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Money Matters: This Week in Washington

This Week in Washington for April 22, 2019

April 22, 2019

By Dina Ellis


Special Counsel Robert Mueller’s long-awaited report was released in redacted form last week, following a press conference during which Attorney General William Barr indicated he disagreed with some of Mueller’s legal theories and emphasized that there was “no collusion.” The full report painted a less flattering portrait of the President and his team’s actions, and included an analysis of 10 episodes that could potentially have been construed as obstruction. House Judiciary Chairman Jerry Nadler (D-NY) issued a subpoena on Friday for an unredacted copy of the report and all underlying evidence, saying, “it now falls to Congress to determine the full scope … and to decide what steps we must take going forward.”

The United States International Trade Commission released its analysis of the new North American trade deal, the United States–Mexico–Canada Agreement (USMCA), which forecast a modest but positive impact on the U.S. economy. The report estimated the deal would result in a .35% boost to the economy and 176,000 new jobs when fully implemented.

Other highlights of last week include:

  • Former Virginia Governor Terry McAuliffe, who had been considering a run for the presidency, announced on Wednesday that he would instead focus his efforts on supporting Democrats in the Virginia State House.

  • Following the release of his taxes, presidential contender Beto O’Rourke was forced to defend his low level of reported charitable contributions saying he and his wife had donated beyond what was itemized because “it wasn’t important for us to take the deduction.”


Congress in recess.


H.R. 2324: On Monday, Rep. Chuy Garcia (D-IL) introduced H.R. 2324, a measure that would require creditors to request demographic information from applicants for certain types of credit in order to prevent discriminatory lending practices with respect to those applicants.

H.R. 2298: On Wednesday, Rep. Jackie Speier (D-CA), along with 14 of her colleagues, reintroduced the “Repeated Objectionable Bothering of Consumers on Phones (ROBOCOP) Act,” which would require telephone companies to offer free robocall blocking services to all their customers. Sen. Richard Blumenthal (D-CT) introduced the companion bill in the U.S. Senate.

H.R. 2338: On Friday, Rep. Eleanor Holmes Norton (D-DC) introduced H.R. 2338, the “Marijuana in Federally Assisted Housing Parity Act of 2019,” which would permit the use of marijuana in federally assisted housing, including public housing and Section 8 housing, in compliance with the marijuana laws of the state where the property is located.


Congress in recess.


FDIC and Federal Reserve Invite Comment on Resolution Plan Requirements: On Tuesday, the Federal Reserve Board and the Federal Deposit Insurance Corporation invited public comment on a proposal modifying their resolution plan (commonly referred to as “living wills”) requirements for large banking firms. The proposal would keep existing resolution plan expectations in place for the largest firms, while reducing requirements for smaller firms that pose less risk. For the most systemically important firms, the proposal would adopt the current practice of requiring resolution plans to be submitted on a two-year cycle. The proposal would tailor the rule’s requirements for firms that do not pose the same systemic risk as the largest institutions, requiring those plans to be submitted on a three-year cycle.

Agencies Seek Comment on Revisions to the Supplementary Leverage Ratio: On Thursday, the Federal Reserve, FDIC, and OCC requested comment on a proposal to modify a capital requirement for U.S. banking organizations predominantly engaged in custodial activities, as required by section 402 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA).

FinCEN Penalizes Peer-to-Peer Virtual Currency Exchanger for Violations of Anti-Money Laundering Laws: On Thursday, FinCEN announced that it had assessed a civil money penalty against Eric Powers for willfully violating the Bank Secrecy Act’s (BSA) registration, program, and reporting requirements. “Obligations under the BSA apply to money transmitters regardless of their size,” said FinCEN Director Kenneth A. Blanco. “It should not come as a surprise that we will take enforcement action based on what we have publicly stated since our March 2013 Guidance—that exchangers of convertible virtual currency, such as Mr. Powers, are money transmitters and must register as MSBs.

Treasury Issues Second Set of Opportunity Zones Guidance: On Wednesday, Treasury issued its second set of proposed regulations related to the new Opportunity Zones tax incentive. The tax benefit, created by the 2017 Tax Cuts and Jobs Act, is designed to drive economic development and create jobs by encouraging long-term investments in economically distressed communities nationwide. Secretary Steven Mnuchin touted the guidance as creating “greater flexibility for communities and investors” and incentivizing “economic revitalization.”

Treasury Designates Key Nodes of ISIS’s Financial Network: On Monday, Treasury’s Office of Foreign Assets Control (OFAC) designated seven individuals and one entity pursuant to Executive Order (E.O.) 13224, which targets terrorists and those providing support to terrorists or acts of terrorism. Specifically, OFAC designated key financial facilitators and conduits for the Islamic State of Iraq and Syria (ISIS) operating in Europe, Africa, and the Middle East. “This action is directed at the Iraqi-based Rawi Network, which has used hawalas and money service businesses to circumvent the formal banking sector and move terror funds for ISIS across Europe, Africa and the Middle East. Treasury is dedicated to ensuring the enduring defeat of ISIS by cutting off all remaining sources of their terror funding around the globe,” said Sigal Mandelker, Under Secretary for Terrorism and Financial Intelligence.

Treasury Targets Finances of Nicaraguan President Daniel Ortega’s Regime: On Wednesday, Treasury’s Office of Foreign Assets Control (OFAC) designated Laureano Ortega Murillo, the son of Nicaraguan President Daniel Ortega and Vice President Rosario Murillo, as well as Nicaraguan bank Banco Corporativo SA (BanCorp). The action targets corrupt financial operations and Ortega regime support networks. “Treasury is sanctioning Laureano Ortega Murillo and BanCorp for their roles in corruption and money laundering for the personal gain of the Ortega regime. These actions send a message to all who continue to prop up the Ortega regime that there is a steep price to pay for abusing the Nicaraguan economy and its people,” said Sigal Mandelker, Under Secretary for Terrorism and Financial Intelligence.

CFTC Commissioner Criticizes Federal Reserve’s Swaps Counterparty Risk Measure: Speaking at a CFTC advisory committee meeting, CFTC Commissioner Brian Quintenz criticized the Federal Reserve’s proposal, saying it could “increase transaction costs and diminish market liquidity for commercial end-users” and impose “enormously punitive treatment of oil and gas derivatives transactions.”

CFTC Approves a Final Rule to Provide Exception to Annual Privacy Notice Requirement: On Friday, the CFTC approved a final rule to revise a CFTC regulation that requires certain futures commission merchants, retail foreign exchange dealers, commodity trading advisors, commodity pool operators, introducing brokers, major swap participants, and swap dealers to provide annual privacy notices to customers. The final rule revises CFTC Regulation 160.5 to remove the requirement to provide these annual privacy notices when certain conditions are satisfied.

CFPB Announces Symposium Series: On Thursday, CFPB Director Kathy Kraninger announced a symposia series exploring consumer protections in today’s dynamic financial services marketplace. The series will be aimed at stimulating a proactive and transparent dialogue to assist the Bureau in its policy development process, including possible future rulemakings. The first topic for the series will clarify the meaning of abusive acts or practices under Section 1031 of the Dodd-Frank Act. The symposia series will include topics ranging from abusive acts or practices, behavioral law and economics, small business loan data collection, disparate impact and the Equal Credit Opportunity Act, cost-benefit analysis, and consumer authorized financial data sharing.

SEC Issues Risk Alert Reminding Advisers to Follow Privacy Rules: On Tuesday, the SEC’s Office of Compliance Inspections and Examinations issued a risk alert, warning investment advisors and broker-dealers to “review their written policies and procedures, including implementation of those policies and procedures, to ensure that they are compliant with regulation [safeguard procedures].”

SEC and FINRA Announce National Compliance Outreach Program: On Tuesday, the SEC and FINRA announced the opening of registration for their 2019 National Compliance Outreach Program for Broker-Dealers, which will be held June 27, 2019, in Chicago. The program is designed to provide an open forum for regulators and industry professionals, including compliance, internal audit, and other senior personnel of broker-dealer firms and branch offices, to discuss current compliance practices and promote a more effective compliance structure for the protection of investors.

HUD Calls on Housing Providers to Protect Residents from Carbon Monoxide: On Thursday, HUD sent all public housing authorities and private owners of HUD-subsidized housing a notice to remind and encourage them to install working CO detectors in their properties. “A simple, inexpensive, widely-available device can be the difference between life and death,” said HUD Secretary Ben Carson. “Given the unevenness of state and local law, we intend to make certain that CO detectors are required in all our housing programs, just as we require smoke detectors, no matter where our HUD-assisted families live.”


Newly Confirmed FHFA Director Appoints Deputy: New FHFA Director Mark Calabria has selected Adolfo Marzol to serve as his principal deputy director. Mr. Marzol will join the agency from HUD, where he has served for two years as a senior advisor to Secretary Carson.

SEC Names Two New Deputy Chief Counsels in Division of Investment Management: On Monday, the SEC announced that Sara Cortes and David Bartels had been named Deputy Chief Counsels of the Division of Investment Management. Ms. Cortes has been a member of the division’s Rulemaking Office since 2013, serving most recently as Assistant Director and head of the Investment Adviser Regulation Office. Mr. Bartels has served in a number of capacities in the Division of Investment Management, most recently as Senior Policy Advisor to Director Dalia Blass.

Herman Cain Remains Committed to Vetting Process: Despite backlash from some members of Congress, Herman Cain, one of the President’s reported choices for vacancies on the Federal Reserve Board, has indicated he remains “very committed” to the vetting process. The White House however, has reportedly begun to interview additional candidates.


West Virginia to Use DLT in 2020: West Virginia’s Elections Director announced that the state will use blockchain and distributed ledger technology during the 2020 election, following a successful pilot during the 2018 midterms. In a statement, Donald Kersey praised the positive impact of DLT in allowing U.S. military forces overseas to take part more easily in the democratic process.

State Regulators Urge Congress to Enact Safe Harbor Legislation: In a letter to Congress on Monday, regulators from 24 states and Puerto Rico called for “Congress to consider legislation that creates a safe harbor for financial institutions to serve a state-compliant business or entrust sovereign states with the full oversight and jurisdiction of marijuana-related activity.” They argued that establishing a safe harbor would reduce the risk inherent in cash-and-carry operations, and bring their operations into the regulatory reporting compliance framework.

Banking Advisory Group Calls for Clarity around LIBOR Phase-out: Members of the National Association of Corporate Treasurers are calling for greater transparency and clarity from regulators surrounding the transition from the LIBOR benchmark. Chairman Tom Deas urged in an SEC advisory group meeting for the agency to “give us certainty as to the accounting, tax, and regulatory treatment of these conversions so that we can know that now, and make these changes.”

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