DC Insights – Quarterly Edition

After an extended fight for the Speakership in the House, Kevin McCarthy (R-CA) firmly has the gavel in hand and is slowly building out his Leadership team. While House Leadership jockeying continues, the Senate Committee structure has fallen swiftly into place with few changes.

The Senate remains a friendly audience for key fixed income provisions such as the reinstatement of advance refundings with Chairman Wyden (D-OR) and Ranking Member Crapo (R-ID) continuing to lead the Senate Finance Committee.

In Senate Banking, Chairman Brown (D-OH) retained the gavel, however he will have a new GOP partner in Tim Scott (R-SC) as Ranking Member. Mr. Scott has long been active within the capital markets and fixed income; this includes sponsorship of legislation that named munis as level 2b liquid assets and longstanding and vocal support of opportunity zones stemming from the 2017 Tax Cuts and Jobs Act.

Following weeks of jockeying on the House side, Committee Chairs have been named and Subcommittee Leadership is coming into clearer view with some surprises.

House Ways and Means will be led by Jason Smith (R-MO) who beat out veteran lawmaker Vern Buchanan (R-FL). The Committee Democrats continue to be led by Rep. Richie Neal (D-MA), a name that is very familiar to muni market.

The House Financial Services Committee leadership will remain in the same hands with Rep. Patrick McHenry (R-NC) as Chair and Rep. Maxine Waters (D-CA) Ranking Member.

Below we will dig into the new House Leadership and how key appointments will impact key Committees and Subcommittees and their approach to munis and fixed income.

In a surprise decision, the House GOP Steering Committee elected Rep. Jason Smith of Missouri to lead the powerful House Ways and Means Committee. He previously was the Ranking Member of the House Budget Committee where he was known as a deficit hawk. Rep. Smith was chosen over the more senior Rep. Vern Buchanan (FL), a longstanding moderate Member of the tax writing committee. This move likely signals the GOP plans to conduct stringent oversight on the Biden Administration. At this time, subcommittee Chairs have yet to be named. Mr. Smith has said very little on fixed income throughout his tenure however has appointed key muni allies to sit on the Committee this Congress. Some key appointments include: Rep. David Kustoff (R-TN)

A name familiar with BDA membership, Mr. Kustoff was added to the powerful tax writing Committee late last year and continues to champion key muni provisions. As a longtime supporter of legislation to reinstate tax-exempt advance refundings, we plan to work with the Congressman to continue to grow bipartisan support for the provision throughout this Congress. Rep. Brian Fitzpatrick (R-PA)

Mr. Fitzpatrick has supported many municipal bond provisions throughout his tenure on the Hill. This includes recent support of legislation that would raise the bank qualified debt limit from $10 million to $30 million and for legislation to reinstate tax-exempt advance refundings. Rep. Greg Steube (R-FL)

Another new addition to the Committee, in prior Congresses Mr. Steube has co-sponsored BDA tracked legislation recently including a bill that would reinstate tax-exempt advance refundings.

While leadership of the key Financial Services Committee was in little doubt with Rep. Patrick McHenry (R-NC)in line to take the gavel, many Subcommittee Leadership appointments were up in the air, mostly in part to Republican imposed term limits. Some key appointments include: Rep. Anne Wagner (R-MO) was appointed Chair of the Capital Markets Subcommittee, a key post for the fixed-income markets with SEC oversight powers. Wagner takes over for longtime Capital Markets Leader Bill Huizenga, she is a longstanding and outspoken critic of key regs such as the DOL Fiduciary Rule and Dodd Frank, Rep. Wagner was quoted as saying her priorities include, “ I will work to strengthen our public markets, help small businesses and entrepreneurs access capital, and increase investor opportunities for main street investors.” Rep. French Hill (R-AK)

A key fixed income champion has been named Chair of the Asset, Financial Technology, and Inclusion Subcommittee. This is a newly formed Subcommittee giving Mr. Hill some ability to shape the agenda over time. He was quoted recently as stating, “At a time of major technological advancement and change in the financial sector, it is our job to work across the aisle and promote responsible innovation while encouraging fintech innovation to flourish safely and effectively in the United States.” Rep. Bill Huizenga (R-MI)

Another name that is familiar to the fixed income market was named Chair of the Oversight and Investigations Subcommittee. Following two years of aggressive action from the SEC, we expect this Subcommittee to be a main driver of the overall Committees agenda. Rep. Huizenga confirmed this approach saying, “I look forward to leading the fight against this administration’s repeated attempts to ignore congressional oversight. Today is a good day for the American people, and a bad day for bureaucrats in Washington.”