This Week in Washington for July 13, 2020
By Dina Ellis
THE BIG PICTURE
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The United States surpassed 3 million coronavirus cases, a grim milestone as the resurgence across the South and West continues to worsen. Dr. Anthony Fauci warned against a sense of “false complacency” and lamented the division and distrust across the country, which he claimed has hindered a coordinated response. This issue of schools has become the focus of attention as districts across the country struggle to balance the safety of students and staff with the risk of coronavirus spread as they make plans for the coming schoolyear. The President pressured governors on Tuesday to support a full return to classrooms in the fall, with Education Secretary Betsy DeVos echoing those sentiments, and criticizing localities who had proposed only partial in-person instruction. CDC Director Robert Redfield emphasized that the agency’s guidance was never intended “to be used as a rationale to leave . . . schools closed.” Despite this preference, significant concerns about a return to classrooms remain among administrators, teachers, and parents, particularly in areas experiencing a spike in infections.
The Supreme Court closed out its term, releasing a number of high profile decisions. On Monday, the Court ruled unanimously that states may require presidential electors to support the popular vote winner, and punish those who break their pledge to do so. On Wednesday, in a 7-2 decision the Court upheld the administration’s decision to allow religious and moral exemptions from the Affordable Care Act’s mandate to provide free birth control for women. On Thursday, in a pair of 7-2 decisions, the Court rejected the President’s argument that he had “absolute” immunity from investigation. The Court upheld a New York grand jury subpoena for the President’s tax returns and other financial documents but sent the case back to the lower court to give the President an opportunity to raise additional arguments. Separately, the Court vacated lower court rulings upholding subpoenas by House Committees, remanding the cases in order to apply a new standard. House Democrats celebrated the decisions, which they said reaffirmed “the President is not above the law,” and the important role of congressional oversight. Democratic leadership indicated they remain committed to continue pursuing the cases through the lower courts.
Negotiations over the parameters of an additional relief package continue. The administration has reportedly focused on the issues of drug pricing transparency, medical billing, and telemedicine tweaks as potential areas for bipartisan compromise. Senate Majority Leader Mitch McConnell hopes to pass a measure before the August recess, meaning a lot of ground would need to be covered over the next few weeks. House Speaker Nancy Pelosi rejected the US$1T cap for the package floated by the administration, calling it “an interesting starting point” but one that doesn’t come anywhere near what is required in House Democrats’ view.
The virus continues to impact the trajectory of the presidential campaign, forcing the candidates to adapt to the rapidly evolving public health landscape. A number of Republican Senators have announced they won’t be in attendance at the Republican National Convention set to take place next month in Jacksonville, Florida due to coronavirus concerns, including Chuck Grassley.
Other highlights of last week include:
On Friday evening the President commuted the sentence of his former campaign adviser Roger Stone, days before Stone was set to report to prison. Stone was found guilty on 7 counts stemming from the Russia probe.
The administration formally gave notice that the United States plans to withdraw from the World Health Organization, a move which would go into effect next July.
The President’s former personal attorney was taken back into custody on Thursday after violating the terms of his early release.
The President’s niece, Mary Trump, has penned a scathing tell-all in which she accuses the President of “hubris and willful ignorance.”
LAST WEEK ON THE HILL
HOUSE FINANCIAL SERVICES COMMITTEE
Hearing on “
Lisa Cook, Professor, Department of Economics, James Madison College, Michigan State University
Lily Eskelsen García, President, National Education Association
Joseph Stiglitz, Professor of Economics, Columbia University
Diego Zuluaga, Associate Director of Financial Regulation Studies, Cato Institute
Hearing on “
Brian McClendon, CEO, Co-founder, CVKey Project
Krutika Kuppalli, M.D., Infectious Diseases Physician
Andre M. Perry, Fellow, Metropolitan Policy Program, Brookings Institution
Ramesh Raskar, Professor, MIT and Founder, PathCheck Foundation
Hearing on “
Carmen Castillo, Chairwoman of the Board of Directors, U.S. Hispanic Chamber of Commerce
Ron Busby Sr., President and CEO of the U.S. Black Chambers, Inc.
Jenell Ross, President, Bob Ross Auto Group
Karen Kerrigan, President and CEO, SBE Council
SENATE BANKING COMMITTEE
Committee Democrats Urge Chairman Crapo to Hold Another Hearing on Shelton’s Nomination to the Federal Reserve Board: On Friday, ranking member Sherrod Brown (D-OH) led a letter signed by all Committee Democrats to Chairman Mike Crapo (R-ID), urging him to hold another hearing on Dr. Judy Shelton’s nomination for the Board of Governors of the Federal Reserve before moving her nomination forward. On Friday, Chairman Crapo announced that he would markup Dr. Shelton’s nomination on July 21st in the midst of an economic and public health crisis. The Senators made clear that Shelton’s answers during her nomination hearing raise serious doubts about her ability to handle the economic fallout of the Coronavirus pandemic. The Senators, in their letter, highlighted how Shelton’s extreme views would be disastrous for the American economy as it struggles to recover from the Coronavirus pandemic.
Brown, Klobuchar Call on the OCC to Ensure Banks Provide Relief to Homeowners: On Friday, ranking member Sherrod Brown (D-OH) and Sen. Amy Klobuchar (D-MN) led seven colleagues in a letter to the OCC calling for clarification regarding the critical role played by state and local officials—including Governors and Attorneys General—in working with banks to provide relief to homeowners and mortgage holders during the coronavirus pandemic. The Senators called on the OCC to “confirm that the hundreds of agreements already reached by banks across the nation with state and local agencies regarding treatment of mortgage holders are legal, enforceable, and fully within the powers of state and local regulators.”
LEGISLATION INTRODUCED AND PROPOSED
H.R. 7495: Rep. Linda Sanchez (D-CA) introduced H.R. 7495, which would help charitable nonprofit organizations provide services to meet the increasing demand in community needs caused by the coronavirus pandemic, preserve and create jobs in the nonprofit sector, reduce unemployment, and promote economic recovery.
H.R. 7498: Rep. Rashida Tlaib (D-MI) introduced H.R. 7498, which would authorize Federal Reserve banks to purchase COVID-19 related municipal issuances.
H.R. 7506: Rep. Ted Budd (R-NC) introduced H.R. 7506, which would provide a civil remedy for individuals harmed in lawless jurisdictions.
H.R. 7564: Rep. David Scott (D-GA) introduced H.R. 7564, which would amend the Investment Advisers Act of 1940 to require the Securities and Exchange Commission to adopt data protection policies for information the Commission receives from investment advisers.
THIS WEEK ON THE HILL
Tuesday, July 14
House Financial Services Committee (Subcommittee on Investor Protection, Entrepreneurship and Capital Markets) Virtual Hearing on “
Wednesday, July 15
House Appropriations Committee Markup of “FY2021 Homeland Security; Financial Services and General Government Appropriations Bills”: 10:00 AM in 1100 Longworth Building.
Thursday, July 16
House Financial Services Committee (Subcommittee on Oversight and Investigations) Virtual Hearing on “
SBA and Treasury Release Paycheck Protection Program Loan Data: On Monday, the SBA released a tranche of data on the 4.9 million recipients of Paycheck Protection Program loans, leading to a flurry of coverage and analysis of which entities received funding. A number of private-equity backed companies received loans, as well as businesses with ties to members of Congress and state governments, raising some eyebrows. The release included loan-level data, including business names, addresses, NAICS codes, zip codes, business type, demographic data, non-profit information, name of lender, jobs supported, and loan amount ranges. For all loans below US$150,000, SBA did not release business names and addresses.
CFTC’s Market Risk Advisory Committee to Meet on July 21: On Monday, the CFTC’s Market Risk Advisory Committee (MRAC) announced it will hold a public meeting on Tuesday, July 21, 2020 via teleconference. At the meeting, the MRAC will receive status updates from its subcommittees: Climate-Related Market Risk, CCP Risk and Governance, Market Structure, and Interest Rate Benchmark Reform. The meeting will also include a discussion regarding market activity in the early part of 2020, immediately following the onset of the COVID-19 pandemic in the United States.
LabCFTC to Host Fintech-Focused Virtual Event Series in the Fall: On Thursday, the CFTC announced that LabCFTC will present Empower Innovation 2020, a series of interactive virtual events throughout the fall. The three-part series will facilitate a dialogue among innovators, regulators, market participants, and the public around cutting-edge fintech innovation. In light of the COVID-19 pandemic, the Empower Innovation 2020 series will be held in lieu of the 2020 Fintech Forward conference.
SEC Adopts Amendments to Exemptive Applications Procedures: On Monday, the SEC announced that it had voted to adopt rule amendments to establish an expedited review procedure for exemptive and other applications under the Investment Company Act that are substantially identical to recent precedent, as well as a new informal internal procedure for applications that would not qualify for the new expedited process. These actions are intended to make the application process more efficient as well as to provide additional certainty and transparency regarding the process.
SEC Issues Agenda for July 16 Special Meeting of the Asset Management Advisory Committee: On Monday, the SEC released the agenda for the virtual July 16 special meeting of the Asset Management Advisory Committee. The meeting will feature discussions on improving diversity and inclusion in the asset management industry, including issues relating to diverse asset managers, as well as issues relating to data privacy and the impact of technology on investment advice.
SEC Proposes Amendments to Update Form 13F for Institutional Investment Managers: On Friday, the SEC announced that it has proposed to amend Form 13F to update the reporting threshold for institutional investment managers and make other targeted changes. The threshold has not been adjusted since the Commission adopted Form 13F over 40 years ago. SEC Chairman Jay Clayton said the proposal will update “the 13F reporting threshold to a level that furthers the statutory goal of enabling the SEC to monitor holdings of larger investment managers while reducing unnecessary burdens on smaller managers.”
Consumer Financial Protection Bureau Issues Final Rule on Small Dollar Lending: On Tuesday, the CFPB issued a final rule concerning small dollar lending in order to maintain consumer access to credit and competition in the marketplace. The final rule rescinds the mandatory underwriting provisions of the 2017 rule after re-evaluating the legal and evidentiary bases for these provisions and finding them to be insufficient. Additionally, the Bureau announced that it will undertake new research focusing on identifying information that could be disclosed to consumers during the small dollar lending process to allow them to make the most informed choices. Senate Banking Committee ranking member Sherrod Brown (D-OH) blasted the move, saying the administration had “given payday lenders exactly what they paid for by gutting a rule that would have protected American families from predatory loans that trap them in cycles of debt.”
Consumer Financial Protection Bureau Ratifies Prior Regulatory Actions: On Tuesday, the CFPB ratified most regulatory actions the Bureau took from January 4, 2012 through June 30, 2020. The ratification of previous regulatory actions provides the financial marketplace with certainty that the rules are valid in light of the Supreme Court decision in Seila Law. “The Bureau is taking action to ensure that consumers and market participants understand that the same rules continue to govern the consumer financial marketplace,” said CFPB Director Kathleen Kraninger.
OCC Announces Project REACh to Promote Greater Access to Capital and Credit for Underserved Populations: On Friday, the OCC announced the launch of Project REACh to promote financial inclusion through greater access to credit and capital. REACh stands for Roundtable for Economic Access and Change and brings together leaders from the banking industry, national civil rights organizations, business, and technology to identify and reduce barriers that prevent full, equal, and fair participation in the nation’s economy. “The recent civil unrest across our country emphasizes that too many people have been left out of our nation’s economy,” said Acting Comptroller of the Currency Brian Brooks. “While we applaud others, who have made large financial contributions to address immediate needs, Project REACh will focus on policy and structural changes that can help more people participate in our economy and prosper in the same way so many others have.”
COMINGS AND GOINGS AT THE AGENCIES
FDIC Names Bob De Luca Deputy Chief Information Officer: On Tuesday, the FDIC announced the selection of Bob De Luca as the agency's new Deputy Chief Information Officer. Mr. De Luca joins the FDIC from the General Services Administration, where he served as executive director of the Information Technology Centers of Excellence since its inception in 2018.
CFPB Director Kraninger Announces Deputy Director: On Tuesday, CFPB Director Kathy Kraninger announced that Thomas Pahl will serve as the Deputy Director of the Bureau. Pahl has served as Policy Associate Director for Research, Markets, and Regulations since April 2018. Previously, Pahl was the Acting Director of the Bureau of Consumer Protection at the Federal Trade Commission.
Supreme Court to Hear Cases on FHFA Constitutionality and FTC Restitution Authority: On Thursday, the Supreme Court announced that it would hear the appeal in a case challenging the government’s “net worth sweep” of Fannie Mae and Freddie Mac. The court will review the single-director structure of the FHFA as well as its conservatorship role. Separately, the court agreed to review the FTC’s restitution authority.
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