Money Matters: This Week in Washington

This Week in Washington for October 5, 2020

October 06, 2020

Dina Ellis


For the latest advice for businesses dealing with the coronavirus, be sure to check out Paul Hastings’ targeted alert series: https://www.paulhastings.com/coronavirus

President Trump announced in the early hours of Friday morning that he had tested positive for COVID-19. His diagnosis is one in a cluster of cases linked to the Rose Garden ceremony held to announce Amy Coney Barrett as his nominee for the Supreme Court, with the First Lady, several top aides, his campaign manager Bill Stepien, former New Jersey Governor Chris Christie, Notre Dame President John Jenkins, and Senators Thom Tillis (R-NC) and Mike Lee (R-UT) also contracting the virus. The President, who has eschewed social distancing and the wearing of masks during several campaign events in recent weeks, was criticized for attending a fundraiser at his New Jersey golf club on Thursday after learning his aide Hope Hicks was ill. The President was transferred to Walter Reed Medical Center Friday evening for monitoring and to receive treatment, where his doctors expressed optimism about his prognosis. Senate Majority Leader Mitch McConnell announced Saturday that the Senate would remain out until October 19 in a bid to prevent further spread, but indicated hearings on Barrett’s nomination would continue on schedule.

Earlier in the week, the President and former Vice President Joe Biden faced off in the first debate of the campaign, sparring over their records, economic plans, the integrity of the election and policies on police reform and racial equality. The evening was marked by chaotic exchanges and bickering, rife with interruptions and personal accusations. The evening became a fundraising boon for Biden, with his campaign announcing it had raised US$10M in donations in the hours immediately following the debate. Given the lack of clarity as to when the President last tested negative for the virus, some feared those in the debate hall may have been exposed on Tuesday. Biden announced on Friday that both he and his wife had tested negative and pledged to release the results of all future tests.

Last ditch negotiations between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin over a stimulus measure failed to yield any material results, making any action on additional aid unlikely prior to the election and the House’s departure for its October recess. On Monday, House Democrats unveiled their scaled back US$2.2T measure to demonstrate their priorities and values, voting to pass it on Thursday evening in an effort to pressure Republicans into making a deal. Senate Majority Leader Mitch McConnell however, criticized the package as a “far-left wish list.” Pelosi urged airlines to hold off on furloughs and layoffs, saying that payroll relief was “imminent.” The President appeared to support a larger measure via tweet over the weekend, urging the parties to get it done.

Other highlights of last week include:

  • On Thursday, the Labor Department announced that an additional 837,000 Americans had filed for unemployment benefits last week. On Friday, the September jobs report was released, showing that while the unemployment rate fell to 7.9%, job growth had also slowed, with employers adding only 661,000 jobs.

  • Early Thursday morning, the President signed the stopgap spending measure into law, averting a government shutdown.

  • Sen. Pat Toomey (R-PA) will reportedly not seek re-election in 2022.


House Committee Chairs Launch Investigation Into DOD’s Inappropriate Use of CARES Act Funds: On Friday, Rep. James Clyburn, Chairman of the Select Subcommittee on the Coronavirus Crisis, Rep. Maxine Waters, Chairwoman of the Committee on Financial Services, Rep. Carolyn Maloney, Chairwoman of the Committee on Oversight and Reform, and Rep. Stephen Lynch, Chairman of the Subcommittee on National Security, sent a letter to Defense Secretary Mark Esper requesting documents on the potentially inappropriate use of hundreds of millions of dollars from the CARES Act. The letter follows reporting that nearly $1 billion of Defense Production Act (DPA) funding, which Congress appropriated to DOD under the CARES Act to “prevent, prepare for, and respond to the coronavirus,” instead has been “funneled to defense contractors and used for making things such as jet engine parts, body armor, and dress uniforms.”


Hearing on “License to Bank: Examining the Legal Framework Governing Who Can Lend and Process Payments in the Fintech Age”: On Tuesday, the Task Force on Financial Technology held a hearing to examine the legal framework and regulatory scope governing the oversight of traditional banks and other commercial businesses—especially technology companies—engaged in financial activity and the effect on consumer protection, financial stability, and the traditional separation of banking and commerce.

  • Raúl Carrillo, Policy Counsel, Demand Progress Education Fund; Fellow, Americans for Financial Reform Education Fund

  • Everett Sands, Chief Executive Officer, Lendistry

  • Arthur Wilmarth, Jr., Professor Emeritus of Law, George Washington University Law School

  • Brian Knight, Director, Innovation and Governance Program, Mercatus Center


No hearings held.


House Small Business Committee Hearing on “Preventing Fraud and Abuse of PPP and EIDL: An Update with the SBA Office of Inspector General and the Government Accountability Office”: On Thursday, the Subcommittee on Investigations, Oversight, and Regulations held a hearing to discuss the July 28, 2020, Management Report from the SBA Office of Inspector General (OIG) and the COVID-19 reports from the Government Accountability Office (GAO). The reports detailed a lack of internal controls and potential for fraud within SBA’s Economic Injury Disaster Loan (EIDL) program and Paycheck Protection Program (PPP). The hearing gave Members the opportunity to discuss OIG and GAO’s findings and determine if SBA’s response to these reports is consistent with their recommendations or if more work needs to be done to prevent fraud, waste, and abuse.

  • Hannibal “Mike” Ware, Inspector General, Office of the Inspector General, United States Small Business Administration

  • William Shear, Director, Financial Markets and Community Investment, United States Government Accountability Office

Select Committee on the Coronavirus Crisis Hearing on “Health and Human Services Department’s Response to the Coronavirus Crisis”: On Friday, the Select Committee held a hybrid hearing to examine the Trump Administration’s alleged political interference in the work of scientists and public health experts at the CDC and FDA, the Administration’s refusal to provide accurate and clear public health information, and the failure of the Administration to develop and implement a comprehensive national plan to contain the coronavirus, more than eight months into this public health emergency.

  • Alex Azar, Secretary, Department of Health and Human Services


House Passes Measure on Uyghur Forced Labor: On Wednesday, the House voted 253-163 to pass H.R. 6270, the Uyghur Forced Labor Disclosure Act of 2020, sponsored by Rep. Jennifer Wexton (D-VA). The measure would require the SEC to issue rules requiring publicly traded companies to annually disclose imports of manufactured goods and materials that originate, or are sourced in, the Xinjiang Uyghur Autonomous Region. It would also require the SEC and the GAO to provide information to Congress regarding these disclosures, as well as oversight.


H.R. 8407: Rep. Guy Reschenthaler (R-PA) introduced H.R. 8407, which would require the Securities and Exchange Commission to assess whether the disclosure of information related to investments in certain entities is necessary or appropriate for the purposes of certain reports under the securities laws, to establish the Entities of the People's Republic of China that Threaten United States National Security List.

H.R. 8410: Rep. Andy Barr (R-KY) introduced H.R. 8410, which would require the appropriate Federal banking agencies to establish a three-year phase-in period for de novo financial institutions to comply with Federal capital standards, to provide relief for de novo rural community banks.

H.R. 8416: Rep. Steve Cohen (D-TN) introduced H.R. 8416, which would amend the Housing and Community Development Act of 1974 to revise the formula for allocation of community development block grant funds.

H.R. 8445: Rep. Joe Wilson (R-SC) introduced H.R. 8445, which would impose certain measures with respect to Hezbollah-dominated areas in Lebanon and Latin America, and to impose sanctions with respect to senior foreign political figures in Lebanon, Venezuela, Cuba, and Nicaragua supporting Hezbollah.

H.R. 8451: Rep. Rosa DeLauro (D-CT) introduced H.R. 8451, which would amend the Housing and Community Development Act of 1974 to provide additional funding under the Community Development Block Grant program for units of general local government to digitize and make available online information regarding violations of housing construction, building, and safety codes.

H.R. 8458: Rep. Ted Lieu (D-CA) introduced H.R. 8458, which would amend the Securities Exchange Act of 1934 to require public companies to provide sexual harassment claim disclosures in certain reports and to require public companies to implement mandatory sexual harassment training.

H.R. 8462: Rep. David Price (D-NC) introduced H.R. 8462, which would safeguard taxpayer resources and strengthen the Nation's resilience against severe storms and flooding.

H.R. 8495: Rep. Brad Sherman (D-CA) introduced H.R. 8495, which would prohibit United States persons from engaging in transactions relating to Russian sovereign debt.


No financial services hearings scheduled.


Agencies Issue Two Final Rules: On Tuesday, the Federal Reserve, FDIC, and OCC agencies finalized two rules, which are either identical or substantially similar to interim final rules currently in effect and issued earlier this year. They include: (1) A final rule that temporarily defers appraisal and evaluation requirements for up to 120 days after the closing of certain residential and commercial real estate transactions; and (2) a final rule that neutralizes—due to the lack of credit and market risk—the regulatory capital and liquidity effects for banks that participate in certain Federal Reserve liquidity facilities.

SEC Staff to Host October 26 Roundtable on Regulation Best Interest and Form CRS: On Monday, the SEC announced October 26 as the date for its roundtable, at which Commission staff and the Financial Industry Regulatory Authority (FINRA) will discuss initial observations on Regulation Best Interest and Form CRS implementation. Regulation Best Interest and Form CRS were adopted by the Commission on June 5, 2019, as part of a package of rules and interpretations designed to address the obligations of broker-dealers and investment advisers when they provide recommendations or investment advice to retail investors. Participants will include staff from the Office of Compliance Inspections and Examinations, the Division of Trading and Markets, the Division of Investment Management, and FINRA.

SEC Whistleblower Program Ends Record-Setting Fiscal Year with Four Additional Awards: On Wednesday, the SEC announced awards to four individuals for total payments of almost $5 million. Each of these whistleblowers provided critical information that alerted the Commission of the alleged wrongdoing and resulted in successful enforcement action. This year, the SEC has made a record 39 individual awards of approximately $175 million, more than in any prior fiscal year.

CFTC to Hold an Open Commission Meeting on October 6: On Wednesday, CFTC Chairman Heath Tarbert announced the CFTC will hold an open meeting on Tuesday, October 6, 2020, at 10:30 a.m. The Commission will consider the following: (1) Final Rule: Amendments to Compliance Requirements for Commodity Pool Operators on Form CPO-PQR and (2) Memorandum of Understanding: MOU Between the CFTC and the Office of Financial Research Regarding the Sharing of Data and Information Collected on Form CPO-PQR.

CFTC Charges BitMEX Owners with Illegally Operating a Cryptocurrency Derivatives Trading Platform and Anti-Money Laundering Violations: On Thursday, the CFTC announced it had filed a civil enforcement action in federal court charging five entities and three individuals that own and operate the BitMEX trading platform with operating an unregistered trading platform and violating multiple CFTC regulations, including failing to implement required anti-money laundering procedures. “Digital assets hold great promise for our derivatives markets and for our economy,” said Chairman Heath Tarbert. “For the United States to be a global leader in this space, it is imperative that we root out illegal activity like that alleged in this case. New and innovative financial products can flourish only if there is market integrity. We can’t allow bad actors that break the law to gain an advantage over exchanges that are doing the right thing by complying with our rules.”

CFTC Chairman Tarbert Announces New Agricultural Advisory Subcommittee and Seeks Nominations for Membership: On Thursday, CFTC Chairman Heath Tarbert announced that the Commission is accepting nominations for a Subcommittee to evaluate Commission policy with respect to the implementation of amendments to enumerated agricultural futures contracts with open interest (Ag-OI Subcommittee) under the CFTC’s Agricultural Advisory Committee (AAC). “I’m pleased to form this Ag-OI Subcommittee as a manifestation of the CFTC’s core value of clarity, providing transparency to market participants about our rules and processes,” said Chairman Tarbert. “I look forward to drawing upon the expertise of a broad group of market participants in the agriculture community to bolster the level of transparency in the execution of the CFTC’s statutory requirement to approve amendments to agricultural futures contracts.”

Federal Reserve Board Invites Public Comment on Proposal that Would Update the Board's Capital Planning Requirements to Be Consistent with Other Recently Modified Board Rules: On Wednesday, the Federal Reserve Board invited public comment on a proposal that would update the Board's capital planning requirements to be consistent with other Board rules that were recently modified. Last year, the Board finalized a framework that sorts large banks into different categories based on their risks, with rules that are tailored to the risks of each category. The proposal today updates the Board's capital planning requirements—which help ensure that firms plan for and determine their capital needs under a range of different scenarios—to reflect that new framework. In particular, firms in the lowest risk category are on a two-year stress test cycle and not subject to company-run stress test requirements and the proposal reflects those changes. The proposal also would seek comment on the Board's existing capital planning guidance applicable to all firms.

Federal Reserve Board Announces It Will Extend for an Additional Quarter Several Measures to Ensure that Large Banks Maintain a High Level of Capital Resilience: On Wednesday, the Federal Reserve Board announced that, due to the continued economic uncertainty from the coronavirus response, it would extend for an additional quarter several measures to ensure that large banks maintain a high level of capital resilience. For the fourth quarter of this year, large banks—those with more than US$100B in total assets—will be prohibited from making share repurchases. Additionally, dividend payments will be capped and tied to a formula based on recent income. The capital positions of large banks have remained strong during the third quarter while such restrictions were in place.

Federal Reserve Board Extends Temporary Actions Aimed at Increasing the Availability of Intraday Credit Extended by Federal Reserve Banks: On Thursday, the Federal Reserve Board extended to March 31, 2021, temporary actions aimed at increasing the availability of intraday credit extended by Federal Reserve Banks on both a collateralized and uncollateralized basis. These temporary actions: (1) suspend uncollateralized intraday credit limits (net debit caps) and waive overdraft fees for institutions that are eligible for the primary credit program; (2) permit a streamlined procedure for secondary credit institutions to request collateralized intraday credit (max caps); and (3) suspend two collections of information that are used to calculate net debit caps.

Treasury Issues Ransomware Advisories to Increase Awareness and Thwart Attacks: On Thursday, Treasury issued a pair of advisories to assist U.S. individuals and businesses in efforts to combat ransomware scams and attacks, which continue to increase in size and scope. The Financial Crimes Enforcement Network (FinCEN) advisory, entitled Advisory on Ransomware and the Use of the Financial System to Facilitate Ransom Payments, provides information on the role of financial intermediaries in payments, ransomware trends and typologies, and related financial red flags. It also provides information on effectively reporting and sharing information related to ransomware attacks. The Office of Foreign Assets Control (OFAC) advisory, entitled Advisory on Potential Sanctions Risks for Facilitating Ransomware Payments, highlights the sanctions risks associated with facilitating ransomware payments on behalf of victims targeted by malicious cyber-enabled activities.

CFPB, FTC, State, and Federal Law Enforcement Partners Announce Nationwide Crackdown on Phantom and Abusive Debt Collection: On Tuesday, the CFPB, along with the FTC and more than 50 federal and state law enforcement partners, announced a nationwide law enforcement and outreach initiative to protect consumers from phantom debt collection and abusive and threatening debt collection practices. The initiative, called Operation Corrupt Collector, includes enforcement actions brought by the FTC, three federal partners, and partners from 16 different states against debt collectors engaged in these illegal practices.

CFPB Releases Assessment of TRID Mortgage Loan Disclosure Rule: On Thursday, the CFPB published an assessment of the TRID Integrated Disclosure Rule (the Truth in Lending Act and Real Estate Settlement Procedures Act). The assessment found that the TRID Rule made progress towards several of its goals. The evidence available for the assessment indicates that the TRID Rule improved consumers’ ability to locate key information, compare terms and costs between initial disclosures and final disclosures, and compare terms and costs across mortgage offers. Evidence was mixed, but leans positive, regarding whether the Rule improved consumer understanding of forms.

HUD Secretary Launches ‘Mustard Seed Series’ Virtual Workshops for Faith Leaders and Congregations: On Wednesday, HUD Secretary Ben Carson launched a series of virtual workshops for faith congregations entitled “The Mustard Seed Series.” The virtual events will feature faith organizations that have successfully created affordable housing, reduced homelessness, or used innovative housing models to serve individuals in need. The meetings will serve as a forum for other faith organizations to learn about the experiences of these communities and to replicate the successes they have experienced.

CDC Extends No Sail Order Through October 31: On Wednesday, the CDC announced the extension of a No Sail Order for cruise ships through October 31, 2020. This order continues to suspend passenger operations on cruise ships with the capacity to carry at least 250 passengers in waters subject to U.S. jurisdiction. Cumulative surveillance data reported to CDC from March 1 through September 29, 2020, shows at least 3,689 COVID-19 or COVID-like illness cases on cruise ships in U.S. waters, in addition to at least 41 reported deaths. The continued spread of the COVID-19 pandemic worldwide, risk of resurgence in countries that have suppressed transmission, ongoing concerns related to restarting of cruising internationally, and need for additional time to assess industry measures to control potential SARS-CoV-2 transmission on board cruise ships with passengers without burdening public health, support continuation of the No Sail Order at this time.


California Governor Signs Legislation Establishing State Consumer Financial Protection Watchdog: California Governor Gavin Newsom signed twelve bills to protect consumers from financial predators and abusive business practices. Central to the package is AB 1864, a law that significantly expands the state’s ability to protect Californians against abusive and predatory financial products and services. The bill establishes the Department of Financial Protection and Innovation (DFPI), adding 90 positions over the next three years to transform the agency into California’s version of the federal Consumer Financial Protection Bureau, the agency championed by President Obama and Senator Warren.

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.

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