The House Financial Services Committee, sitting at the nexus of Wall Street money and Washington power, is typically a magnet for incoming freshmen lawmakers looking to vault into perches overseeing a multitrillion-dollar industry.
Not this year.
In a twist, the biggest Democratic class since Watergate is mostly steering clear of seeking seats on what has been considered a gilded panel, top Democrats and industry sources say.
The development owes primarily to a couple of factors. More than half the Democratic members of the incoming class — 36 of 63 soon-to-be lawmakers — campaigned on pledges to refuse corporate PAC money. That has diminished the allure of the Financial Services Committee as a post offering the opportunity to fundraise from the banking, insurance, and real-estate sectors. “It’s like what Dillinger said about why he robs banks,” financial services lobbyist Jason Rosenstock tells me. “If you don’t take corporate PAC money, there’s less incentive” to serve on the panel.
Meanwhile, would-be members are gravitating to other committees, including the House Transportation and Infrastructure Committee. That panel is expected to work on a major infrastructure package that could be the only major initiative that advances next year — carrying with it hundreds of billions of dollars worth of projects for lawmakers to bring home to their districts. Others are lining up for posts on committees — such as Judiciary and Oversight and Government Reform — that will take the lead doing the high-profile work of investigating the Trump administration.
“There are cycles to these things,” says Rep.-elect Katie Porter (D-Calif.), a University of California at Irvine School of Law professor who focuses on consumer bankruptcy and requested a seat on the Financial Services panel. She noted that most of her classmates focused on other issues in their campaigns — and pointed to the impact that the anti-PAC pledge has made dimming the panel’s draw.
One senior House Democratic aide confirms it: “There aren’t a lot of people who want it.”
That could change. Having just all but officially sewn up her bid to return to the speakership, House Minority Leader Nancy Pelosi (D-Calif.) and her leadership team can now turn their attention to doling out committee assignments.
The process looks likely to stretch into next year, but this much is clear: A number of incoming freshmen vying for seats on small, exclusive committees will need to settle for choices further down their lists. For example, one particularly high-wattage incoming lawmaker — Rep.-elect Alexandria Ocasio-Cortez (D-N.Y.) — has identified the Energy and Commerce and Ways and Means committees as her top picks but expressed interest in Financial Services if neither works out.
And sources close to the process tell me Ben McAdams, who will represent Salt Lake City and its heavy concentration of industrial loan companies, and Porter, an Elizabeth Warren acolyte, are both near-locks to serve on the committee.
Democrats will have 13 new seats on Financial Services when they transition into the majority, plus two or three more from current members who move to other panels. But it’s possible if demand for those assignments doesn’t materialize, leadership could move to shrink the panel. With 60 members, it is the third-largest in the House.
Democrats serving on the committee span the ideological spectrum, from Rep. Maxine Waters (D-Calif.), the progressive who will chair it come January, to more industry-friendly types, such as Rep. Jim Himes, the Greenwich, Conn.-based former Goldman Sachs banker who leads the moderate New Democrat Coalition.
Waters this week issued a mission statement of sorts. In it, she said she would “continue to have an open door policy, in order to hear the perspectives of all stakeholders, including representatives of the financial services industry as well as advocates for consumers and investors.” But she also listed her priorities, including “protecting consumers and investors from abusive financial practices, ensuring strong safeguards are in place to prevent another financial crisis, expanding and supporting affordable housing,” and more.
Rion Dennis of Americans for Financial Reform said those seeking to join the panel are “going to have to be part of that agenda.”
Charles Gabriel, president of Capital Alpha partners and a veteran observer of financial services issues on Capitol Hill, argued divided government and a shrinking to-do list will limit the legislative ambitions of the committee, making it a less-than-enticing destination for new members.
“Some may get excited over all the oversight and investigation fun incoming Chairman Waters has promised, perhaps aimed, to start, at Wells, Deutsche and Equifax/CRAs,” Gabriel wrote in an email. “But in many past Congresses the only output has literally been a handful of commemorative coin bills. And I've heard remarked that the banking committee is like the ‘freshman dorm’ - you're at risk of being parked there if you don't come to town with prominence, friendships among the leadership, or politically-‘bankable’ relationships with either the constituencies overseen by other key committees or the advocacy groups set against them.”
Porter said she would be happy to discuss with her classmates why the committee is worthwhile, though she hasn’t yet.
For her part, she said, “I want to be on financial services because I am literally a professor who studies financial services. This is my life’s work… It was an easy sell for me.”
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— Markets calmed down. AP's Marley Jay: “U.S. stocks wobbled Thursday as the markets turned fairly quiet after a very turbulent start to the week. Small companies dropped and high-dividend stocks, which investors favor when they want to reduce risk, rose. Major stock indexes spent the day switching between small gains and losses after several days of much bigger moves."
Retail investors are rattled. CNBC's Jeff Cox: “A brutal fourth quarter for the stock market is exacting a substantial price on investor psychology, particularly for the mom and pop crowd. Pessimism among retail investors is at the worst level in about 5½ years, according to the latest American Association of Individual Investors survey. The 48.9 percent of those who think the S&P 500 will be negative in six months is up 18.4 percentage points from last week’s reading and is the highest since April 11, 2013."
— The strong economy isn't reaching everybody. The Post's Heather Long: "Jerome H. Powell, chair of the Federal Reserve and one of the world’s top economic leaders, has spent much of 2018 telling people that the U.S. economy is strong and almost 'too good to be true.' But last week, he stressed a different message — not everyone has been lifted by faster growth. 'The benefits of this strong economy and sound financial system have not reached all Americans,' Powell said in Dec. 3 speech...
"The reality is that in a year when unemployment hit the lowest level in almost 50 years, with inflation staying low and growth popping after the tax cuts, a surprising number of red flags remain in the economy, especially compared with the last period of strong economic growth, in 1999-2000. It’s a reminder, many experts say, that the U.S. economy has deep structural problems that are far from being cured."
Consider, per Heather:
- "Four in 10 adults still say they don’t have enough savings to cover a $400 emergency expense, according to the latest Federal Reserve report on the economic well-being of Americans."
- "A substantial number of Americans — 45 percent — still rate the current economy as 'only fair' or 'poor,' according to a Gallup poll in November."
- "The labor force participation rate for men ages 25 to 54 is 89 percent, which is below the pre-recession level."
- "The number of dollar stores has surged from 20,000 to 30,000 locations since 2011."
- "About 4.8 million Americans who want full-time employment are stuck in part-time jobs, according to the Labor Department."
And yet, the labor market continues heating up. Lucia Mutikani at Reuters: “The number of Americans filing applications for jobless benefits tumbled to near a 49-year low last week, which could ease concerns about a slowdown in the labor market and economy... Tightening labor market conditions bolster expectations that the Federal Reserve will raise interest rates at its Dec. 18-19 policy meeting. With inflation likely to remain tame through the first half of 2019, economists see fewer rate hikes next year."
— Goldman: Brexit is less likely after May survives no-confidence vote. Bloomberg's William Canny: “While it remains unclear how this Greek tragedy will play out, Goldman Sachs is of the view that [Prime Minister Theresa May's] win reduces the likelihood 'of a disorderly Brexit and increases the probability of a reversal of Brexit itself.' Goldman said the party’s euroskeptic faction 'holds much less sway across Parliament at large than its influence within the Conservative Party would suggest.'
BUT: "Labour MPs, emboldened by support from Conservative rebels, may yet call for a parliamentary vote of no confidence, Goldman said, which could open the door to a second referendum.”
— Doubt builds about Chinese concessions. Bloomberg's Shawn Donnan, Peter Martin and Jenny Leonard: "In Washington and Beijing, the idea that China is willing to water down its plans for high-tech industrial dominance to appease President Donald Trump is already meeting with skepticism. Faced with tariffs on some $250 billion in Chinese exports to the U.S. and threats from Trump of more to come, Chinese officials are now working on plans to extend the targets in the Made in China 2025 strategy by another decade and open sectors up to further foreign participation to try and satisfy U.S. demands, according to people familiar with the discussions. That effort may in fact be little more than a cosmetic exercise, according to officials in both administrations...
Two senior Trump advisers expressed skepticism about the Chinese plans to at the very least de-emphasize the industrial policy and said the U.S. was looking for more than a simple rebranding. In an interview with CNBC, Wilbur Ross said Chinese officials had clearly stopped mentioning Made in China 2025. But 'that doesn’t mean they’ve dropped it,' Ross said, adding that it remained in China’s economic interest to pursue the goals."
The Trump administration nevertheless just made official its decision to delay until March a tariff rate increase on $200 billion worth of Chinese imports, per Bloomberg.
— Tri-country dispute heats up. AP's Christopher Bodeen and Rob Gillies: “China confirmed Thursday that it has detained two Canadian men, raising the stakes in a three-way dispute over a Chinese technology executive facing possible extradition from Canada to the United States. Entrepreneur Michael Spavor and former diplomat Michael Kovrig were taken into custody Monday on suspicion of 'engaging in activities that endanger the national security' of China . . . the cases are being handled separately by local bureaus of the national intelligence agency in Beijing, where Kovrig was picked up, and the northeastern city of Dandong, where Spavor lived . . . . The two cases ratchet up pressure on Canada, which is holding [Meng].”
- "Trump denies directing Michael Cohen to break the law to buy the silence of Playboy playmate and porn star." The Post's John Wagner.
“Cohen says Trump knew hush-money payments were wrong, contradicting his former boss.” The Post’s John Wagner.
“Trump was in the room during hush money discussions with tabloid publisher.” NBC News’s Tom Winter.
"Trump inauguration spending under criminal investigation by federal prosecutors." WSJ's Rebecca Davis O’Brien, Rebecca Ballhaus and Aruna Viswanatha.
- "Russian Maria Butina pleads guilty in case to forge Kremlin bond with U.S. conservatives." The Post's Spencer S. Hsu and Tom Jackman.
“Russian agent’s guilty plea intensifies spotlight on relationship with NRA.” The Post’s Roz Helderman, Tom Hamburger, and Michelle Ye Hee Lee.
- "Get ready for Mueller’s phase two: The Middle East connection." The Daily Beast's Erin Banco.
“Mueller’s treatment of cooperating witnesses suggests end of Russia investigation may be near.” The Post’s Devlin Barrett.
-- There's a new candidate for chief of staff, Huffpost's S.V. Date scooped: first son-in-law Jared Kushner, currently a White House adviser. More: "Kushner has been pushing his own candidacy with Trump, citing his work on a criminal justice reform package and a claimed ability to work with Democrats, one person said. 'I don’t know why he thinks that, when the Democrats are mainly going to be coming after Trump,' the source said."
— Virgin Galactic reaches “space.” Soon tourists will, too. The Post's Christian Davenport: “Virgin Galactic launched a spacecraft more than 50 miles high Thursday, reaching the Federal Aviation Administration’s definition of space and capturing a long-elusive goal for the company founded by Richard Branson that one day wants to fly tourists through the atmosphere.
“Though it did not reach orbit, the flight was the first launch of a spacecraft from United States soil with humans on board to reach the edge of space since the Space Shuttle was retired in 2011. And it effectively opens a new era in human spaceflight, one where companies are working to end governments’ long held monopoly on space, aiming to push farther faster. Though it just scratched the lowest edge of where many believe space begins, the launch had huge implications for a growing industry aiming to fly civilians on a regular basis. The flight was bold and risky, and following a fatal crash from four years ago, reminiscent in its daring of a bygone era of human spaceflight.”
— It'll be years until Amazon opens in NYC and VA. WSJ's Laura Stevens and Shayndi Raice: “Amazon.com Inc.’s announcement that it will bring 25,000 new jobs to both New York City and Northern Virginia has sparked a frenzy of local activity. Condos are flying off the market. City leaders are fighting over tax incentives. Businesses are already preparing for a rush of new customers. Lost in all the commotion: It will likely take many years, if not a decade, before residents see a massive army of Amazon employees invading their cities.
“That is because Amazon plans to slowly hire workers rather than overwhelm its new hosts all at once. Amazon has told employees at its Seattle headquarters it won’t require them to relocate . . . meaning it will rely on mostly local hires . . . Before workers can move in, Amazon needs to remodel temporary offices it is leasing in Long Island City and Crystal City, which will take several months. Amazon already has plenty of office space in both metro areas, so it won’t need to rush construction . . . It could take roughly two years before Amazon is able to break ground on its new New York campus, and potentially a little sooner for Northern Virginia, due to various needed site approvals and other preconstruction work.”
— Federal approval could triple the hemp market. AP's Gillian Flaccus: “Hemp is about to get the nod from the federal government that marijuana, its cannabis plant cousin, craves. A provision of the farm bill that received final approval in Congress on Wednesday removes hemp from the list of federally controlled substances and treats the low-THC version of the cannabis plant like any other agricultural crop. THC is the cannabis compound that gives pot its high. [Trump] is expected to sign the bill into law next week.
“The change sets the stage for greater expansion in an industry already seeing explosive growth because of growing demand for cannabidiol, or CBD, a non-psychoactive compound found in hemp that many see as a way to better health. Federal legalization could triple the overall hemp market to $2.5 billion by 2022, with $1.3 billion of those sales from hemp-derived CBD products.”
— Flying cars could be a multi-trillion-dollar market. Bloomberg's Esha Dey: “Flying cars, long a staple of science fiction, may be landing in the real world sooner than you think. Sleek vehicles floating above their more chaotic, terrestrial siblings are common trope in stories of a more technologically advanced future that now may not be so distant. Intersecting economic and technological factors including better battery efficiency, artificial intelligence and improved satellite communication may provide just the right incubator to supercharge the development of flying cars, analysts at Morgan Stanley said this month. . . .
“Technology industry titans have long dabbled with the idea. Google co-founder Larry Page has backed Zephyr Airworks, a flying-car startup, while Uber Technologies Inc., Boeing Co. and Airbus SE, have joined a government-led group in Japan to bring airborne vehicles to the country in the next decade. Lockheed Martin Corp. is investing in electric and autonomous VTOLs or vertical takeoff and landing vehicles . . . Cash has also been flowing to startups. . . . According to the analysts’ most bullish calculations, it could become a $2.9 trillion global market by 2040, while the most pessimistic estimates peg the value to about $615 billion.”
— Trump says he'll do whatever it takes to avoid shutdown. The Post's Erica Werner, Damian Paletta and John Wagner: "Trump pledged Thursday to do 'whatever it takes to get border security,' deepening an impasse over border wall funding barely a week from a crucial deadline for a partial government shutdown to begin. In a video posted on Twitter, Trump attacked Democrats as 'absolute hypocrites' and claimed they’ve supported funding border barriers in the past but won’t do so now because of their opposition to him...
Trump is demanding $5 billion for his border wall for 2019, while Democrats are unwilling to give him more than $1.3 billion for border fencing. Democrats said Thursday that they won’t budge... On Capitol Hill, confusion and uncertainty reigns about how the dispute will end.
— Hensarling, Waters deregulation bill stalls. Politico's Zachary Warmbrodt: "One of the House's major bipartisan achievements this year — a sweeping financial deregulation package negotiated by Democrat Maxine Waters and Republican Jeb Hensarling — may be doomed. As Congress prepares to leave town in the coming days, Democrats are opposing efforts to attach the legislation to a year-end government funding bill. GOP Senate leadership hasn't scheduled a stand-alone vote, which some expect would fail.
"The stalemate comes as disagreements have cropped up among lawmakers and the Trump administration over a number of provisions in the bill, which the House passed on a 406-4 vote in July. Hensarling is willing to negotiate, but that may not be enough. 'We are still working to try to see if it can be brought forward in one of the vehicles that moves, but that’s not resolved yet,' Senate Banking Chairman Mike Crapo (R-Idaho) said in an interview. 'The longer this takes, the less time there would be for an independent vote on it.'"
— Sinema, Smith join Senate Banking. American Banker's Neil Haggerty: "Senate Democrats will add two new members to the Banking Committee in January as their caucus loses two current members who suffered election defeats. Senator-elect Kyrsten Sinema, D-Ariz., and Sen. Tina Smith, D-Minn., will join the panel just as Sens. Joe Donnelly, D-Ind., and Heidi Heitkamp, D-N.D., who both lost re-election bids in November, are departing."
- The Wilson Center hosts "Electricity Market Reforms in Ukraine: Challenges and Opportunities" in Washington on Friday.
— From The New Yorker's Amy Hwang:
Naughty, instead of nice: Santa Clauses behaving badly
‘I took a chance’: Skeleton unearthed in Long Island basement identified as missing father
‘Nobody should work here, ever’: Man quits Walmart job over store’s PA system