Impeachment fight derailing banking bills? Think again
WASHINGTON — Despite partisan tumult over the impeachment inquiry into President Trump, lobbyists and industry analysts see two legislative priorities for banks potentially staying above the political fray.
The conventional wisdom about House Democrats' formal probe of the Trump administration is it will lead to an further breakdown in moving bills through Congress. Last week, White House Press Secretary Stephanie Grisham said the inquiry “destroyed any chances of legislative progress.”
But in the midst of Democrats launching the probe on Sept. 24, two banking industry-backed initiatives with bipartisan backing — cannabis banking reform and changes to anti-money-laundering rules — appeared to gain steam. The House overwhelmingly passed the pot banking bill one day later, and on Sept. 26 senators formally introduced the AML bill with four Republican sponsors and four Democratic sponsors.
Observers said lawmakers who want to see the bills succeed will try to move forward notwithstanding the furor over the impeachment proceedings.
“Advancing common-sense bipartisan solutions to real and pressing problems like cannabis banking and an AML system that’s gone haywire should be doable regardless of whether or not the president violated his oath of office via a phone call with the president of Ukraine,” said Aaron Klein, economic studies fellow at the Brookings Institution.
Bankers still are hopeful that the Ukraine probe will not derail their priorities.
“As a banking trade group, you want the Congress to stay focused on policy … and not the politics of impeachment,” said Paul Merski, group executive vice president for congressional relations and strategy at the Independent Community Bankers of America. “Time is already a challenge in both the House and Senate. … We would prefer that members stay focused on policy and key policy issues.”
Howard Headlee, president of the Utah Bankers Association, who was in Washington last week to push marijuana banking and AML reforms, said he thinks those issues rise above the partisan rancor.
"I don’t think it’s as toxic as it appears in the media," Headlee said of the policy environment. "There are a number of issues that seem to be above the political toxicity. ... I felt like it was one of my most productive trips ever to Washington, D.C., and it was in the middle of this impeachment thing."
The data on legislative action during an impeachment process is limited. Yet Klein pointed to infrastructure legislation that passed when President Bill Clinton was being impeached. (The Senate later acquitted him.)
“Bill Clinton cut a major infrastructure deal with [Former House Speaker] Newt Gingrich while he was being impeached,” Klein said. “There is no reason why Congress can’t legislate and investigate.”
A day after House Speaker Nancy Pelosi announced the impeachment inquiry, the House passed the Secure and Fair Enforcement Banking Act, or SAFE Banking Act, on Sept. 25 by a 321-103 vote. Ninety-one Republicans joined nearly all of the chamber’s Democrats in supporting the bill.
The bill is a priority for bankers looking for the ability to service marijuana businesses in states that have legalized the substance. It would bar federal regulators from penalizing financial institutions for catering to marijuana businesses that are compliant with state laws.
Members of the Senate Banking Committee the next day introduced the AML bill, which the banking industry also strongly backs. It would require companies to disclose their true, or beneficial, owners at incorporation to the Financial Crimes Enforcement Network. A similar beneficial ownership bill passed the House Financial Services Committee in June 43-16, with 10 Republicans joining all of the panel’s Democrats.
Some believe the two bills could be exceptions to the rule that legislative progress will stall with impeachment.
“I think that in many ways legislating is mostly dead … but it’s not completely dead,” said Ed Mills, a policy analyst at Raymond James. “Anytime you see a bipartisan, bicameral approach, you start to have to pay attention.”
Klein said cannabis banking and AML reforms are “pressing problems” that Congress should still act on while impeachment moves forward. He added that the White House statement on a legislative breakdown was “not a sustainable threat.”
Even before impeachment, the Senate was viewed as a roadblock for marijuana banking. But the bill was amended to include protections for industrial hemp businesses in order to attract support from Senate Majority Leader Mitch McConnell, R-Ky., who pushed to de-schedule the crop in a farm bill last year.
Rep. Ed Perlmutter, D-Colo., who has led the cannabis banking effort in the House for six years, also tried to sway hesitant Republicans by adding language in the bill to formally end Operation Choke Point. The Obama-era Justice Department policy drew banks into fraud investigations of controversial merchants such as payday lenders.
“The amendment related to hemp in the House helps win over the Senate majority leader, who helped legalize hemp last year,” Mills said. “The focus on Operation Choke Point helps win over some Republicans. You don’t argue this as a pro-pot legislation.”
Perlmutter said at a press conference last week that he thinks Congress can legislate while impeachment moves forward.
“I think that the Congress can continue and will continue to operate even as investigations into some of the activities of the White House are conducted,” Perlmutter said. “We can walk and chew gum at the same time and we can do these things. And I think this bill, because of the safety implications of it, will be taken up by the Senate.”
James Ballentine, executive vice president of congressional relations and political affairs at the American Bankers Association, said he thinks Perlmutter’s negotiations with Republicans will help the bill advance in the Senate.
“This is really a master class of how you go about getting legislation done and trying to work things out on both sides of the aisle — working with a number of stakeholders, allowing time to work the process, and working to get things down to the floor,” Ballentine said.
Senate Banking Committee Chairman Mike Crapo, R-Idaho, has said he would like to hold a vote on cannabis banking legislation in committee before the end of the year.
“I always prefer Congress remain a legislative body that advances legislation to benefit the American people,” Crapo said in a statement after Pelosi’s impeachment announcement.
Despite bankers’ optimism that some of their priorities will move forward, Mills said that the timing of the impeachment inquiry heading into a presidential election year still poses a threat to legislation.
“If this impeachment inquiry puts a Senate trial into the first half of next year … things are largely on hold until this is completed,” Mills said. “And if it doesn’t get completed until presidential primary season … that is usually the excuse not to do anything.”