{"id":2033,"date":"2021-02-22T16:20:06","date_gmt":"2021-02-22T16:20:06","guid":{"rendered":"https:\/\/thornrun.com\/financial-services-report-2-22\/"},"modified":"2023-08-08T21:25:29","modified_gmt":"2023-08-08T21:25:29","slug":"financial-services-report-2-22","status":"publish","type":"post","link":"https:\/\/thornrun.com\/financial-services-report-2-22\/","title":{"rendered":"Financial Services Report (2\/22)"},"content":{"rendered":"\n

After a pseduo-recess <\/em>week Congress returns to really start cranking on moving the Biden administration’s key first 100 day priorities. For the Senate, this means moving nominations, starting with Linda Thomas-Greenfield’s nomination to be Ambassador to the United Nations, as well as Tom Vilsack’s nomination to be Secretary of Agriculture, and potentially Gina Raimondo to be Commerce Secretary if Ted Cruz relents. <\/p>\n\n\n\n\n\n\n\n

It will also be a busy\nweek for nominees at Senate Committees, starting with a two-day confirmation\nhearing in the Senate Judiciary Committee to consider Judge Merrick Garland’s\nnomination to be U.S. Attorney General on Monday and Tuesday. Meanwhile, the\nSenate Finance Committee will consider Adewale Adeyemo’s nomination to be\nDeputy Secretary of Treasury on Tuesday, followed by Katherine Tai’s nomination\nto be United States Trade Representative (USTR) Ambassador on Thursday. <\/p>\n\n\n\n

Over in the House, the\nfocus is on the President Biden’s “American Rescue Plan” for COVID-19\nrelief. The House Budget Committee will convene on Monday to piece together\neach committee\u2019s legislation to comply with reconciliation instructions into\nthe final $1.9 trillion virus aid package, which will also include continuing\nto scrub provisions for possible “Byrd Rule” violations. Once\ncompleted, the action turns to the House Rules Committee, who will also work to\nensure the legislation stays under the $1.9 trillion threshold. Reports that\nthe bill as passed by the various committees has swelled up to $1.95 trillion\ncould complicate the timing for the floor vote, potentially pushing to the\nlater part of the week. <\/p>\n\n\n\n

Meanwhile, the House\nis also scheduled to take up a package of wilderness-related bills as well as\npass the Equality Act (H.R. 5 <\/a>116th), legislation to pass federal legal\nprotections for LGBTQ people. <\/p>\n\n\n\n

In other, “non-nominee” Committee action we will see Federal Reserve Chairman Jerome Powell appear before the Senate Banking and House Financial Services Committees to discuss the Semiannual Monetary Policy Report on Tuesday and Wednesday, respectively. Elsewhere, the House Judiciary Subcommittee on Antitrust, Commercial, and Administrative Law will kick off its series of hearings on online competition next Thursday.<\/p>\n\n\n\n

Last Week in the House<\/strong><\/p>\n\n\n\n

There was no floor\nactivity last week, as the House was in a committee work week.<\/em><\/p>\n\n\n\n

Hearings, etc.<\/em><\/p>\n\n\n\n

HFSC Stock Market Hearing (2\/18): <\/strong>On Thursday, the House Financial Services\nCommittee held a hearing entitled \u201cGame Stopped? Who Wins and Loses When Short\nSellers, Social Media, and Retail Investors Collide.\u201d While the marathon\nhearing, which lasted nearly six hours, sought to dive deeper into the market\nvolatility that unfolded in January, the only clear take-away was that the\nChairwoman intended to hold two more hearings on the topic. <\/p>\n\n\n\n

During the hearing, members raised a variety of issues including,\n(1) whether there should be limits or additional disclosures requirements on\nshort sellers; (2) payment for order flow model (PFOF) and who it benefits\nmost; (3) the timeline of the settlement process to clear the transfer of a\nsecurity from a seller to a buyer; and, (4) whether apps like Robinhood\n“simplify” or “gamify” investing, among others. Ultimately,\nit felt like the hearing provided more questions than answers, but it did seem\nthat any of the policy changes raised by those questions were bigger than just\nRobinhood, Citadel and Keith Gill. <\/p>\n\n\n\n

Bills Introduced<\/em><\/p>\n\n\n\n

H.R. 1040<\/strong><\/a> <\/strong>(Burgess): To amend the Internal Revenue Code of 1986 to provide\ntaxpayers a flat tax alternative to the current income tax system. <\/p>\n\n\n\n

H.R. 1041<\/strong><\/a> <\/strong>(Boyle): To repeal the debt ceiling. <\/p>\n\n\n\n

H.R. 1058<\/strong><\/a> <\/strong>(Kinzinger): To amend the Middle Class Tax Relief and Job Creation\nAct of 2012 to amend the definition of eligible facilities request, to codify\nthe 60-day time frame for certain eligible facilities requests, and for other\npurposes. <\/p>\n\n\n\n

H.R. 1068<\/strong><\/a> (Pascrell): To amend the Internal Revenue Code of 1986 to provide\nfor the proper tax treatment of personal service income earned in pass-thru\nentities. <\/p>\n\n\n\n

H.R. 1136<\/strong><\/a> <\/strong>(Hastings): To establish a Government-wide initiative to promote\ndiversity and inclusion in the Federal workforce, and for other purposes. <\/p>\n\n\n\n

H.R. 1187<\/strong><\/a> (Vargas): To provide for disclosure of additional material\ninformation about public companies and establish a Sustainable Finance Advisory\nCommittee, and for other purposes. <\/p>\n\n\n\n

H.R. 1116<\/strong><\/a> (DeFazio): To provide for increased audits, improved technology\ninfrastructure, and increased staff for the Internal Revenue Service for the\npurpose of reducing the tax gap, and for other purposes. <\/p>\n\n\n\n

Other Activity<\/em><\/p>\n\n\n\n

Dems Call for Tax Filing Extension:<\/strong> On Thursday, a group of Democrats on the House Ways and Means Committee sent a letter<\/a> to the IRS, urging the extension of this year\u2019s tax filing date beyond the current April 15 deadline. The Members argued that last year’s extended due date, from April 15 to July 15,\u00a0provided valuable relief, and that an extension would again be helpful again this year. The letter stated that \u201chealth and safety concerns continue to keep taxpayer assistance sites closed and taxpayers homebound. As a result, taxpayers are having a much harder time receiving the crucial assistance they are accustomed to and require. These challenges are especially acute for low-income taxpayers with limited digital or English proficiency.” The lawmakers also noted that IRS is still processing millions of tax returns that were filed last year, and that as a result of last year\u2019s extended deadline, this filing season is condensed. <\/p>\n\n\n\n

Last Week in the Senate<\/strong><\/p>\n\n\n\n

There was no floor\nactivity, as the Senate was not in session last week.<\/em><\/p>\n\n\n\n

Other Activity<\/em><\/p>\n\n\n\n

Brown Holds First Hearing as Chairman<\/strong><\/p>\n\n\n\n

On Thursday, Senator Sherrod Brown held his first hearing as\nChairman of the Senate Banking Committee. The hearing<\/a>, which entitled, The Coronavirus Crisis: Paving the Way to An Equitable Recovery,\nhad a witness list that included the Mayor of Youngstown and the manger of a Brooklyn bakery<\/a>. <\/p>\n\n\n\n

Warren Also Questions Citadel<\/strong>: On Tuesday, Sen. Elizabeth Warren (D-MA) sent a letter<\/a> to Citadel CEO Kenneth Griffin, questioning the\ncompany\u2019s relationship with Robinhood and the role they played in the GameStop\nfrenzy that unfolded last month. This letter to Citadel, came after the Senator\nmade public the nearly nearly 200 page response <\/a>she had received from an earlier inquiry to\nRobinhood. <\/p>\n\n\n\n

The Senator’s missive offered further questioning on the issues of payment for order (PFOF) as well as seeking to better understand how the company resolves potential conflicts of interest between Citadel\u2019s hedge-fund and its market-maker divisions. <\/p>\n\n\n\n

Manchin Potentially Sinks Tanden Nomination<\/strong>: On Friday, Senator Joe Manchin (D-WV) announced that he intended to vote against Neera Tanden, the President’s choice to helm the Office of Management and Budget (OMB), apparently based on her past tweets. In a statement announcing his decision, the centrist Democratic Senator noted that “overtly partisan statements will have a toxic and detrimental impact on the important working relationship between members of Congress and the next director of the Office of Management and Budget.”\u00a0 Assuming every other Democratic Senator were to vote for her, Tanden would need to secure at least one other Republican to vote for her in order for the Vice President to break the tie. As of this writing, the Administration has not indicated they are going to pull her name, though if her nomination was to fail, it had been rumored that Gene Sperling, another former Clinton alumni may be be put forward. <\/p>\n\n\n\n

Last Week in the Administration<\/strong><\/p>\n\n\n\n

FDIC Appoints First Chief Innovation Officer<\/span><\/em><\/p>\n\n\n\n

On Tuesday, the Federal Deposit Insurance Corporation (FDIC) named<\/a> Sultan Meghji as the agency\u2019s first Chief\nInnovation Officer. Meghji will be charged with leading the FDIC\u2019s efforts to\npromote the adoption of innovative technologies across the financial services\nsector. \u201cAs a recognized expert in financial technology, Sultan brings years of\ntechnical knowledge and an entrepreneurial spirit to our FDiTech team,\u201d said\nFDIC Chairman Jelena McWilliams. \u201cUnder his leadership, I am confident we will\nfind innovative ways to utilize technology to modernize our bank supervision,\nenable community banks to adopt technological solutions, and bring more\nunderserved people into the financial fabric of our nation.\u201d <\/p>\n\n\n\n

Fed\u2019s Brainard Remarks on Climate Risk<\/span><\/em><\/p>\n\n\n\n

On Thursday, Federal Reserve governor Lael Brainard gave a speech<\/a> on the role of financial institutions in\naddressing climate change risk, arguing that the economy and financial system\nare already being affected by climate change. In light of this, said the\ncentral bank is ramping up work to ensure the financial system can deal with\nthe risks that lay ahead of it. \u201cClimate change is already imposing substantial\neconomic costs and is projected to have a profound effect on the economy at\nhome and abroad,\u201d Ms. Brainard said in a text of a speech. She argued that\nfinancial firms should now begin a process of adapting to this reality, and\nthat while the change needed by firms will vary by institution, putting off the\ntransition will come at a higher price later. In terms of disclosures, Ms.\nBrainard stated that, “ultimately, moving toward standardized, reliable\nand mandatory disclosures could provide better access to the data required to\nappropriately manage risks.” <\/p>\n\n\n\n

OHSA to Investigate Whistleblower Retaliation<\/span><\/em><\/p>\n\n\n\n

On Friday, the Department of Labor announced<\/a> that the Occupational Safety and Health\nAdministration (OSHA) is now overseeing worker retaliation complaints filed\nunder two new whistleblower statutes \u2014 the Criminal Antitrust Anti-Retaliation\nAct and the Anti-Money Laundering Act. Under the Criminal Antitrust\nAnti-Retaliation Act, OSHA will investigate individual whistleblower\u2019s\ncomplaints of retaliation for reporting criminal antitrust violations to their\nsuperiors or the federal government; or for showing cause, testifying or\nparticipating in, or otherwise assisting an investigation or proceeding related\nto antitrust law violations. The administration will do the same for Anti-Money\nLaundering Act cases. <\/p>\n\n\n\n

Tech Industry Sues Over Maryland Online Ad Tax<\/span><\/em><\/p>\n\n\n\n

On Thursday, a coalition of trade organizations filed a lawsuit<\/a> against the Maryland state government over a bill passed last month to impose a digital ad revenue tax. The plaintiffs include the Computer & Communications Industry Association (CCIA) \u2014 with members including Amazon, eBay, Facebook, Google and Uber \u2014 along with the U.S. Chamber of Commerce and the Internet Association. The suit challenges the state\u2019s recently enacted gross receipts tax on digital advertising revenue as unconstitutional and illegal under a federal internet tax moratorium. The House of Delegates voted to pass the bill in January, overriding a prior veto by Gov. Larry Hogan (R) from 2020.The bill imposes a tax of up to 10 percent on a company with global revenue from digital advertising that exceeds $15 billion, with smaller percentages\u00a0for companies with less revenue. The suit alleges the tax goes against the Internet Tax Freedom Act, a federal law that bars “multiple and discriminatory taxes on electronic commerce.” The suit also argues that Maryland’s new statute will lead to a rise in “junk” content and raise costs for consumers. <\/p>\n\n\n\n

This Week’s Schedule<\/strong><\/p>\n\n\n\n

Mon. (2\/22)<\/span><\/strong><\/p>\n\n\n\n