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Gen Z looks for more financial guidance and protection amid rising debt and consumerist culture

Those born between 1997 and 2012 have grown up online with easy access to purchasing and money. Consumer advocates say Gen Z now faces unique economic headwinds.

Sanders presses for 32-hour workweek in new bill and hearing

Sen. Bernie Sanders and others argue it is time to revisit century-old practices on the length of workweeks for American employees as technology advances.

A ‘comeback story’ for American manufacturing

President Biden celebrated his clean-energy infrastructure investments in his State of the Union speech on Thursday.

Dogecoin case argued at Supreme Court, importance questioned by justices

The Supreme Court heard arguments related to a $1.2 million Dogecoin giveaway in 2021.

Supreme Court tilts toward exempting national banks from state laws

Justices took up a case examining whether national banks can be exempt from state laws, centering on New York’s mandate that mortgage lenders pay interest on escrow accounts.

Senators split on the health of the US economy

WASHINGTON – Senators voiced fierce opposition over the state of the U.S. economy on Thursday during a hearing to examine the results of the Treasury Department’s Financial Stability Oversight Council annual report, released in December. 

The report highlighted how low inflation, a low unemployment rate and increased real wages have contributed to a robust economic recovery since the COVID-19 pandemic. However, the report also called attention to concerns over the economy in 2024, including high interest rates.

Treasury Secretary Janet Yellen touted the rapid economic recovery in 2023, saying that average American wages are keeping up with rising costs. 

“Over the past three years, the Biden administration has driven a historic recovery,” Yellen said. “We are doing better than any other advanced country.” 

However, while Democrats are more optimistic about the economy, Republicans remained skeptical and grilled Yellen about rising costs since the height of the pandemic. 

“It seems some of my friends on the other side live in an alternate universe,” said ranking member Tim Scott (R-S.C.). “The Biden administration and ‘Bidenomics’ has decimated, destroyed, leveled, family, after family, after family.”

Scott cited current inflation and savings statistics, including the roughly 16% total inflation increase since 2021. According to Scott, two-thirds of Americans do not have $1,000 in their savings account.

“It is not a problem, it is a crisis,” he said.

Sen. John Kennedy (R-La.) echoed similar concerns, telling Yellen she is a “good sport to go out every day and try to defend ‘Bidenomics’.”

Kennedy also said these higher prices are here to stay, leaving many Americans without wage increases at odds. 

Yellen argued that real wages have increased to balance out these costs. In fact, according to the U.S. Treasury, “real weekly earnings for the median worker grew 1.7% between 2019 and 2023.”

“Wages are also up,” Yellen said. “Americans, on average, are better off, in spite of the higher price level.” 

On the other side of the aisle, Democrats largely praised the state of the economy and the work of the Biden administration.

Sen. Tina Smith (D-Minn.) said many economists predicted a recession last year. “In fact, the economy has been defying expectations,” she said. “Since Biden took office, wages have increased significantly for low and middle-income earners.” Smith touted the successes of the Inflation Reduction Act, which she says has improved aspects of the economy and infrastructure across the nation. 

In terms of investment and overall economic growth, she said the country is much better off, especially compared to other nations.

Likewise, Sen. John Fetterman (D- Pa.) was quick to praise ‘Bidenomics’ and the job of the Treasury. He seemed surprised at the list of economic developments, such as a low unemployment rate and increasing wages. “That’s pretty good,” Fetterman said. “Any fair experts would say that our economy is the envy of the world.”

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Lawmakers debate Biden pause on liquefied natural gas project approvals

WASHINGTON — Lawmakers on Tuesday drew partisan battlelines after the Biden administration paused approvals for liquefied natural gas exports, arguing over what would best protect the environment, local communities and national security.

Democrats at a House Energy and Commerce subcommittee hearing characterized the move as a moderate and necessary measure. Republicans called it a ban rather than a pause and argued it would compromise U.S. jobs and the country’s position as the top energy provider in the world.

On Jan. 26, President Joe Biden announced a pause on pending decisions on LNG exports to countries where the U.S. does not have free trade agreements. The administration said the move was intended to give the Department of Energy time to update its process for determining whether proposed LNG projects serve the “public interest,” as required by the Natural Gas Act.

Rep. Jeff Duncan (R-S.C.), chair of the Energy, Climate and Grid Security Subcommittee, called the pause “a gift to Vladimir Putin,” noting Russia is second-largest producer of natural gas after the United States. LNG exports from the U.S. allowed many European countries to switch from Russian natural gas to U.S. natural gas after the Russian invasion of Ukraine.

Democrats pointed to House Republicans’ opposition to a Senate bipartisan border bill that includes Ukraine funding. 

But Biden’s pause sends a message to other countries that the U.S. is not a reliable source of energy, making them more likely to turn to other countries, Duncan contended. 

Republicans argued that continuing to expand U.S. production of natural gas is the best option to promote clean energy. According to the Energy Information Administration, the U.S.’s progress in lowering greenhouse gas emissions is primarily a result of coal being replaced by cleaner natural gas. Even Russian natural gas releases 41% more emissions than U.S. gas, said Rep. Debbie Lesko (R-Ariz.). 

“If the Biden administration would do the smart thing and increase LNG exports to Europe, India and Asia, we can help them reduce their coal consumption,” Lesko said. “It’s a common sense and easy task to substitute U.S. natural gas for Russian natural gas that continues to flow to our allies in NATO and the EU.”

But Europe’s current gas storage, at 96%, is among its all-time highest levels, said Gillian Giannetti, a senior attorney for the nonprofit environmental advocacy group Natural Resources Defense Council. She said most studies “strongly suggest” that the LNG being produced “will more than supply the European need,” and Europe will continue to transition away from gas.

“Given that these facilities can last up to 40 years, it’s an extremely risky investment to build LNG facilities in the 2030s,” she said.

This pause will have no impact on the LNG exports or facilities that have already been approved. Even if no new approvals are issued, U.S. LNG exports are already projected to double by 2027 and triple by the early 2030s, Giannetti said.

The energy that goes into liquefying natural gas, which is necessary to ship it overseas, offsets the “cleanliness” of the energy source, she added. The pause will allow the DOE to assess the significance of methane leakages throughout the process of liquefying and exporting natural gas, Giannetti said.

The DOE also needs to factor environmental justice into its framework, Giannetti said, as communities in proposed project areas suffer disproportionately high respiratory problems and have expressed their opposition to the plans.

Rep. Cathy McMorris Rodgers (R-Wash.) noted the job benefits of U.S. natural gas production but incorrectly characterized the administration’s pause as a reversal of these benefits.

“The administration is ignoring the fact that natural gas continues to create millions of new jobs, bring manufacturing back to the U.S. and revitalize our communities across the country,” McMorris Rodgers said. “President Biden’s LNG export ban will end these benefits for local economies, kill American jobs and increase energy prices for people across the board.” The pause does not affect current exports, supply or jobs in the LNG industry.

Other Republicans noted the immediate harm on the industry’s investment outlook. The indication of political forces entering the market would make it hard to reach necessary levels of investment, said Toby Rice, president and CEO of EQT Corporation, the largest natural gas producer in the U.S.

“The reason why it affects now, not in the future, is capital investment in an industry. If an industry knows it’s being shut down, the intensive capital investment that is needed will not be put in place,” Rep. Mariannette Miller-Meeks (R-Iowa) said.

Small business policy readjustments may change what it means to be considered ‘small’

WASHINGTON – The Small Business Administration (SBA) is adjusting standards that determine which businesses can access government contracts and benefits designated for small businesses. These policy changes may alter small businesses’ competition and access to federal resources. 

“Changes to small-size standards and policies can be a double-edged sword if not done correctly,” said Rep. Nydia Velázquez (D-N.Y.). “We do not want to disincentivize or punish growth, but we must also carefully ensure we do not prematurely push small businesses into a market where they cannot compete.” 

The Small Business Act of 1953 authorized the SBA to establish specific small business size standards. This act was updated in 2010 with the Small Business Jobs Act, which requires the SBA to reassess small business standards industry-by-industry every five years. 

To determine the standards a small business must adhere to, the SBA uses the North American Industry Classification System (NAICS), which groups together businesses based on similarities in their processes to manufacture their goods and services. Small businesses are typically limited by either a maximum revenue or employee count depending on their NAICS code. According to Velázquez, this system has resulted in there being 40% fewer small businesses over the last decade. 

Erin Allen is the president of Contemporaries, a staffing solutions firm in the D.C. area. According to Allen, her business applies to multiple NAICS codes, resulting in Contemporaries teetering on the edge of no longer qualifying as a small business under federal classifications. Losing the benefits of being classified as a small business would result in her having to lay off 30% of her workforce. 

“The SBA should look at industries more holistically… rather than just using a formula,” said Allen. “I cannot compete with large contractors.”

To avoid shutting down after graduating from the small business level, many businesses look towards joint venture agreements, which occurs when a small business partners up with a larger firm in the same industry. 

Joint venture agreements provide financial relief for small businesses, but they also enable large businesses to continue to compete in the small business economy. According to Rep. Marie Gluesenkamp Perez (D-Wash.), many of these joint venture agreements result in small businesses owning 51% of their business, with large companies owning the other 49%. 

“Problems arise when these big guys utilize small business as a vehicle to get federal work otherwise set aside for small businesses,” Gluesenkamp Perez said. “Large businesses are getting this advantage that Congress set aside for the small guys who can’t otherwise compete.”

The next logical solution seems to be raising the “out of date” SBA size standards, according to Rep. Mark Alford (R-Mo.). Andrew Christ, COO of Compass Constructors, said that “very small” businesses are against this decision because it creates a “glass ceiling” that results in competition against “larger” small businesses for government benefits and contracts. 

Rep. Morgan McGarvey (D-Ky.) suggested that to avoid complications with raising size standards, the SBA should implement an “offramp” program, which would assist businesses in the period after graduating from small business status. This period is notoriously difficult for growing small businesses and is referred to as the “valley of death” by the Department of Defense.

McGarvey asked Brad Moore, CEO of Sterling Computers, a company that struggled when graduating from small business status, if an “offramp” program would have made this transition process less burdensome on his company. Moore said, “Definitely.”

Overall, changing SBA size standards is widely supported, but any changes to these standards can have wide-ranging implications for small businesses across the nation. 

“How the Small Business Administration defines ‘small’ can have an enormous impact on the success of an individual’s small business as well as the collective success of small businesses across the country,” said Velázquez.

Lawmakers rally against financial scams and fraud, call for stronger security measures

WASHINGTON – Lawmakers on the Senate banking committee on Thursday sought answers on how to spot and shut down financial scams and fraud, especially as new platforms to send money proliferate.

Committee Chair Sherrod Brown (D-Ohio) underscored the distressing surge in check fraud that prompted a public alert in 2022 and wire fraud, which has led to a staggering loss of at least $270 million in 2023 for consumers. 

“Banks, payment apps, and financial services must take responsibility, step up their efforts, and earn back the trust of their consumers,” Brown said. “A collective effort is needed to make our financial system safer, combating fraud and scams across various financial platforms, including cryptocurrency.”

Brown also noted that scammers are exploiting vulnerabilities in newer platforms such as PayPal, Venmo, Cash App and Zelle. 

“When you send money through an app or send a check in the mail, people are supposed to trust that financial companies are protecting their money and will help them if something goes wrong,” Brown said. “That’s not what we see.”

Carla Sanchez-Adams, senior attorney from the National Consumer Law Center, a nonprofit, told lawmakers that low-income and elderly communities are dealing with payment fraud at a higher rate. She explained how these communities, who are already struggling, are the ones who can least afford to lose money due to payment fraud and errors. 

Historically, low-income and elderly communities are more likely to be victims of financial fraud, with one in 18 older adults experiencing financial fraud or scams. 

Another study from the National Center for Biotechnology Information found that nearly 10% of participants of an average age of 82 said they had experienced financial fraud. Of these, the majority were Black elderly with fewer years of education, lower income and lower literacy. 

The committee’s ranking member, Sen. Tim Scott (R-S.C.), called for financial institutions to intensify their efforts to combat fraud. He also suggested that regulatory changes are needed to address scams and fraud in the banking system.

In 2022, Americans lost nearly $9 billion to fraud; around 20% of those fraud losses totaled more than $5,000.

“For many families, falling victim to scams equates to wiping out a lifetime of savings, impacting not only their account balances but also instilling a fear that their transactions are no longer secure,” Scott said.

While lawmakers and witnesses agree that education is a powerful tool against financial crimes, they also concurred that fraud can happen to anyone, and financial institutions should play a part in protecting and serving consumers. 

“I don’t think anyone is immune to consumer fraud,” said Sen. Jon Tester (D-Mont.).

‘We’re in risk management mode:’ Fed chair expects no rate cuts through March

WASHINGTON – The Federal Reserve on Wednesday left its key interest rate unchanged for the fourth consecutive meeting, with Chair Jerome Powell quashing hope of rate cuts in March.

The unanimous vote by the 12-member, rate-setting Federal Open Market Committee called for stronger evidence of inflation stabilizing before it lowers its target rates, which currently sit at 5.25% to 5.5%. 

“Inflation is still too high, ongoing progress in bringing it down is not assured, and the path forward is uncertain,” Powell said during a news conference Wednesday afternoon.

The core Personal Consumption Expenditures index, or PCE, the Fed’s preferred measure of watching prices, sits at 2.9%. Powell himself acknowledges this figure is low, especially after a persistent period of inflation since 2022 that the Fed has deemed “unacceptably high.”

Despite a steady decline in the PCE index, Powell reiterated that Fed officials will need continued evidence of moderating inflation towards 2%, the Fed’s goal. 

“We have confidence, we’re looking for greater confidence,” Powell said, emphasizing that members want to see continuation of “good data” to justify rate-cutting. 

The markets were not happy with the news, as the Dow Jones Industrial Average fell more than 300 points to close at 38,150.30, while the broader Standard & Poor’s 500 index dropped 1.6% to end at 4,845.65. The tech-heavy Nasdaq Composite Index also ended down 2.2% at 15,164.01.

Powell noted that there have been good signs lately: The economy grew at a 3.1% rate last year, and the unemployment rate has managed to stay low at 3.7%, remaining under the Fed’s 4% target despite major layoffs from companies.

“Let’s be honest, this is a good economy,” stated Powell. 

Some economists call it a “Goldilocks” economy – one that is “just right” with low inflation with moderate growth. 

In 2023, the economy had an average monthly gain of 225,000 jobs, down from the 2022 measure of 399,000, but still outpacing economist expectations. 

“It’s been an amazingly strong labor market,” said Joseph Gagnon, a senior fellow at the Peterson Institute for International Economics. “We can’t actually expect it to keep growing as fast – it won’t.”

At this point, Powell said, the Fed policy makers would need to see either a weakening labor market or persistently low inflation numbers to be persuaded to cut rates. 

Lower interest rates facilitate economic expansion by making it easier to borrow money. 

On Tuesday, Sen. Sherrod Brown (D-Ohio) sent Powell a letter urging the Fed to lower interest rates amid steep housing costs. Specifically, Brown lamented that inflation costs disproportionately affect working-class families, and high interest rates compound the burden. 

“For working Americans and small businesses who already feel the crush of inflation, higher housing costs and reduced access to credit will only make it worse,” Brown wrote in the letter. “I urge the Federal Reserve to ease monetary policy early this year.”

When asked about the letter, Powell maintained that the Fed committee looks out for societal interest through their price stability mandate, agreeing that increasing prices jeopardizes low-income groups first.

“Middle class people have some scope to absorb higher costs,” said Powell. “What society has asked us to do is to get inflation down and the tools that we use to do it are interest rates.” 

The high interest rates tamp down inflation, he continued. He added that the committee was prepared to keep rates at the current level longer.

“We have made a lot of progress on inflation,” said Powell. “We just want to make sure we do get the job done in a sustainable way.”

Tech CEOs accused of having ‘blood’ on their hands as senators grill them over the spread of child sexual images online

WASHINGTON — Lawmakers slammed top executives of large tech companies on Wednesday for not doing enough to prevent online exploitation of children as protesters helped pack the audience sharing victims’ pictures and grim statistics of the problem.

“There is blood on your hands,” Sen. Lindsey Graham (R-S.C.) said to Mark Zuckerberg, CEO of Meta, the parent company of Instagram and Facebook, as the audience erupted in applause. “There is an upside to everything here, but the dark side hasn’t been dealt with.”

The National Center for Missing and Exploited Children said it had received over 32 million reports of suspected child sexual exploitation in 2022 – everything from enticing children to commit sex acts online to sextortion, where people are blackmailed over explicit photos. That is a stark jump from 21.6 million reports in 2020. 

To fight this increase, senators have introduced five bills that, collectively, aim to hold social media platforms accountable, improve the system for reporting exploitation, and create better punishments for the spread of such material.

All the company officials said they agreed with such efforts but were divided over whether they supported the measures in their current form. One proposal, the Kids Online Safety Act garnered the biggest split – with Evan Spiegel, the CEO of Snapchat’s parent company, vocally in support but TikTok’s CEO against it. 

In the days leading up to the hearing, several platforms made “coincidentally timed” changes, according to Sen. Dick Durbin (D-Ill.), to their policy related to the spread of exploitative material. X, formerly known as Twitter, announced that it was creating a 100-person office in Austin, Texas, to police content, while Meta officials published the company’s legislative “framework” and banned direct messages between minors and people they don’t follow. The parent company of Snapchat also expanded in-app parent tools.

Senators supported these policy updates, but believe that the only way to make any permanent change is to reverse Section 230 – a provision in a law that gives social media companies immunity from actions committed by users on their platforms.

“Nothing is going to change unless we open up the courtroom doors,” said Sen. Amy Klobuchar (D-Minn.).

The audience at the hearing was particularly noticeable. Groups of protesters brought pictures of children who were victims of exploitation. Some wore shirts that said “I’m worth more than $270” – in reference to internal documents from Meta revealing that the lifetime value of a teen on their service is $270. 

Joann Bogard, one of the protesters, said she expected that the CEOs would not fully support the current proposed policies, but she was skeptical of whether the head of Snapchat would follow through on his pledge to support a bill if it passed.

“It’ll be interesting to see if he actually does call off the lobbyists and doesn’t lobby against bills like the Kids Online Safety Act,” Bogard told the Medill News Service.

Zuckerberg faced a lot of criticism, with Sen. Richard Blumenthal (D-Conn.) noting that a 2021 internal memo showed that Zuckerberg denied a request to hire a 45- to 84-person engineer team focused on wellbeing and safety on Meta platforms. The team would have cost $50 million, Blumenthal said, in a year that Meta earned $39.4 billion. 

Zuckerberg, in his opening remarks, cited a report from the National Academies of Science stating that there was not a causal link between social media and negative mental health outcomes for young people. At one point, he turned to try to apologize to families in the audience but was met with hostile stares.

The support for the five bills is unanimous according to Durbin – a rarity in the closely divided Judiciary Committee. But senators said they needed to act on that bipartisan backing.

“If this doesn’t turn the corner, I don’t know if you can ever turn it,” said Graham.

Navigating the Streaming Arena: Congress Dives into Changing Sports Media Landscape

WASHINGTON  – A recent deal between the National Football League and NBCUniversal’s Peacock to stream a wild-card game solely on that platform has prompted lawmakers to further examine the rise of sports streaming services.

On Wednesday, the House Commerce subcommittee called media industry representatives to explain the recent challenges alongside sports broadcasting and viewer trends. 

“Consumers have more choices than ever when it comes to the way they watch their favorite sports,” said Rep. Doris Matsui (D-Calif.).  Congress has the power to step into the fray because it can challenge the NFL’s broadcast antitrust exemption. This exemption currently enables collective selling of broadcast rights rather than individually by each team.

John Ourand, a sports correspondent at Puck News, an online news site, described the current landscape as “chaos.” 

“People that are not sports fans that like entertainment programming; they’ve already cut the cord” from cable services, Ourand said.

Since March 2023, traditional broadcast television has remained the preferred method for 57 percent of Americans to enjoy sports, Statista reported. However, a surge in high-speed internet availability has led to a decline in cable subscriptions. The number of cable and related services subscribers dropped to 69.2 million in 2021, from nearly 94 million in 2017. 

The wild-card playoff game on Peacock, when the Kansas City Chiefs defeated the Miami Dolphins,  became the most watched streaming program in U.S. history. But both broadcast stations and consumers criticized the move because it limited access. 

“When the NFL put [a playoff game] behind a streaming platform, that was clearly alarming,” Brian Lawlor, president of Scripps Sports, whose parent company owns several local stations, told lawmakers. “We are on the NBC station in West Palm Beach, so of all the NFL granted Peacock the right and the mandate that they have put that NFL game in Miami for their local fans.” 

The NFL, owning rights to all its games, secured a $125.5 billion television rights deal over the next decade. Rob Thun, the chief content officer of DirecTV, described the NFL’s role in streaming. 

“As the NFL has expanded its season and added new games, they’ve opportunistically taken some of those games and used that as vehicles to provide opponents for some of these streamers to then buy these exclusive games and put them into those apps,” Thun said. “That’s going to lead to further fragmentation, further frustration and higher bills for consumers.”

Costs of media distribution rights grew at an annual rate of 6.3 percent, reaching $19.8 billion in 2022, now projected to grow to $31.6 billion by 2030, according to research conducted by Morgan Stanley.  

At the same time, the sales of broadcast rights to regional sports networks face uncertainty as cable subscriptions drop and costs of such media rights rise. Lawlor called for broadcast stations to be part of the equation when moving forward with streaming options.

“It’s important that local fans can view local channels with local sports,” Lawlor said. “Most of the news operations are not profitable by themselves.” 

Consumers are also balking at paying more. A 2023 study revealed that 35 percent of sports fans found video content too expensive, dissuading them from purchasing such services. 

“Sports fans now have the freedom to choose services that align with their preferences,” said Rep. Cathy McMorris Rodgers (R-Wash.), chair of House Commerce Committee. “Sports leagues recognize that they need to meet fans where they are, which is why they’re quickly moving online.”

Big Tech companies, like Amazon, are joining the mix as well, as part of a deal in which it invested in a regional sports network, showcasing a shift in local sports programming. Sports journalists like Ourand warn of these changes to the industry. 

“It certainly is changing the sports media landscape because it’s getting a lot of those games,” Ourand said.

Proposed act seeks to restore U.S. patent system, emphasizing biotechnology

WASHINGTON – Intellectual property experts told Congress members on Tuesday that the Patent Eligibility Restoration Act (PERA) is essential to encourage more inventors to apply and get their patents approved, adding that the act would benefit American innovation and businesses.

PERA aims to streamline the U.S. patent system by placing clearer guidelines around what is and isn’t eligible for patenting. In the Senate Intellectual Property Subcommittee hearing, experts emphasized disallowing patents on naturally occurring phenomena, like genes used during diagnostic and genetic testing. 

“PERA will return eligibility to important inventions,” said Intellectual Property Subcommittee chair Rep. Chris Coons (D-Del.). “It will also make clear what is not patent eligible.”

Efforts to get PERA passed grew out of two Supreme Court decisions, Mayo Collaborative Services vs. Prometheus Laboratories in 2012 and Alice Corporation vs. CLS Bank International in 2014, which placed severe limitations on the ability of inventors to be granted patents. 

Many intellectual property experts have criticized the decisions, citing that they have lowered the amount of patents being issued to new inventors. Professor and witness Adam Mossoff cited that, between 2014 and 2019, there was a 1,056% increase in the number of decisions finding ineligible patent claims and a 914% increase in the number of invalidated patents. 

“These numbers are striking,” Mossoff said. “They are undeniable confirmation that the Alice/Mayo inquiry caused revolution in the U.S. patent law in ways never before seen by either inventors or lawyers.”

The majority of witnesses said they believed that PERA is the solution to these unprecedented decreases in new patents. 

Former Under Secretary of Commerce for Intellectual Property Andrei Iancu argues that they provide much-needed guidance for businesses to know what is patentable. 

“Congress needs to create clear rules,” Iancu said. “Whatever those rules may end up being after legislative debate, at least the public deserves to know what the rules of the road are.” 

Witnesses told lawmakers they look forward to how PERA could benefit the biotechnology industry. Many areas of biotechnology use patented human genes as benchmarks for diagnostic and genetic testing. By not allowing human genes to be patented, some witnesses believe that more inventors will have the ability to create companies and, therefore, competition in their own biotechnology field, lowering costs. 

Personalized medicine is one area of biotechnology that some expect to see increased access to following the implementation of PERA. Mike Deem, a scientist, inventor and biotech entrepreneur, said that the policy will allow personalized medicine providers to “treat better at lower cost.”

While increased access to human genes may decrease costs for some forms of biotechnology, some experts argue that it’ll increase others in the process. 

The BRCA test uses patented human genes as biomarkers to test if a patient has an increased risk of getting breast cancer. If PERA is put into law, the genes used for this testing would no longer belong to the creators of the test, complicating the process. 

“The patent system does now and should prevent the protection of inventions,” said witness Richard Blaylock, “but not mere discoveries of information.”

The vague PERA guidelines were designed to allow judges to use their own interpretations  when deciding whether or not something is eligible for a patent.

Leaving patent eligibility up to judges is exactly what many lawmakers believe is necessary to continue innovation and restore the U.S. patent system. 

“The Patent Eligibility Restoration Act is needed to restore clarity, reliability, and predictability to our vital U.S. patent system,” Coons said.

Proposed banking rules criticized by Small Business Committee, ‘Shark Tank’ investor

WASHINGTON – “Shark Tank” investor and venture capitalist Kevin O’Leary urged House members on Thursday to oppose a set of proposed bank regulations that he said would harm small businesses’ access to lending. 

The set of regulations, titled Basel III, would require banks to increase the amount of capital they hold by an estimated 20% on average. This extra amount that banks would have to set aside would not be available to loan out to small businesses, according to a House Small Business Committee memo. 

“It’s a bad policy,” O’Leary, who has the nickname “Mr. Wonderful” on the ABC series, told the committee. He said that he felt the needs of small businesses were not taken into consideration when the regulations were being written.

Basel III is the third standard proposed by the international Basel Committee on Banking Supervision, which was created after the 2008 crisis to address the risks financial institutions posed to the global economy. The Federal Reserve has faced increased pressure to implement the regulations especially after the Silicon Valley Bank crash in March 2023.

The only committee member who spoke out in support of Basel III was ranking member Nydia Velázquez (D-N.Y.), who contended that the regulations would not hurt small businesses as much as other lawmakers stated. 

“The proposed rule is just that – a proposal,” Velázquez said. “There are more than 4,500 banks in this country and less than 40% of them will be directly affected by the rule.”

Still, some experts have made the argument that community banks not directly affected by Basel III would still be indirectly affected by hampering their ability to receive money from larger banks. 

Everett Sands, the founder and CEO of Lendistry, a fintech firm, urged the Federal Reserve to postpone adoption of Basel III.

“It will start at the top banks, it will then trickle down into community banks, it will then trickle down into community development financial institutions (CDFIs), and afterwards it then, obviously, would go to small businesses,” Sands said. “It is not ready for the current environment we are in today.”

Lendistry is a CDFI, or an institution that aims to lend money to people in communities who are less likely to have consistent access to lending like minorities, women and rural residents. 

Rep. Morgan McGarvey (D-Ky.) noted that CDFIs may receive less funding from big banks under the Basel III regulations because they are perceived as “higher risk.” Sands added that even though there would be a perceived risk, data shows that it is “not reality.”

Many small business owners have begun to look for other avenues of funding, primarily venture capitalists. 

Rep. Jake Ellzey (R-Texas), however, said that isn’t the best option for small companies. He said he was particularly concerned about family businesses where owners would not want to sell a part of their “heart and soul” to stay open in search of venture capital money.

O’Leary, a venture capitalist himself, said that this option is also becoming less viable. 

Venture capital funding has declined 39% in the past 24 months because of inflation’s impact, he said. 

“I would go as far as to say that right now, venture capital is dead,” O’Leary said. “The typical VC firm today is not worried about new deals; they’re trying to determine in their portfolios, which one should survive and which one’s they’re going to let die.”

Many in the banking industry said that the prospect of new regulations has discouraged many small business owners from continuing operations. According to a survey from Goldman Sachs of small businesses, if Basel III is finalized, 67% plan to halt expansion, 42% to lay off workers or stop hiring and 21% plan on closing their businesses.

Jill Bommarito, owner of Ethel’s Baking Company, a gluten-free bakery based in Michigan, told lawmakers Basel III is one more policy in a set of many that ignores the needs of small businesses. 

“This rule would not only cut off small businesses from accessing the capital they need to grow, but it will push small business owners to predatory lenders,” Bommarito said. “As a small business… you don’t feel you matter.”

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‘The very biggest problem that American families are facing’ : Lawmakers discuss federal action to tackle local exclusionary zoning policies

WASHINGTON – Experts push for federal action addressing restrictive local zoning that has stymied affordable housing availability at a Joint Economic Committee hearing on Wednesday. 

Local rules prohibit building anything other than single-family detached homes in 75% of residential land in many American cities, the New York Times’ Upshot reported in 2019

“Single-family homes with yards require more land per home than other structures, and therefore are more expensive to rent or buy,” testified Jenny Schuetz, a senior fellow at Brookings Metro. 

Primarily, the federal government should look to supplement local legislative initiatives to increase construction of denser housing, said Schuetz.

“Ultimately, state and local governments have to do this, but the federal government can provide resources and support,” Schuetz said in an interview with Medill News Service.

Lawmakers and attendees suggested a lack of alignment between different levels of government has hampered progress. 

“The federal government blames the states, the states blame the counties, the counties blame the localities, and then back up the chain we go – How many of you have seen this movie?” asked Rep. Katie Porter (D-Calif.) as she demanded accountability from her fellow government members. 

Researchers at Freddie Mac estimated that, as of 2020, the U.S. had a housing supply deficit of around 3.8 million units. Schuetz referenced a similar figure at the hearing, as well as in another hearing on housing supply in which she testified in September.

A bipartisan tax deal announced earlier this week would increase a tax credit for low-income housing, but Porter said it’s just not enough to close the housing supply deficit. The deal still has to pass both houses, but congressional leaders have said they are hopeful it will be enacted.

“After the housing market collapse of 2008, new housing supply never recovered to keep up with demand,” said Sen. Martin Heinrich (D-N.M.), chair of the joint committee

Reports show that the homeless population rose 12% in 2023 from the previous year. That year, the U.S. Department of Housing and Urban Development (HUD) reported the highest count of people experiencing homelessness on a single night since 2007, when the HUD started tracking the data. 

“Exclusionary zoning adds to this problem, placing restrictions on where people can live and the types of housing they can live in, often enmeshed with discriminatory practices that have left a legacy of unequal opportunity,” Heinrich added. 

Jenn Lopez, founder of Project Moxie, an affordable housing consulting firm, appealed to the committee, asking for more federal resources and support of local land use reform.

“I urge you to consider pairing these two practices to bolster the economy,” said Lopez. “When we provide affordable housing, we house our local workforce, create jobs and stabilize our communities.”

However, zoning reform is controversial. When Alexandria, Va., eliminated single-family zoning in October, it saw intense opposition from its residents. Colorado has been attempting to enact statewide inclusionary zoning laws only to encounter local resistance and petitions that push city councils to repeal approved reforms.  

In his testimony, Falim Furth, senior research fellow at the Mercatus Center, a libertarian think tank, where he directs the Urbanity Project, noted that both Vermont and Montana have successfully banned local single-family occupancy zoning.

“These ambitious extensive limitations of local regulatory authority received supermajority support from legislators in both parties,” said Furth.

And residents can be galvanized to support changes to their local laws, added Tobias Peter, co-director of the Housing Center at the American Enterprise Institute, the center-right leaning think tank

“If you frame it around where your kids and grandkids are going to live, that seems to have an impact,” said Peter.

Zoning law changes now often require a groundswell of local support and the united force of both federal and local jurisdictions, emphasized these advocates. 

“Local and state governments are stepping way into this space and bringing their checkbooks, inviting the federal government,” Lopez told Medill News Service. “It’s time to make that next leap, that next major investment in our inventory as a country.”

Lawmakers examine safest ways to compensate student-athletes

WASHINGTON – Some legislators want immediate action on the FAIR College Sports Act, meant to standardize state laws on student-athletes profiting from their personal brands, but it looks unlikely that Congress can come to an agreement anytime soon.

Lawmakers and witnesses at a hearing Thursday by a House subcommittee disagreed over appropriate forms of compensation from universities for their athletes, transparency requirements for businesses making deals with athletes and even whether a federal standard should exist.

The NCAA first allowed student-athletes to profit off their name, image and likeness in 2021, if consistent with state laws. This allows athletes to sign deals with outside organizations ranging from hundreds to millions of dollars.

“The sudden transition to NIL has enabled a wild west environment where pay for play is rampant,” said Subcommittee Chair Rep. Gus Bilirakis (R-Fla.).

The FAIR Act, introduced by Rep. Bilirakis, would protect the right of students to enter into NIL contracts, with “reasonable limits” on the time they may spend on endorsements. It would also ban athletes from accepting incentives to attend an institution and require them to notify a government-created commission when they enter into a contract.

Under current NCAA rules, universities must take a hands-off approach to their athlete’s NIL contracts. Representatives and witnesses pointed to instances of collectives taking advantage of athletes’ lack of support. In one instance, reported by The Athletic,  a collective agreed to pay an athlete $1.5 million across two years but included clauses in the contract that allowed them to ask for the money to be repaid, as well as a 10% commission and expenses, even if the agreement were terminated.

Meredith Page, a Division I volleyball player at Radford University, testified that many students are leaving their existing scholarships to enter the transfer portal, with collectives promising high-paying opportunities at another school, only to find that those opportunities are no longer available. There is currently no accountability mechanism when this happens, Page said.

“Until there’s some transparency and some consequence associated with this, I think we’re going to continue to have this problem,” said Charlie Baker, president of the NCAA.

Chase Griffin, a Division I football player at UCLA with more than 40 NIL deals, said the oversight mechanisms would discourage businesses from offering these deals, yielding less compensation for student athletes’ hard work.

Griffin also pushed against an oversight body appointed by the government, based on responses to a survey of college athletes that he helped lead. When Rep. Lori Trahan (D-Mass.) asked Griffin who student-athletes trust the least, he answered, “Congress.”

“That should concern each one of us here today, that the very people this committee is looking to ‘protect’ don’t actually trust that we have their best interest at heart,” Trahan said. “I don’t think that, as drafted, the bill that we’re focusing on today will do much to change that.”

Meanwhile, the National Labor Relations Board has brought a case against the University of Southern California, the Pac-12 Conference and the NCAA arguing that college athletes should be classified as employees.

The student-athlete witnesses emphasized that they would not like to become university employees. Kaitlin Tholl, a Division I softball player at the University of Michigan, cited concerns over getting fired for poor performance and confusion over the financial consequences.

“Will I be taxed? Will I lose my scholarship? Will I be paid minimum wage? There’s so much that goes into it that I think people need to be careful what they wish for,” Tholl said.

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Supply chain disruptions, foreign conflict putting stresses on U.S. transportation agencies

WASHINGTON – Congressional lawmakers and witnesses examined whether slower U.S. infrastructure growth and disruptions in the supply chain are hurting basic transportation needs during a hearing on Wednesday assessing the state of the industry.

Rep. David Rouzer (R-N.C.), chair of a House Transportation subcommittee who presided over the hearing, cited the Iranian-backed Houthi militant group in his opening remarks as a significant threat to a crucial global shipping route in the Red Sea. Rouzer said major shipping carriers must now opt for longer, costlier routes, such as around the Cape of Good Hope in South Africa.

He also condemned the ongoing migrant crisis at the southern border, which forced American border officials to close two crucial rail bridges from Mexico into Eagle Pass and El Paso, Texas, in December. The closings came after U.S. Customs and Border Protection found a resurgence of smuggling organizations moving migrants through Mexico on freight trains, according to a CBP statement.

Rep. Jeff Van Drew (R-N.J.) contended that the mass influx of illegal immigration is disrupting  supply chains “even thousands of miles away from our southern border.” 

Van Drew said the rail border crossings account for roughly $34 billion in commerce. “How much more money does our country need to lose through the effects of these illegal crossings? How much more evidence does this administration need before it will finally take action? Enough is enough.”

One freight brokerage executive, Jeff Tucker, the CEO of Tucker Company Worldwide, said his company is closely watching for disruptions to cargo at the border.

“There is a humanitarian crisis associated with what’s happening down there, with individuals jumping onto the train — children, women, men, people of all ages. I’m glad that I am not the one in charge of having to deal with this mess,” he said.

He implored politicians to work closely and communicate with transportation industry workers, who witness the daily effects of supply chain disruptions. “When we’re surprised and don’t have any opportunities to divert our routes, that’s very painful,” Tucker said to Van Drew.

Rouzer asked about the ripple effect of cargo vessel attacks in the Red Sea on America’s supply chain. He called upon Stephen Edwards, the CEO of the Port of Virginia, one of the country’s largest and busiest container ports, on what he’s seen.

“The initial impact is the delay in vessels arriving both in Asia and coming back to the United States, and the redeployment of ships to cover those slots elsewhere,” Edwards said. He said international ocean carriers must reschedule their ships, estimating an extra seven days for cargo ships traveling from Southeast Asia to the East Coast of the United States.

Company officials also said the U.S. increasingly relies on its southern neighbor for manufactured goods and raw materials due to escalating trade disputes with China and other disruptions, according to Tucker.

He said regional manufacturing in Mexico eliminates the concerns of a single point of failure — a phenomenon in the supply chain world where one failure causes the takedown of the entire system — that sparked when the U.S. solely relied on China for critical goods.

“I don’t know how many members here have been to the border. I’ve been there, toured it, and it’s a heck of a thing,” Tucker said. “We all know how much freight came from China and the Far East, and now a lot more of it will come through the border, where we now have major security concerns.”

Rep. Troy Nehls (R-Texas) cited one company that was deeply affected by the rail closures — the Union Pacific Railroad. He said it reported nearly 4,500 railcars were held south of the border and asked Tucker how his organization handled a similar rate of shipping suspension.

Tucker said most of his goods, such as grains, are perishable and that delivering delayed consumable goods has significant ripple effects on the country’s access to nutritious, fresh food.

As the U.S.-Mexico border issues continue, shipping companies must learn to pivot quickly to maintain significant profit and public trust. “As I said earlier, way more freight is moving north from Mexico. Please expect that to continue over the next decade. We just can’t afford to have a closure like that again.”



Medill Today | March 14, 2024