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What's Up in Washington: A Divided Government When the New Congress Convenes in 2019; Action at Federal Agencies (MAG Quarterly- Volume Six, Issue Four)

By Beth Provenzano, Vice President, Public Affairs, MAG 

December 6, 2018

Democrats picked up enough seats in the mid-term elections to take back the majority of the House of Representatives. While they will kick off the new Congress focused on their investigative and oversight authority, Republicans kept the majority in the Senate, paving the way for more judicial confirmations next year.

A Divided Government When the New Congress Convenes in 2019
When the new Congress convenes January 3, 2019, the Democrats will hold the House Majority and Republicans secured the Senate Majority, picking up several seats in red states, including Indiana, Missouri, and North Dakota. A divided government will make it harder for President Trump to advance his policy priorities, and Democrats are likely to open investigations regarding conflicts of interest between the White House and the president’s company, as well as Russian interference with the 2016 election. Democrats have also expressed an interest in obtaining President Trump’s tax returns, and Republican control in the Senate will allow Majority Leader McConnell (R-TX) to continue his focus on confirming judicial nominees.

House Committee Chairmanships will transition to Democrats, and Rep. Maxine Waters (D-CA) is expected to lead the House Financial Services Committee. Waters is focused on housing finance, looking into big banks’ practices, and the Fed’s policies that impact minorities and the poor. The Committee membership will change drastically on the Republican side of the aisle. In addition to several notable Committee member retirements from Congress, including current Chairman Jeb Hensarling (R-TX), who authored the Financial CHOICE Act in 2017 and was solidly against the Durbin Amendment, and Rep. Dennis Ross (R-FL), who defended merchants’ position to preserve the Durbin Amendment, there were a few losses that are important to note.  Rep. Bruce Poliquin (R-ME), an advocate for merchant positions on the Committee with Ross, faces a ranked-choice run off against Maine House Assistant Majority Leader Jared Golden. Rep. David Young (R-IA), who is not on the Financial Services Committee, lost his re-election bid to Rep.-elect Cindy Axne (D-IA). Young led the efforts to remove the Durbin Amendment repeal from the Financial CHOICE Act in 2017. We don’t expect any significant efforts to repeal Durbin in the future with Hensarling’s retirement from the House, but merchant advocates will need to educate the freshmen members of the House as well as new members to the Financial Services Committee on swipe fees and other payments issues.

Committee restructuring will take some time to sort out. There are still several outstanding races to be called, and the breakdown will determine the ratio of Democrats to Republican seats on each committee. During organizational meetings, the caucuses will elect the new Speaker of the House, Majority Leader, Minority Leader, and other leadership positions. Then the Rules Committee will go through the process of Committee leadership and assignments, and the whole process can take weeks.

Federal Reserve Seeks Public Comment on Supporting Faster Payments
This quarter, the Federal Reserve announced it is seeking public comment on their ability to support faster payments through December 14. As technology evolves and customer expectations demand a speedy and smooth experience in checkout, the Fed asked to hear from payments stakeholders about their ability to support a move to real-time gross settlement.

As part of their examination and to reach more stakeholders, the Fed hosted town halls throughout November to walk through the Federal Register notice and answer questions and gather feedback from attendees.  

The Merchant Advisory Group (MAG) plans to submit comments to the Fed, calling for competition and transparency as the United States moves to faster payments. MAG’s comments will be available for review after they are filed on the MAG member-only resources web page.

FTC Hearings on Competition and Consumer Protection in the 21st Century
The Federal Trade Commission (FTC) has held several public hearings as part of an examination into competition and consumer protection in the 21st Century and will hold two more sessions on data security and consumer privacy. The hearings have looked at evolving business practices, new technologies, international developments, and broad-based changes in the economy.

The FTC also invited public comments prior to the hearings to gather broad and diverse views on topics such as antitrust and consumer protection law as well as enforcement and the intersection of privacy, big data and competition. As you may recall, MAG submitted comments, which focused on the need for competition and the role innovation plays in the payment’s ecosystem. 

The FTC also recently announced a series of hearings beginning this month and concluding in February 2019, which will examine the FTC’s authority to deter unfair and deceptive conduct in data security and privacy matters.