Public Policy Bulletin

Public Policy Bulletin

A Washington insider's view on policy and politics.

Proposed Rule to Bring More Oversight to Debit Card Providers Servicing Federal Financial Aid Recipients

Posted in Education, Financial Services
Mike GillEdward Goetz

Earlier this week, the U.S. Department of Education (DOE) published a Notice of Proposed Rulemaking in the Federal Register to amend the cash management regulations of the Student Assistance General Provisions regulations issued under the Higher Education Act of 1965, as amended (HEA).

The department was prompted to issue the proposed rule after receiving a number of reports from government and consumer groups documenting a troubling pattern of practices being employed by some financial account providers, including:

  • Providers prioritizing disbursements to their own affiliated accounts over aid recipients’ preexisting bank accounts.
  • Providers and schools strongly implying to students that signing up for the college card account was required to receive Federal student aid.
  • Private student information unrelated to the financial aid process being given to providers before aid recipients consented to opening accounts.
  • Access to the funds on the college card was not always convenient.
  • Aid recipients being charged onerous, confusing, or unavoidable fees in order to access their student aid funds or to otherwise use the account.

The burden of the new regulations on post-secondary institutions largely depends on their current relationships with banks and debit card providers. For example, many large, public flagship institutions have revenue arrangements with banks and debit card providers. If an institution has such an arrangement, they will need to revise their contracts to comply with these regulations when they are made final.

Continue Reading

Utah Seeks to Join Challenge to New Federal Fracking Rules

Posted in Environment & Energy
Dave FreudenthalEdward Goetz

The governor of Utah announced last week that the state is working to join Wyoming, North Dakota, and Colorado in challenging the U.S. Department of the Interior’s (DOI) rule to regulate hydraulic fracturing on federal and tribal lands.

The case Utah is trying to join was filed by Wyoming in March and claims the new fracking rules exceed DOI’s jurisdiction under the Federal Land Policy and Management Act, the Mineral Leasing Act, as well as the Safe Water Drinking Act. Two industry groups sued to block the regulations immediately following their release, but Wyoming is the first state to sue.

The suit revolves around the new rule’s well casing and wastewater storage requirements, as well as the requirement for drillers to disclose what chemicals they are using in their fracking operations.

Continue Reading

DOJ Expectations from Companies Cooperating with Criminal Investigations

Posted in Government & Internal Investigations
Cari StinebowerEdward Goetz

Last week, Assistant Attorney General Leslie R. Caldwell, speaking at the New York City Bar’s fourth annual White Collar Crime Institute in Manhattan, candidly expressed what the government is looking for from companies wanting credit for cooperating in criminal investigations.

She noted, “While every internal investigation will be unique, and depend on the scope of misconduct and the size and nature of the corporation, there are a few aspects that are universal:

  • We expect you to learn the relevant facts, assuming they are learnable.
  • If you choose to cooperate with us, we expect that you will provide us with those facts, be they good or bad.
  • Importantly, that includes facts about individuals responsible for the misconduct, no matter how high their rank may be.
  • We expect timely provision of evidence. What does that mean?  That doesn’t mean you need to call us on day one. In most cases it is in everyone’s interest for there to be an orderly internal investigation. Exact timing varies with the facts, but once companies know the facts, we do not expect them to delay providing them to us.”

Continue Reading

Lifting 40-year Ban on Exporting U.S. Crude Oil: Senate Energy Committee Chair to Introduce New Bill

Posted in Environment & Energy
Jennifer N. WatersJana del-CerroEdward Goetz

On April 21, the Chairman of the Senate Energy and Natural Resources Committee, Lisa Murkowski (R-AK), told the audience at an energy conference that she will introduce a bill to lift the 40-year ban on the export of U.S. crude oil.

Murkowski said the impetus for her plan is the possibility of the six major world powers reaching an agreement with Iran on its nuclear program and relaxing sanctions that have kept much of Iran’s oil off the international market.

She also spoke in favor of taking advantage of exemptions in current law. For example, Murkowski is pushing the Commerce Department to accept a proposal made by Mexico’s state-owned oil company, Petroleos Mexicanos (Pemex), to swap up to 100,000 barrels per day (bdp) of Mexican dark crude for U.S. light crude oil. This deal would benefit U.S. Gulf Coast refineries that have invested heavily to retrofit their facilities for processing heavier crude, and are already importing significant quantities of the heavier crude from Mexico and other countries.

Crowell & Moring will continue to monitor hearings and proposed legislation to keep clients up to date on what could potentially be a significant shift in U.S. oil policy.

Financial Industry Regulation Update – April 17, 2015

Posted in Commodities, Financial Services
Jenny E. Cieplak

On Tuesday, CFTC Commissioner Wetjen outlined his regulatory agenda for the next year in testimony before the House Agriculture Subcommittee on Commodity Exchanges, Energy and Credit. Commissioner Wetjen identified three key rulemakings before the CFTC – Margin for Uncleared Swaps, Capital Requirements, and Position Limits. He also addressed the issue of customer funds held by FCMs, noting that because bankruptcy law requires that an FCM’s customer funds be shared ratably among customers in the event of an FCM bankruptcy, the CFTC’s ability to require segregation of individual customer funds is limited. The Commissioner suggested that Congress amend the bankruptcy code to permit greater flexibility for the protection of customer funds, noting that customers may currently believe they can get better protection in the OTC market which allows them to require segregation of their funds. Continue Reading

Financial Industry Regulation Update – March 27, 2015

Posted in Financial Services
Jenny E. Cieplak

Last week, the House began the process of CFTC reauthorization, with a House Agriculture subcommittee holding hearings with testimony from CME, the NFA and various other market participants. The subcommittee members seem intent on presenting a bill very similar to last year’s HR 4413, which passed the House but was not taken up by the Senate. Given changes in Senate composition the bill seems more likely to be considered by both houses of Congress this year.

At the hearings, witnesses focused on the costs of complying with new regulations, including reporting and the proposed margin and position limits rules, and the burden imposed by regulatory uncertainty. Subcommittee members were particularly focused on compliance costs and whether these costs were in line with the benefits provided by new regulations. Witnesses mentioned a number of potential steps the CFTC should take, including expanding the definition of “bona fide hedge” in the position limits rules and delaying real-time reporting for swaps in thinly-traded markets so the counterparties cannot be identified. Witnesses also suggested tweaking the CFTC’s rulemaking process to allow for industry roundtables and open meetings before regulations are proposed, rather than waiting until the CFTC has already formulated its positions.

Continue Reading

2015: The Year of the Regulator – Crowell & Moring’s Regulatory Forecast

Posted in Cybersecurity / Privacy, Environment & Energy, Health Care, Technology / Telecommunications
Crowell & Moring

Crowell & Moring LLP has released its inaugural “Regulatory Forecast: What Corporate Counsel Need to Know for the Coming Year.”

In this forecast, over 40 contributors from various sectors dig into the regulatory trends in Washington and beyond that are going to be affecting industry. The report focuses on sectors ranging from energy to health care, and features on-the-ground analysis from key regions, such as California and Europe, that are setting the pace for the future of industry regulation.

Continue Reading

Commodities Regulation Update – February 9, 2015

Posted in Financial Services, Politics
Jenny E. Cieplak

CFTC Commissioner Giancarlo’s recently-issued white paper on the current arc of swaps regulation has given new ammunition to proponents of principle-based oversight of the markets rather than the more recent prescriptive-based approach of the Commission.  The Commissioner’s speech before the American Bar Association, the text of which was recently made public, began on a more conciliatory note but quickly moved into a summary of the white paper, including criticism of the open access rules and the all-to-all trading requirement.  The open question is whether Commissioner Giancarlo’s calls for reform of the recently-finalized rules will lead to frank discussion of the rules within the Commission, or will lead to the other Commissioners circling the wagons against his calls for change. Chairman Massad has already said that he prefers a more incremental approach to tinkering with the rules.  Continue Reading

Export of Energy Commodities Part of House Energy and Commerce Committee’s ‘Architecture of Abundance’ Framework

Posted in Environment & Energy
Edward GoetzJana del-Cerro

On February 9, the House Committee on Energy and Commerce released a framework for a comprehensive energy package to advance its ‘Architecture of Abundance’ agenda this Congress.  It focuses on four areas: modernizing infrastructure, a 21st century energy workforce, energy diplomacy, and efficiency and accountability.  The planned end-state is a “solutions-focused energy package” for House consideration later this year.  The committee also plans to closely coordinate the process with the Senate. Continue Reading

Commodities Regulation Update – January 19, 2015

Posted in Commodities, Financial Services
Jenny E. Cieplak

Last week’s biggest story was the surprise move by the Swiss government to decouple the Swiss Franc from the Euro.  As the Swiss government removed the cap of 1.20 Francs to the Euro, the Franc surged in value, in part based on suggestions that the European Union is expected to follow in the footsteps of the US and institute a policy of “quantitative easing.” The Swiss government defended the surprise move, suggesting that announcing the policy beforehand would have only encouraged excessive speculation. 

Both institutional and retail investors, as well as currency brokers, were hit with large losses as the markets fluctuated.  Many retail investors were particularly hard-hit, and the news was filled with stories of investors who lost huge amounts on leveraged bets on the currency.  Both the NFA and the FCA have said they are monitoring foreign currency brokers generally, and in particular are looking into practices at brokers that underwent severe losses.  New York-based FXCM already received a $300 million loan from Leucadia to shore up its balance sheet, and UK-based Alpari has stated that it is insolvent.  It remains to be seen how regulators will respond but a review of currency margin rules may be forthcoming.  For example, it is possible that retail forex dealers will be required to segregate customer funds from their own funds in the same manner as FCMs and swap dealers.

Continue Reading