2018 MIDTERM ELECTIONS

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1 2018 MIDTERM ELECTIONS The Impact on Retail Banking November 7, 2018

2 Today s presenters: Richard Hunt - President & Chief Executive Officer, CBA Kris Fallon - Vice President, Congressional Affairs, CBA Sam Whitfield - Senior Vice President, Congressional Affairs, CBA Questions? If you would like to ask a question during the call, it to Ryan Blake: rblake@consumerbankers.com 2

CBA-PAC is a voluntary, non-partisan committee that supports candidates from both sides who understand the importance of a healthy, vigorous and robust financial services industry.

Annually, nearly half of CBA-PAC receipts come from individual contributions.

3 CBA-PAC is a voluntary, non-partisan committee that supports candidates from both sides who understand the importance of a healthy, vigorous and robust financial services industry. 53 In 2017, CBA-PAC received support from 53 individuals including 16 first-time supporters. More than 90% of CBA team members participate in the CBA-PAC. Annually, nearly half of CBA-PAC receipts come from individual contributions. «48% «CBA-PAC identified 54 legislators who were champions and friends of the industry, disbursing over $200,000 in $200K « In under 8 years, CBA-PAC has grown from $18,500 to $200,000+ in annual receipts. Since 2008, CBA-PAC has received $350,000+ in personal contributions from industry supporters. 3

4 Senate Breakdown Pre-Election Post-Election REPUBLICANS 49 DEMOCRATS 53 REPUBLICANS 46 DEMOCRATS (MS, FL) 1 UNRESOLVED (AZ) 4

5 Senate 35 Seats Up: 26 Dems + 9 Reps Toss Ups Senator Party State Result Sen. Jeff Flake - Retiring R AZ Too close to call Sen. Dean Heller* R NV Lost Sen. Joe Donnelly* D IN Lost Sen. Jon Tester* D MT Won Sen. Claire McCaskill D MO Lost Sen. Bill Nelson D FL Lost (recount) Notable Senator Party State Result Sen. Bob Corker* - Retiring R TN Won Marsha Blackburn (R) Sen. Heidi Heitkamp* D ND Lost Sen. Joe Manchin D WV Won Sen. Bob Menendez* D NJ Won Sen. Ted Cruz R TX Won *Serving on Senate Banking Committee 5

6 Senate Seat Flips DEMOCRAT TO REPUBLICAN REPUBLICAN TO DEMOCRAT MODERATE DEMS 116 th Congress Manchin (D-WV) NORTH DAKOTA Sen. Heitkamp (D) Rep. Kevin Cramer (R) NEVADA Sen. Heller (R) Rep. Jacky Rosen (D) Carper (D-DE) Peters (D-MI) Tester (D-MT)* Warner (D-VA) * 9 MISSOURI Sen. McCaskill (D) A.G. Josh Hawley (R) UNRESOLVED Jones (D-AL) * Coons (D-DE) Kaine (D-VA) FLORIDA Sen. Nelson (D) Gov. Rick Scott (R) ARIZONA (open seat) Rep. Martha McSally (R) Rep. Kyrsten Sinema (D) Bennet (D-CO) *Serving on Senate Banking Committee INDIANA Sen. Donnelly (D) Mike Braun (R) 6

7 Senate Republican Leadership Lame Duck Agenda Sen. Mitch McConnell SENATE MAJORITY LEADER ± Administration and Judicial Confirmations Fed Confirmations Kraninger Confirmation ± Continuing Resolution/Omnibus ± Farm Bill 116 th Agenda ± Administration and Judicial Confirmations ± Regulatory Reform (Energy, Health, Etc.) ± Economy and Job Growth Leadership Office 115 th Congress 116 th Congress Majority Leader Mitch McConnell Mitch McConnell Majority Whip John Cornyn John Thune Republican Conference Chair John Thune John Barrasso Republican Policy Committee John Barrasso Roy Blunt Republican Conference Vice Chair National Republican Senatorial Committee Chairman Roy Blunt Cory Gardner TBD - Deb Fischer, Joni Ernst TBD - Todd Young ± Annual Appropriations Process 7

8 Senate Democratic Leadership Leadership Office 115th Congress 116th Congress Minority Leader Minority Whip Assistant Leader Policy and Communications Committee Chairman Conference Vice Chairs Steering Committee Chairman Outreach Chairman Policy and Communications Committee Chairman Vice Chairman Conference Secretary Chuck Schumer à Dick Durbin à Patty Murray à Debbie Stabenow à Mark Warner, Elizabeth Warren à Amy Klobuchar à Bernie Sanders à Joe Manchin à Tammy Baldwin à Democratic Senatorial Campaign Committee Chairman Chris Van Hollen Catherine Cortez-Masto? 8

Senate Banking Committee Agenda ± GSE reform ± Flood insurance reauthorization ± Reducing government data

Mike Crapo CURRENT & EXPECTED CHAIRMAN ± Examining cryptocurrency ± No government subsidies to companies

Sherrod Brown (D-OH) CURRENT & EXPECTED RANKING MEMBER Financial Institutions & Consumer Protection Pat

Transportation & Community Development - Tim Scott (R-SC) ± National Security & International Trade &

Insurance & Investment - TBD DEMOCRATS Heidi Heitkamp (D-ND) Lost Joe Donnelly (D-IN) Lost POSSIBLE

9 Senate Banking Committee Agenda ± GSE reform ± Flood insurance reauthorization ± Reducing government data collection Sen. Mike Crapo CURRENT & EXPECTED CHAIRMAN ± Examining cryptocurrency ± No government subsidies to companies that pursue social policy (i.e. gun policy) Sen. Sherrod Brown (D-OH) CURRENT & EXPECTED RANKING MEMBER Financial Institutions & Consumer Protection Pat Toomey (R-PA) CURRENT & EXPECTED CHAIRMAN SUBCOMMITTEES ± Economic Policy - Tom Cotton (R-AR) ± Housing, Transportation & Community Development - Tim Scott (R-SC) ± National Security & International Trade & Finance - Ben Sasse (R-NE) Elizabeth Warren (D-MA) CURRENT & EXPECTED RANKING MEMBER ± Securities, Insurance & Investment - TBD DEMOCRATS Heidi Heitkamp (D-ND) Lost Joe Donnelly (D-IN) Lost POSSIBLE ADDITION: Gary Peters (D-MI) REPUBLICANS Bob Corker (R-TN) Retiring Dean Heller (R-NV) Lost POSSIBLE ADDITIONS: Mike Braun (R-IN) Kevin Kramer (R-ND) Todd Young (R-IN) Mitt Romney (R-UT) RATIO: 115th Congress = 13/12 116th Congress = 14/12 (possible) 2 SEATS TO FILL 3 SEATS TO FILL 9

10 Key Senate Committee Chairmen Sen. Marco Rubio (R-FL) Small Business & Entrepreneurship Expected Chairman Sen. Roger Wicker (R-MS) Commerce, Science & Transportation Expected Chairman Sen. Chuck Grassley (R-IA) Finance Expected Chairman Sen. Richard Shelby (R-AL) Appropriations Current & Expected Chairman Sen. Lamar Alexander (R-TN) Health, Education, Labor & Pensions Current & Expected Chairman Sen. Lindsey Graham (R-SC) Judiciary Expected Chairman 10

11 House of Representatives Pre-Election Post-Election REPUBLICANS 193 DEMOCRATS 7 VACANCIES 198 REPUBLICANS 220 DEMOCRATS 17 UNRESOLVED 11

12 House of Representatives 2018 Races LIKELY DEMOCRAT (8 Dem, 4 GOP) LEAN DEMOCRAT (2 Dem, 12 GOP) TOSS UP (1 Dem, 30 GOP) LEAN REPUBLICAN (1 Dem, 24 GOP) LIKELY REPUBLICAN (1 Dem, 25 GOP) AZ-1 O Halleran CA-7 Bera CA-16 Costa FL-7 Murphy MN-7 Peterson NH-1 Shea-Porter* NJ-5 Gottheimer PA-8 Cartwright PA-17 Rothfus/Lamb NJ-2 LoBiondo* PA-5 VACANT-Meehan PA-6 Costello* 108 Competitive Seats NV-3 Rosen* NV-4 Kihuen* AZ-2 McSally* CA-49 Issa* CO-6 Coffman IA-1 Blum IL-6 Roskam KS-3 Yoder MI-11 Trott* MN-2 Lewis MN-3 Paulsen NJ-11 Frelinghuysen* PA-7 VACANT-Dent VA-10 Comstock ± 95 Republican, 13 Democrat ± Dems needed to flip 23 seats to gain control ± 218 = Majority MN-1 Walz* CA-10 Denham CA-25 Knight CA-39 Royce* CA-45 Walters CA-48 Rohrabacher FL-26 Curbelo FL-27 Ros-Lehtinen* IA-3 Young IL-12 Bost IL-14 Hultgren KS-2 Jenkins* KY-6 Barr ME-2 Poliquin MI-8 Bishop NC-9 Pittenger* NC-13 Budd NJ-3 MacArthur NJ-7 Lance NM-2 Pearce* NY-19 Faso NY-22 Tenney OH-1 Chabot OH-12 Balderson PA-1 Fitzpatrick TX-7 Culberson TX-32 Sessions UT-4 Love VA-2 Taylor VA-7 Brat WA-8 Reichert* MN-8 AR-2 CA-50 FL-15 FL-16 GA-6 GA-7 IL-13 MO-2 MT-AL NC-2 NE-2 NY-11 NY-24 NY-27 PA-10 PA-16 SC-1 TX-23 TX-31 VA-5 WA-3 WA-5 WI-1 WV-3 Nolan* Hill Hunter Ross* Buchanan Handel Woodall Davis Wagner Gianforte Holding Bacon Donovan Katko Collins Perry Kelly Sanford* Hurd Carter Garrett* Beutler McMorris Rodgers Ryan* Jenkins* PA-14 AK-AL AZ-6 CA-4 CA-21 CO-3 FL-6 FL-18 FL-25 IA-04 IN-2 MI-1 MI-3 MI-6 MI-7 NC-8 NY-1 NY-2 NY-21 OH-10 OH-14 TX-2 TX-21 TX-22 TX-24 WI-6 OPEN (Lamb) Young Schweikert McClintock Valadao Tipton DeSantis* Mast Diaz-Balart King Walorski Bergman Amash Upton Walberg Hudson Zeldin King Stefanik Turner Joyce Poe* Smith* Olson Marchant Grothman Source: Cook Political Report, October 18, 2018 *Asterisks denote incumbents not seeking reelection, seeking other office, or lost their primary election. 12

House Leadership Agenda ± Oversight of Administration ± Strengthen consumer protections and protect the CFPB: Democrats.

± Healthcare ± Policies aimed at wage growth ± Dreamers and immigrant families ± Gun control ± Infrastructure Rep.

Jim Jordan POTENTIAL HOUSE MINORITY LEADER 13 DEMOCRATS OPPOSED TO PELOSI Democrat Leadership Office Speaker of the House

Minority Whip Republican Conference Chair National Republican Campaign Committee Chair 116 th Congress Nancy Pelosi Steny

13 House Leadership Agenda ± Oversight of Administration ± Strengthen consumer protections and protect the CFPB: Democrats... will continue to fight to strengthen vital consumer protections and hold big banks accountable for fraud and abuse. ± Healthcare ± Policies aimed at wage growth ± Dreamers and immigrant families ± Gun control ± Infrastructure Rep. Nancy Pelosi EXPECTED SPEAKER OF THE HOUSE Rep. Kevin McCarthy, Rep. Steve Scalise or Rep. Jim Jordan POTENTIAL HOUSE MINORITY LEADER 13 DEMOCRATS OPPOSED TO PELOSI Democrat Leadership Office Speaker of the House Majority Leader Whip Democratic Congressional Campaign Committee Chair Republican Leadership Office Minority Leader Minority Whip Republican Conference Chair National Republican Campaign Committee Chair 116 th Congress Nancy Pelosi Steny Hoyer TBD Jim Clyburn Denny Heck, Suzan DelBene or Sean Maloney 116 th Congress Kevin McCarthy, Steve Scalise or Jim Jordan Steve Scalise or Patrick McHenry Cathy McMorris Rodgers TBD 13

House Financial Services Committee Agenda ± Fair Lending and Community Reinvestment Act ± Oversight (Trump Administration, Large Banks) ±

..will shut down megabanks that repeatedly show indifference toward consumer protection.

I have not forgotten that you undermined our community... What am I going to do to you? What I'm going to do to you is fair.

Maxine Waters, October 2018 SUBCOMMITTEES Gregory Meeks (D-NY) Financial Institutions & Consumer Credit Subcommittee EXPECTED CHAIRMAN Ann Wagner

14 House Financial Services Committee Agenda ± Fair Lending and Community Reinvestment Act ± Oversight (Trump Administration, Large Banks) ± Corporate Governance ± Overturn Mulvaney s actions and protect the BCFP ± Break up the big banks: My bill...will shut down megabanks that repeatedly show indifference toward consumer protection. ± Consumer privacy Maxine Waters (D-CA) EXPECTED CHAIRWOMAN I have not forgotten you foreclosed on our houses. I have not forgotten that you undermined our community... What am I going to do to you? What I'm going to do to you is fair. I'm going to do to you what you did to us. Rep. Maxine Waters, October 2018 SUBCOMMITTEES Gregory Meeks (D-NY) Financial Institutions & Consumer Credit Subcommittee EXPECTED CHAIRMAN Ann Wagner (R-MO) Financial Institutions & Consumer Credit Subcommittee POTENTIAL RANKING MEMBER ± Capital Markets, Securities, and Investment - Carolyn Maloney (D-NY) ± Housing and Insurance - Emanuel Cleaver (D-MO) Blaine Luetkemeyer (R-MO) EXPECTED RANKING MEMBER ± Monetary Policy & Trade - Gwen Moore (D-WI) ± Oversight & Investigations - Al Green (D-TX) ± Terrorism & Illicit Finance - Ed Perlmutter (D-CO) 14

15 House Financial Services Committee REPUBLICAN -10* DEMOCRAT th Ratio: 34/26 Republican departures & losses = Democrat departures & losses = 5 Retirements: Retirements: Jeb Hensarling (R-TX) Ed Royce (R-CA) Competitive Races: Andy Barr (KY-06): W Ted Budd (NC-13): W Ruben Kihuen (D-NV) Keith Ellison (D-MN) John Delaney (D-MD) 116th Ratio: 34/26 (If current ratio is kept) Republican seats to be filled = 2-5 Democrat seats to be filled = 13 Dennis Ross (R-FL) Steve Pearce (R-NM) Luke Messer (R-IN) French Hill (AR-02): W Randy Hultgren (IL-14): L Mia Love (UT-04): U* Lost Primary: Mike Capuano (D-MA) Dave Trott (R-MI) Lost Primary: Robert Pittenger (R-NC) Tom MacArthur (NJ-03): U* Bruce Poliquin (ME-02): U* Keith Rothfus (PA-17): L Claudia Tenney (NY-22): L Lee Zeldin (NY-01): W Senate Run: Kyrsten Sinema (D-AZ) Competitive Races: Josh Gottheimer (NJ-05): W Charlie Crist (FL-05): W 15

16 Key House Committee Chairmen Nydia Velazquez (D-NY) Small Business Expected Chairwoman Elijah Cummings (D-MD) Oversight & Government Reform Expected Chairman Richard Neal (D-MA) Ways & Means Expected Chairman Frank Pallone (D-NJ) Energy & Commerce Expected Chairman Bobby Scott (D-VA) Education & Workforce Expected Chairman Nita Lowey (D-NY) Appropriations Expected Chairwoman James McGovern (D-MA) Rules Expected Chairman Jerrold Nadler (D-NY) Judiciary Expected Chairman 16

17 State Leaders Governors Pre-Election: ± 16 Democrats ± 33 Republicans ± 1 Independent Attorneys General Pre-Election: ± 22 Democrats ± 27 Republicans ± 1 Independent Post-Election: ± 23 Democrats ± 26 Republicans ± Georgia Too Close to Call Post-Election: ± 26 Democrats ± 24 Republicans 17

18 What does all of this mean? 18

19 Top Take-Aways 1. Legislative gridlock (no significant financial services legislation will be enacted). 2. Oversight of President Trump and large banks will take center stage. 3. Regulatory reform at agencies will continue unabated. 4. Chairwoman Waters will seek to thwart CRA modernization. 5. CBA s advocacy efforts are full speed ahead Election.. 19

20 VS. 20

21 Questions? your questions to Ryan Blake: 21

22 Stay in Touch ± Online consumerbankers.com ± ± Facebook - LinkedIn - YouTube ± CBA SmartBrief ± Webinars & Whitepapers ± Suite 550 Podcast RICHARD HUNT CBA President & CEO 22

House 2018 races Senate 2018 races 2018 governor races

House 2018 races Senate 2018 races 2018 governor races House 08 races Senate 08 races 08 governor races Cook Political Report ratings October /, 08 Current House and Senate divisions House of Representatives Senate 50 votes for majority 5 votes needed to pass*