Author Archives: Jonathan Daniel Cohen

Prepared Remarks of Former Special Inspector General for the Troubled Asset Relief Program (“SIGTARP”) Neil M. Barofsky Before the U.S. Senate Committee on Homeland Security and Governmental Affairs (Part II of IV)

by Neil M. Barofsky

These remarks have been edited for length and are being published in four parts. The following post is Part II of Neil M. Barofsky’s prepared remarks, which were delivered on July 28, 2020. For Part I of this post, click here.

My testimony concerning the effectiveness of the CARES Act will focus on the lending programs administered by the SBA, Treasury, and the Federal Reserve, with specific attention on the most active of these programs, the PPP.  First, there is no question that the PPP has had a significant and positive impact on millions of small businesses, with a recent study by the Federal Reserve and others estimating that it helped preserve more than 2.3 million jobs.[1]  But by no means should there be a declaration of mission accomplished.  Chiefly, there has been a significant lack of transparency by Treasury and the SBA in the program that makes it difficult to fully assess its integrity, fairness (particularly to traditionally underbanked businesses), or overall effectiveness.  In order to fully assess the program, additional measures will be needed to increase transparency and oversight.  In addition, available information suggests that meaningful sums may have been lost or misdirected because the program design elevated the risk of fraud and misuse by borrowers.

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Unexplained Wealth Orders, Explained: The UK Regime and Considerations for the United States (Part II of II)

by Alun Milford and Alicyn Cooley

In Part One of this article, we described the history of Unexplained Wealth Orders (“UWOs”) in England and Wales, and their use by UK authorities to date. As litigation challenging UWOs already has shown, respondents against whom such orders are entered face a binding precedent to the contrary should they seek to persuade a court that a UWO violates their or their spouse’s privilege against self-incrimination. Although the self-incrimination concern presented by UWOs is just one of many reasons that this investigative tool is unlikely to be adopted in the United States, as we detail below, the UWO regime in the United Kingdom presents important considerations—and, potentially, applications—for U.S. authorities. At the same time, the U.S. example of targeted increases in transparency around real estate transactions might give the UK authorities food for thought.

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Schrems II – Where are we now?

by Luke Dembosky, Jeremy Feigelson, Avi Gesser, Jim Pastore,  Friedrich Popp, Christopher Garrett, Fanny Gauthier, Robert Maddox, and Mengyi Xu

As covered in our previous blog post, the CJEU has invalidated the EU-U.S. Privacy Shield for cross-border transfers of personal data from the EU to the U.S. (the “Schrems II” decision) and cast significant doubts over whether companies can continue to use the European Commission-approved Standard Contractual Clauses (“SCCs”) to transfer EU personal data to the U.S., or to other jurisdictions with similarly broad surveillance regimes.

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Prepared Remarks of Former Special Inspector General for the Troubled Asset Relief Program (“SIGTARP”) Neil M. Barofsky Before the U.S. Senate Committee on Homeland Security and Governmental Affairs

by Neil M. Barofsky

These remarks have been edited for length and are being published in four parts. The following post is Part I of Neil M. Barofsky’s prepared remarks, which were delivered on July 28, 2020.

As the former Special Inspector General of the Troubled Asset Relief Program (“SIGTARP”), I established and supervised the audit division that monitored the financial assistance provided to companies and individuals as part of the historic TARP program.  I also provided real-time advice and oversight as the U.S. Department of Treasury (“Treasury”) developed and implemented the programs that are serving as the model for much of what it is using in response to the current crisis.  I regularly reported to Congress on that work.

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Corporate Compliance Approach to Racism and Excessive Force Issues in Police Departments

by Emil Moschella and Joseph Murphy

Today there is an urgent call for reform with respect to race relations in policing, especially in the use of force.  Proposed solutions range from defunding the police to more discrete ideas that address the use of force, de-escalation techniques, dealing with impaired individuals, providing on the scene expertise to work with the police, the quality of internal investigations, discipline, and preventing dismissed law enforcement officers from working in similar positions anywhere in the country. 

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A Decade with Dodd-Frank: How Crisis Drives Meaningful Change

by Jordan A. Thomas 

On July 21, 2010, with the country reeling from a devastating financial crisis, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act, which encompassed comprehensive financial reform the likes of which hadn’t been seen since the Great Depression. Over more than 2,000 pages, the Act created oversight, rules, regulations and various agencies designed to safeguard investors. From the Volcker Rule to the Financial Stability Oversight Council, whistleblower programs for the SEC and CFTC, and dozens of reforms in between, Congress sought to combat both systemic and endemic risk in the commercial markets.

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New CFPB Supervisory and Enforcement Priorities in Light of the COVID-19 Pandemic

by Rachel Rodman, Robert Duncan, and Scott Cammarn

On July 16, 2020, the Consumer Financial Protection Bureau (“CFPB”) hosted a webinar outlining, for the first time, the CFPB’s supervisory and enforcement priorities in light of the coronavirus pandemic.  Of note, the CFPB announced that it has de-prioritized a good portion of the agency’s existing exam schedule to conduct “prioritized assessments” focused on (i) consumers having trouble making loan payments, and (ii) markets where Congress provided special borrower protections under the CARES Act.  These include: residential mortgage servicing, student loan servicing, auto loan servicing, consumer reporting and furnishing, and collections.  The CFPB also stated that it plans to assess financial institutions’ implementation of the Paycheck Protection Program (“PPP”) for fair lending compliance.  We expect these prioritized assessments will be the leading edge of the CFPB’s supervisory and enforcement work in consumer financial services markets most impacted by the pandemic.

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Schrems II: Privacy Shield Invalid and Severe Challenges for Standard Contractual Clauses

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Yesterday, the Court of Justice of the European Union (CJEU), the EU’s highest court, invalidated the EU-U.S. Privacy Shield for cross-border transfers of personal data.  The CJEU’s decision also cast significant doubts over whether companies can continue to use the European Commission-approved Standard Contractual Clauses (SCCs) to transfer EU personal data to the U.S., or to other jurisdictions with similarly broad surveillance regimes.  The CJEU’s lengthy decision is here and its short-form press release is here (PDF: 319.62 KB).

What does this mean for organizations that rely on Privacy Shield or SCCs?  History suggests that privacy enforcement authorities in the EU may hold their fire while efforts are made to come up with a replacement system for data transfers.  EU authorities hopefully will clarify their enforcement intentions soon.  In any event, organizations that have relied on Privacy Shield will have to turn immediately to considering what practical alternatives they might adopt.  U.S. government authorities will also have to turn to the knotty question of what data transfer mechanisms might ever satisfy the CJEU, given persistent EU concerns about U.S. government surveillance of personal data.

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UK Introduces Magnitsky-Style Human Rights Sanctions Regime

by Karolos Seeger, Jane Shvets, Catherine Amirfar, Andrew M. Levine, Natalie L. Reid, David W. Rivkin, Alan Kartashkin, Konstantin Bureiko, and Martha Hirst

On 6 July 2020, the UK implemented a new sanctions regime targeting global human rights abuses, which allows the UK government to impose asset freezes and travel bans on persons it determines to have committed serious human rights violations. These restrictions have initially targeted 49 persons from Myanmar, Russia, Saudi Arabia and North Korea.

This is the first time since Brexit that the UK has diverged from EU sanctions policy. Although many of the targets and restrictions are broadly aligned with the “Magnitsky”-style sanctions previously implemented by the United States and Canada, the UK regime has some important differences. Companies operating in the UK will need to ensure that their sanctions systems and controls reflect this new regime.

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Actions and Words

by Bart M. Schwartz

The pain we all are witnessing following the killing of George Floyd should make all rethink how we can fight racism and give everyone an equal opportunity.  Even if we think we are doing the right things, we must examine if we are and if that is enough. We must redouble our efforts, but we also must talk about the value of life, opportunity and freedom for all people. Speaking out needs to be combined with actions. Actions alone are not enough. Racism in any form must not be tolerated.

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