Money Matters: This Week in Washington
This Week in Washington for August 17, 2020
August 17, 2020
Dina Ellis
THE BIG PICTURE
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Coronavirus cases in the United States surpassed 5.3 million as deaths approached 170,000. The major college football conferences announced they would postpone their fall season due to coronavirus concerns, becoming the latest casualty of the pandemic. In a positive development, the FDA announced it had granted emergency authorization to a low-cost rapid saliva-based test developed in partnership by Yale and the NBA, which many hope will greatly expand Americans’ access to frequent and rapid testing.
After months of speculation, on Tuesday, Joe Biden announced he had selected California Senator Kamala Harris as his running mate. If elected, Harris will make history as the first woman, first Black, and first South Asian American Vice President. The Democratic Convention is set to kick off this week in Milwaukee, Wisconsin, though will be largely virtual in nature due to COVID-19.
Negotiations over an additional relief package remain at a stalemate as congressional leadership and the administration are deadlocked over the size and scope of the measure. Any additional relief legislation is unlikely until after Labor Day, as the Senate left has officially departed DC for their traditional August recess. As millions of Americans remain in limbo, economists are increasingly sounding the alarm that absent federal action, an “escalation in the virus may make the [economic] pothole into a sinkhole” as lifting restrictions in some areas too early “hurt both the economy and public health.”
The House Oversight Committee has called for an urgent hearing next week with Postmaster General Louis DeJoy over how recent changes made at the USPS have impacted its ability to handle mail-in voting for the upcoming election. On Sunday, House Speaker Nancy Pelosi announced she would recall members to DC in order to address the crisis at the Postal Service.
Other highlights of last week include:
The President’s younger brother, Robert, passed away on Saturday at the age of 71.
New jobless claims fell below one million last week for the first time since the onset of the pandemic in March.
Rep. Ilhan Omar (D-MN) survived a primary challenge on Tuesday, becoming the third member of the so-called “squad” of progressive freshmen Democrats to survive a challenge.
LAST WEEK ON THE HILL
Schatz, Murkowski Lead Bipartisan Group of 48 Senators in Calling for Extension of Census Deadlines: On Tuesday, Senators Brian Schatz (D-HI) and Lisa Murkowski (R-AK) led a group of 48 bipartisan senators in calling for the extension of the statutory deadlines for the delivery of apportionment data and redistricting files following the 2020 Census, arguing that “Extending the deadlines for the delivery of these files in the next COVID-19 relief package will ensure that the Census Bureau has adequate time to complete a full, fair, and accurate 2020 Census. It will also ensure that both the Congress and the states receive accurate data for apportionment and redistricting.”
SENATE BANKING COMMITTEE
Brown, Colleagues Urge FHFA to Extend the Comment Period for Critical Capital Rule: On Tuesday, Sen. Sherrod Brown (D-OH), Ranking Member of the Committee, led nine Senate Democrats in a letter to FHFA Director Mark Calabria, urging the agency to extend the comment period for the proposed capital framework for Fannie Mae and Freddie Mac. The Senators cited the importance and complexity of the proposal, as well as the ongoing public health crisis, in calling for the extension. The Senators called on the agency to extend the comment period and allow for more thoughtful feedback on the critical rule, which will impact the entire housing finance system and the millions of homeowners and renters who depend on it.
OTHER COMMITTEES
House Coronavirus Crisis Subcommittee Seeks Transparency on Conflicts of Interest and Vaccine Selection in Operation Warp Speed: On Wednesday, Subcommittee Chairman Jim Clyburn (D-SC) sent letters to HHS Secretary Alex Azar, Operation Warp Speed Chief Advisor Dr. Moncef Slaoui, and David Harris, President and Chief Executive Officer of Advanced Decision Vectors, seeking documents and information on potential conflicts of interest in Operation Warp Speed, the Administration’s vaccine and therapeutic development initiative. “The Select Subcommittee strongly supports efforts to develop and distribute a life-saving coronavirus vaccine, but I am concerned that the selection of candidate vaccines for Operation Warp Speed lacked transparency and excluded many vaccine experts,” wrote Clyburn.
Congressional Black Caucus Town Hall on “Evictions, COVID-19, & Black America: A Rental Housing Crisis”: On Friday, the Caucus held a virtual town hall to discuss the impact of the coronavirus pandemic on housing among minority communities, with a particular focus on the issue of evictions.
Lisa Rice, President and CEO, National Fair Housing Alliance
Malcolm Bennett, President and Founder, Minority Apartment Owners Association
Diane Yentel, President and CEO, National Low Income Housing Coalition
Ayanna Fortson, Director of Housing and Community Development, National Urban League
LEGISLATION INTRODUCED AND PROPOSED
H.R. 7995: Rep. Mark Amodei (R-NV) introduced H.R. 7995, which would amend title 31, United States Code, to save Federal funds by authorizing changes to the composition of circulating coins.
H.R. 8003: Rep. Dwight Evans (D-PA) introduced H.R. 8003, which would require the provision of notice to homeowners regarding available housing relief to respond to the COVID-19 pandemic.
H.R. 8007: Rep. Mark Green (R-TN) introduced H.R. 8007, which would eliminate the authority of the Board of Governors of the Federal Reserve System to hold closed meetings in planning economic stabilization under the Coronavirus Economic Stabilization Act of 2020.
H.R. 8028: Rep. Filemon Vela (D-TX) introduced H.R. 8028, which would amend the Equal Credit Opportunity Act to prohibit discrimination based on an applicant's institution of higher education.
THIS WEEK ON THE HILL
Both chambers on August recess.
THE REGULATORS
Federal Reserve Board Announces Individual Large Bank Capital Requirements: On Monday, the Federal Reserve Board announced individual large bank capital requirements, which will be effective on October 1. Under its framework for large banks—those with more than US$100B in total assets—capital requirements are in part determined by stress test results, which provide a risk-sensitive and forward-looking assessment of capital needs.
Federal Reserve Board Announces Revised Pricing for Its Municipal Liquidity Facility: On Tuesday, the Federal Reserve Board announced revised pricing for its Municipal Liquidity Facility (MLF). The revised pricing reduces the interest rate spread on tax-exempt notes for each credit rating category by 50 basis points and reduces the amount by which the interest rate for taxable notes is adjusted relative to tax-exempt notes.
Federal Banking Agencies Issue Joint Statement on Enforcement of Bank Secrecy Act/Anti-Money Laundering Requirements: On Thursday, the Federal Reserve, FDIC, NCUA, and OCC issued a joint statement updating their existing enforcement guidance to enhance transparency regarding how they evaluate enforcement actions that are required by statute when financial institutions fail to meet Bank Secrecy Act/anti-money laundering (BSA/AML) obligations. The statement clarifies that isolated or technical violations or deficiencies are generally not considered the kinds of problems that would result in an enforcement action. The statement also addresses how the agencies evaluate violations of individual components (known as pillars) of the BSA/AML compliance program.
SEC Urges Firms to Monitor Staff Amid COVID-19: On Wednesday, the SEC’s Office of Compliance Inspections and Examinations issued an alert reminding firms that despite challenges caused by the pandemic, they are still obligated to supervise personnel’s “investment and trading activities” and encouraged firms to “closely review and, where appropriate, modify their supervisory and compliance policies and procedures.”
CFTC Unanimously Approves Proposals Amending Margin Requirements for Swap Dealers and Major Swap Participants: On Friday, the CFTC announced it has voted unanimously to approve two proposals amending certain margin requirements for swap dealers (SDs) and major swap participants (MSPs). The first proposal would align aspects of the CFTC’s uncleared swap margin requirements (CFTC Margin Rule) with the Basel Committee on Banking Supervision and the International Organization of Securities Commissions’ margin requirements for non-cleared derivatives (BCBS/IOSCO Framework). The proposal would also allow SDs and MSPs to rely on certain counterparties’ calculation of initial margin. The second proposal would amend the CFTC Margin Rule to permit the application of separate minimum transfer amounts for initial and variation margin, and the application of a minimum transfer amount of up to $50,000 for separately managed accounts.
Fannie Mae and Freddie Mac Announce New Adverse Market Fee: On Thursday, Fannie Mae and Freddie Mac announced they would impose a 0.5% “adverse market fee” on most refinanced mortgages beginning September 1. The move drew backlash from many in the mortgage industry, along with top Democrats like Sen. Sherrod Brown (D-OH) who slammed the decision as one would that “hurt families across the country” and said “the GSEs and their regulator should be fulfilling their mission to support homeowners and the housing market. Instead, they’re doing just the opposite.”
HUD Awards $472M to Public Housing Authorities to Help Keep Residents Housed: On Monday, HUD announced $472 million in CARES Act funding to help low-income families during the coronavirus pandemic. This funding can be used by Public Housing Authorities to help families assisted by Housing Choice Vouchers (HCV) and Mainstream vouchers prevent, prepare for, and respond to the coronavirus. “This funding will provide additional resources to public housing authorities to make sure people have a decent, safe, and affordable place to call home,” said HUD Secretary Ben Carson. “HUD continues to work with our public housing authorities to protect American families from this invisible enemy, including vulnerable residents in the Housing Choice Voucher Program.”
DOJ Announces Global Disruption of Three Terror Finance Cyber-Enabled Campaigns: On Wednesday, the DOJ announced the dismantling of three terrorist financing cyber-enabled campaigns, involving the al-Qassam Brigades, Hamas’s military wing, al-Qaeda, and ISI. These three terror finance campaigns all relied on sophisticated cyber-tools, including the solicitation of cryptocurrency donations from around the world. The action demonstrates how different terrorist groups have similarly adapted their terror finance activities to the cyber age. Each group used cryptocurrency and social media to garner attention and raise funds for their terror campaigns. Pursuant to judicially-authorized warrants, U.S. authorities seized millions of dollars, over 300 cryptocurrency accounts, four websites, and four Facebook pages all related to the criminal enterprise.
COMINGS AND GOINGS AT THE AGENCIES
Sebastian Gomez Abero Named Deputy Director of SEC's Small Business Advocacy Office: On Tuesday, the SEC announced that Sebastian Gomez Abero has been named Deputy Director of the SEC's Office of the Advocate for Small Business Capital Formation (OASB). Mr. Gomez Abero joined the SEC in 2007, and since July 2018, has served as Senior Advisor to Chairman Jay Clayton.
Deputy Chief Accountant Marc Panucci to Leave SEC: On Wednesday, the SEC announced that Marc Panucci, Deputy Chief Accountant, plans to leave the agency later this month.
Robert Bowes Nominated to Seat at CFTC: On Thursday, the White House announced the President plans to nominate Robert Bowes to serve as a commissioner of the Commodity Futures Trading Commission, succeeding Brian Quintenz. Bowes currently serves as an appointee at the Department of Housing and Urban Development.
THE COURTS
OCC Defends Fintech Charters: On Thursday, the OCC defended its authority to grant special purpose bank charters at the second circuit, arguing that the challenge brought by the New York Department of Financial Services was “not ripe” due to the lack of pending or approved applications.
SIFMA Files Suit over SEC’s Muni Adviser Exemption: On Friday, the Securities Industry & Financial Markets Association filed suit against the SEC, seeking to block its temporary exemption that allows financial advisors to directly solicit loans without needing to register as a broker dealer, arguing that it “creates an uneven playing field that exclusively benefits municipal advisors at the expense of more regulated broker-dealers.”
OTHER NOTEWORTHY NEWS
US and EU Engage in Privacy Shield Discussions: On Monday, the Commissioner for Justice Didier Reynders and U.S. Secretary of Commerce Wilbur Ross initiated discussions to evaluate the potential for an enhanced EU-U.S. Privacy Shield framework to comply with the 16 July judgement of the Court of Justice of the European Union in the Schrems II case. This judgement declared that this framework is no longer a valid mechanism to transfer personal data from the European Union to the United States.
China Issues Sanctions on 11 US Individuals over Hong Kong: On Monday, China announced that it had imposed sanctions on 11 Americans, including Senators Marco Rubio (R-FL) and Ted Cruz (R-FL) for “behaving badly on Hong Kong-related issues.”
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