFS each time they want to share confidential supervisory information with legal counsel or with independent auditors employed by the regulated entity to provide legal or auditing services to the regulated entity. Under the new proposed regulation, a regulated entity may share confidential supervisory information with its legal counsel or independent auditor without the prior written approval by the Department if there is written agreement between the regulated entity and their counselor or auditor in which the legal counsel or independent auditor agrees.
House and Senate Find Common Ground on Robocall Legislation: After passing competing bills, Senate and House lawmakers have reached “an agreement in principle” on legislation to fight back against robocalls. The compromise measure will be called the Pallone-Thune TRACED Act and “require telephone carriers to verify calls and allow robocalls to be blocked in a consistent and transparent way, all at no extra charge,” while also giving “the FCC and law enforcement the ability to quickly go after scammers.”