Week in Review

IN THE NEWS

• A federal court ruled that the U.S. Census Bureau cannot halt door-to-door collection of household data earlier than the original end date. The ruling responded to the Census Bureau’s plan to end field data collection by September 30, a month earlier than originally planned. The associate director for the 2020 census, Al Fontenot, confirmed that the Bureau had already started cutting back on temporary field workers. Kristen Clarke, president and executive director of the Lawyers’ Committee for Civil Rights Under Law, reportedly called the 2020 Census “the most important civil rights issue of the day,” and committed “to holding this Administration accountable in its repeated attempts to omit people of color, immigrants, and other vulnerable populations from the 2020 Census.”
• Director of the Office of Management and Budget Russell Vought sent a memorandum to the leaders of executive departments and agencies to cancel contracts for training on critical race theory, white privilege, or other forms of racial literacy. Vought called the racial literacy trainings “divisive, anti-American propaganda” that suggest that “virtually all white people contribute to racism.” Some experts have reportedly expressed concerns that a lack of racial bias training will result in discriminatory practices by federal agencies, a concern exemplified in research finding that a disproportionate number of federal contracts are awarded to white-owned businesses.
• The U.S. Court of Appeals for the Fourth Circuit upheld a lower court’s permanent injunction of a rule that prohibits federally funded health care providers from giving abortion referrals. The U.S. Department of Health and Human Services rule sought to prevent health care providers that receive funds under Title X of the Family Planning Program from performing abortions or giving abortion referrals. The majority criticized an earlier Ninth Circuit decision, which overturned similar state court injunctions. In the majority opinion, Judge Stephanie Thacker wrote that the agency’s attempt to justify the rule “failed to recognize and address the ethical concerns of literally every major medical organization in the country, and it arbitrarily estimated the cost of the physical separation of abortion services.”
• A federal judge struck down part of the U.S. Department of Labor’s joint employer final rule, which sought to clarify the definition of “employer” for the Fair Labor Standards Act. Traditionally, the Fair Labor Standards Act considered multiple employers as “joint employers,” such as when an employee works for both a contractor and subcontractor. In the rule, the Labor Department limited the circumstances under which employers are considered joint employers and are liable under the Fair Labor Standards Act. The final rule, for example, disregarded the employer’s business model when determining whether an employee had joint employers. The court found that the final rule ignored the broad employment definition in the Fair Labor Standards Act and the Labor Department violated the Administrative Procedure Act because it failed to justify the new definition.
• The coronavirus relief bill proposed by Senate Republicans failed in the U.S. Senate. The bill included provisions for weekly federal unemployment benefits through December 2020, additional Paycheck Protection Program funding, $105 billion to aid schools in their pandemic response, and $16 billion for coronavirus testing. The bill also protected employers from lawsuits whose employees are exposed to the coronavirus. In a statement, Senate Majority Leader Mitch McConnell (R-Ky.) stated that the “many serious differences” between Democrats and Republicans “should not stand in the way of … making law that helps our nation.” Democrats reportedly declared the bill “a non-starter” because of the challenges to get “legislation that can pass Congress, earn President Trump’s signature and become law so close to Election Day.”
• The Federal Deposit Insurance Corporation announced that it will begin a pilot program for requesting future employment information from departing bank examiners in response to a report by the U.S. Government Accountability Office that warned the agency of possible conflict of interest issues. Although the agency already has a policy of reviewing the work of senior examiners who accept employment with banks that they examined within the last 18 months, the report recommended expanding the program to include all departing examiners, to implement internal appeal processes, and to change decision-making procedures to require more than one employee’s approval. In a letter attached to the report, Doreen Eberley, director of risk management at the Federal Deposit Insurance Corporation, said that the agency has made previous attempts to collect post-employment information methodically, but found that enforcement of the reporting was difficult.
• The California State Legislature passed the California Consumer Financial Protection Law, a bill that seeks to expand the state’s consumer financial regulatory oversight. The bill would give the California Department of Business Oversight additional powers to license new financial products and issue regulations to prevent unfair or deceptive practices. The bill would also exempt companies that were already licensed by the agency from enforcement of most regulations under the new law. Nancy Thomas, a partner at Morrison and Foerster specializing in consumer regulatory law, drew comparisons between the bill and Title X of the Dodd-Frank Act, suggesting that California may develop its own version of the federal Consumer Financial Protection Bureau.
• A federal court issued a temporary restraining order barring the Detroit police from using batons, shields, gas, rubber bullets, chokeholds, or sound cannons against protesters. Detroit Will Breathe, an activist movement calling for an end to police brutality, filed the lawsuit in response to alleged police brutality at recent Black Lives Matter protests. Detroit Police Chief James Craig claimed that the order has not impacted police actions as the department’s policy not to use force against peaceful protesters already complies with the ruling. Although the police claimed that the decision would not affect their actions, members of Detroit Will Breathe celebrated the decision and plan to seek a permanent injunction.
• According to an internal note to staffers, the U.S. Agency for International Development is reportedly deactivating its coronavirus task force and replacing it with a “Readiness Unit” to help redistribute the task force’s responsibilities to other parts of the agency. Pooja Jhunjhunwala, the agency’s acting spokesperson, reportedly said that “as the pandemic will be with us for the foreseeable future, existing agency structures and processes can meet just these kinds of long-term challenges.” The expected disbanding of the task force follows a series of internal restructuring and staffing transitions in the agency. Agency staffers have reportedly had mixed reactions to the disbanding of the task force, with some anticipating internal conflicts from a lack of coordination and others supporting the decision because the “task force’s mandate was overly broad.”

WHAT WE’RE READING THIS WEEK

• In a recent National Bureau of Economic Research paper, Massimo Pulejo, a doctoral student, and Pablo Querubín, a professor, both at New York University, found that reelection concerns are factors that help to explain variation in government responses to the coronavirus pandemic. In countries where incumbents are eligible for reelection and the upcoming election is near, Pulejo and Querubín determined that the incumbents imposed less restrictive public health directives. Pulejo and Querubín argued that restrictive policies, such as closing workplaces or imposing lockdowns, harm the economy. Since there is evidence that an incumbent’s chances of reelection are tied to the economy, Pulejo and Querubín suggest that incumbents believe strict public health measures will affect their chance of reelection.
• In an article in the Yale Journal on Regulation, John Armour, Jeffrey Gordon, and Geeyoung Min found that stock-based compensation creates incentives for corporate managers to avoid implementing regulatory compliance programs. Armour and his coauthors showed that it is less common for firms with stock-compensated managers to disclose their regulatory compliance procedures than firms without stock compensation. To balance these incentives, Armour and his coauthors proposed stricter personal liability for corporate boards of directors whose companies compensate managers with stock options.
• In a report for the Center for American Progress, Neil Campbell, Abby Quirk and Roby Chatterji proposed the creation of an “Opportunity and Counseling Corps” as an extension of the AmeriCorps federal program. The Opportunity and Counseling Corps would hire recent graduates and community members to help schools through teaching, tutoring, and counseling in high-poverty communities. The authors suggested the new branch of AmeriCorps could help mitigate the economic and social effects of the pandemic for students and provide good jobs for young adults, who may struggle to find jobs in the current economic climate.

FLASHBACK FRIDAY

• In an essay in The Regulatory Review, Charlie Rosenthal analyzed Steven Schwarcz’s argument that the Dodd-Frank Wall Street Reform and Consumer Protection Act is based on faulty assumptions about large banks being “too big to fail.” Schwarcz claimed that bankers are not motivated by the possibility of a bailout. Instead, bankers engage in risky behavior because they fail to assess risk accurately. As a potential solution, Schwarcz recommended that firm managers consider risks to the public when making decisions or compare “the expected values to the firm and to society against each other.”