The House and Senate convene today at noon and 3 p.m., respectively.


Votes. Lawmakers will take up a series of homeland security and natural resources bills under suspension of the rules — see the complete list here. The following financial services measures are also on deck:

  • H.R. 5783 – the Cooperate with Law Enforcement Agencies and Watch Act would provide a safe harbor for financial institutions that maintain a customer account at the request of a federal and state law enforcement agency.
  • H.R. 435 – the Credit Access and Inclusion Act would clarify federal law related to reporting certain positive consumer credit information to consumer reporting agencies.
  • H.R. 4294 – the Prevention of Private Information Dissemination Act would impose a criminal penalty for unauthorized disclosures of certain individually identifiable information by officers or employees of a federal department or agency.
  • H.R. 6069 – the FIND Trafficking Act would require the U.S. comptroller general to conduct a study on how virtual currencies and online marketplaces are used to buy, sell, or facilitate the financing of goods or services associated with sex trafficking or drug trafficking.

Foreign Investment Risk Review Modernization Act (H.R. 5841). The House will take up FIRRMA under suspension of the rules. The bill would overhaul operations at the Committee on Foreign Investment in the United States (CFIUS) and reform current U.S. export controls. The House bill contains a few provisions that are not included in the Senate version of the measure. For example, the bill includes language that would empower CFIUS to report any foreign investments in the U.S. entertainment industry that may result in censorship. CFIUS would also have the power to suspend certain pending transactions — those that may result in foreign ownership of a U.S. company — until a final determination is made.

Immigration Part II. The House is expected to take up consideration of the Border Security and Immigration Reform Act (H.R. 6136) — the “compromise” immigration bill that would, among other things, offer DACA recipients a pathway to citizenship.

Defense Reauthorization. Lawmakers will consider a motion to go to conference on the FY 2019 defense reauthorization bill (H.R. 5515).


FY 2019 Appropriations. The Senate is expected to resume consideration of H.R. 5895, the “minibus” spending package that would cover Energy-Water, Legislative Branch, and Milcon-VA funding for fiscal year 2019. A final vote on the package is scheduled for 5:30 p.m. today.

Farm Bill. The chamber will also take its first procedural vote to kick off debate on the Senate version of the 2018 farm bill.

Senate Banking Hearings. The Senate Banking Committee will hold hearings on Tuesday and Thursday to discuss legislative proposals related to increasing access to capital and examining corporate governance.

Key Hearings and Meetings

Tuesday, 6/26

  • House Financial Services Committee. Subcommittee hearing on “International and Domestic Implications of De-Risking.”
  • House Appropriations Committee. Committee markup of FY 2019 Labor-HHS-Education appropriations bill.
  • Senate Appropriations Committee. Markup of an original bill making appropriations for the Department of Labor, Department of Health and Human Services, Department of Education, and Related Agencies FY 2019.
  • Senate Finance Committee. Hearing on prescription drug affordability and innovation, focusing on addressing challenges in today’s market.
  • Senate Banking Committee. Hearing to examine legislative proposals to increase access to capital.

Wednesday, 6/27

  • Senate HELP Committee. Hearing to examine how to reduce health care costs, focusing on understanding the cost of health care in America.
  • Senate Appropriations Committee. Subcommittee hearing to examine proposed budget estimates and justification for fiscal year 2019 for the Department of State.
  • House Financial Services Committee. Hearing on “Oversight of the Department of Housing and Urban Development.” HUD Secretary Ben Carson to testify.

Thursday, 6/28

  • Senate Banking Committee. Hearing to examine legislative proposals to examine corporate governance.
  • Senate Appropriations Committee. Markup of the FY 2019 Defense spending bill and Labor-HHS-Education spending bill.
  • SEC. Opening meeting to consider whether to propose a rule that would permit ETFs that satisfy certain conditions to operate without first obtaining an exemptive order from the commission. The commission will also consider potential amendments to smaller reporting company definition; rules to require the use of the XBRL format for the submission of operating company financial statement information and fund risk/return summary information; potential amendments to Form N-PORT and Form N-1A. More details here.

On June 21, breaking with nearly half a century of legal precedent, the U.S. Supreme Court ruled 5-4 in South Dakota v. Wayfair, Inc. that online retailers may now be required to collect sales tax in states where they do not maintain a physical presence. The implications of the court’s decision are monumental, since this opens the door for every state with a sales tax (45) to follow in South Dakota’s footsteps and require online retailers to collect tax. According to a December 2017 Government Accountability Office report, this could amount to over $13 billion in revenue for states.

 The road to repealing the Court’s 1967 Bellas Hess v. Illinois and 1992 Quill v. North Dakota decisions has been long. In Quill, the Supreme Court limited a state’s ability to collect sales tax to retailers with a physical presence (e.g., a warehouse or store) in the taxing jurisdiction. Quill followed the Bellas Hess decision in which the Supreme Court determined that states cannot tax mail order companies for in-state sales, unless they maintained a physical presence in the state.

 In 2015, nearly 50 years after Bellas Hess, Justice Kennedy issued an invitation to revisit both these cases, signaling a potential shift in the court’s opinion. In Direct Marketing Association v. Brohl, Justice Kennedy noted that in light of technological and social changes that have taken place in an increasingly interconnected economy, the Supreme Court should reconsider its previous decisions. Justice Kennedy also recognized the negative financial repercussions for states as a result of potentially outdated decisions in both these cases.

In Wayfair, the majority recognized that a physical presence requirement puts traditional brick-and- mortar companies at a disadvantage since they still have to collect sales tax, though online sellers do not. It also recognized that the physical presence requirement imposes an arbitrary standard on sales tax collection – while sellers with a pervasive Internet presence and a large customer base in-state were not required to collect sales tax, businesses with only a few items of inventory in the state were still subject to sales tax requirements.

 Of course, the dissent took a different view, noting that this is more of a policy issue for Congress to take action. While the justices may have hoped that Congress might resolve the situation for states and online retailers, most sales tax collection bills have repeatedly failed. In 2013, the Senate passed the Marketplace Fairness Act, but the House did not act on the bill. More recently, earlier this year, Rep. Kristi Noem (R-SD) unsuccessfully pushed for the passage of the Remote Transactions Parity Act in the House.

Given the Supreme Court decision in Wayfair there is now additional pressure on Congress to act. Without congressional action, retailers may face a myriad of state sales tax collection statues, creating major administrative burdens, especially for small sellers. In the coming months, many online retailers will place increasing pressure on Congress to create a uniform set of rules in this space. However, given Congress’ other priorities, the chances of passing a bill remain remote.


The White House announced over the past weekend that the president will nominate Kathy Kraninger to serve as the next director of the Consumer Financial Protection Bureau (CFPB). Little is known about Kraninger, currently an associate director who oversees the budget of the Department of Homeland Security at the Office of Management and Budget (OMB). She works closely with OMB Director and Acting CFPB Director Mick Mulvaney.

Kraninger has previous Capitol Hill experience, having worked for the House and Senate Appropriations Committees. Her nomination is widely viewed as a placeholder, allowing Mulvaney to extend his stay as acting director of the CFPB beyond the June 22 deadline. Based on federal rules under which Mulvaney was appointed to the bureau, he would have had to vacate the post on June 22 unless the president named a replacement.

The confirmation process is expected to be a rough one for Kraninger given her apparent lack of experience in consumer financial regulation. If confirmed, however, she is expected to continue Mulvaney’s policies at the bureau.

No official timeline has been offered for Kraninger’s confirmation, but Sen. Elizabeth Warren (D-MA), a staunch defender of the CFPB and member of the Senate Banking Committee, is planning to put a “hold” on Kraninger’s nomination over questions about her role in the development and implementation of the administration’s policy of separating families at the border.

According to Carol Tan of the IRS, proposed regulations for the international provisions of the GOP tax law will be complete before the end of the year. In order for final regulations to be retroactively applicable starting on Jan. 1, 2018, all regulations must be finalized within 18 months of enactments or June 2019. The IRS hopes to give the public at least six months to comment on proposed regulations, leaving them with a December 2018 deadline to issue proposed guidance on the GILTI, FDII, BEAT, and other provisions.


On June 14, the Treasury Department and the IRS announced the final round of Opportunity Zone designations for four additional states. The program has now designated areas in all 50 states, Washington, D.C., and five U.S. territories.

The 2017 tax law created Opportunity Zones (OZ) to draw investment to certain economically disadvantaged urban and rural areas. The law outlines special tax incentives, including exclusions from capital gains taxes, for OZ-investors.

In order to take advantage of OZs, an investment vehicle, known as an Opportunity Fund (OF), must be created by the individual or business and organized as a corporation or partnership. The Opportunity Funds must be used for the purpose of investing and must hold at least 90 percent of its assets in qualified OZ property.

Qualified Opportunity Funds are determined by the Community Development Institutions Fund (CDIF) within the Treasury Department. The process for allocations OFs is similar to that used by the New Markets Tax Credit to certify community development entities.

According to the Treasury Department, nearly 35 million Americans live in the communities designated as OZs. These areas have an average poverty rate of over 32 percent, compared with the national average of 17 percent.

Treasury and the IRS recently released Opportunity Zones Frequently Asked Questions  to provide additional information on the program. More guidance is expected to be released in the coming months.

A full list of designated OZs is available here.

Tax Reform 2.0 may get a summer release according to House Ways and Means Chairman Kevin Brady (R-TX). Brady said that GOP members of his tax-writing committee have been meeting regularly to discuss the forthcoming package — the centerpiece of which will focus on making permanent the individual tax cuts enacted in 2017. The price tag for permanency has been estimated to cost anywhere between $600 billion and $700 billion.

Brady’s plan is to circulate draft legislation in July so that the House GOP caucus can review the proposals before official bill introduction. In addition to extending tax cuts, the package may also include provisions addressing retirement savings and education benefits. The goal is to get legislation out before the August recess.

Tax Reform 2.0 has little chance of surviving in the Senate, as nine Democrats would have to cross the aisle to help get it across the finish line. Still, left-leaning organizations aren’t taking any chances, issuing a letter urging lawmakers to reject “round 2 of tax cuts.” The June 12 letter cites cost concerns and argues that the 2017 tax cuts have disproportionately benefitted the wealthy. Signatories to the letter include 130 prominent national organizations such as the AFL-CIO, the Children’s Defense Fund, and the Center for American Progress.

The Senate convenes today at 3 p.m., and the House meets Tuesday at noon.

All eyes will be on the House chamber this week as members prepare to take up two bills to reform the U.S. immigration system and address the fate of DACA recipients (so-called “Dreamers”).

First up will be Rep. Bob Goodlatte’s Securing America’s Future Act (H.R. 4760), a measure that would, among other things, give Dreamers legal status but no pathway towards citizenship. The bill is expected to fail.

The second vote will be on a compromise bill, the Border Security and Immigration Reform Act, drafted by House Republicans, which adheres to the White House’s immigration framework. The legislation would offer Dreamers a pathway towards citizenship, eliminate the diversity visa lottery program, provide funding for the border wall, and limit family-based immigration. According to Speaker Paul Ryan (R-WI), the compromise bill would also end the policy of family separation. However, some immigration experts have argued that the draft bill does nothing to address the widely excoriated practice of separating children from their parents at the border. At this writing, passage of the compromise bill is a toss-up.

President Trump is expected to meet with House Republicans on Tuesday evening to discuss the immigration votes and affirm his support for their efforts.

Here’s what else is in store for the week:


Opioid Bills. The chamber will take up another tranche of bills addressing the opioid crisis.

Budget Resolution. Introducing a budget blueprint for fiscal year 2019 is a moot exercise at this point, but House Budget Chairman Steve Womack (R-AR) may still release a budget plan for messaging purposes.

Tax Cut Hearing. The House Financial Services Committee will hold a Wednesday hearing to examine how tax cuts and deregulation can empower a pro-growth economy.


Defense Vote. Members are preparing to take a final vote today on the FY 2019 defense reauthorization bill (H.R. 5515). Votes are expected to begin around 5:30 p.m. Passage is expected. As a refresher, H.R. 5515 also contains the language of the Foreign Investment Risk Review Modernization Act (S. 2098), a measure that would update operations at the Committee on Foreign Investment in the United States’ (CFIUS). Of note, it would expand CFIUS’s ability to review certain inbound foreign investments.

FY 2019 Appropriations Minibus. The Senate will tackle its first appropriations package (H.R. 5895) this week. The “minibus” has already cleared the House and covers funding for Energy-Water, Legislative Branch, and Milcon-VA. The first procedural vote will take place after the defense vote.

Rescissions Package. The White House’s $15 billion spending cuts package may face a Senate vote this week. The deadline to pass the rescissions package is June 22. It remains unclear whether Senate Majority Leader Mitch McConnell (R-KY) has the necessary votes.

Key Hearings

Tuesday, 6/19

  • Senate Appropriations Committee. Subcommittee markup on the FY 2019 Financial Services spending bill.

Wednesday, 6/20

  • Senate Finance Committee. Hearing on “Current and Proposed Tariff Actions Administered by the Department of Commerce.” Secretary Ross to testify.
  • Senate Finance Committee. Subcommittee hearing on trade and commerce at U.S. ports of entry.
  • House Ways and Means Committee. Subcommittee hearing on “IRS and U.S. Department of Justice Efforts to Return Taxpayers’ Seized Funds.”
  • House Financial Services Committee. Hearing on “Empowering a Pro-Growth Economy by Cutting Taxes and Regulatory Red Tape.”
  • House Financial Services Committee. Subcommittee hearing on the illicit use of virtual currency.

Thursday, 6/21

  • House Financial Services Committee. Hearing on the oversight of the SEC. Chairman Clayton to testify.