Although we do not know who is going to win the Presidential election next week, proponents of former Vice President Biden are once again putting their faith in positive polling, and so we are starting to see an increase of articles about the Biden Transition. In fact, Politico has a whole newsletter devoted to the topic. While these stories are either primarily blind guesses or driven by those vying to be considered (or perhaps a combination of the two), a clear narrative has emerged about how Progressives are keeping close tabs on potential nominees in order to root out the possibility of any whiff of impropriety (however they define it).
Of course, for the liberal left, the easiest way for a potential administration official to have tainted him or herself is to have worked for a “corporate interest” (however defined) or even worse having lobbied for corporations. The continued decent of the Democratic party in imposing these types of purity tests is both a reflection of the anti-business sentiment among the far left but also, a capitulation the great group-think echo chamber that consumes much of our national politics. Rather than view these potential candidates of possessing valuable knowledge of how an industry operates, a blanket prohibition is an easier way to confirm the “us vs. them” mentality and eliminate dissention on policy decisions. As Senator Warren has said, “personnel is policy” but it is equally important to remember that each person is not a monolith of the jobs they have previously held.
While some, are trying to do a good job of pushing back against the imposition of so-called purity tests for administration positions, in the event that there is a blue wave, an energized left will undoubtedly claim victory – despite the overabundance of moderate challengers in the Senate. How the Biden transition team navigates the dissonance between that hype and the reality of what transpired will offer a keen insight into the tenor of his Administration.
2020 Election Snapshot
—PRESIDENTIAL OUTLOOK. The current polling continues to favor former Vice President Joe Biden, with consistent leads both in national polls and a slight-to-significant edge in key swing state polls such as Michigan, Wisconsin, Pennsylvania, and Florida. However, at this point in the race, Secretary Clinton was polling favorably, and many prognostication sites had here with as high as a 99 percent chance of winning. The New York Times Upstart has a really interesting chart, where they show the current polling and contrast it with an analysis of what it would mean if today’s polls are as off as they were going into the 2016 election. By plugging those revised figures into this handy 538 tool you can see that giving Pennsylvania to Trump gives him a 99% chance of victory while switching that state to Biden gives him the same chance of winning.
— SENATE OUTLOOK. The Senate currently features a 53-47 Republican majority. With 23 out of the 35 seats up this cycle held by Republicans, Democrats are statistically well-positioned to narrow or even flip the Senate GOP Majority. As of today, there is a widespread consensus that there are four races that may effectively decide the majority: Arizona, Colorado, Maine, and North Carolina are the seats that Democrats see as their best chance of flipping. However, Democrats are also eyeing seats in Georgia, Iowa, South Carolina, Montana, Texas, Alaska, and Kansas as potential long-shot flips.
—HOUSE OUTLOOK. Democrats are currently favored to keep their House majority, and have maintained a consistent lead in generic ballot polling since 2018, according to polls aggregated by RCP and 538. While Republicans could end up flipping some of the 30 Democratic districts that voted for President Trump in 2016, redistricting in North Carolina — as well as the retirements of Republican lawmakers in tossup districts in Texas, Georgia, and Iowa — leaves the GOP with a slim margin of error in their push to trim or flip the House Democratic majority.
Last Week in the House
The House has been in a district work period since October 5th. Members are currently set to return to D.C. on Monday, November 16th
Last Week in the Senate
Last week Leader McConnell attempted to bring two different COVID related measures to the floor, though both failed to clear procedural hurdles. First, on Tuesday, the Republican bill to extend the small-business Paycheck Protection Program (PPP) was rejected by a vote of 57-40. While five Democrats broke rank to support the measure it failed to reach the 60-vote threshold needed to advance. Later that day, Senate Democrats also blocked consideration of a health care bill. Then on Wednesday, the Senate was unable to reach the 60 vote threshold to consider the Republicans’ $500 billion targeted COVID-19 relief bill.
On Thursday, the Senate Judiciary Committee unanimously advanced the Supreme Court nomination of Judge Amy Coney Barrett at its executive business meeting — despite a decision by Democrats to boycott the markup, which lead to a series of procedural votes designed to delay the ability of Republicans to initiate the Barrett vote on the floor. However, by the end of the week Democrats had exhausted their procedural protest options and Leader McConnell teed up a vote to create a 6-3 conservative Supreme Court this evening.
Fair Access to Financial Services Act (Brown): Six Democratic senators, spearheaded by Sen. Sherrod Brown (OH), along with Sens. Elizabeth Warren (MA), Bob Menendez (NJ), Cory Booker (NJ), Tina Smith (MN.) and Chris Van Hollen (MD), introduced a bill Wednesday meant to prevent financial services companies from discriminating against customers. The Act would make it illegal for any U.S. bank, credit union, investment firm, broker or dealer, insurance company, or lender to reject a customer or limit their access to services based on their race, religion, country of origin, ethnicity, sexual orientation and gender identity. The bill’s sponsors say it is intended to bolster the Civil Rights Act of 1964 and it is viewed by many as a preview of what a the agenda of a Sherrod Brown Senate Banking Committee would be.
S. 4834 (Merkley): A bill to require the use of the voice and vote of the United States in international financial intuitions to advance the cause of transitioning the global economy to a clean energy economy and to prohibit United States Government assistance to countries or entities to support fossil fuel activity, and for other purposes.
S. 4835 (Merkley): A bill to prohibit bank holding companies from facilitating fossil fuel production from new sources or new or expanded fossil infrastructure that would drive such production, and for other purposes.
S. 4828 (Loeffler): A bill to amend section 230 of the Communications Act of 1934 (commonly referred to as the “Communications Decency Act”) to stop censorship, and for other purposes.
S. 4818 (Cardin): A bill to provide assistance to small businesses affected by COVID-19, and for other purposes.
Sen. Sherrod Brown Letter to CFPB: On Wednesday, Sen. Brown sent a letter to CFPB Director Kathy Kraninger, demanding the delay of the Division of Supervision, Enforcement, and Fair Lending (SEFL) reorganization until at least after the election. He argued that the reorganization is misguided and will weaken consumer protection, and called for delaying implementation until it is clear that Kraninger will continue as Director.
Senate Democrats’ Letter to SEC: On Wednesday, Sen. Brown, along with Sens. Tammy Baldwin (D-WI), Jack Reed (D-RI), and Chris Van Hollen (D-MD), sent a letter to SEC Chair Jay Clayton urging the SEC to withdraw the proposed changes that would dramatically increase the Form 13F reporting threshold for institutional investment managers. The lawmakers stressed the proposal would undermine transparency in the U.S. stock market and eliminate critical information used by public companies and the SEC. The Senators called on the agency to withdraw the rule and pursue reforms that increase transparency.
Last Week in the Administration
GSE Patch Extension
On Tuesday, the Consumer Financial Protection Bureau (Bureau) issued a final rule to extend the Government-Sponsored Enterprise (GSE) Patch until the mandatory compliance date of a final rule amending the General Qualified Mortgage (QM) loan definition in Regulation Z. The GSE Patch was scheduled to expire on January 10, 2021. The Bureau is taking steps to ensure a smooth and orderly transition away from the GSE Patch and to maintain access to responsible, affordable mortgage credit upon its expiration.
FDIC Announces More COVID-19 Regulatory Relief
On Tuesday, the Federal Deposit Insurance Corporation (FDIC) issued an interim final rule (IFR) to provide relief for such banks that have incurred substantial costs on a temporary basis due to COVID-19 relief funds or other unintended increases in deposits. The FDIC’s action would allow banks that have experienced unexpected growth because of COVID-19 to use a calculation of their total consolidated assets as of December 31, 2019 in order to determine whether they are subject to the requirements of Part 363 of the FDIC’s regulations – which require certain auditing and reporting requirement – for this fiscal year, effectively allowing certain banks to be exempt if they had crossed thresholds due to infusions of assets from PPP loans, or more deposits, as savings are up this year.
CFPB Financial Records Proposed Rule
On Thursday, following an announcement in July about their intention to do this, the Consumer Financial Protection Bureau issued an advance notice of proposed rulemaking (ANPR) requesting information related to consumer access to financial records. Long favored by fintech as a way to modernize how consumer information and data can be transferred between institutions, and how customers can control that data flow, Section 1033 has been viewed by some as the underpinning of the entire FinTech ecosystem. The initiation of this rulemaking is likely to be contentious, as the Bureau is seeking comment on how it should develop regulations to determine who ultimately is in control of the data in financial records.
NYS Issues First Bitlicense Charter
On Wednesday, the Superintendent of Financial Services, Linda A. Lacewell announced that PayPal, Inc. is the first to receive a conditional Bitlicense from the New York State Department of Financial services. This approval allows PayPal, in partnership with Paxos Trust Company, to enable customers to buy, sell, and hold certain cryptocurrencies, providing a potentially significant boost to the use of digital assets. Dan Schulman, president and CEO of PayPal, said in a statement that the approval “represents an important step forward in our goal to contribute to the evolution of the regulatory framework for digital currency and help our consumers safely and responsibly engage with cryptocurrencies.”
Senate Commerce to Examine Section 230:
On Wednesday, the Senate Commerce Committee will hear from the CEOs of Google, Twitter, and Facebook to examine whether Section 230 of the Communications Decency Act enables bad behavior by Big Tech. The Committee will discuss legislative proposals to modernize the law in an effort to increase transparency and accountability.
Senate Banking Committee to hear from Chair Clayton:
The Senate Banking Committee announced that it would hold a hearing on Tuesday November 13th entitled “Oversight of the Securities and Exchange Commission,” with Securities and Exchange Commission Chairman Jay Clayton as the sole witness.
ESG Issues Continue to Rise in Importance
Recently, there has been a renewed focus by the investor community and some corporations to promote environmental, social, and corporate governance (ESG) issues as part of their capital expenditure planning. Democrats have prioritized ESG as way to harness some of the powers of capitalism to drive the systemic changes they have advocated for but have not successfully changed the law on. Looking forward, a Biden administration is far more likely to push an agenda that would be viewed as “pro-ESG” as compared to the continuation of the Trump administration, which believes in less regulation, but regardless the market is driving some of these changes. Ultimately, the breadth and scope of such a push will dependent on whether the Democrats control the Senate. This TRP memo examines the potential policy initiatives and broader ESG movements for the coming year.