Recently in Government Relations Category

Government regulators in the US and Europe have oil market speculators in the crosshairs, and are looking to take them down by imposing sweeping restrictions on how they can trade. 

Apparently, governments on both sides of the pond fear that oil speculation can lead to wildly volatile oil prices, which could derail the nascent economic recovery.  In the US, the Commodity Futures Trading Commission announced that it is interested in lessening the influence of speculative traders, such as hedge funds and investment banks, by putting caps on how much money any one trader can put down on a commodity at any one time.

The moves come as the price of a barrel of oil creeps back up from a 2009 low of nearly $34 to a recent high of around $73 a barrel.  In 2008, the price of oil shot up to $145 a barrel, placing a major burden on the finances of companies and individual consumers alike.

It's been a while since I posted anything on the GM bankruptcy, and the hiatus has been completely deliberate.  With so much news and speculation swirling around the proceedings, it would be easy to let the affair completely take the blog over.

But yesterday's opinion from the bankruptcy court judge definitely deserves a post, especially since one of the key points in the opinion deals with the disposition of injury lawsuits against the company.

After years of delays and denials from the Bush EPA, California finally has permission to impose strict regulations on the amount of greenhouse gas emissions produced by cars in the state. 

The formal waiver under the Clean Air Act allows California to require automakers to increase the efficiency of the vehicles they intend to sell in California by 40% over the next seven years, resulting in an average fuel economy of 35.5 miles per gallon by 2016.

President Obama proposed a national standard for automobiles in May that would largely mirror California's plan.  Since many states have already signaled their intention to follow California's lead, today's decision could speed implementation of the national standard.

This would be good news for the auto industry, since they could focus on one standard rather than 50. 

This national standard would be just the first step in the Obama administration's plan to expand regulation of pollution linked to climate change. 

As I wrote last week, many corporate counsel in energy and manufacturing companies have already begun consulting with environmental experts to get a sense of their current greenhouse gas impact, and to explore ways of complying with the eventual regulations.

Testifying on Capitol Hill today, Federal Reserve Chairman Ben Bernanke told a House committee that he didn't put the screws to Bank of America executives in order to force them to acquire Merrill Lynch.

That deal wound up costing taxpayers $20 million, and Bank of America CEO Kenneth Lewis stated that the Treasury Secretary at the time, Henry Paulson, and other federal regulators threatened his job after he expressed doubts about the deal.  Bernanke told the committee that he was not involved in any such intimidation.

Bernanke also denied that he or any other member of the Fed had instructed BoA to cover up information about Merrill's deep financial troubles, arguing that failing to disclose that information would have violated the executives' fiduciary duty to the company's shareholders.

In addition, Bernanke defended the deal as necessary to avoid a complete meltdown of the financial system at a time when Lehman Brothers had just collapsed and lending was essentially frozen. 

After the Supreme Court's decision in Massachusetts v. EPA, which found that the agency has the ability under the Clean Air Act to regulate greenhouse gas emissions from new motor vehicles, the Bush administration dragged its feet when it came to actually regulating the gases. 

The Obama administration, on the other hand, is moving forward at full speed.  On April 17, the EPA released a finding that carbon dioxide and four other greenhouse gases are harmful to public health.  This now obligates the EPA to set rules for the emissions from new automobiles.

The Obama administration's plan to alter regulations governing financial institutions will undoubtedly significantly impact those institutions' legal departments.  The proposal promises to profoundly alter the regulatory scheme that such institutions work under.  Nowhere is this prediction more pronounced than on the subject of mandatory arbitration of claims against lenders and brokers. 

Under the present system, individuals with a claim against lenders or brokers usually sign contracts that bind them to mandatory arbitration of their claims.  This arbitration can occur in a jurisdiction unrelated to the individual and their claim, and the right to choose the arbitrator is generally reserved for the financial institution. 

As if banks haven't had enough to worry about recently, now the Obama administration is planning the biggest financial reform in two generations. 

In a speech today, President Obama outlined his plans for the new financial regulations scheme.  Among the changes: the administration will eliminate the Office of Thrift Supervision and place the Federal Reserve in charge of overseeing systemic risks.  The goal of the changes is to streamline bank supervision and reduce risk that could spread out from the financial sector and threaten the broader economy.

The House of Representatives passed The Credit Cardholders' Bill of Rights Act yesterday, and sent the bill to President Obama for his signature.  President Obama has indicated that he will sign the bill (even though a provision was tacked onto the bill allowing for the possession of loaded weapons in national parks to the extent permitted under state law).

This bill is sure to provide in house counsel at credit card companies some long nights at the office soon, and some sleepless nights after that worrying about whether the company is in compliance with the new regulations.

The SEC is starting to sound like it doesn't have much faith that shareholders will hold boards of directors accountable for their failings under the current system.

On Wednesday, the agency opened a proposal to public comment that would allow shareholders who own a certain percentage of a company's stock to place their nominees for the board on the annual proxy ballot that goes out to all the company's shareholders.

This could give small blocs of shareholders more of a say on issues like executive compensation and the levels of risky behavior that companies engage in.

The Supreme Court has agreed to hear a challenge to the Sarbanes-Oxley Act (SOX), the 2002 act that established the Public Company Accounting Oversight Board.   Congress passed SOX in response to several high-profile instances of accounting fraud earlier this decade, most notably the Enron collapse.

The board monitors the accounting industry, especially the four largest accounting firms that handle the books for many of the most prominent corporations.  The Securities and Exchange Commission chooses the board's members, with consultation by the Fed and the Treasury Department.