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  • Katherine Flocken

What to Expect from Washington this Fall


The tidal basin adjacent to the National Mall will soon be flush with fall foliage.

Congress returns to Washington next week following an eventful August recess. The country endured growing trade tensions with China, a trio of tragic mass shootings in Texas and California and a catastrophic hurricane, which has wreaked havoc in the Bahamas and now threatens Florida, Georgia and the Carolinas.


Each of these events that took place over the summer will shape what was already expected to be a busy fall in Washington. With only 14 months until the presidential and congressional elections of 2020, there remain several important issues for Congress and the Trump administration to tackle – and jockey over.


When Congress returns, it will urgently consider proposals regarding disaster relief, gun control, climate change, opioid abuse, healthcare, the president’s trade agenda – including the United States-Mexico-Canada Agreement – immigration reform, the application of antitrust laws in the technology sector and the threat of an economic recession, just to name a few. But consideration of these issues should not be interpreted as suggesting that meaningful legislation will be enacted.


On the congressional side, much of the optimism at the start of the year that major progress could be made during the current Congress on issues including infrastructure and data privacy has already darkened just eight months into the new Congress. In fact, as we discussed several weeks ago, it is now far more likely that state legislatures will make the first substantive moves on data privacy amidst a politically-divided Congress that finds itself unable to enact, in some cases, even must-pass legislation. On infrastructure, a highway funding bill passed the Senate Environment and Public Works Committee by a unanimous, bipartisan vote of 21-0 shortly before the August recess and the bill currently has the support of President Donald Trump – but he has walked away from broader discussions on the topic, despite making “a great rebuilding of America’s crumbling infrastructure” a centerpiece of his 2016 campaign.


And if you think the political climate in Washington is challenging now, it’s going to get worse.


The Democratic presidential primary is now in full swing. While the field of candidates has narrowed somewhat – a relative term since there are still nearly two-dozen candidates in the race – there remain too many voices in the arena to provide for a fulsome debate. And on the Hill, additional retirements from Congress – mostly by incumbent Republicans (12 so far compared to two Democrats) – continue to shake up the prospects for what will happen in next year’s election. Senator Johnny Isakson’s (R-GA) announcement that he will retire at the end of this year has some even contemplating whether the Senate could flip to Democratic control following next year’s election.


Concern that both the House and Senate could be held by the Democrats in 2021 will increase Republicans’ eagerness to ensure their base is highly motivated to turn out next November – meaning topics that are highly partisan, such as gun control and immigration, will continue to be hotly debated in Congress even though little progress is likely to be made. Hearings will be held and bills will be introduced. The president will say that Congress is doing nothing and those in Congress will blame each other and the administration as each side of the aisle locks into what its base most wants to hear.


A cynical view of Washington? Perhaps, but one borne out of the political parties’ playbooks from election cycles of the recent past.


Though our elected leaders may spend the next several months – and beyond – posturing against one another, we are likely to see another story entirely from the regulatory agencies, particularly in the financial services space. Momentum over the last few months from the regulators is indisputable. The financial regulatory agencies are making real progress tackling historic areas of challenge and gridlock and are working hard to update policies to catch up with changing technology – like virtual banking and artificial intelligence – that will change the lives of Americans and improve U.S. global competitiveness.


We have seen tremendous activity from regulators recently, including:


  • The Federal Reserve tackling real-time payments issues and pledging to make real-time payments a reality in the U.S. by 2024, which has the potential to significantly impact financial services options for consumers while making the United States more globally competitive;

  • The Consumer Financial Protection Bureau’s publication of its first no-action letter results demonstrated the value of alternative data and artificial intelligence in credit underwriting and encouraged more fintech companies to work with regulators to develop innovative products that can expand financial access and inclusion; and

  • The Federal Deposit Insurance Commission, Office of the Comptroller of the Currency, Federal Reserve, Consumer Financial Protection Bureau and the Financial Industry Regulatory Authority are all building up offices of innovation to help ensure proactive and meaningful engagement with technology providers, including through active recruitment of employees directly from the tech sector.


While issues such as data privacy may see significant debate in Congress, but not any meaningful action, the robust efforts of these regulators will continue to transform the financial services industry for the benefit of the consumer. Moreover, even a gridlocked Congress can heavily influence the regulatory agencies’ agenda and priorities through use of the bully pulpit and the appropriations process, so the conversations happening in Congress are worth paying attention to – as they will help inform the regulatory agenda. It is certainly going to be an interesting autumn in Washington.

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