Week in Review

IN THE NEWS

• The U.S. Senate voted down the Right to Contraception Act, as its 51 affirmative votes were nine fewer than the 60 votes necessary for the bill to survive. The Act would have afforded federal protection of “an individual’s ability to access contraceptives and to engage in contraception.” All but two Republican senators voted against the bill, with many in the party, including Senator John Cornyn (R-Tex.), claiming that Democrats were employing “fearmongering to further their own political agenda.” Democratic senators unanimously voted for the bill. Senate Majority Leader Chuck Schumer (D-N.Y.) denied that it was a “show vote” and reiterated the legislation was necessary after Republicans blocked contraception bills in states such as Virginia.
• President Joseph R. Biden instituted new executive actions that limit asylum requests when the border is overwhelmed by migration unless a migrant fits into a limited exception. No new asylum requests will be granted once the average number of daily requests exceeds 2,500 over a seven day period, as it does today. Asylum availability can reopen 14 days after requests fall back to a weekly average below 1,500 per day. Individuals from both sides of the political spectrum have criticized President Biden’s actions. A senior Biden Administration official defended the actions and noted that this criticism is “another sign that there is no lasting solution to the challenges we are facing without Congress doing its job.”
• President Joseph R. Biden vetoed a resolution to preserve a Securities and Exchange Commission (SEC) rule requiring institutions to record digital assets as liabilities on their balance sheets. The rule made it prohibitively expensive for banks to hold digital assets, including cryptocurrency. Bipartisan majorities in the U.S. House and Senate and the cryptocurrency industry supported the resolution, citing concerns about “a significant departure from longstanding accounting treatment for custodial assets” and increased risks to consumers. President Biden, however, refused to “support measures that jeopardize the well-being of consumers and investors” and struck down the resolution as inappropriately constraining the SEC’s ability to address similar issues in the future.
• The Consumer Financial Protection Bureau (CFPB) finalized a rule creating a registry of corporations that fail to comply with consumer laws and are subject to court orders from local, state, or federal governments. The rule aims to create oversight of nonbank financial companies by determining which corporations have repeatedly failed to comply with consumer laws. Nonbank companies that breach consumer law must now register with the CFPB and provide written confirmation from senior executives that the company will comply with required orders.
• The U.S. House of Representatives Committee on Appropriations proposed a bill to cut funding from financial regulators including the Internal Revenue Service (IRS), SEC, and the CFPB. The Committee proposed a $2.2 billion reduction to IRS funding for 2025 that would limit enforcement funds and eliminate “Direct File,” the IRS’s free online tax filing system. The proposal would also cut the SEC’s enforcement funds by $144.3 million. Because the CFPB receives funding from the Federal Reserve System, the proposal would change the CFPB’s structure and make it subject to the congressional appropriations process.
• The European Union announced that after its rise in EU users, Temu, a popular Chinese online retailer, will need to comply with stricter regulations by September 2024. Since joining the EU market in April 2023, Temu surpassed the 45 million user threshold to be designated as a Very Large Online Platform (VLOP) under the EU’s Digital Services Act (DSA). Temu is now required to have greater transparency to assess more closely risks arising from “the listing and sale of counterfeit goods, unsafe or illegal products, and items that infringe intellectual property rights.” Temu affirmed that it is “fully committed to adhering to the rules and regulations outlined by the DSA to ensure the safety, transparency, and protection of users within the European Union.”
• The U.S. Department of Agriculture proposed a new rule guaranteeing poultry farmers a base price for the growth of their broiler chickens. The rule would attempt to combat abuses to competition in the meat and poultry industry by addressing issues in grower ranking payment systems—systems that determine payment among competing growers—and capital investment requirements that poultry companies have for broiler chickens. The proposed rule aims to ensure that broiler chicken growers are not disadvantaged while providing consumers with fair prices.
• The U.S. Department of the Treasury and IRS issued final regulations under Section 6418 of the Internal Revenue Code concerning the transfer of energy credits. The final regulation includes new rules clarifying the definition of excess credit transfer and direction concerning real estate investment trusts transfer of tax credits. The final regulation promotes the continued development of the credit market.

WHAT WE’RE READING THIS WEEK

• In an essay published in the Seattle University Law Review, Elizabeth Pollman, a professor at the University of Pennsylvania Carey Law School, surveyed recent trends in securities jurisprudence by considering Adam Pritchard and Robert Thompson’s book, A History of Securities Law in the Supreme Court. Pollman argued that future securities law may not return to being a “bellwether” of the Court’s jurisprudence, like it was in the past, nor will it remain as unpredictable as it is in the present. Pollman contended it may be influenced instead “by seismic shifts in administrative law and other key legal transitions,” as issues involving the First Amendment, the “major questions doctrine,” and Chevron review look to be in the Court’s path. Pollman noted, “we might now be on the precipice of a new chapter” in securities law.
• In a recent report to the Administrative Conference of the United States, Shalini Bhargava Ray, associate professor at the University of Alabama School of Law, examined how different agencies respond to people who want to know how a law would apply to their specific situations. Ray explained that agencies vary in how and whether they provide these requests with “individualized guidance,” and often balance the benefits of reducing uncertainty against concerns about consistency, costs, and fairness. Given the public demand for individualized guidance, Ray recommended that agencies provide advice, make it available on their websites, and state its legal effect. To address the cost concern, Ray suggested that agencies charge user fees in addition to adjusting the level of advice from more costly and formal to less costly and informal.
• In a recent Brookings Institution report, Daniel K. Tarullo, a professor at Harvard Law School, argued that stress testing to set minimum capital requirements for banks, a risk management tool used to judge the effects of unfavorable economic circumstances on financial institutions, has become a predictable and routine process over the last dozen years. Tarullo identified several advantages to stress testing, such as its ability to provide complete pictures of bank resiliency. Tarullo, however, noted several drawbacks in the Federal Reserve’s use of stress tests, such as dependance on the book values of bank assets. Tarullo recommended that, although idealistic, stress testing to set capital minimums should be administered in a more dynamic fashion with more supervisory discretion allowed.

EDITOR’S CHOICE

• In an essay in The Regulatory Review, Kevin Werbach, the First Pacific Company Professor of Legal Studies and Business Ethics at the Wharton School of the University of Pennsylvania, analyzed the executive order on digital asset regulation issued in March 2022 by President Joseph R. Biden. The Biden Administration called for studies and for working groups coordinating through an interagency process to assess the risks of digital assets, such as cryptocurrencies, and chart a path forward. Financial inclusion of marginalized groups and technical advancement, Werbach argued, are the two most critical elements for the development of the digital asset sector. Werbach concluded that “real progress” will require action by federal financial regulatory agencies and Congress—but the executive order was an important first step.