Oversight & Investigations Informer – November 8, 2021
What We Are Watching:
CONGRESSES PASSES INFRASTRUCTURE BILL: On Friday the House passed the long-awaited infrastructure bill, sending it to President Biden’s desk for signature. The bipartisan Infrastructure Investment and Jobs Act puts $550 billion in new spending towards transportation projects, the electric grid, and broadband infrastructure. Thirteen House Republicans bucked their leadership to vote with Democrats on the measure, and six Democrats, all members of the progressive “squad”, voted against the bill.
BUILD BACK BETTER NEGOTIATIONS CONTINUE: After successfully passing infrastructure, Democrats are now focusing their attention on President Biden’s $2 trillion social spending and tax plan. Speaker Pelosi said she aims to bring up the bill when Congress returns the week of November 15. Moderate House Democrats indicated readiness to support the bill once they see the final budget analysis of the bill, but Senators Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) have not yet committed their support.
The House and Senate are in recess and return the week of November 15.
What We Are Watching:
INFRASTRUCTURE BILL INCLUDES $1 BILLION TO STATE AND LOCAL GOVERNMENTS FOR CYBERECURITY: Part of the bill sent to the President’s desk on Friday includes $1 billion over four years to state and local governments to bolster cybersecurity infrastructure.
SYNVERSE SUED FOR DATA BREACHES: Vice News reports that seven U.S. citizens are suing telecom firm Syniverse for negligence in protecting their data, including call records, call locations, and text messages, after the company discovered a data breach that lasted from 2016 until 2021.
GROUP OF HOUSE DEMOCRATS CALL FOR FURTHER ACTION ON CYBER ENFORCEMENT: Representatives Tom Malinowski (D-NJ), Anna Eshoo (D-CA), Katie Porter (D-CA) and Joaquin Castro (D-TX) put out a joint statement applauding the Biden administration’s recent actions imposing sanctions on companies involved in cyber espionage, and called on the Biden administration to add more companies to its entity list of sanctions.
What We Are Watching:
LITIGATION COMING OVER CALIFORNIA OIL SPILL: The Center for Biological Diversity notified the Interior Secretary and Bureau of Ocean Energy Management last week that it plans to sue the federal government over “the failure to review and update plans for platforms off the coast,” following the oil spill off the coast of California last month. Though the spill was not as severe as initially feared, it has prompted calls from Democrats for bans on offshore production.
OVERSIGHT SUBPOENAS BIG OIL: House Oversight and Reform Committee Chairwoman Maloney (D-NY) sent subpoenas to four oil and gas companies and two trade associations last week, over the objections of the Ranking Member, seeking communications between executives, communications with public relations firms and social media companies, and records of payments made to third parties. The letter gave a deadline of November 16 to turn over the requested documents.
METHANE FEE COULD SURVIVE: A controversial fee on methane emissions survived the U.S. House of Representatives’ Build Back Better Act last week, although it remains to be seen if the provision will make it into the final bill. The U.S. recently joined other countries in pledging to slash methane emissions, adding international pressure to take action on the powerful greenhouse gas.
DEMOCRATS CALL FOR FIRST EVER CLIMATE SANCTIONS: Congressional Democrats are asking President Biden to sanction individuals and companies “that are perpetrating the worst climate damage, with a particular focus upon companies that violate human rights while harming the climate.” Only four Members of Congress signed the letter, but they include heavyweights like Sens. Warren (D-MA), Sanders (D-VT), and Markey (D-MA). For now, the Members seem to be suggesting the sanctions should be used to coerce China, the largest current emitter of greenhouse gases, to act on climate change, but the signers also emphasize the sanctions could be used to deter corporations “from causing additional harm.”
FINANCIAL SERVICES SECTOR
What We Are Watching:
TIME TO NOMINATE: President Biden will soon announce his nomination for the Federal Reserve, and is rumored to be either current Chair Jerome “Jay” Powell or Lael Brainard, a member of the Board of Governors of the Federal Reserve System. Before Thanksgiving, Biden asked Democratic Senators to meet with Powell, leading some to think that Powell will remain. This comes as Randall “Randy” Quarles submits his resignation as a member of the Federal Reserve Board, effective at the end of December. He has served as the Board’s first Vice Chair of Supervision.
COALITION AGAINST OCC NOMINEE: Americans for Tax Reform is leading a coalition against Biden’s Chair nominee for the Office of the Comptroller of the Currency (OCC). In a letter to the Senate Banking Committee, the coalition warned that Saule Omarova has a desire to eliminate private banking in the U.S. and plans to expand the size and authority of the OCC. Omarova was seen last week on the Hill meeting with Democratic Senators ahead of an expected hearing the week of November 15.
BANKS FIGHT CLIIMATE CHANGE: After the United Nations Climate Conference (COP26) Summit in Glasgow, Scotland, last week, banks and asset managers, who represent 40% of the world’s financial assets, have pledged to meet the goals laid out in the Paris Climate Agreement. The participants will commit to reaching net zero carbon emissions by 2050.
BIDEN ADMINISTRATION RELEASES FIRST REPORT ON CRYPTO: Last week, the President’s Working Group (PWG) released their report after weeks of speculation, outlining the direction of the regulation of stablecoins. This is the first report by the Biden Administration on the crypto industry and called for prompt action from Congress.
The House Committee on Financial Services Subcommittee on Diversity and Inclusion is hosting a virtual hearing on December 9, “There’s No Pride in Prejudice: Eliminating Barriers to Full Economic Inclusion for the LGBTQ+ Community”.
Acting Office of the Comptroller of the Currency Chair, Michael J. Hsu, will deliver remarks on climate change risks. on Monday, November 8. After the remarks, OOC’s Climate Change Risk Officer Darrin Benhart will join to co-host a fireside chat on the subject. Hsu should discuss the framework banks will receive later this year on their involvement in combatting climate change.
The Chair of the Federal Reserve Board, Jerome Powell, will give the opening remarks at the Conference on Diversity and Inclusion in Economics, Finance, and Central Banking on Tuesday, November 9.
On Wednesday, November 10, the latest Consumer Price Index will be released. Economists expect that inflation will continue to rise and this will impact President Biden’s popularity and the 2022 midterms.
Members of FTI’s Financial Services Public Affairs & Government Relations team wrote a thought leadership piece on the President’s Working Report (PWG) on stablecoins. The report calls on Congress to take the lead on regulating stablecoins and did not give leading authority to one agency, stating the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) both have jurisdiction over the industry. There is a long road ahead on Congressional action, with hearings on crypto expected in the upcoming months across several committees, such as House Financial Services, Senate Banking, and both the Senate and House Agriculture Committees.
What We Are Watching:
GEISINGER SETTLES FALSE CLAIMS ALLEGATION FOR $18.5 MILLION: On Monday, the Justice Department announced that Geisinger Community Health Services (GCHS) agreed to pay $18.5 million to resolve allegations that they filed false hospice and home health service claims to Medicare. Geisinger voluntarily reported the error after a self-audit, a move that the Justice Department commended, according to Modern Healthcare.
NEW BIDEN ADMINISTRATION RULE WILL RAISE HOSPITAL PRICE DISCLOSURE VIOLATION FINES: On Tuesday, the Biden Administration finalized a new rule, which will go into effect at the beginning of 2022, which will raise the maximum penalty large hospitals can pay for failing to comply with price disclosure rules from $109,500 per year to approximately $2 million per year. Per the Wall Street Journal, the rule will also “crack down” on practices some hospitals use to make it difficult to access pricing information, such as the use of special coding to prevent search engines from displaying prices in their search results.
JUDGE RULES THAT J&J, TEVA, ENDO, AND ABBVIE DID NOT RELEASE MISLEADING INFORMATION ON OPIOID ADDICTIVENESS: On Monday, a federal judge ruled that Johnson & Johnson, Teva Pharmaceutical Industries, Endo International, and Abbvie’s Allergan did not mislead physicians and patients about the addictiveness of opioids, or create a public health crisis through their marketing. This represents the first instance in which a judge or jury rejected state or local government claims that opioid manufacturers should be held liable for the opioid epidemic.
On Wednesday, November 10, 2021 at 2:00 p.m., the Select Subcommittee on the Coronavirus Crisis will hold a hearing in Chicago entitled “Building Vaccine Confidence: Our Shot at Curbing the Pandemic in Chicago and Beyond.” The witness list will include: Lori E. Lightfoot, Mayor of Chicago; Ngozi Ezike, M.D., Director of Illinois Department of Public Health; Helene D. Gayle, M.D., President and CEO of The Chicago Community Trust; Omar Khan, M.D., Co-Chair of Muslim Community Center’s Health & Awareness Committee; Martha Martinez, Manager of Pandemic Health Navigator Program (Gail Borden Public Library District); Don Abram, Program Manager of Interfaith Youth Core; and Ben O’Donnell, Coronavirus Survivor.
On Tuesday, Dr. Rochelle Walensky recommended the use of the Pfizer-BioNTech COVID-19 vaccine in children between the ages of five to 11, clearing the final hurdle in making a COVID-19 vaccine available to young children. Notably, Dr. Walensky’s recommendation conflicts with a previous recommendation from the Food and Drug Administration’s (FDA’s) independent advisory board—the Vaccines and Related Biological Products Advisory Committee (VRBPAC)—which cautioned that only children at high risk of developing complications secondary to COVID-19 should receive the vaccine at this time due to limited safety information. The new guidance enables the vaccination of some 28 million children in the U.S. While some providers state they will begin administering the vaccine as early as Wednesday, federal officials indicated they do not expect vaccinations for children in that age group to commence until next week.
What We Are Watching:
BOEING DIRECTORS REACH 737 MAX SETTLEMENT WITH SHAREHOLDERS: Company directors agreed to a $237.5 million settlement with shareholders to resolve a lawsuit over the board’s safety oversight of the 737 Max. The Boeing plane was grounded for over a year and a half after crashes in 2018 and 2019 that killed 346 people. The settlement will require an additional board member who has aviation, engineering, or safety oversight experience.
POTENTIAL FEMA GRANT FOR PFAS FREE FIREFIGHTING FOAMS: Bloomberg Law reported that the latest draft framework of President Biden’s Build Back Better legislation contains $95 million to fund grants for FEMA to provide firefighters with personal protective equipment as well as acquire alternative firefighting foams that don’t contain PFAS.
AMERICAN AIRLINES DELAYS VACCINE MANDATE DEADLINE: American Airlines announced that it is delaying its rule requiring that all employees be vaccinated until January 4, from an original date of November 24. CNBC reports that Southwest Airlines and other airlines are likely to follow suit.
TECH, MEDIA & TELECOM SECTOR
What We Are Watching:
FACEBOOK RELEASES PROBLEMATIC USE STATS: In a new report, Facebook researchers found that 1 in 8 users of the site engage in compulsive use of social media, or problematic use mirror, which impacts their sleep, work, parenting or relationships.
NEW KLOBUCHAR, COTTON BILL TO BLOCK BIG TECH MERGERS: A new antitrust bill introduced Friday aims to make it more difficult for Big Tech to acquire rival companies and would force them to prove proposed mergers aren’t anticompetitive, giving enforcers, like the Justice Department, more authority to stop acquisitions.
NEW SUBCOMMITTEE FOR 2022?: Rep. Jim Jordan (R-OH) said on a conservative radio show that if the GOP wins the House in the 2022 elections, he will create a new investigations subcommittee focused on Big Tech to examine tech at the House Committee on the Judiciary. “We need to go after Big Tech, censorship of conservatives,” Jordan said on the Firebrand online show hosted by fellow Republican Rep. Matt Gaetz of Florida.
Task Force on Financial Technology Subcommittee hearing on “Buy Now, Pay More Later? Investigating Risks and Benefits of BNPL (Buy Now Pay Later) and Other Emerging Fintech Cash Flow Products” on Tuesday, November 2 at 10:00am.
On November 3, the House Economic Disparity and Fairness in Growth Committee holds a hearing on “Our Changing Economy: The Economic Effects of Technological Innovation, Automation and the Future of Work.”
A study by the Computer and Communications Industry Association surveying 18 companies that are likely candidates for being designated as platforms including Google, Apple, Facebook, Amazon, and Microsoft found that antitrust bills targeting large “platform” companies would block up to 21 percent of the money spent on tech startup acquisitions.
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