The Washington Weekly – COVID Upends Washington

In what can only be described as a wild and unprecedented few weeks in Washington, President Trump and multiple members of his Administration tested positive for COVID-19 along with many sitting U.S. Senators-an October surprise like none seen before.

After learning that multiple Members of his Caucus have tested positive, Senate Majority Leader Mitch McConnell put the Senate into recess through at least October 19th, likely sidelining all stimulus and Supreme Court deliberations for at least a few weeks.

On the House side, Speaker Pelosi (D-CA) introduced and quickly passed a trimmed down HEROES Act, a $2.2 trillion dollar stimulus package that included additional aid for state and local governments. The Speaker has continued negotiations with Treasury Secretary Mnuchin, seemingly looking for middle ground for additional stimulus to circumvent the Senate Republican Caucus prior to the November elections.

However, the talks appear to be sidelined after a multitude of conflicting Presidential tweets earlier this week calling for a halt of the discussions until after the election to yesterday imploring House Republicans he wants a big deal now.

**As part of the BDA Fixed Income Insights Political Intel Series, this week the BDA released its 2020 Electoral Outlook: Tax Policy and Municipal Bonds

The brief can be viewed here.

Legislative Recap:
Members of Congress Urge SEC to Withdraw Exemptive Order

With support and assistance from the BDA, Representatives French Hill (R-AR) and Vincente Gonzalez (D-TX) wrote the SEC in opposition of the Temporary Exemptive Order for Municipal Advisors.The legislators urged the Commission to withdraw the original proposed order and ensure that the TCE expires on December 31st 2020 citing investor protection concerns and lack of market need.

The letter can be viewed here.

Further, the Members questioned the SEC’s motives pushing the action through under the guise of COVID relief citing the municipal markets are now, and have been functioning quite well due to in part to the programs created by the Treasury Department and  Federal Reserve, including the Municipal Liquidity Facility (MLF).

House Passes Trimmed Stimulus-Trump Stunts Deliberations

The House yet again passed the HEROES Act, a robust $2.2 trillion dollar stimulus package and yet again, the House failed to include any municipal bond provisions.

The House actions kicked off another round of discussions with the Administration in search of a compromise.  Late last week, and into early this week it appeared as if progress was being made towards a $1.6 trillion dollar package. Further, Fed Chairman Jerome Powell continued to press lawmakers to take additional action to further stave off a deeper, longterm recession.

However, President Trump on Tuesday effectively ended discussions, ordering his Deputies pull back and wait to pass another round of stimulus after the November 3rd elections, only to recant days later claiming the desire to pursue a piecemeal approach.

At this time, it appears there is no clear path for a new round of stimulus in the coming weeks.

While the BDA has been skeptical of any additional stimulus measures passing before the election, and even more so doubtful for inclusion of bond provisions, this turn of events puts the passage of stimulus in jeopardy even in the lame duck session regardless of the electoral outcome.

Reg Recap:
FIMSAC Discusses Observations and Lessons Learned

Earlier this week, the SEC FIMSAC held a virtual meeting focused on various issues facing issuers, and a recommendation on electronic trading.

The meeting notice can be viewed here.

The meeting worked to address the regulatory disparities between broker-dealers and alternative trading systems.  This included deliberation on a recommendation in response to an SEC concept release from last week. The SEC asked for comment on whether the current regulatory structure for alternative trading systems needs to be changed.

The recommendation can be viewed here.

Further, the Committee discussed observations and lessons learned due to COVID. This included reaction to the extreme volatility March, and the need for additional state and local aid from Congress.

FIMSAC also heard from newly appointed MSRB CEO Mark Kim who stated that the MSRB has received to date over 20,000 disclosures  that reference the pandemic and about 12,600 issuers had submitted disclosures that referenced COVID-19.

Other Regulatory News:
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