OVERSIGHT AND INVESTIGATIONS – JANUARY 8, 2021
What We Are Watching:
REACTIONS TO MOB STORMING THE CAPITOL: House Speaker Nancy Pelosi and Senate Democratic Leader Chuck Schumer called for President Donald Trump’s removal from office for inciting the mob attack on the Capitol, and some Democratic lawmakers are pushing for Congress to return next week to begin impeachment proceedings. Business and trade group leaders have also called for Trump’s resignation, including National Association of Manufacturers president Jay Timmons who issued a statement that Pence should seriously consider invoking the 25th amendment. Vice President Mike Pence has not given any indication that he will support invoking the 25th amendment.
DEMOCRATS RETAKE THE SENATE: Raphael Warnock and Jon Ossoff won their respective Senate races in Georgia, resulting in a 50-50 tiein the Senate and that will give Democrats control in the chamber through Vice President Kamala Harris’s tie-breaking vote. Warnock will be Georgia’s first Black senator and Ossoff will be Georgia’s first Jewish senator.
BIDEN APPOINTMENTS: President-elect Joe Biden named Merrick Garland, D.C. Circuit Court of Appeals Judge and former Supreme Court nominee, as his nominee to be Attorney General, and Lisa Monaco, a former Obama administration homeland security advisor, as Deputy Attorney General. Additional appointments include: Gov. Gina Raimondo of Rhode Island as Commerce Secretary; Mayor Martin J. Walsh of Boston as Labor Secretary; and Isabel Guzman, director of California’s Office of the Small Business Advocate, as head of the Small Business Administration.
CONGRESSIONAL REVIEW ACT: With control of both Chambers secured, Congressional Democrats are discussing using the Congressional Review Act (CRA) to overturn regulations put in place under the Trump Administration’s rule making authority. In 2017, the Republican controlled Congress used the CRA to overturn 16 rules implemented by the Obama administration, and now that the shoe is on the other foot, lawmakers are discussing what Trump rules they have the votes to scrap.
THREE SELECT COMMITTEES: Speaker Pelosi gaveled in the 117th Congress on an unusual Sunday session. The new House Rules authorized three select committees with oversight authority: the Select Committee on Economic Disparity and Fairness in Growth, the Select Committee on the Climate Crisis, and the Select Subcommittee on the Coronavirus Crisis. These select committees have investigatory authority over policies, strategies, and innovations related to their respective subject matters, and we expect their oversight to cut across industries
The results of the Georgia election gave Democrats control of the Senate, but much of the Democratic legislative agenda can only be advanced with the support of Democratic moderates. All eyes will be on swing vote Joe Manchin (D-WV) as well as other moderates such as Democrats Mark Kelly and Kyrsten Sinema of Arizona, and Susan Collins (R-ME) and Lisa Murkowski (R-AK).
New Select Committees in the House provide Leaders with more flexibility to pursue priority items, but ultimate decision-making authority still lies with the standing committees of jurisdiction.
What We Are Watching:
HOUSE OVERSIGHT ON CLIMATE: Democrats on the House Oversight environment subcommittee released their climate change recommendations Thursday. It calls for the Biden administration to increase the social cost of carbon, eliminate support for fossil fuels, and create new tax benefits for clean energy companies. The 21-page staff report also urges the committee to continue investigating “the extent to which industry has influenced the Trump Administration’s actions — including anti-climate decisions and regulatory actions.”
CAPITOL CONDEMNATIONS: Statements from business leaders were swift and succinct following Wednesday’s disheartening events at the Capitol building. Leaders across industries, including leaders from the largest US energy companies and associations, condemned the events calling them “unspeakable” and “shocking.”
A NEW ATTORNEY GENERAL: President-elect Joe Biden has nominated former Supreme Court nominee Merrick Garland to be the new US Attorney General. If confirmed, Garland would bring a unique level of environmental law expertise to the Justice Department’s top spot. Garland has presided over dozens of federal air, water, and energy policies during his more than two decades as a judge on the US Court of Appeals for the District of Columbia Circuit. Although it’s unclear exactly how Garland’s environmental law expertise would come into play, President-Elect Biden has made it clear that climate action will be prioritized throughout the executive branch. His campaign has committed to revamping parts of DOJ with climate action in mind, and environmental advocates are already urging Garland to champion the initiative.
FINANCIAL SERVICES SECTOR
What We Are Watching:
DELISTING: The New York Stock Exchange will delist three Chinese telecommunication giants, signaling its second reversal in two days came after new guidance from the Treasury Department.
CHINA STOCK BAN: The State Department and Pentagon are contemplating adding Chinese companies Alibaba and Tencent to the list of Chinese companies barred from receiving U.S. investments.
AMEX PROBE: The inspectors general offices of the Treasury Department, Federal Deposit Insurance Corp. and Federal Reserve are investigating whether AmEx used aggressive and misleading sales tactics to sell cards to business owners and whether customers were harmed.
With Senator Ron Wyden (D-OR) poised to take over as chair of the Finance Committee, he is likely using the gavel to support Biden’s tax priorities, which include an increase in capital gains.
Senator Sherrod Brown (D-OH) is likely to take over as chair of the Banking Committee with Elizabeth Warren (D-MA) expecting to chair the Subcommittee on Financial Institutions and Consumer Protections. Implications include heightened scrutiny for Wall Street and private equity.
What We Are Watching:
DEMOCRATIC LEADERS URGE HALT TO PRIVATIZATION OF EXCHANGE MARKETPLACES: On Tuesday, Democratic leaders from committees of jurisdiction, including: the Senate Finance Committee, Senate Health, Education, Labor, Pensions Committee, the House Committee on Ways and Means, the House Committee on Energy and Commerce, and the House Committee on Education and Labor, issued press releases featuring a letter they wrote last week to the Trump Administration to withdraw a proposed rule that would essentially eliminate or privatize the health care exchanges. Members portend that the rule would hamper access to coverage, raise out of pocket costs, and force consumers to navigate a “decentralized landscape of private entities” to get coverage. They also refer to the rule as an “ideological crusade” against the Affordable Care Act.
UNITEDHEALTH SUBSIDIARY INDICTED ON LABOR MARKET COLLUSION: On Thursday, the Department of Justice (DOJ) announced an indictment of UnitedHealth subsidiary, Surgical Care Affiliates. In the antitrust suit, the DOJ alleges that Surgical Care Affiliates made deals with competitors dating as far back as 2010 to not a hire competitor’s senior-level employees. DOJ alleges that the company engaged in “two separate bilateral conspiracies” to “suppress competition” in the labor market. Further, DOJ warns that “companies who illegally deprive employees of competitive opportunities are not immune from our antitrust laws.”
Democratic control of the Senate will elevate Senate health leaders to powerful Committee positions. Senator Patty Murray (D-WA) will take control of the Senate Health, Education, Labor, Pensions Committee, while Senator Ron Wyden (D-OR) will take over the Senate Finance Committee. Wyden’s leadership of Senate Finance may mean that bipartisan policies that the Committee has been worked on previously, such as drug pricing reform, will likely return to the agenda.
House Speaker, Nancy Pelosi (D-CA-12) announced last week that the Select Subcommittee on the Coronavirus Crisis will remain active in the 117th Congress, signaling a continued focus on COVID-19 oversight. The Coronavirus Subcommittee will likely align their priorities and investigations with the new Administration’s focus.
Speaker Pelosi also announced the creation of a new Select Committee on Economic Disparity & Fairness in Growth. The Select Committee will support efforts to “combat the crisis of income and wealth disparity in America.” The Committee could choose to examine health care topics related to or affected by income inequality such as health care costs, access, health disparities and social determinants of health.
What We Are Watching:
MEGA AUTO MERGER COMING SOON: Fiat Chrysler Automobiles NV and Peugeot PUGOY maker PSA Group aim to complete their merger by January 16. The trans-Atlantic deal would mark the largest merger of auto manufacturers in the 21st century. The companies passed a major milestone on Monday when both sets of shareholders approved the merger. The deal is expected to create the third-largest auto manufacturer by vehicle sales.
SECDEF CONFIRMATION SET: The Senate Armed Services Committee will hold a confirmation hearing for Lloyd Austin to be Secretary of Defense on January 19, a day prior to the inauguration of President-Elect Joe Biden. The date of the hearing indicates Austin will not be confirmed until after the inauguration. House Armed Services Committee Chairman Adam Smith (D-WA-09) is pushing for Lloyd Austin to testify before his committee as part of the process to grant Austin a special waiver to lead the Pentagon despite his recent military service. The House hearing is not expected to take place before January 21, indicating Austin will not be confirmed until the last week of January at the earliest.
CDC PROPOSES TESTING FOR AIRLINE PASSENGERS: The U.S. Centers for Disease Control and Prevention (CDC) is proposing a requirement for international airline passengers to be tested prior to entering the U.S. Airlines for America, a trade association representing major U.S. airlines endorsed the proposal on Monday in a letter to Vice President Mike Pence. New York Governor Andrew Cuomo to similarly requested testing for international airline passengers to help monitor and prevent the spread of new COVID-19 variants in the U.S.
Democratic control of the Senate is expected to elevate Tom Carper of Delaware to Chair the Environment and Public Works Committee, Maria Cantwell of Washington to Chair of the Commerce, Science, and Transportation Committee, Patrick Leahy of Vermont to Chair of the Appropriations Committee, and Jack Reed of Rhode Island to Chair of the Armed Services Committee.
TECH, MEDIA & TELECOM SECTOR
Week in Review:
CHIP AWAY IN U.K.: The U.K.’s competition regulator announced that it plans to investigate Nvidia’s proposed acquisition of British chip designer Arm. Nvidia announced plans to buy Arm from SoftBank for $40 billion last September.
HOW HACKS HAPPEN: Czech software development firm JetBrains published a statement denying a report from both the New York Times and the Wall Street Journal that claimed JetBrains is under investigation for potential involvement in the SolarWinds hack. The reports, which cited government sources, said that US officials are looking at a scenario where Russian hackers breached JetBrains and then launched attacks on its customers, one of which was SolarWinds.
SOFT BAN: President Trump this week signed an executive order prohibiting transactions with eight Chinese software applications, including Alipay, the payment platform owned by Ant Group, and WeChat Pay, which is owned by Tencent. The move follows another executive order that’s shaken up Chinese companies on the New York Stock Exchange.
TECH OVERSIGHT DISCUSSIONS AT CES: On Tuesday, broadband leaders will discuss the future of high-speed internet connectivity and connecting underserved communities. On Wednesday, industry and policymakers will discuss the trends in regulation as governments around the world begin setting the rules for self-driving vehicles.
SOCIAL PRESSURE: Expect investigations of the role social media played in Wednesday’s Capitol Building riot to be an early priority for the new Congress. As the investigation of the police failure also moves forward, look for discussion about what law enforcement missed in the digital world and the balance social media platforms try to strike between guarding user privacy and assisting police.
The views expressed herein are those of the author(s) and not necessarily the views of FTI Consulting, Inc., its management, its subsidiaries, its affiliates, or its other professionals.
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