Money Matters: This Week in Washington
This Week in Washington for June 22, 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:
Coronavirus cases in the United States hit 2.3 million, as deaths approached 122,000. While some areas of the country have managed to flatten and bend the curve, a number of states, such as Texas, Florida, and Arizona have seen record infection and hospitalization rates over the past week as the virus continues to surge across the South and West. Top administration officials expressed optimism that the country would not see a second wave in the fall, in contrast to the more measured perspective of Dr. Anthony Fauci, who cautioned the country was still in the midst of its first wave.
The Supreme Court released a number of high profile decisions last week. On Monday, the Court delivered a major win for LGBTQ rights, ruling 6-3 that gay and transgender employees are protected from discrimination under Title VII of the Civil Rights Act. On Thursday, in a 5-4 decision, with Chief Justice John Roberts joining the liberals, the Court ruled the administration’s decision to rescind DACA was “arbitrary and capricious under APA” and sent the program to DHS to “consider the problem anew.” While the decision does not preclude future efforts to end the program, it is unlikely the administration would be able to implement a new framework prior to the election.
The President returned to the campaign trail on Saturday, holding a rally at an indoor arena in Tulsa, Oklahoma. The decision to hold the event drew backlash from some corners, as public health officials warned of the increased risk of COVID-19 transmission indoors, particularly if attendees did not wear masks. In the run-up to the event, six campaign staffers tested positive, underscoring the difficulty of staging mass events during the pandemic. The President will hold another rally in Arizona on Tuesday and plans to reprise his July Fourth celebration in DC; although this year, the event will be held on the South Lawn of the White House instead of at the Lincoln Memorial.
Other highlights of last week include:
After a tense public back and forth between Attorney General Bill Barr and the US Attorney for the Southern District of New York Geoffrey Berman over whether Berman would resign, the President formally fired Berman on Saturday and announced his plan to nominate SEC Chair Jay Clayton to the position. The move drew sharp criticism from Democratic leaders, who demanded answers over the chain of events.
An additional 1.5 million workers filed for unemployment last week, as the economic hardship caused by the pandemic persists in many areas of the country.
On Tuesday, the President signed an Executive Order on law enforcement reform, calling for police departments to adopt high standards and train officers on de-escalation techniques.
House Speaker Nancy Pelosi ordered Confederate portraits be removed from the Capitol, as a growing movement to remove statues and monuments to the Confederacy sweeps the country.
LAST WEEK ON THE HILL
Bipartisan Group of Senators Calls for Permanent Expansion of Telehealth Following COVID-19 Pandemic: On Monday, Senators Brian Schatz (D-HI) and Roger Wicker (R MS) led a bipartisan group of 30 senators in calling for the expansion of access to telehealth services during the COVID-19 pandemic to be made permanent. “Americans have benefited significantly from this expansion of telehealth and have come to rely on its availability,” the senators wrote in a letter to Senator Majority Leader Mitch McConnell (R-KY) and Minority Leader Chuck Schumer (D-NY). “Congress should expand access to telehealth services on a permanent basis so that telehealth remains an option for all Medicare beneficiaries both now and after the pandemic.”
Leaders of Key House Committees Call for Transparency after Administration’s Refusal to Release Names of PPP Loan Recipients: On Monday, Rep. Maxine Waters (D CA), Chairwoman of the House Committee on Financial Services, Rep. Richard Neal (D MA), Chairman of the House Committee on Ways and Means, and Rep. Nydia Velázquez (D NY), Chairwoman of the House Committee on Small Business, wrote to Treasury Secretary Steven Mnuchin and SBA Administrator Jovita Carranza, reminding them of their duty to be transparent and accountable stewards of the American taxpayers’ money and expressing their dismay at the decision not to release the names of companies that received funding through the Paycheck Protection Program. Given the shared responsibility the Committees have to conduct oversight of Treasury and SBA, the Chairs requested the names of all recipients of PPP loans, the dollar amount of all loans received, and the names of all applicants that did not receive PPP loans by a Friday deadline.
HOUSE FINANCIAL SERVICES COMMITTEE
Hearing on “
Mr. Tom Kellermann, Head of Cybersecurity Strategy, VMware
Mr. Kelvin Coleman, Executive Director, National Cyber Security Alliance/li>
Ms. Amanda W. Senn, Chief Deputy Director, Alabama Securities Commission; on behalf of the North American Securities Administrators Association (NASAA)
Mr. Jamil Jaffer, Founder & Executive Director, National Security Institute, Assistant Professor of Law & Director, National Security Law & Policy Program
Hearing on “
The Honorable Jerome Powell, Chairman, Board of Governors of the Federal Reserve System
SENATE BANKING COMMITTEE
Hearing on “
The Honorable Jerome Powell, Chairman, Board of Governors of the Federal Reserve System
Select Committee on the Coronavirus Crisis Hearing on “
Michele Evermore, Senior Researcher and Policy Analyst, National Employment Law Project
William E. Spriggs, Chief Economist, AFL-CIO, Professor, Department of Economics, Howard University
Jason Furman, Professor of the Practice of Economic Policy, Harvard University
Rachel Greszler, Research Fellow in Economics, Budget and Entitlements, The Heritage Foundation
ON THE FLOOR
Land Conservation Bill Passes Senate: On Wednesday, the Senate voted 73-25 to pass the S. 3422, Great American Outdoors Act. The measure, first introduced by Sen. Cory Gardner (R CO), would fully fund the Land and Water Conservation Fund (LWCF) at a level of US$900M every year and addresses the approximately US$20B maintenance backlog on federal public lands.
LEGISLATION INTRODUCED AND PROPOSED
H.R. 7197: Rep. Earl Blumenauer (D-OR) introduced H.R. 7197, which would establish a US$120B Restaurant Revitalization Fund to provide structured relief to food service or drinking establishments through December 31, 2020.
H.R. 7201: Rep. Katherine Clark (D-MA) introduced H.R. 7201, which would provide assistance with respect to child care infrastructure.
H.R. 7218: Rep. Andy Levin (D-MI) introduced H.R. 7218, which would expedite the provision of humanitarian assistance, including life-saving medical care, to the people of North Korea.
H.R. 7231: Rep. Dan Webster (R-FL) introduced H.R. 7231, which would establish the Infrastructure Bank for America as a corporation to serve as a lender for and investor in infrastructure projects.
H.R. 7240: Rep. Sean Casten (D-IL) introduced H.R. 7240, which would update and expand the requirements for energy efficiency for federally assisted housing.
H.R. 7261: Rep. Gregory Meeks (D-NY) introduced H.R. 7261, which would amend the Securities Exchange Act to require issuers to disclose services performed for State and local governments in connection with the issuance of bonds that may be used to pay for settlements or judgments in connection with police violence or civil rights abuses.
S. 3798: Sen. Pat Toomey (R-PA) introduced S. 3798, the Hong Kong Autonomy Act, which would impose sanctions with respect to foreign persons involved in the erosion of certain obligations of China with respect to Hong Kong.
S. 3975: Sen. Catherine Cortez Masto (D-NV) introduced S. 3975, the Financial Compensation for CFPB Whistleblowers Act, which would reward whistleblowers from a Civil Penalty Fund for between 10 – 30% of settlement awards.
S. 3985: Sen. Tim Scott (R-SC) introduced S. 3985, the Just and Unifying Solutions to Invigorate Communities Everywhere (JUSTICE) Act, which would provide long-term solutions focused on police reform, accountability and transparency, while also promoting efforts to find solutions to systemic issues affecting people of color such as education and health disparities. Senate Majority Leader Mitch McConnell (R-KY) intends to hold a procedural vote on the measure this week.
Data Accountability and Transparency Act of 2020: Sen. Sherrod Brown (D-OH), ranking member of the Senate Banking Committee, released a draft version of his Data Accountability and Transparency Act of 2020. The proposal would: ban the collection, use, or sharing of personal data unless specifically allowed by law; ban the use of facial recognition technology; prohibit the use of personal data to discriminate in housing, employment, credit, insurance, and public accommodations; require anyone using decision-making algorithms to provide new accountability reports; and create a new, independent agency that is dedicated to protecting individuals’ privacy and the implementation of DATA 2020.
THIS WEEK ON THE HILL
Tuesday, June 23
Senate Banking Committee Hearing on “
Thursday, June 25
House Financial Services Committee (Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets) Hearing on “
Friday, June 26
House Financial Services Committee (Subcommittee on Housing, Community Development and Insurance) Hearing on “
Federal Reserve Board Announces It Will Resume Examination Activities for All Banks: On Monday, the Federal Reserve Board announced that it will resume examination activities for all banks, after previously announcing a reduced focus on exam activity in light of the coronavirus response. In March, the Board had announced that it would focus on outreach and monitoring in light of the coronavirus response measures and temporarily reduce its exam activity, with the greatest reduction for smaller banks. Since that time, banks have had time to implement contingency operating plans and adapt their operations, so exam activity will resume. The Board anticipates that exams will continue to be conducted offsite until conditions improve and will continue to work with banks to understand any specific issues they may be facing.
Federal Reserve Board Announces It Will Be Seeking Public Feedback on Proposal to Expand Its Main Street Lending Program: On Monday, the Federal Reserve Board announced it will be seeking public feedback on a proposal to expand its Main Street Lending Program to provide access to credit for nonprofit organizations. As with the existing Main Street Lending Program, which targets small and medium-sized businesses, the proposed expansion would offer loans to small and medium-sized nonprofits that were in sound financial condition before the coronavirus pandemic and could benefit from additional liquidity to manage through this challenging period. “Nonprofit organizations are critical parts of our economy, employing millions of people, providing essential services to communities, and supporting innovation and the development of a highly skilled workforce,” Federal Reserve Chair Jerome H. Powell said. “Nonprofits provide vital services across the country, and we are working to help them through this difficult time.”
Federal Reserve Board Announces Updates to Secondary Market Corporate Credit Facility: On Monday, the Federal Reserve Board announced updates to the Secondary Market Corporate Credit Facility (SMCCF), which will begin buying a broad and diversified portfolio of corporate bonds to support market liquidity and the availability of credit for large employers. As detailed in a revised term sheet and updated FAQs, the SMCCF will purchase corporate bonds to create a corporate bond portfolio that is based on a broad, diversified market index of U.S. corporate bonds. This index is made up of all the bonds in the secondary market that have been issued by U.S. companies that satisfy the facility's minimum rating, maximum maturity, and other criteria. This indexing approach will complement the facility's current purchases of exchange-traded funds.
SBA and Treasury Announce New EZ and Revised Full Forgiveness Applications for the Paycheck Protection Program: On Wednesday, the SBA, in consultation with the Department of the Treasury, posted a revised, borrower-friendly Paycheck Protection Program (PPP) loan forgiveness application implementing the PPP Flexibility Act of 2020. In addition to revising the full forgiveness application, SBA also published a new EZ version of the forgiveness application that applies to borrowers that: are self-employed and have no employees; OR did not reduce the salaries or wages of their employees by more than 25% and did not reduce the number or hours of their employees; OR experienced reductions in business activity as a result of health directives related to COVID-19 and did not reduce the salaries or wages of their employees by more than 25%. The EZ application requires fewer calculations and less documentation for eligible borrowers.
Consumer Financial Protection Bureau Launches Pilot Advisory Opinion Program to Provide Regulated Entities with Clear Guidance and Improve Compliance: On Thursday, the CFPB launched a pilot advisory opinion (AO) program to publicly address regulatory uncertainty in the Bureau’s existing regulations. The pilot AO program will allow entities seeking to comply with regulatory requirements to submit a request where uncertainty exists. The Bureau will then select topics based on the program’s priorities and make the responses available to the public. The pilot program will focus on four key priorities: (1) providing consumers with timely and understandable information to make responsible decisions; (2) identifying outdated, unnecessary, or unduly burdensome regulations in order to reduce regulatory burdens; (3) enforcing consistency of Federal consumer financial law in order to promote fair competition; and (4) ensuring markets for consumer financial products and services operate transparently and efficiently to facilitate access and innovation.
FHFA Extends Foreclosure and Eviction Moratorium: On Wednesday, the Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac (the Enterprises) will extend their single-family moratorium on foreclosures and evictions until at least August 31, 2020. The foreclosure moratorium applies to Enterprise-backed, single-family mortgages only. The current moratorium was set to expire on June 30th. In a statement, Director Mark Calabria affirmed, “During this national health emergency no one should worry about losing their home.” Sen. Sherrod Brown (D-OH) applauded the decision but urged HUD and FHFA to go further and “immediately extend the eviction moratorium for renters and work with Congress to provide vital rental assistance to keep renters in their homes during and after this pandemic.”
CFTC to Hold an Open Commission Meeting on June 25: On Monday, the CFTC announced that it will hold an open meeting on Thursday, June 25, 2020 at 10:00 a.m. via teleconference. The Commission will consider the following: (1) Final Rule: Exemption from the Swap Clearing Requirement for Certain Affiliated Entities – Alternative Compliance Frameworks for Anti Evasionary Measures (Inter-Affiliate Exemption 50.52); (2) Final Rule: Post-Trade Name Give Up on Swap Execution Facilities; (3) Proposed Rule: Electronic Trading Risk Principles Withdrawal of the Proposed Rule and Supplemental Proposal for Regulation AT; (4) Proposed Rule: Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants (Phase VI Compliance Date Extension); and (5) Final Rule: Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships with, Hedge Funds and Private Equity Funds (Volcker Rule).
COMINGS AND GOINGS AT THE AGENCIES
SEC Names Jennifer Leete as Associate Director in Enforcement Division: On Wednesday, the SEC announced that Jennifer Leete has been named Associate Director in the SEC’s Division of Enforcement. Ms. Leete, who first joined the agency in 1999, succeeds Antonia Chion, who retired in February 2020.
President Intends to Nominate Caroline Crenshaw to SEC Post: On Thursday, the President announced his intent to nominate Caroline Crenshaw to fill outgoing Democratic commissioner Robert Jackson’s seat at the SEC. Ms. Crenshaw currently serves as Senior Counsel at the SEC and as a Captain in the United States Army Reserve.
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.