Financial Services Report (11/16)

— TRUMP VS. BIDEN. Former Vice President Joe Biden has been declared President-elect by all the major media outlets after clinching victories in Pennsylvania, Michigan, Arizona, Wisconsin, and Nevada. President-elect Biden is also leading in Georgia as the remaining mail-in and absentee ballots continue to get counted or recounted. President Trump appeared to concede the race on Saturday, before apparently changing his mind and continuing to claim victory.

— SENATE. Control of the Senate will not be formally determined until January’s Peach State doubleheader, as both Georgia Senate races are headed to runoff elections. With Republicans currently holding a 50-48 advantage in the race for the Senate, Democrats will need to win both races on January 5 to forge a 50-50 tie in the upper chamber (allowing Vice President-elect Kamala Harris to serve as the tiebreaking vote). If the GOP prevails in one or both of these Georgia runoffs, Senate Republicans will retain their majority in what would be a status quo 117th Congress. Regardless of whether there is a narrow Democratic majority in both chambers or a divided government next year, the administration will still need to strive for bipartisan cooperation in order to clinch policy wins.

—HOUSE. Democrats have officially kept control of the U.S. House of Representatives, but saw a number of incumbents lose their seats.  At this point Democrats have a 219-203 advantage, with 13 races yes to be called. With the majority of those races favoring Republicans, it seems like Democrats will end up somewhere around 222 seats, meaning they will have a very narrow majority to work with next year.

Last Week in the House

The Floor

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.

Hearings

HFSC Hearing with Prudential Regulators (11/12): On Thursday, the Senate Banking Committee held a hearing with federal prudential regulators from the Federal Reserve Board, the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the National Credit Union Association (NCUA). Of note, FDIC ChairwomanJelena McWilliams announced that she intends to carry out the balance of her term, which ends in 2023. Additionally, while much of the hearing focused on banking regulations, an exchange between Rep. Alexander Mooney (R-WV) and Vice Chair Quarles where Quarles expressed confidence that the U.S.’ state-run insurance regulatory framework will fit within the scope of the IAIS capital standard and be accepted as “outcome equivalent” as the IAIS proposed global standard continues to take shape.

Other Activity

Hoyer Legislative Agenda Dear Colleague: House Majority Leader Steny Hoyer (D-MD) issued a Dear Colleague letter on Monday, outlining the House’s legislative agenda for the remainder of the congressional term. Fiscal year (FY) 2021 appropriations and the National Defense Authorization Act face hard deadlines in December, and lawmakers will need to navigate several “poison pill” issues before an agreement on these items can be reached. Noting that another round of COVID-19 relief is a top priority and expressed hope that the Senate will work with the House to reach an agreement. He additionally outlined the chamber’s consideration of legislation to reauthorize the National Apprenticeship Act in an effort to create 1 million apprenticeship opportunities by 2025.

Last Week in the Senate

The Floor

On Tuesday, the Senate Appropriations Committee released all twelve of its Fiscal Year 2021 funding measures and subcommittee allocations. 

Senate Majority Leader Mitch McConnell filed cloture on Federal Reserve nominee Judy Shelton on Thursday, November 12, paving the way for a vote as early as this week. Her long-pending, controversial nomination is expected to be confirmed by the Senate, giving President Trump the opportunity to further shape the long-term direction of one of the government’s most powerful entities.

Hearings

Senate Banking Hearing with Prudential Regulators (11/10): On Tuesday, the Senate Banking Committee also heard from federal prudential regulators from the Federal Reserve Board, the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the National Credit Union Association (NCUA). The discussion centered around the state of financial regulation since the pandemic, as well as both the immediate and long-term results of regulatory intervention on banks and credit unions. The witnesses outlined their agency’s efforts to support economic recovery during the COVID-19 pandemic as well as their respective work to promote financial inclusion. Regarding several questions about asset-threshold regulatory concerns for banks distributing PPP loans, Acting Comptroller Brian Brooks stated that bank regulators are working on an inter-agency basis to create a set of rules for relief for certain asset thresholds being tripped that trigger higher scrutiny and requirements. Of note, he stated that this will likely cap out at the $10 billion threshold.

Bills Introduced

S.4487 (Sanders): A bill to eliminate certain subsidies on fossil-fuel production.

S. 4885 (Blackburn): A bill to amend the CARES Act to provide that EIDL emergency grant advance payments shall not be subject to certain reductions.

Other Activity

Senate Dems Probe Calabria on FHFA Loan Sales: On Tuesday, Senate Dems. Sherrod Brown (D-OH) and Jack Reed (D-RI) sent a letter to Federal Housing Finance Agency Director Mark Calabria, pushing back on the recent sales on recent GSE loan sales by Fannie Mae and Freddie Mac. They argue that these sales, of more than 40,000 homes with non-performing loans, could put thousands of homeowners at risk of delinquency or foreclosure since unlike Fannie Mac and Freddie Mac, these private purchasers aren’t obligated to provide forbearance to borrowers.

Last Week in the Administration

Treasury Regulation Updates on TRIP

On Tuesday, the Treasury Department issued a proposed rule to implement technical changes to the Terrorism Risk Insurance Program. In addition, Treasury is proposing rules to clarify the manner in which Treasury will calculate “property and casualty insurance losses” for purposes of considering certification of an act of terrorism, and “insured losses” when administering the financial sharing mechanisms under the Program.

Fed States Climate Change as Stability Risk

The U.S. Federal Reserve for the first time called out climate change among risks enumerated in its biannual financial stability report, released Monday, and warned about the potential for abrupt changes in asset values in response to a warming planet. “Acute hazards, such as storms, floods, or wildfires, may cause investors to update their perceptions of the value of real or financial assets suddenly,” Fed Governor Lael Brainard said.

Looking Ahead

Mon. (11/16)

• Brookings Webinar on the Economy – 2:00 PM – The Brookings Institution will host a webinar entitled “The Economy and Monetary Policy,” featuring a discussion with Federal Reserve Vice Chair Richard Clarida. Details here.

Tues. (11/17)

• Hearing: Senate Banking Committee on SEC Oversight – 10:00 AM – The Senate Committee on Banking, Housing, and Urban affairs will hold an oversight hearing of the SEC, featuring testimony from Chairman Jay Clayton. Details here.
• The Hill Webinar on Housing – 1:00 PM – The Hill will host a webinar entitled “Building the Dream: The Housing Affordability Agenda,” featuring a discussion with Sen. Sherrod Brown (D-OH) and Rep. Steve Stivers (R-OH). Details here.
• Hearing: Senate Commerce Sub. on COVID-19 Manufacturing – 2:30 PM – The Senate Commerce Subcommittee on Manufacturing, Trade, and Consumer Protection will hold a hearing entitled “Examining the American Manufacturing Industry’s Response to the COVID-19 Pandemic.” Details here
• Urban Institute Webinar on PPP – 3:00 PM – The Urban Institute will host a webinar entitled “Small-Business Lending After the Paycheck Protection Program: What’s Next?” Details here.

Wed. (11/18)

• Executive Session: Senate Commerce Committee – 10:00 AM – The Senate Committee on Commerce, Science, and Transportation will hold an executive session to consider pending legislative items. Details here.
• CFPB November 2020 Advisory Board Meetings – 1:00 PM – The Consumer Financial Protection Bureau (CFPB) will host combined meetings of its Credit Union Advisory Council, Community Bank Advisory Council and Consumer Advisory Board. Details here.

Thu. (11/19)

• Cato Institute Annual Monetary Conference – 10:00 AM – The Cato Institute will host its 38th Annual Monetary Conference entitled “Digital Currency, Risk or Promise?” Details here.
• Executive Business Session: Senate Judiciary Committee – 10:00 AM – The Senate Judiciary Committee will hold an executive business session to consider S. 4632 — The Online Content Policy Modernization Act. Details here.
• Hearing: House Financial Services Sub. on Insuring During the Pandemic – 10:00 AM – The House Financial Services Subcommittee on Housing, Community Development, and Insurers will hold a hearing entitled “Insuring against a Pandemic: Challenges and Solutions for Policyholders and Insurers.” Details here.

Fri. (11/20)

• CFPB November 2020 Academic Research Council Meeting – 1:30 PM – The Consumer Financial Protection Bureau (CFPB) will hold a meeting of its Academic Research Council. Details here.