Money Matters: This Week in Washington
This Week in Washington for July 20, 2020
By Dina Ellis
THE BIG PICTURE
For the latest advice for businesses dealing with the coronavirus, be sure to check out Paul Hastings’ targeted alert series:
The resurgence of COVID-19 across the country continued as confirmed cases reached 3.7 million and fatalities surpassed 140,000. Several states have struggled to scale up testing capacity to meet demand, and are sounding a similar alarm heard earlier in the pandemic as limitations hinder contact tracing. In an effort to cut down on lengthy waits for test results, the administration announced it would release guidance to reduce unnecessary testing. Governors around the country are being forced to reverse reopening decisions as outbreaks tied to bars, restaurants, and other indoor facilities are identified. Tensions between the administration and infectious disease expert Dr. Anthony Fauci were evident as White House advisor Peter Navarro published a highly critical op-ed, forcing the President to publicly downplay reports of a rift.
Negotiations over the phase four relief package continued as Senate Majority Leader Mitch McConnell prepared to unveil Republicans’ legislative proposal. McConnell stressed his commitment to including a five-year liability shield in the measure, to ensure that businesses and schools are protected as long as they make “reasonable” efforts to follow guidelines. The extension of US$600-a-week enhanced unemployment benefits remains a point of contention as the July 31st expiration date looms. The President pushed for the inclusion of a payroll tax cut, threatening to veto any measure that doesn’t include one.
After trailing in the polls for several weeks, the President has shaken up his reelection team, promoting Bill Stepien to campaign manager, and demoting Brad Parscale, who will resume his prior role running digital operations. Plans for the Republican convention, parts of which had been shifted to Jacksonville, Florida in order to allow for greater in-person participation, are being scaled back amid a surge in infections in the state.
Other highlights of last week include:
Civil rights hero and longtime Georgia congressman John Lewis passed away on Saturday at the age of 80. Lewis was heralded by leaders across the political spectrum as the “Conscience of Congress.”
Supreme Court Justice Ruth Bader Ginsburg was briefly hospitalized to treat a suspected infection. Later in the week, Ginsburg revealed that she is being treated for a recurrence of liver cancer but said she is “fully able” to remain on the bench.
The President signed the Hong Kong Autonomy Act into law and issued an executive order ending preferential treatment for Hong Kong, saying it would “now be treated the same as mainland China.”
An additional 1.3 million Americans applied for unemployment benefits last week, as the economic hardship resulting from the pandemic continues.
The Washington Redskins football team announced on Monday that it will change its name and logo, after years of criticism by Native American activist groups.
LAST WEEK ON THE HILL
Democratic Committee Chairs Seek Information on Trump Administration Failures to Boost Production of PPE and Testing: On Tuesday, Representatives Maxine Waters (D-CA), Chair of the Financial Services Committee, Adam Smith (D-WA), Chair of the Committee on Armed Services, Eliot Engel (D-NY), Chair of the Committee on Foreign Affairs, Bennie Thompson (D-MS), Chair of the Committee on Homeland Security, and Frank Pallone, Jr. (D-NJ), Chair of the Committee on Energy and Commerce, sent a letter to Secretary of Defense Mark Esper and Secretary of Health and Human Services Alex Azar seeking answers as to why the Administration has not used funding in the CARES Act for the Defense Production Act to boost production of critical medical supplies and equipment needed to combat COVID-19, such as personal protection equipment and diagnostic testing. “Three months after the passage of the CARES Act, we remain concerned that . . . efforts to increase the short-term and long-term domestic production of critically needed medical supplies and equipment is fragmented and uncoordinated, even as we see record number of infections and spikes in hospitalizations,” the chairs wrote.
Senators Warren, Van Hollen, and Cortez Masto Urge Mnuchin and Powell to Provide Greater Financial Assistance to State and Local Governments: On Tuesday, Senators Elizabeth Warren (D-MA), Chris Van Hollen (D-MD), and Catherine Cortez Masto (D-NV) sent a letter to Federal Reserve Chairman Jerome Powell and Treasury Secretary Steve Mnuchin urging that they provide greater financial assistance to state and local governments in the current economic downturn. The letter noted the importance of aggressive Fed and Treasury efforts to help cash-strapped state and local governments, while acknowledging that Congress must also provide the fiscal support that is needed to support these governments in the long-term.
Senators Press Trump Administration to Reverse Move Undermining Coronavirus Hospital Data Collection and Reporting: On Friday, Sen. Dianne Feinstein (D-CA) and Sen. Patty Murray (D-WA) led a group colleagues in writing to Vice President Mike Pence and Coronavirus Task Force Coordinator Dr. Deborah Birx urging the Trump administration to reverse recent changes requiring hospitals to report data to a new system set up by the Department of Health and Human Services instead of the National Healthcare Safety Network (NHSN), which is run by the Centers for Disease Control and Prevention (CDC) and has been in use for over a decade. The Senators wrote, “In the midst of a global pandemic, these changes pose serious challenges to the nation’s response by increasing the data management burden for hospitals, potentially delaying critical supply shipments, compromising access to key data for many states, and reducing transparency for the public.”
HOUSE FINANCIAL SERVICES COMMITTEE
Hearing on “
Hon. Dr. William Spriggs, Chief Economist, AFL-CIO, Professor of Economics, Howard University
Anne Simpson, Director of Board Governance and Strategy, California Public Employees' Retirement System
Camille Busette, PhD, Senior Fellow and Director of the Race, Prosperity, and Inclusion Initiative, the Brookings Institution
Neil Bradley, Executive Vice President and Chief Policy Officer, Chamber of Commerce of the United States of America
Hearing on “
Alys Cohen, Staff Attorney, National Consumer Law Center
Marcia Griffin, Founder and President, HomeFree-USA
Donnell Williams, President, National Association of Real Estate Brokers
Ed DeMarco, Ph.D, President, Housing Policy Council
House Appropriation Committee “
House Subcommittee on the Coronavirus Crisis Hearing on “
Ben Bernanke, Distinguished Fellow in Residence, the Brookings Institution, Former Chair, Board of Governors of the Federal Reserve
Janet Yellen, Distinguished Fellow in Residence, the Brookings Institution, Former Chair, Board of Governors of the Federal Reserve
SENATE BANKING COMMITTEE
No hearings held.
LEGISLATION INTRODUCED AND PROPOSED
H.R. 7592: Rep. Ben McAdams (D-UT) introduced H.R. 7592, which would require the Comptroller General of the United States to carry out a study on trafficking.
H.R. 7603: Rep. Van Taylor (R-TX) introduced H.R. 7603, which would amend the Defense Production Act of 1950 to require congressional notice if the Committee on Foreign Investment in the United States notifies a party to a covered transaction that the Committee has completed all action with respect to such transaction.
H.R. 7625: Rep. Annie Craig (D-MN) introduced H.R. 7625, which would provide for the release of cosigners on private student loans in the case of the death of the student borrower.
H.R. 7632: Rep. Brian Fitzpatrick (R-PA) introduced H.R. 7632, which would prohibit a jurisdiction that defunds the police from receiving grants under certain Economic Development Assistance Programs and the Community Development Block Grant Program.
H.R. 7633: Rep. Chuy Garcia (D-IL) introduced H.R. 7633, which would authorize the Secretary of Housing and Urban Development to make grants to public housing agencies and owners of other federally assisted housing to cover the costs of removing and replacing lead-based water service pipes from federally assisted housing projects.
H.R. 7639: Rep. Adam Kinzinger (R-IL) introduced H.R. 7639, which would impose sanctions with respect to Turkey's acquisition of the S-400 air and missile defense system.
H.R. 7661: Rep. Bryan Steil (R-WI) introduced H.R. 7661, which would temporarily prevent emerging growth companies from losing their status during the COVID-19 pandemic.
Economic Justice Act: On Thursday, Senate Minority Leader Chuck Schumer and Senate Democrats unveiled the Economic Justice Act, a major new legislative proposal to make US$350B in immediate and long-term investments in Black communities and other communities of color. The measure would seek to partially offset the cost of the proposal by re-programming US$200B of unspent CARES Act funds that were previously provided to the Department of Treasury to facilitate corporate lending by the Federal Reserve. The two main objectives are: (1) to immediately help communities of color respond to the pandemic through a US$135B investment in child care, mental health and primary care, and jobs, and (2) to build wealth and health in these communities over the next five years by investing US$215B as a down payment for infrastructure, a homeowner down payment tax credit, Medicaid expansion, and more.
THIS WEEK ON THE HILL
Tuesday, July 21
Senate Banking Committee “
Wednesday, July 22
Senate Banking Committee Hearing on “
Thursday, July 23
House Financial Services Committee Hearing on “
Federal Reserve Board Modifies Main Street Lending Program to Provide Greater Access to Credit: On Friday, the Federal Reserve Board modified the Main Street Lending Program to provide greater access to credit for nonprofit organizations such as educational institutions, hospitals, and social service organizations. As detailed in term sheets released concurrently, the Board approved two new loan options to provide support to a broad set of nonprofit organizations that were in sound financial condition prior to the pandemic. “Nonprofits provide vital services across the country and employ millions of Americans,” Federal Reserve Chair Jerome Powell said, “We have listened carefully and adapted our approach so that we can best support them in carrying out their vital mission during this extraordinary time.”
Federal Housing Administration Proposes Streamlined Single-Family Servicing Policies: On Tuesday, the FHA published proposed revisions to its single-family servicing policies that are designed to remove unnecessary barriers for homeowners seeking mortgage payment relief, achieve operational consistency with industry standard best practices, and reduce burdens incurred by the industry when servicing an FHA-insured mortgage portfolio. FHA will be accepting industry feedback on the proposed changes for 60 days.
FSOC to Start an Activities-Based Review of the Secondary Mortgage Market: On Tuesday, during the Financial Stability Oversight Council's Principals Meeting, it was announced that FSOC will begin an activities-based review of the secondary mortgage market. In December, FSOC implemented an activities-based approach for identifying and addressing potential risks to financial stability. The review will assess both the risk that activities in the secondary mortgage market pose to the stability of the financial system and the efficacy of various risk mitigants. FHFA Director Mark Calabria applauded the decision, saying, “As demonstrated by the 2008 financial crisis and again by COVID-19, Fannie Mae and Freddie Mac must be well capitalized in order to support the mortgage market during a stressed environment.”
SEC, MSRB, and FINRA to Hold Compliance Outreach Program for Municipal Advisors: On Thursday, the SEC, MSRB, and FINRA announced the opening of registration for a virtual Compliance Outreach Program for Municipal Advisors. The program will provide municipal market participants an opportunity to hear from SEC, MSRB, and FINRA staff on timely regulatory and compliance matters for municipal advisors. Topics of discussion include, among other things, the duties and standards of conduct for municipal advisors under MSRB Rules G-42 and G-17 and the fiduciary duty under the Securities Exchange Act of 1934; the SEC’s temporary conditional exemption from broker registration for certain direct placement activities; operational considerations for registered municipal advisors; and OCIE and FINRA examination processes and common observations, as well as relevant SEC and FINRA enforcement actions.
CFTC to Hold Open Commission Meetings on July 22 and 23: On Monday, the CFTC announced it will hold open meetings on July 22 and 23. The meetings will be held via conference call. On the 22nd, the Commission will consider the following: (1) Final Rule: Capital Requirements of Swap Dealers and Major Swap Participants; (2) Proposed Rule: Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants. On the 23rd, the Commission will consider the following: (1) Amendment Order: Exempting Certain Multilateral Trading Facilities and Organized Trading Facilities Authorized within the European Union from the Requirement to Register with the Commodity Futures Trading Commission as Swap Execution Facilities; (2) Final Rule: Cross-Border Application of the Registration Thresholds and Certain Requirements Applicable to Swap Dealers and Major Swap Participants.
CFTC Extends Targeted Relief to Market Participants in Response to COVID-19: On Friday, the CFTC’s Division of Swap Dealer and Intermediary Oversight (DSIO) announced that, in light of the continuing challenges resulting from the COVID-19 pandemic, it has extended the time period for the targeted no-action relief provided in CFTC Staff Letter No. 20-16 to registrants listing new principals and to applicants for registration as associated persons from the requirement to submit a fingerprint card for any such principal or AP registration applicant.
CFPB Study Shows Financial Product Could Help Consumers Build Credit: On Monday, the CFPB released a report indicating that a credit builder loan could increase the likelihood of establishing a credit record for consumers without one and could help improve the credit scores of those with no current outstanding debt. The Bureau issued, “Targeting Credit Builder Loans: Insights from a Credit Builder Loan Evaluation” and an accompanying practitioner’s guide to broaden insight for community-based organizations and financial institutions working toward expanding financial inclusion.
CFPB Releases Online Tool to Help College Students Determine How to Pay for College: On Wednesday, the CFPB released the “Your Financial Path to Graduation” web tool designed to help students clearly understand the total cost of attending college and make informed decisions about paying for their education. The tool helps students turn financial aid offers into plans to pay for school step-by-step. Along the way, it explains terms, offers money saving tips, and tracks uncovered costs. Once students finish making a plan, the tool estimates the total debt at graduation and offers information to help the student evaluate whether that debt is affordable in the long run.
CFPB Takes Action to Help Employers Develop Emergency Savings Programs to Boost Worker Financial Resilience: On Friday, the CFPB announced that it issued a Compliance Assistance Statement of Terms Template (CAST Template) under its Compliance Assistance Sandbox (CAS) Policy to Build Commonwealth, Inc. (Commonwealth). Employers interested in creating an automatic savings (Autosave) program as a way for employees to build emergency savings and increase their financial resiliency would then be able to use the CAST Template as the basis for an application to receive approval from the Bureau to create such a program.
FTC Launches New Online Tool for Exploring Military Consumer Data: On Monday, the Federal Trade Commission launched a new tool that explores data about problems military consumers may experience in the marketplace. For the first time, data about reports the FTC has received from active duty service members and veterans will be available online in an interactive dashboard.
FinCEN Issues Advisory on the Financial Action Task Force-Identified Jurisdictions with Anti-Money Laundering and Combating the Financing of Terrorism Deficiencies: On Tuesday, FinCEN issued an advisory to inform financial institutions of updates to the FATF list of jurisdictions with strategic anti-money laundering and combating the financing of terrorism (AML/CFT) and counter-proliferation financing deficiencies. As part of the FATF’s listing and monitoring process to ensure compliance with its international AML/CFT standards, the FATF identifies certain jurisdictions as having strategic deficiencies in their AML/CFT regimes.
European Court of Justice Invalidates Decision on the Adequacy of the Protection Provided by the EU-US Data Protection Shield: On Thursday, the European Court of Justice ruled in the Schrems II case, effectively invalidating the EU-U.S. Privacy Shield. As a result of that decision, the EU-U.S. Privacy Shield Framework is no longer a valid mechanism to comply with EU data protection requirements when transferring personal data from the European Union to the United States. Commerce Secretary Wilbur Ross indicated the U.S. will continue to administer the Privacy Shield program, including processing submissions for self-certification and re-certification to the Privacy Shield Frameworks and maintaining the Privacy Shield List, “and hope to be able to limit the negative consequences to the $7.1 trillion transatlantic economic relationship.”
OTHER NOTEWORTHY NEWS
Defense Department Unveils Guidance Effectively Banning Confederate Symbols: On Friday, Secretary of Defense Mark Esper provided guidance to Defense senior leaders and commanders on the public display or depiction of flags in the Department of Defense. The Secretary noted that flags are powerful symbols, particularly in the military community for whom flags embody common mission, common histories, and the special, timeless bonds of warriors. The Secretary also noted that the flags we fly must accord with the military imperatives of good order and discipline, treating all our people with dignity and respect, and rejecting divisive symbols. While not explicitly mentioning the Confederate battle flag, the guidance will act as an effective ban on its display.
Paul Hastings’ Government Relations team is monitoring these issues. We help our clients craft strategies to address federal legislative and regulatory matters. Please reach out to us if your organization needs assistance with congressional or regulatory relations.