Legal Soundings. Episode Two: ECONOMIC POLICY OUTLOOK 2022

Mayer Brown



Hello.  I’m Liz Stern from Mayer Brown.  Delighted to have you join us for the first 2022 episode of our interview series, “Legal Soundings.”






This bi-monthly discussion spotlights interviews with leading experts drawn from across our business globally talking about current compelling geo-political topics and advising on the most pressing risks and opportunities that our clients face.






Legal Soundings is part of Mayer Brown’s top leadership initiative 10Hundred by which we provide multi-channel communications for clients on the top 10 issues that they are facing in the next 100 days.






Today, from the nations capital, Washington DC, our Legal Soundings episode addresses precisely that type of predominant issue, the economic policy outlook for 2022.






I am joined by my partner Andrew Olmem, a leader in Mayer Brown’s public policy regulatory and political law practice as well as our financial services regulatory practice. 






Andrew’s practice focusses on complex financial services, regulatory and legislative matters and that is not a surprise because prior to joining Mayer Brown Andrew served as the Deputy Assistant to the President for economic policy and Deputy Director of the US National Economic Council, the NEC.






Andrew, is ideally suited to tell us what to expect and what matters in 2022.  So, Andrew we are now entering Year 2 of the Biden Administration.  What are the top take aways from your perspective that our clients should be aware of in this new year?






Well, first of all happy 2022 and so let me get out my crystal ball here and give you three forecasts for this year.






The first is Congress will not enact any new tax increases. 






Second, regulatory agencies will be the drivers of policy this year with a focus on climate change and anti-trust and third the sharp increase in inflation in the United States will impact not only the Federal Reserve’s policy on interest rates and markers this year but also Congresses debate over the revised Build Back Better Bill and be a major political issue throughout the year and the mid-term elections this fall.






Oh, Andrew, that is so fascinating. I am particularly interested in the regulatory agencies rearing back into…into action but let’s begin with your first topic.






Prior to the recess in December, Congress was in the middle of debating the president’s Build Back Better Bill as you mentioned.






Congress is now back, can you give us some details and bring us up to date?  What is going on in Congress and what are the likely priorities now?






Sure, a lot has changed really over the last four weeks.  You know most importantly Senator Joe Mansion of West Virginia, has announced that he will not support the administration’s Build Back Better Bill and ended negotiations over the Bill.






The administration and senate democrats had really hoped to be able to reach an agreement with him and to do amendments to the Build Back Better Bill that had passed the house, made those amendments in the senate, send them back over to the house and come back with some kind of conference committee to reconcile the two Bills.






Pass that reconcile Bill and get it to the President for signing, ideally in January or February, the first part of this year.






That game plan is now off the table and we are now kind of effectively re-setting the negotiations on that Bill and it is very uncertain on how things will proceed.






Now, the real question is are they going to be able to revise the Bill and I think right now the odds are still in favour of them passing a Bill.  There is a lot at stake on passing another Bill.  Democrats generally would like to see a version of that Bill passed so I think you have to give the odds in favour of the administration still being able to get something passed but it is still…it is an uphill battle right now for them to pass that legislation.






remember, this is an election year and if that Bill is not well underway by the end of the first quarter this year we are simply going to run out of time.






That’s fascinating, Andrew.  I think our clients are going to ask the next logical question which is so what do you think that Congress will get done this year and that will be of particular importance to their business.






Yeah, so the first thing is Congress is going to have to pass additional spending Bills to keep the government funded for the rest of the year. 






The Spending Bill that was reached at the end of last year expires on February 18th.  There is a debate about whether or not there will be another continuing resolution where Congress funds agencies at the current levels or whether or not they will pass appropriations Bills that make changes in spending for the different agencies. 






That debate is ongoing right now but we should have that resolved some time in February.






One thing that we won’t have to worry about that is significant this year is another extension of the debt limit.  The deal reached at the end of last year effectively takes that debate off…off the table so there won’t be any debates about, or concerns about the [05:51] defaulting on its debt because Congress doesn’t raise the debt limit.






Other than that Congress does not have a deep legislative agenda although I would put two other Bills on the radar screen.  One is the senate last year passed a Bill to address [China’s [06:10] and economic [challenge 06:11] to the United States.  That Bill had strong Biden participant support and was sent over to the house where it has really lagged for the last several months and it is unclear whether or not the house will take it up or will revise the Bill and send it back to the senate.






But that is a Bill that I would keep your eyes on.






The second Bill to watch is the American Innovation and Choice Online Act by Senator Amy Klobuchar.  That is the Bill that would enact new regulations for our online [06:43 lunar] platforms.  It has strong Biden participant support and it is likely to pass on a committee later this month.






I still think the chances of that being enacted into law this year are still not good but it is one to keep an eye on because there is definitely strong interest on both sides of the aisle in enacting new regulations on the tech industry.






Two other points to note what Congress will do outside of the legislative sphere.  One is that Congress will continue to be active with investigations.






You know the tech industry again has been a focus over the last year as well as oversight of Covid related spending.






And the last thing that will keep the senate very busy this year is confirmation of nominees.  The Biden Administration has a fair number of positions still open that they are seeking…that they proposed nominees for, that need to be confirmed as well as judges.






In particular this is very important in economic…for economic policy because the Biden Administration now has five nominations sent up to the Congress including for Chair, Vice-Chair and Vice-Chair for supervision and nominees to be the Director of the Federal Housing Finance Agency, several nominations to the Board of the Commodity Futures Trading Commission, the Federal Trade Commission and several other important economic agencies.






And you also never know when a Supreme Court Justice may retire and make a little surprise and put additional work on the nominations front for…for the senate this year.






Thank you, Andrew.  I think that is a perfect Segway with you mentioning so many of these nominations to talk about the Federal Regulatory Agencies.  If Congress is unable to pass legislation how will that impact the agendas of the Federal Regulatory Agencies in 2022?






Yeah, so policy normally shifts in any administration after the first year to the agencies. You know Congress typically comes in, passes legislation and the agencies go and implement it.






There will be some of that this year but you will also see agencies on their own come up with their own agendas to move forward on some key policy issues that are kind of consistent with the Biden Administration’s overall policy priorities.






Foremost on that list are climate change and anti-trust policy.  Those are two areas where the administration has been cleared that they want to pursue very aggressive changes to the existing policy.






Other areas to quickly watch will be the Consumer Financial Protection Bureau and the Federal Banking Agencies are likely to move on fair lending and enact new policies enforcement acts relating to fair lending.






And you are also likely to see the Securities and Exchange Act, Securities and Exchange Commission consider new market structural reforms.






Andrew, tell us also what really should global companies, corporations know about these critical regulatory reforms?






I think the most important one for them to keep an eye on and also understand is the change that is going on right now in anti-trust policy.






You know for the last 40 years there has been a [bi-10:09] consensus about the US anti-trust policy which focused on consumer welfare.  Did the [M&A 10:19] activity improve choice for consumers?  Did it lower prices for consumers?






That standard is now being overturned by the Biden Administration, especially at the FTC with the new Chair.  It’s been very clear that she believes other factors need to be considered and anti-trust reviews including the impact of M&A on stakeholders such as employees and other…other competitors and also simply viewing companies that are either large or becoming large as part of M&A activity as a problem in itself regardless of the impact of that activity on consumers.  That’s a big change and it means that companies looking to do M&A activity in the United States need to be aware of it and understand on how to navigate these new and evolving rules and standards so that they can successfully complete their deals.






Thank you, Andrew and I will just mention that we are planning…we are targeting a March Legal Soundings episode on exactly that topic because of the pace that we’ve seen of activity from the FTC in that regard.






Let’s go back to the overall.  If you were going to say there is one thing…what’s the one thing that our clients, major corporations, should be keeping their eyes on this year, what would be the one thing?






Definitely digital assets and Crypto currency markets.  They have grown very, very fast over the last couple of years and particularly last year. 






We are getting a lot of tension from policy makers on how to establish a regulatory regime for them.  In addition, they have gone mainstream so these are not things that merely are focussing on financial services companies but just commerce generally.






I fully expect digital assets to become embedded in our normal commercial life going forward and 2022 is really set to be a year where we see additional strides in the development of those markets and the use of digital assets in our daily lives.






Andrew, thank you.  This has been a terrific run through the priorities and we’ve loved having you as a guest and undoubtedly, we will again.






And for our audience thank you very much, we will see you in our next episode. 

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