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In CQ Roll Call, TRP’s Rosenstock Forecasts Congress’s Financial Services “To-Do List” in 2020

January 13, 2020

In an article for CQ Roll Call, TRP’s Jason Rosenstock offered his insights on Congress’s Financial Services “to-do” list for 2020. While speculation indicates that Senate Majority Leader Mitch McConnell (R-KY) will spend more time on presidential nominations in 2020, Rosenstock pointed to cannabis banking legislation, anti-money laundering laws, and flood insurance reform as top priority policy items that could hitch a ride on a larger financial services-related package or must-pass measure before the end of this year. “Clearly there is a broad interest in getting some type of relief for banks and payment processors,” said Rosenstock. “But whether there is enough support for a narrow, financial services industry-only fix will play itself out over the next year.”

The article in its entirety can be read below.

2020 Legislative Preview: Financial Services

Jan. 13, 2020 By Jim Saksa, CQ

The Issue

Congress knocked two items off of its financial services to-do list late in 2019 — reauthorizing the Export-Import Bank and the Terrorism Risk Insurance Program — but there’s still plenty to get done in 2020. That doesn’t mean lawmakers will make it happen.

First, there’s the reauthorization deal that wasn’t: the National Flood Insurance Program. The appropriations package swept in seven-year extensions for the Ex-Im Bank and the terrorism risk program, but it left flood insurance high and dry, merely delaying its sunset date by one year.

In addition, a measure to let banks work with state-licensed cannabis companies without getting dinged for breaking federal drug control laws could see action, as well as big updates to the nation’s anti-money laundering laws.

Where It Stands
A long-term flood insurance extension advanced out of the House Financial Services Committee 59-0, and a bipartisan group of Senate Banking Committee members want Chairman Michael D. Crapo, an Idaho Republican, to mark up their companion bill.

But Crapo says he isn’t the dam blocking the flow of legislation. It’s Senate Majority Leader Mitch McConnell, the Kentucky Republican who has been busy confirming judicial nominees and not much else.

That leaves just two ways to get substantial legislation through the Senate, says Thorn Run Partners’ Jason Rosenstock: get unanimous consent or hitch a ride on a larger, must-pass measure.

“I think he’s willing to give up a couple hours of floor time on a [stand-alone measure],” Rosenstock says of McConnell. “But he’s not going to spend a week.”

Crapo prefers to only mark up legislation with a realistic chance of passage. Besides flood insurance, he might find time for measures that would update anti-money laundering laws and let banks work with state-licensed cannabis companies without violating federal drug laws.

But after signaling he wanted to work on pot banking, Crapo released a request for information saying he opposed the bill in its current form, and listing concerns beyond his committee’s purview, like “marketing tactics to children.”

That could make a hash of things, Rosenstock warns. “Clearly there is a broad interest in getting some type of relief for banks and payment processors,” he says. “But whether there is enough support for a narrow, financial services industry-only fix will play itself out over the next year.”

McConnell’s preference for confirming GOP judges over discussing bipartisan bills could reach new heights in 2020, says Ian Katz, an analyst at Alpha Capital Partners. “You’re going to have some sort of bad blood in Congress after the whole impeachment episode,” he says.

A Senate trial will increase the premium on floor time in an already shortened election year.

“You don’t have that many legislative days,” says Katz. “Basically, you have the first half of the year.  . . .  Generally, I’m fairly skeptical of major legislation getting through.”

Pot banking is “probably one of the top priorities for the committee in 2020,” Rosenstock says, pointing to amendments to the House-passed version aimed at preventing another “Operation Choke Point,” an Obama administration program that scrutinized banks’ relationships with businesses deemed a risk for fraud and money laundering, such as gun dealers and payday lenders. The program incensed Crapo.

Other provisions added in the House would help hemp companies, a growing sector in McConnell’s home state.

Rosenstock remains relatively bullish on anti-money laundering legislation, even though — like Katz — he thinks all bills face an uphill battle in 2020. The House passed a bill 249-173 in October. The entire financial services industry backs it, along with law enforcement, national security, human rights, big business and labor groups.

Crapo says he wants to work on legislation, and a bipartisan group of eight Senate Banking Committee members introduced their own version. But the National Federation of Independent Businesses remains opposed, and with them, a few Republican senators.

Elections could also spur legislators into action. Colorado Republican Sen. Cory Gardner faces a tough fight, with popular former Gov. John Hickenlooper as the likely Democratic challenger. Giving Gardner a win on pot banking — he’s a leading co-sponsor on almost every pro-weed bill that’s been introduced — could help the GOP retain the Senate.

Then again, the issue is a step removed from average voters, says Katz, and not one Gardner differs from Democrats on.