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The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) recently announced several sanctions-related actions, including President Biden’s new Executive Order (E.O.) Imposing Sanctions on Certain Persons Destabilizing Sudan and Undermining the Goal of a Democratic Transition. The E.O. expands the scope of a 2006 Executive Order following the determination that recent events in Sudan “constitute an unusual and extraordinary threat to the national security and foreign policy of the United States.” The E.O. outlines specific prohibitions and provides that all property and interests in property that are in the U.S. or that later come in the U.S., or that are in the possession or control of any of the identified U.S. persons must be blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in. Concurrently, OFAC issued a new FAQ clarifying which sanctions authorities are applicable to Sudan and the Sudanese government.
OFAC also issued Venezuela-related General License (GL) 42, which authorizes certain transactions related to the negotiation of settlement agreements with the IV Venezuelan National Assembly and certain other entities. The authorized transactions must relate to debt owed by the Venezuelan government, Petróleos de Venezuela, S.A., or any entity owned, directly or indirectly, 50 percent or more. GL 42 does not authorizes transactions involving the Venezuelan National Constituent Assembly convened by Nicolas Maduro or the National Assembly seated on January 5, 2021. OFAC also released three new related FAQs and one amended FAQ.
Additionally, OFAC released cyber-related GL 1C, which authorizes certain transactions with Russia’s Federal Security Service that would normally be prohibited by the Weapons of Mass Destruction Proliferators Sanctions Regulations, and issued three amended cyber-related FAQs. A few days later, OFAC issued Russia-related GL 8G, which authorizes certain transactions related to energy that would otherwise be prohibited by E.O. 14024, involving certain entities, including Russia’s central bank. OFAC clarified that GL 8G does not authorize prohibited transactions related to (i) certain sovereign debt of the Russian Federation; (ii) the “opening or maintaining of a correspondent account or payable-through account for or on behalf of any entity subject to Directive 2 under E.O. 14024, Prohibitions Related to Correspondent or Payable-Through Accounts and Processing of Transactions Involving Certain Foreign Financial Institutions”; and (iii) or “[a]ny debit to an account on the books of a U.S. financial institution of the Central Bank of the Russian Federation,” among others.
President Biden recently issued his sweeping economic report, in which the administration’s Council of Economic Advisers addressed numerous economic policy concerns, including the current crypto ecosystem and the perceived appeal of crypto assets. The report discussed claims made about the purported benefits of crypto assets, such as the decentralized custody and control of money, as well as the potential for “improving payment systems, increasing financial inclusion, and creating mechanisms for the distribution of intellectual property and financial value that bypass intermediaries that extract value from both the provider and recipient,” but argued that “[s]o far, crypto assets have brought none of these benefits.” The report countered that, in fact, “crypto assets to date do not appear to offer investments with any fundamental value, nor do they act as an effective alternative to fiat money, improve financial inclusion, or make payments more efficient; instead, their innovation has been mostly about creating artificial scarcity in order to support crypto assets’ prices—and many of them have no fundamental value.”
Arguing that these issues raise questions about the role of regulations in protecting consumers, investors, and the financial system on a whole, the report conceded that some of the potential benefits of crypto assets —including (i) serving as investment vehicles; (ii) offering money-like functions without having to rely on a single authority; (iii) enabling fast digital payments; (iv) improving the underbanked population’s access to financial services; and (v) improving the current financial technology infrastructure through distributed ledger technology—may be realized down the road. However, the report cautioned that “[m]any prominent technologists have noted that distributed ledgers are either not particularly novel or useful or they are being used in applications where existing alternatives are far superior.” Highlighting the risks and costs of crypto assets, the report asserted, among other things, that cryptocurrencies are not as effective as a medium of exchange and do not serve “as an effective alternative to the U.S. dollar” due to their use as both money and an investment vehicle.
On March 8, the Biden administration convened a gathering of state legislative leaders to hold discussions about so-called “junk fees”—described as the “unnecessary, unavoidable, or surprise charges” that obscure true prices and are often not disclosed upfront. While the announcement acknowledged actions taken by federal agencies over the past few years to crack down on these fees, the administration recognized the role states play in advancing this effort. The Guide for States: Cracking Down on Junk Fees to Lower Costs for Consumers outlined actions states can take to address these fees, and provided several examples of alleged junk fees, including hotel resort fees, debt settlement fees, event ticketing fees, rental car and car purchase fees, and cable and internet fees. The guide also highlighted “the banking industry’s excessive and unfair reliance on banking junk fees.” The administration pointed out that a number of businesses have changed their policies in response to the increased scrutiny of junk fees and said several banks have ended fees for overdraft protection. The same day, the CFPB released a new Supervisory Highlights, which focused on junk fees uncovered in deposit accounts and the auto, mortgage, student, and payday loan servicing markets (covered by InfoBytes here).
Additionally, HUD Secretary Marcia L. Fudge published an open letter to the housing industry and state and local governments, encouraging them to “limit and better disclose fees charged to renters in advance of and during tenancy.” Fudge noted that “actions should aim to promote fairness and transparency for renters while ensuring that fees charged to renters reflect the actual and legitimate costs to housing providers.”
California Attorney General Rob Bonta also issued a statement responding to the administration’s call to end junk fees. “Transparency and full disclosure in pricing are crucial for fair competition and consumer protection,” Bonta said, explaining that in February the state senate introduced legislation (see SB 478) to prohibit the practice of hiding mandatory fees.
On March 2, the Biden administration announced the release of its National Cybersecurity Strategy (Strategy) in a continued effort to provide a safe and secure digital ecosystem for Americans. The Strategy, which expands on other steps taken by the administration in this space (covered by InfoBytes here), focuses on several key pillars for building and enhancing collaboration, including:
- Defending critical infrastructure. The Strategy will expand the use of minimum cybersecurity requirements in critical sectors, harmonize regulations to reduce compliance burdens, ensure public-private collaboration is able to defend critical infrastructure and essential services, and defend and modernize federal networks and incident response policies.
- Disrupting and dismantling threat actors. Under the Strategy, tools will be strategically employed to disrupt adversaries, and the private sector will be used to disrupt activities. Ransomware threats will also be addressed through a comprehensive federal approach “in lockstep” with international partners.
- Shaping market forces to drive security and resilience. In an effort “to reduce risk and shift the consequences of poor cybersecurity away from the most vulnerable,” the Strategy proposes to (i) promote privacy and security of personal data; (ii) “[shift] liability for software products and services to promote secure development practices”; and (iii) ensure investments in new infrastructure are supported by federal grant programs.
- Investing in a resilient future. The Strategy promotes coordinated, collaborative actions for reducing systemic technical vulnerabilities across the digital ecosystem and improving resiliency against transnational digital repression. The Strategy also prioritizes cybersecurity research and development for emerging technologies, including postquantum encryption, digital identity solutions, and clean energy infrastructure, and stresses the importance of developing a diverse, robust national cyber workforce.
- Forging international partnerships to pursue shared goals. The Strategy intends to leverage international coalitions and partnerships to counter threats to the digital ecosystem through the use of joint preparedness, response, and cost imposition, which will enable partners to better defend themselves against cyber threats. The U.S. will also work with international partners to create secure, reliable global information and communications technology supply chains and operational technology products and services.
While “next-generation technologies are reaching maturity at an accelerating pace, creating new pathways for innovation while increasing digital interdependencies,” the announcement warned that state and non-state actors are developing and executing campaigns that threaten the digital ecosystem. The Biden administration’s Strategy aims to address those threats.
On February 22, FHA announced a 30 basis point reduction in the annual premium charged to mortgage borrowers, resulting in mortgage insurance premiums of 0.55 percent for most borrowers seeking FHA-insured mortgages (down from 0.85 percent). (See also Mortgagee Letter 2023-05.) The reduction will apply to nearly all FHA-insured Single Family Title II forward mortgages, and is applicable to all eligible property types including single family homes, condominiums, and manufactured homes, all eligible loan-to-value ratios, and all eligible base loan amounts. According to the announcement, the reduction is intended to build on steps taken by the Biden administration to make homeownership more affordable and accessible, particularly for households of color, and could save an estimated 850,000 borrowers an average of $800 annually. As previously covered by InfoBytes, last September HUD modified FHA’s underwriting policies to allow lenders to consider a first-time homebuyer’s positive rental payment history as an additional factor in determining eligibility for an FHA-insured mortgage, and in March, the Property Appraisal and Valuation Equity Task Force outlined steps for addressing alleged racial bias in home appraisals (covered by InfoBytes here). Additional actions taken by HUD to improve homeownership accessibility can be found here.
On February 14, the European Parliament’s Committee on Civil Liberties, Justice and Home Affairs released a draft motion for a resolution concerning the adequacy of protections afforded under the EU-US Data Privacy Framework. As previously covered by InfoBytes, last October President Biden signed an Executive Order on Enhancing Safeguards for United States Signals Intelligence Activities (E.O.) to address the facilitation of transatlantic data flows between the EU and the U.S. The E.O. also outlined bolstered commitments that the U.S. will take under the EU-U.S. Data Privacy Framework (a replacement for the EU-U.S. Privacy Shield). In 2020, the Court of Justice of the EU (CJEU) annulled the EU-U.S. Privacy Shield after determining that, because the requirements of U.S. national security, public interest, and law enforcement have “primacy” over the data protection principles of the EU-U.S. Privacy Shield, data transferred under the EU-U.S. Privacy Shield would not be subject to the same level of protections prescribed by the EU’s General Data Protection Regulation (GDPR).
In the draft resolution, the Committee urged the European Commission not to adopt any new adequacy decisions needed for the EU-U.S. Data Privacy Framework to officially take effect. According to the Committee, the framework “fails to create actual equivalence in the level of protection” provided to EU residents’ transferred data. Among other things, the Committee found that the government surveillance backstops outlined in the E.O. “are not in line” with “long-standing key elements of the EU data protection regime as related to principles of proportionality and necessity.” The Committee also expressed concerns that “these principles will be interpreted solely in light of [U.S.] law and legal traditions” and appear to take a “broad interpretation” to proportionality. The Committee also flagged concerns that the framework does not establish an obligation to notify EU residents that their personal data has been processed, “thereby undermining their right to access or rectify their data.” Additionally, “the proposed redress process does not provide for an avenue for appeal in a federal court,” thereby removing the possibility for EU residents to claim damages. Moreover, “remedies available for commercial matters” are “largely left to the discretion of companies, which can select alternative remedy avenues such as dispute resolution mechanisms or the use of companies’ privacy [programs],” the Committee said.
The Committee called on the Commission “to continue negotiations with its [U.S.] counterparts with the aim of creating a mechanism that would ensure such equivalence and which would provide the adequate level of protection required by Union data protection law and the Charter as interpreted by the CJEU,” and urged the Commission “not to adopt the adequacy finding.”
On January 27, the Biden administration presented a roadmap for mitigating cryptocurrency risks to ensure that cryptocurrencies do not undermine financial stability, investors are protected, and bad actors are held accountable. At President Biden’s direction, the administration previously laid out a comprehensive framework for developing digital assets in a safe, responsible way that also identifies clear risks. (Covered by InfoBytes here.) The administration identified clear risks taken by some crypto entities, such as ignoring applicable financial regulations and basic risk controls, misleading consumers, having conflicts of interest, failing to provide adequate disclosures, or committing fraud. The roadmap also outlined actions taken by the federal banking agencies, including a recently issued joint interagency statement that highlighted key risks banks should consider when choosing to engage in crypto-related services and a notice of proposed rulemaking issued by the FDIC warning companies against making false or misleading claims about digital assets being insured by the agency (covered by InfoBytes here and here). The administration also noted that agencies across the government are developing public-awareness programs to help consumers understand the risks associated with digital assets.
The administration stressed, however, that further action is needed. Priorities for digital asset research and development will be unveiled in the coming months, the administration said, adding that Congress should also step up efforts in this space. This includes expanding regulators’ powers to prevent misuses of customers’ assets, “strengthen[ing] transparency and disclosure requirements for cryptocurrency companies so that investors can make more informed decisions about financial and environmental risks,” “strengthen[ing] penalties for violating illicit-finance rules and subject cryptocurrency intermediaries to bans against tipping off criminals,” and limiting crypto risks to the financial system by following steps outlined in a recent Financial Stability Oversight Council report (covered by InfoBytes here), the administration said.
On January 25, the Biden administration announced new actions for enhancing tenant protections and furthering fair housing principles, which align with the administration’s Blueprint for a Renters Bill of Rights that was released the same day. The Blueprint and fact sheet lay out several new actions that federal agencies and state and local partners will take to protect tenants and increase housing affordability and access.
- The FTC and CFPB will collect information to identify practices that unfairly prevent applicants and tenants from accessing or staying in housing, “including the creation and use of tenant background checks, the use of algorithms in tenant screenings, the provision of adverse action notices by landlords and property management companies, and how an applicant’s source of income factors into housing decisions.” According to the White House, this marks the first time the FTC has issued a request for information that explores unfair practices in the rental market. The data will inform enforcement and policy actions under each agency’s jurisdiction.
- The CFPB will issue guidance and coordinate enforcement actions with the FTC to ensure information in the credit reporting system is accurate and to hold background check companies accountable for having unreasonable procedures.
- The FHFA will launch a transparent public process for examining “proposed actions promoting renter protections and limits on egregious rent increases for future investments.” Periodic updates, including one within the next six months will be provided to interested stakeholders. FHFA Director Sandra L. Thompson commented that the agency “will conduct a public stakeholder engagement process to identify tangible solutions for addressing the affordability challenges renters are facing nationwide, particularly among underserved communities. The proposals discussed during this process will focus on properties financed by [Fannie Mae and Freddie Mac].” She noted that FHFA will continue to evaluate Fannie and Freddie’s role in providing tenant protections and advancing affordable housing opportunities.
- The DOJ intends to hold a workshop to inform potential guidance updates centered on anti-competitive information sharing, including within the rental market space.
- HUD will publish a notice of proposed rulemaking to require public housing authorities and owners of project-based rental assistance properties to provide tenants at least 30 days’ advanced notice before terminating a lease due to nonpayment.
- The Biden administration will also hold quarterly meetings with a diverse group of tenants and tenant advocates to share ideas on ways to strengthen tenant protections.
According to the announcement, the agencies’ actions exemplify the principles laid out in the Blueprint, which underscores key tenant protections, including: (i) renters should be able to access safe, quality, accessible, and affordable housing; (ii) renters should be provided clear and fair leases with defined rental terms, rights, and responsibilities; (iii) federal, state, and local governments should ensure renters are aware of their rights and are protected from unlawful discrimination and exclusion; (iv) renters should be given the freedom to organize without obstruction or harassment from housing providers or property managers; and (v) renters should be able to access resources to prevent evictions, ensure eviction proceedings are fair, and avoid future housing instability.
The administration also announced it is launching a related “Resident-Centered Housing Challenge”—a call to action for housing providers and other stakeholders to strengthen their practices and make independent commitments that will improve the quality of life for renters. The Challenge will launch this spring and encourages states, local, tribal, and territorial governments to improve existing fair housing policies and develop new ones.
On January 11, a coalition of 22 state attorneys general from Massachusetts, California, Colorado, Connecticut, Delaware, the District Of Columbia, Hawaii, Illinois, Maryland, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Washington, and Wisconsin, filed an amicus brief with the U.S. Supreme Court in two pending actions concerning challenges to the Department of Education’s student loan debt relief program. At the beginning of December, the Supreme Court agreed to hear the Biden administration’s appeal of an injunction entered by the U.S. Court of Appeals for the Eighth Circuit that temporarily prohibits the Secretary of Education from discharging any federal loans under the agency’s student debt relief plan (covered by InfoBytes here). In a brief unsigned order, the Supreme Court deferred the Biden administration’s application to vacate, pending oral argument. Shortly after, the Supreme Court also granted a petition for certiorari in a challenge currently pending before the U.S. Court of Appeals for the Fifth Circuit, announcing it will consider whether the respondents (individuals whose loans are ineligible for debt forgiveness under the plan) have Article III standing to bring the challenge, as well as whether the Department of Education’s debt relief plan is “statutorily authorized” and “adopted in a procedurally proper manner” (covered by InfoBytes here). Oral arguments in both cases are scheduled for February 28.
The states first pointed out that under the Higher Education Act, Congress gave the Secretary “broad authority both to determine borrowers’ loan repayment obligations and to modify or discharge these obligations in myriad circumstances.” The Secretary was also later granted statutory authority under the HEROES Act to take action in times of national emergency, which includes allowing “the Secretary to ‘waive or modify any statutory or regulatory provision applicable to the student financial assistance programs’ if the Secretary ‘deems’ such actions ‘necessary’ to ensure that borrowers affected by a national emergency ‘are not placed in a worse position financially’ with respect to their student loans.” The states stressed that while “the magnitude of the national emergency necessitating this relief is unprecedented, the relief offered to borrowers falls squarely within the authority Congress gave the Secretary to address such emergencies and is similar in kind to relief granted pursuant to other important federal student loan policies that have concomitantly advanced our state interests.”
The states went on to explain that the Secretary tailored the limited debt relief using income thresholds to ensure that “the borrowers at greatest risk of pandemic-related defaults receive critical relief, either by eliminating their loan obligations or reducing them to a more manageable level,” thus meeting the express goal of the HEROES Act to “prevent affected borrowers from being placed in a worse position because of a national emergency.” The states also stressed that the Secretary reasonably concluded that targeted relief is necessary to address the impending rise in pandemic-related defaults once repayment restarts. The HEROES Act expressly permits the Secretary to “exercise his modification and waiver authority ‘notwithstanding any other provision of law, unless enacted with specific reference to [20 U.S.C. § 1098bb(a)(1)],” the states asserted, noting that “relevant statutory and regulatory provisions related to student loan repayment and cancellation contain no such express limiting language.”
Secretary Miguel Cardona issued the following statement in response to the filing of more than a dozen amicus curiae briefs: “The broad array of organizations and experts—representing diverse communities and different perspectives—supporting our case before the Supreme Court today reflects the strength of our legal positions versus the fundamentally flawed lawsuits aimed at denying millions of working and middle-class borrowers debt relief.” A summary of the briefs can be accessed here.
On December 27, President Biden signed H.R. 7735, the Improving Access to the VA Home Loan Benefit Act of 2022, which requires the Department of Veterans Affairs to update its regulations, requirements, and guidance related to appraisals for housing loans guaranteed by the agency. The regulations and requirements must specify when an appraisal is required, how an appraisal is to be conducted, and who is eligible to conduct an appraisal for such loans. The Act also requires the VA to submit recommendations to Congress no later than 90 days after the date of enactment for improving appraisal delivery times for VA loans. The agency must consider these recommendations when it prescribes its updated regulations and requirements. Additionally, the VA must provide guidance for desktop appraisals, taking into account situations where a desktop appraisal could provide cost savings for borrowers whereas “a traditional appraisal requirement could cause time delays and jeopardize the completion of a transaction.”