Oversight & Investigations Informer – 1/15/21
NOTABLE DEVELOPMENTS
What We Are Watching:
TRUMP IMPEACHMENT: The House voted to impeach President Donald Trump, charging him with “incitement of insurrection” for encouraging his supporters to attack the Capitol. Ten Republicans voted in favor of impeachment. Senate Majority Leader Mitch McConnell’s office said that the earliest the Senate could start an impeachment trial is Tuesday, January 19, the day before President-elect Joe Biden’s inauguration. McConnell has said that he hasn’t made his decision on whether he will vote to convict Trump, and will be considering the arguments made by both sides on the Senate floor.
COMPANIES SUSPEND PAC DONATIONS: Several major corporations, including AT&T, Marriott, and Blue Cross Blue Shield, announced plans to stop making political donations to the 147 members of Congress who voted against certifying the results of the presidential election. Additionally, many corporations have announced suspension of all political action committee donations in the wake of the mob attack on the Capitol.
BIDEN PROPOSES COVID RELIEF PACKAGE: President-elect Joe Biden announced a $1.9 trillion COVID relief package that includes $1,400 direct payments to most individuals, a $400 a week unemployment insurance supplemental, expanded child tax credit and family paid leave policies, money for state and local governments, and funding for vaccine distribution. Biden officials have expressed hope that the measure can move quickly through Congress with some bipartisan support- otherwise Democrats will need to use budget reconciliation or changes to Senate filibuster rules to clear the Senate with a simple majority.
Week Ahead:
Joe Biden will be sworn in as President at noon on Wednesday, January 20, by Chief Justice John Roberts on the West Front of the U.S. Capitol. Lady Gaga will sing the national anthem and Jenifer Lopez will give a musical performance. Instead of the traditional inaugural balls, Tom Hanks will host a virtual celebration that evening.
Senate nomination hearings include: Alejandro Mayorkas for Secretary of Homeland Security, January 19, 10 a.m.; Janet Yellen for Secretary of the Treasury, January 19, 10 a.m.; Antony Blinken for Secretary of State, January 19, 2 p.m.; Lloyd Austin for Secretary of Defense, January 19, 3 p.m.
KEY INSIGHTS:
The 117th Congress began last week, and its composition and organization is still forming. Speaker Nancy Pelosi announced new batches of House Democratic committee assignments HERE (1/14) and HERE (1/5). Democrats will assume the majority in the Senate soon after the state of Georgia certifies its election results on January 20th and once Senator Kamala Harris’s replacement Alex Padilla is sworn in after Harris’ ascension to Vice President.
Don’t read too much into company announcements that they are suspending PAC donations; corporate PAC committees often put donations on hold in the months after elections to reassess their priorities and strategies.
ENERGY SECTOR
What We Are Watching:
SO YOU’RE TELLING ME THERE’S A CHANCE: Rep. Kathy Castor (D-FL-14) gave a lengthy interview to POLITICO’s Anthony Adragna this week about the House Select Committee on the Climate Crisis’ plans for the new session of Congress. Castor, the committee’s chair, said she would focus on pushing Congress to act on climate change instead of launching investigations of fossil fuel companies, though she cautioned that subpoenas remain a “tool in our toolbox.” Instead, she’d rather see corporations actively lobbying for congressional action on climate change.
ENERGY $$ IN A PICKLE: Major U.S. corporations are reviewing their political donations after over 100 Republican Members of Congress voted against certifying the presidential election results. Bloomberg has compiled a list of companies that are ending donations to the specific Republicans who objected to the election results, those that are pausing all donations, and those that are still evaluating their path forward. Energy producers have largely fallen in the latter two categories, Bloomberg’s Liam Denning notes, because they rely on Republicans to block aggressive climate legislation and stand to gain a negligible PR boost by cutting donations to the GOP: “Critics won’t rethink their opinion of Big Oil — which is centered on the issue of climate change — because it leapt to democracy’s defense.”
Week Ahead:
The U.S. Supreme Court hears oral arguments in BP P.L.C. v. Mayor and City Council of Baltimore on Tuesday, January 19. The decision could have major implications for whether municipalities can sue energy companies to pay for climate change damages.
The Atlantic Council holds its virtual Global Energy Forum, beginning at 8 a.m., Jan. 19-22.
Key Insights
GOP FALLOUT AT AGM: Though the focus on corporate giving to select Republicans will move on to other issues, those that continue to give to Republicans who objected to the election results may find themselves the target of ongoing activist pressure. Shareholder activists continue to file resolutions requesting greater disclosure of company lobbying expenditures and political giving, and how companies respond to this current scrutiny is likely to impact the votes at the next annual general meeting.
FINANCIAL SERVICES SECTOR
What We Are Watching:
SENATE BANKING PLANS: One of Wall Street’s biggest critics on Capitol Hill, Sen. Sherrod Brown, is set to take over the powerful Senate Banking Committee. Brown has said he plans to bring Wall Street executives to the Capitol for public hearings once he takes the gavel and to use the Congressional Review Act to reverse some of Trump’s actions. Brown also says his agenda includes a focuses on climate change and racial justice.
BROOKS OUT: One of crypto’s friendliest voices in the Trump administration, acting OCC Comptroller Brian Brooks, stepped down this week. Before he left he finalized a “fair access rule” which would prohibit large banks from refusing to lend to certain business sectors.
BLACKROCK IN THE WHITE HOUSE: Mike Pyle, former chief investment strategist at BlackRock, will be chief economic advisor to Vice President-elect Kamala Harris. Pyle will join a number of other BlackRock alums, notably Brian Deese and Adewale Adeyemo, in the administration.
FUTURE OF GSE: The Department of the Treasury and the Federal Housing Finance Association announced GSEs will not be exiting conservatorship under the current administration. This came after Senator Sherrod Brown and Representative Maxine Waters blasted Trump for his 11th hour changes to GSEs.
TAX “WISH-LIST”: Senate Finance Committee incoming Chair Ron Wyden and House Ways and Means Committee Chairman Richard Neal announced their tax legislation wish lists for 2021 this week. Wyden said he would continue working on his capital gains tax legislation he began in September.
Key Insights:
With Sherrod Brown at the head of Senate Banking and rumors of Biden picking former CFTC Chairman Gary Gensler as SEC Chairman, Wall Street is gaining two very outspoken critics who already have plans to take them on.
Biden’s decision to pick BlackRock executives to his administration marks a change from previous administrations who have favored Goldman Sachs executives, who have notably been absent in this upcoming administration.
HEALTHCARE SECTOR
What We Are Watching:
FRAMEWORK FOR HEALTH EQUITY: On Monday, House Ways and Means Committee Chairman Richard E. Neal (D-MA-1) released a report on how the Committee will seek to address “the role that racism, ableism, and other social, structural, and political determinants have in perpetuating health and economic inequity in the United States.” Specific policy pillars laid out include: Adaptable, Accessible Technologies and Modernized Infrastructure; Appropriate, Adequate, and Trusted Workforce; Affordable, Comprehensive, and Accessible Health Care; and Support to State and Local Governments for Maximum Efficiency of Resources. These policy pillars reflect the potential legislative agenda that can be seen over the course of the incoming Congress as the COVID-19 pandemic continues to expose critical weaknesses in our health system and exacerbate existing health inequities.
PROFITS, PRICING UNDER PRESSURE: On Thursday, the Senate Committee on Finance released findings from a nearly two-year long investigation into insulin pricing with a focus on the biggest three manufacturers of the drug and their relationships with pharmacy benefit managers. The report states that in 2019, pharmaceutical companies raised the prices of commonly used medications without justification, causing patients and insurers to send an additional $1.2 billion over the year. Senate Finance Committee Incoming Chair Member Ron Wyden (D-OR) stated that “consumers are the only ones losing out in America’s broken drug pricing system, since every part of the pharmaceutical supply chain benefits from higher list prices.” The report was released the same day that Senator Wyden laid out his priorities, which included making the topic of drug pricing a priority.
PASSPORT FOR VACCINE, NOT VACATION: The coalition “Vaccination Credential Initiative” which includes Microsoft, Salesforce, Oracle and the Mayo Clinic is working on a digital passport to indicate who has been vaccinated against COVID-19. The passport could potentially be used by governments, airlines and other entities to screen employees and customers. Other healthcare technology companies, such as Cerner and Epic, have also joined these efforts.
NEW E&C REPUBLICANS: On Tuesday, eight new Republicans were selected by the House GOP steering committee for the House Energy and Commerce Committee, one of the major Committees of jurisdiction over U.S. healthcare. Of the new members, several are active on healthcare issues or are physicians by trade, including:
- Representative Neal Dunn (R-FL-02), a urology surgeon and Army veteran who also serves as ranking member of the House Veterans Affairs Subcommittee on Health
- Representative John Curtis (R-UT-03) who is focused on lowering healthcare costs and the COVID-19 response, he recently cosponsored a bill to waive high deductible health plan requirements for health savings accounts
- Representative Dan Crenshaw (R-TX-02) who recently introduced a bill to allow for direct primary care, outside of the insurance system
- Representative John Joyce (R-PA-13) a Dermatologist focused on repealing the Affordable Care Act (ACA)
Key Insights:
President-elect, Joe Biden’s “American Rescue Plan” includes additional funding for expanded COVID-19 testing and vaccine distribution. It also aims to implement part of President-elect Biden’s healthcare plan by expanding ACA tax credits and limiting premium contributions to 8.5 percent of an individual’s income. Biden’s plan follows a recent Dear Colleague letter by incoming Senate Majority Leader Chuck Schumer (D-NY) which indicated that Senate Democrats will make COVID-19 relief their “first order of legislative business.”
The approach to vaccine distribution continues to evolve, with HHS Secretary Alex Azar stating that the current administration will no longer reserve second vaccine doses. However, it remains to be seen how vaccine distribution will change when the new Biden Administration takes over in just five days.
INDUSTRIALS SECTOR
What We Are Watching:
TOTAL RECALL: Tesla was asked by the National Highway Traffic Safety Administration (NHTSA) to recall approximately 160,000 Model S and X automobiles due to defective equipment found in the vehicle’s central display system, known as the Media Control Unit (MCU). The defective technology prevents drivers from accessing several federally-mandated systems. NHTSA claims it has already identified 12,588 incidents of MCU failure in Tesla vehicles.
CBP PROHIBITS COTTON AND TOMATO PRODUCTS FROM XINJIANG: The U.S. Customs and Border Protection (CBP) announced it would ban imports of cotton and tomato-based products manufactured in Xinjiang, China, over evidence the products are made using forced labor. The ban is the latest step by the U.S. government in a recent push to prohibit imports from Xinjiang that may incorporate forced labor in their product supply chain. The U.S. Department of Homeland Security (DHS) issued a statement indicating products made with forced labor will not be tolerated by CBP, indicating more restrictions may come for goods linked to forced labor and other human rights abuses in Xinjiang.
TOYOTA SETTLEMENT: Toyota will pay a $180 million settlement to the U.S. government in response to allegations the company neglected to address pollution control malfunctions throughout its vehicle fleet for several years. Acting U.S. Attorney Audrey Strauss said Toyota actively “undermined” the U.S. Environmental Protection Agency’s (EPA) self-disclosure system for emissions-related defects.
Key Insights:
HOUSE GOP ANNOUNCES NEW APPROPRIATORS: House Minority Leader Kevin McCarthy (R-CA-23) has named the new Republican appointees to the House Appropriations Committee. The new appropriators are Representatives David Valadao (R-CA-21), Mike Garcia (R-CA-25), Ben Cline (R-VA-06), Anthony Gonzalez (R-OH-16), Ashley Hinson (R-IA-01), and Guy Reschenthaler (R-PA-14). The list consists primarily of recently elected Members with close ties to Republican leadership.
TECH, MEDIA & TELECOM SECTOR
What We Are Watching:
NO LET UP ON ANTITRUST: Makan Delrahim, the Justice Department’s outgoing antitrust chief, said he expects the Biden administration to continue antitrust investigations of U.S. tech companies. The Biden DOJ will take over the current monopoly lawsuit into Google in the realm of internet search, as other reported investigations continue in Apple Inc. over its App Store practices, as well as a separate DOJ probe into Facebook.
VIDEO GAME FAIL DRAWS REGULATORS: Poland’s Office of Competition and Consumer Protection announced it will investigate CD Projekt Red, the maker of the highly anticipated video game “Cyberpunk,” which was criticized by users as rife with errors and bugs and pulled from Sony and Microsoft’s online stores. U.S. firms are reportedly mulling a class action suit against the company.
A VIEW OF THE “STOP THE STEAL” FACEBOOK-VERSE: A wide-ranging New York Times profile of popular right-wing conspiracy accounts traces a boom in popularity and engagement back to Facebook’s algorithm. Multiple pro-Trump accounts saw exponential growth in their followings leading up to the breach of the U.S. Capitol.
NEXTDOOR NEXT UP IN CONTENT MODERATION FIGHT: A week after the Capitol riots, Nextdoor is still working out a response to criticism that it hosts QAnon content and other fringe conspiracies. The company confirmed it classifies QAnon as a hate group, but has yet to release updated content policies for political discussions on the site—all of which take place in private chat rooms and forums.
Week Ahead:
A number of tech firms are taking steps to mitigate rioting or violence in D.C. ahead of Joe Biden’s Inauguration. Airbnb said Wednesday it will block or cancel all reservations in the Washington, D.C. metro area during Inauguration week, while scooter company Lime will clear Trump properties from its location search.
Key Insights:
TO BAN OR NOT TO BAN? Even Twitter CEO Jack Dorsey is still grappling with the decision: “I feel a ban is a failure of ours ultimately to promote healthy conversation.” What most can agree on is how these decisions underscored the Bigness of Big Tech. With many looming antitrust cases on the horizon, Democrats and Republicans will likely both use this moment as a proof point.
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.
