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March 16, 2023
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PRESENTED BY
THE TOP
Happy Thursday morning.
Senate Majority Leader Chuck Schumer is looking to shift expectations ever so slightly.
The conventional wisdom was that the Senate would function as a judge factory this year, with a divided Congress effectively derailing any hopes of bipartisan accomplishments similar to those from the previous two years.
But while Senate Democrats remain on a historic pace with judicial confirmations, Schumer is showing a willingness to spend both time and political capital on legislation that needs GOP support in order to pass.
We sat down with Schumer in his Capitol office Wednesday evening for a wide-ranging discussion on the Senate’s priorities for the next few months.
The temporary pivot from judicial votes starts later today, when the Senate will begin voting on legislation to repeal the Iraq war authorizations. This bipartisan effort puts Congress on track to claw back its war powers for the first time in decades.
A procedural vote to begin debate on repealing the 1991 and 2002 AUMFs (authorization for use of military force) is scheduled for this afternoon. It could take up to a week to push through the legislation, which then has to pass a GOP-run House before heading to President Joe BIden’s desk.
Schumer also wants to put a bipartisan railway safety bill on the floor in the wake of the horrific toxic train derailment last month in East Palestine, Ohio. And he is looking to find common ground with Republicans and progressives alike on banking reform following the collapse of several regional banks. In addition, Schumer sees an opening to get cannabis banking legislation across the finish line this year with Sen. Steve Daines (R-Mont.), who as NRSC chair is trying to kick Schumer out of power.
Assuming these actually come together — and that’s a big “if” — this would take up weeks of valuable floor time that would otherwise go to confirming judicial nominees or other executive-branch posts. Already, the Democratic-controlled Senate has confirmed 116 of Biden’s picks.
Here’s how Schumer views the trade-off:
There was certainly an expectation that with a divided Congress, the Senate would be on autopilot with judicial confirmations. And to a certain extent, that’s true. The chamber has already confirmed 19 federal judges in 2023, even with a slim majority and attendance problems.
But Schumer viewed the bipartisan accomplishments of the last two years as extremely beneficial for Democrats politically, too. It’s part of the reason why he didn’t race to endorse Sen. Elizabeth Warren’s (D-Mass.) bill to roll back the 2018 bank deregulation law — which couldn’t pass either chamber — and instead said he wanted to pursue a bipartisan plan first.
For Schumer, that entails bringing Republicans along, of course. But he also must convince his fellow Democrats that they should compromise.
“It seems to me we have many promising chutes,” Schumer told us, naming a host of bipartisan bills, large and small, that have recently cleared committees. “I feel the same dynamic is here this year. I’ve had more Republicans here this week even, sitting on that couch, on this chair, talking about various bills and how we can get them done. And they want to get them done.”
That doesn’t mean it’s been kumbaya between Schumer and top Republicans. The New York Democrat hammers Speaker Kevin McCarthy daily over GOP budget proposals and the debt limit. On Wednesday, Schumer likened Florida GOP Gov. Ron DeSantis’ opposition to Ukraine aid to those Americans who didn’t want to get involved in Europe in the 1930s. And nearly every day he’s calling out what he refers to as the “MAGA hard-right.”
Schumer’s posture also doesn’t guarantee that the Senate will actually pass any of these bipartisan efforts. But for the moment, there is a potential window for these kinds of deals.
— Andrew Desiderio, John Bresnahan and Jake Sherman
BANKING BULLETIN
Centrist Dems hold the line against banking reform
It might be awhile before moderate Democratic senators seriously consider legislation to reform the U.S. banking system.
Just days into what may or may not be a banking crisis – it’s still early but things are pretty wobbly – many Democratic senators remain deeply skeptical about the need for congressional action beyond hearings.
A lot of the discussion has revolved around the defense of S.2155, the 2018 bipartisan bill that rolled back some key parts of the Dodd-Frank Act involving mid-sized banks.
Moderate Democrats including Sens. Jon Tester (Mont.), Mark Warner (Va.) and Tim Kaine (Va.) aren’t dodging questions about whether they still support that law, even as progressives argue the package is responsible for destabilizing regional banks. Moderates, in fact, continue to support the 2018 law wholeheartedly at this point.
Kaine and Tester have argued that the law was crucial for salvaging community banking in their states. “We were losing capital in rural America” before the 2018 bill became law, Tester told us Wednesday, “because our small banks were getting [eaten] up.”
They’re also not wrong when arguing there’s a lot we don’t know about the decisions leading to the collapse of Silicon Valley Bank. We know even less about why Signature Bank failed, besides significant exposure to crypto. While we wait on answers, moderates say, why would Congress want to rush into legislation?
There’s also the matter of what regulators are doing themselves in the meantime to strengthen the financial system against systemic risks. We spent the last couple of days asking if senators would support the agencies pursuing tougher regulations for regional banks, and the response from moderate Dems was generally positive.
“The nice thing is, [federal regulators] don’t need new legislation,” Kaine told us Wednesday. “They can do more, and I want to hear what they’re proposing to do.”
Tester added: “They have the ability to do that. If they do that based upon risk, that’s exactly what they should do.”
But at the same time, there is an emerging consensus from lawmakers, including key Republicans such as Sen. Tim Scott (S.C.), that bank regulators likely made mistakes in how they supervised Silicon Valley Bank’s operations in the months leading up to its collapse.
Warner and Kaine told us Wednesday night that they trusted Michael Barr, the Federal Reserve’s vice chair for supervision, to conduct an investigation of the San Francisco Fed’s oversight of SVB. That report will be published no later than May 1.
But Warner and Tester said they have serious questions about why Silicon Valley Bank didn’t act more quickly to hedge against the painfully obvious inflation risks lurking in their balance sheet.
“I frankly think that traditional, prudential regulation – safety and soundness – should have caught this,” Warner said. “I’d like to know why that didn’t happen, because interest rate mismatch is ‘Banking 101.’”
Tester argued the core of the 2018 law was directing agencies to “tailor” supervision based on the risk profile of a given bank. That means riskier banks are supposed to be scrutinized more closely:
– Brendan Pedersen
NOMINATION FIGHT
Intense Biden lobbying gets Garcetti win
The Senate confirmation of Eric Garcetti Wednesday as the next U.S. ambassador to India proves once again that it’s always good to have the president on your side.
With President Joe Biden personally lobbying wavering Senate Democrats, and Republicans offering crucial support, Garcetti was confirmed by the Senate in a 52-42 vote. That ended a 20-month drama for Garcetti, the former L.A. mayor and co-chair of Biden’s 2020 presidential campaign.
Bogged down by a sexual misconduct scandal involving a former top aide, Garcetti’s nomination failed to win Senate approval during the 117th Congress, even after the Foreign Relations Committee voted him out with bipartisan support.
Sens. Chuck Grassley (R-Iowa) and Joni Ernst (R-Iowa) raised new questions about Garcetti’s knowledge of former aide Rick Jacob’s behavior, leading some Democrats to balk at backing the nominee. By late 2022, several Senate Democrats privately dismissed the nomination as “dead” and suggested Biden should tap someone else for the post.
Yet Biden turned around and renominated Garcetti at the beginning of this Congress, signaling his determination to have him in New Delhi. Last week, the Foreign Relations Committee again approved Garcetti with bipartisan support.
Despite all of that, however, the 52-year-old Garcetti’s confirmation was still in trouble heading to a floor vote.
Seven to eight Senate Democrats were ready to vote no, which would have sunk the nomination, according to Senate sources. Early on Wednesday, during a Democratic leadership call, there was a “very heated” discussion over why Democrats should support the controversial pick, one senator told us.
Biden and senior White House aides had spent the last few days pressing a number of the swing Democrats, in particular some female senators, to support the nominee.
Garcetti – whose family hired its own lobbyists to help on the nomination – also met privately with some Democratic senators in a bid to win their backing.
“It was part of the process,” said Sen. Elizabeth Warren (D-Mass.), who had a one-on-one with Garcetti. “I looked at his record after he got out of committee, like I do with all nominees.” The Massachusetts Democrat ended up voting yes.
The GOP support for Garcetti was motivated, at least in part, by concern over the lack of a U.S. ambassador to India at a time when the United States is looking to buttress its relationship there as a counterweight to China.
“The president didn’t need to lobby me. Nobody needed to lobby me,” Sen. Bill Hagerty (R-Tenn.) said. Hagerty, a former ambassador to Japan, was one of seven GOP “yes” votes:
—John Bresnahan and Andrew Desiderio
PRESENTED BY GOLDMAN SACHS 10,000 SMALL BUSINESSES VOICES
The last time Congress reauthorized the SBA was before most of the players in this month’s tournament were born.
THE MONEY GAME
Sen. Tim Scott (R-S.C.) is a popular man among Senate Republicans. Nothing shows that better than the stacked list of senators attending a fundraising event celebrating Scott’s new role as the top Republican on the Senate Banking Committee.
GOP Sens. John Boozman (Ark.), Bill Cassidy (La.), Shelley Moore Capito (W.Va.), Lindsey Graham (S.C.), Mike Lee (Utah), Cynthia Lummis (Wyo.) and Lisa Murkowski (Alaska) are special guests slated to attend the March 28 fundraiser.
Tickets for the event range from $500 to $1,500. The fundraiser is part of the 2023 “Tim Scott for Senate Donor Program.” Of course, Scott handily won reelection to the Senate in November and has $21 million in the bank as of Dec. 31, 2022.
— Max Cohen
… AND THERE’S MORE
New: Danielle Barrow is the new executive director of Winning For Women, a leading GOP organization that helps support Republican women candidates. Barrow previously served as Winning For Women’s chief of staff. Before that, she was political director for Rep. Morgan Griffith (R-Va.).
The organization also released its 2023-24 board of directors, chaired by founder Annie Dickerson. Check out the full list here, which includes former Sen. Kelly Ayotte (R-N.H.) and former Rep. Barbara Comstock (R-Va.).
Also: The new Economist poll has an interesting look at the favorable/unfavorable rating of D.C. leaders. President Joe Biden – 47/50 … Vice President Kamala Harris – 40/51 … Speaker Kevin McCarthy – 39/38 … Senate Minority Leader Mitch McConnell – 26/55 … Senate Majority Leader Chuck Schumer – 35/43 … House Minority Leader Hakeem Jeffries – 29/28. Of note: McCarthy is up 12 percentage points from last week.
— Max Cohen and Jake Sherman
PRESENTED BY GOLDMAN SACHS 10,000 SMALL BUSINESSES VOICES
Iman McFarland: Former UNC basketball player and current small business owner.
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