Congress is racing to finalize a spending agreement this week before the new fiscal year for the federal government begins in October. In the absence of a deal, a government shutdown looms this weekend, although most believe a compromise will be reached beforehand. A few outstanding issues remain, chiefly funding for Flint, Michigan and language barring the Securities and Exchange Commission (SEC) from requiring corporations to provide more disclosure of political activities. The Flint funding did not survive a vote in the House to add it to a separate package being considered this week to fund water infrastructure projects and could become the key sticking point to getting a deal done quickly on government funding.
Wells Fargo CEO John Stumpf returns to Capitol Hill this week for a second hearing on the recent revelations about the firm's sales tactics. House Financial Services Committee members will continue to press the chief executive for more details around the controversy. Federal Reserve Chair Janet Yellen is also on the Hill this week.
Finally, the first presidential debate will be held tonight at 9 p.m. Eastern at Hofstra University in New York. The debate, which is being moderated by NBC's Lester Holt, is scheduled to last for 90 minutes, with no breaks. The three topics announced are "Securing America," "America's Direction" and "Achieving Prosperity," which thematically lends itself to a long discussion on national security and the economy.
On Monday morning, Federal Reserve Governor Daniel Tarullo announced several changes to the Federal Reserve's stress testing regime, including proposing that banks with less than $250 billion in assets will be exempted from the Comprehensive Capital Analysis and Review (CCAR) qualitative review starting in 2018. Tarullo's
speech, which was delivered at Yale University, outlines the first major recalibration of the Federal Reserve stress testing process since it was created in the years following the last financial crisis. It is expected that the Fed will release text of a proposed rulemaking outlining these changes later Monday.
The House Financial Services Committee has a busy week before Congress leaves town for the November elections. On Tuesday, a panel of the committee will hold a legislative
hearing to examine bills intended to increase access to mainstream banking products and services. Later that day, another subcommittee will hold a
hearing exploring the potential impact of the policy agenda of the Financial Stability Board on the American economy.
On Wednesday, the full committee will
hear from Federal Reserve Chair Janet Yellen who will deliver the Fed's semi-annual report to Congress on its macroprudential supervision and regulation of the financial system. Later that same day, a panel of the committee will hold a
hearing on the bilateral discussions between the U.S. and the E.U. regulators on insurance markets.
On Thursday, Wells Fargo CEO John Stumpf will appear
before the full committee to testify regarding the ongoing cross-selling controversy at the bank and field its questions. There is a possibility that this hearing could go even more poorly for the bank than the Senate hearing from last week did, not simply because the House committee can be more unruly and more political than the Senate committee. The Financial Services Committee has also opened a bipartisan investigation into the Wells Fargo controversy that threatens to discover new information and keep the negative headlines coming for much longer than a single hearing ever could. This has become the biggest financial policy story in Washington, and the ramifications and subsequent investigations by regulators and Congress could extend far beyond what happened at Wells Fargo.
On Tuesday, the House Ways and Means Committee will hold a
hearing on the effective enforcement of U.S. trade laws. The Commissioner of U.S. Customs and Border Protection (CBP), Gil Kerlikowske, will testify before the committee.
The Joint Economic Committee (JEC) will assess the economic recovery at a
hearing on Wednesday. Three economic experts, including CNBC's Larry Kudlow, will testify.
On Thursday, a panel of the House Judiciary Committee will hear testimony on ongoing oversight efforts of federal agencies. This
hearing will focus on the Department of Justice's (DOJ) Civil, Tax and Environment and Natural Resources divisions, as well as the U.S. Trustee program, which oversees administration of bankruptcy cases and private trustees.
The Obama administration's Clean Power Plan (CPP) will have yet another day in court on Tuesday, this time in front of a panel of federal appeals judges. The U.S. Court of Appeals for the District of Columbia Circuit will hear arguments from both sides over the legality of the implementation of the CPP. At the heart of the debate is whether or not the Environmental Protection Agency (EPA) has the authority to regulate CO2 emissions under the powers given to it in the Clean Air Act. This legal debate is likely to continue until it reaches the Supreme Court.
This week, the House will vote on a handful of healthcare-related bills, including the Mental Health First Aid Act of 2016 and the Dangerous Synthetic Drugs Control Act of 2015.
The oversight panel of the House Energy and Commerce Committee will hold a
hearing on Tuesday to examine bioresearch labs and inactivation of dangerous pathogens. The committee will discuss the findings of a recent Government Accountability Office (GAO) report on the improvement needed for Federal Select Agent Program's oversight of incomplete inactivation of dangerous pathogens. Officials from GAO, the Centers for Disease Control and Prevention (CDC), the United States Department of Agriculture (USDA), the National Institutes of Health (NIH), and the Department of Defense (DOD) will testify on how they are strengthening their policies.
On Wednesday, the oversight panel of the House Ways and Means Committee will
explore how the federal government conducts investigations into Medicare fraud and improper payments, and how these cases are prosecuted.
The views contained in this newsletter are not necessarily those of CIT Group Inc. ("CIT"). This material was prepared by the CIT Communications & Government Relations Department for informational purposes only in an attempt to provide timely, nonpartisan, summary and analysis of ongoing activity in Washington D.C. The newsletter incorporates information from a variety of sources, both private and public. Any copyright which may exist in any information or material sourced from a third party remains the sole and exclusive property of the original source, and the copyright in this newsletter otherwise is the sole and exclusive property of CIT. This newsletter may not be reproduced or otherwise distributed in whole or in part without the express written permission of CIT. Assumptions, analysis and opinions contained in this document constitute our judgment as of the date of the document and are subject to change without notice. No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein.