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Newsletter | Revolving Door Project Newsletter | June 8, 2022

June Gloom for Student Debtors, Plus Biden’s Solar Breakthrough

Confirmation CrisisExecutive BranchIndependent Agencies

From archaic mining regulations to new crypto “mining” regulations, strong protections are key.

This edition of the Revolving Door Project newsletter was originally published on our Substack. View and subscribe here.

The tortuous game of will-they-won’t-they cancel student debt continues. Biden’s decision this week to cancel $5.8 billion in debt held by 560,000 former students of the systematically fraudulent, now-defunct Corinthian Colleges seems to signal a willingness (finally!) to wield executive authority on higher ed issues. Meanwhile, a historic coalition of over 500 labor, civil rights and advocacy groups continues to press Biden for sweeping cancellation. The labor movement has been ramping up its calls for student debt cancellation, and more unions, including the Amazon and Starbucks unions and several traditionally blue-collar unions, are joining the fight. This show of force from a broad labor base could help Biden overcome his political reservations, with organized labor actively refuting the Republican talking point that student debt relief is a handout to elite university graduates.

Education Secretary Cardona has indicated that the department is “ready to roll” on whatever form of student debt relief is finalized this summer. Here’s hoping that it makes a dent in more than compound interest, and avoids the bureaucratic quicksand of “means-testing” — really, that it helps millions of Americans feel like they can breathe. And to protect those Americans who haven’t yet entered the fraudulent-college-to-unpayable-debt pipeline, David Dayen has an excellent piece in the Prospect this week on how the Biden administration could dismantle predatory for-profit colleges without Congress.

Governance

Emergency Powers

It’s all too easy to overlook the victories, so let’s spend a moment relishing the White House’s decision on Monday to use the Defense Production Act to “accelerate domestic production of clean energy technologies,” including parts for solar panels, building insulation, and heat pumps:

Together, these actions will spur domestic manufacturing, construction projects, and good-paying jobs – all while cutting energy costs for families, strengthening our grid, and tackling climate change and environmental injustice. With a stronger clean energy arsenal, the United States can be an even stronger partner to our allies, especially in the face of Putin’s war in Ukraine. The stakes could not be higher.

This is a winning argument for deploying clean energy: it improves people’s lives on all these levels at once. Solar power is the cheapest energy source in history. It does not pollute the air and despoil the environment. It does not poison you in your own home. It does not empower autocrats. If Democrats were to coalesce around touting the real benefits of solar as forcefully as the fossil fuel industry does the false superiority of gas stoves, we could really get somewhere.

The implementation of a just energy transition, of course, is more complicated than its messaging should be. Where messaging should be confident and unswerving, implementation must prioritize listening and course-correction. The Biden administration’s embrace of environmental justice must be practiced. And that means that when indigenous groups push back against the mining boom facilitated by Biden’s use of the DPA to secure domestic sources of metals and minerals for clean technology, the administration needs to listen. As the White House works on updating the “sacred” environmental justice order signed by Clinton in 1994, which was symbolically important but never really put into practice, it should not shy away from navigating these challenges. 

Stephanie Woodward wrote last Thursday for In These Times that, “With a new mining boom looming, tribes and environmental groups are pushing alternatives, such as mineral recycling, and sounding the alarm about the patchwork of regulations that allow companies to stake claims without warning or consultation.” Updating archaic mining regulations (which can be done without Congress) is a must, and “mining e-waste” is a particularly exciting solution, as it promises low-cost, low-impact access to important materials while reducing the 57 million tonnes of e-waste smothering the earth’s surface. Rather than replicating patterns of poorly-regulated, exploitative extraction to develop better energy technologies, we must learn from historical mistakes, and do better at every stage of the process. 

Criminal Prosecutions

This Thursday marks the first public hearing on the Jan. 6 insurrection, which will be broadcast at 8 pm ET. We can expect to get a broad overview of the “extremely well-organized” attack on the capitol, as the committee presents “previously unseen material documenting January 6th,” and summarizes its findings about “the coordinated, multi-step effort to overturn the results of the 2020 presidential election and prevent the transfer of power.” 

Revolving Door Project Executive Director Jeff Hauser issued a statement last week in advance of the hearings, emphasizing that it’s not enough for the Jan. 6 committee to present evidence of Trump and his cronies’ lawbreaking; the DOJ must hold them accountable for their crimes. “The worst possible politicization is allowing guilty people to go uncharged because the Department of Justice fears criticism for following the law where it leads,” Jeff wrote.

In other DOJ news, it was good to see the DOJ follow through on its stated intent to hold corporate criminals accountable in Glencore and Allianz’s recent guilty pleas, which led to a combined $6.8 billion in fines. $5 billion of the Allianz penalty will go to the investors they defrauded, and its subsidiary Allianz Global Investors will be disqualified from advising on U.S. investment funds for the next decade. Mandated corporate restructuring and ending profitable lines of business are undoubtedly a more powerful deterrent than fines for the biggest firms engaging in criminal behavior, and should be encouraged. 

Announcing Glencore’s guilty plea for its multi-year scheme to manipulate fuel oil prices, Merrick Garland stated: “The rule of law requires that there not be one rule for the powerful and another for the powerless; one rule for the rich and another for the poor.” We hope that Garland upholds this definition of the rule of law in his undoubtedly greatest test as Attorney General: holding accountable the former president and his conspirators. 

Personnel

The good news first: we applaud Biden’s recent nomination of Public Justice civil rights lawyer Karla Gilbride as general counsel for the U.S. Equal Employment Opportunity Commission. Gilbride has a long history of defending workers’ rights, winning a string of victories in recent years on behalf of workers and consumers facing forced arbitration. 

On the other end of the spectrum, BigLaw firm Cravath, Swaine & Moore LLP just announced it’s opening a new DC office led by three revolvers fresh out of the administration, two of whom were high-level Trump appointees: Jelena McWilliams, former Chairman of the FDIC; Elad L. Roisman, former Commissioner and Acting Chairman of the SEC; and Jennifer S. Leete, former Associate Director in the SEC’s Division of Enforcement. These hires epitomize the revolving door. While they’re in the government, they’re industry-friendly, weak regulators; when they leave the government, they help their new firms secure clients from the industries they previously favored. They distinguish themselves by promising their clients access to old colleagues in the government, and carry a certain weight with judges and the press. 

In other news, continuing our running commentary on how broken the Senate confirmation process is, the Tennessee Valley Authority board is down to five of nine members, and that number could drop to two by the end of the year. In the midst of a climate emergency, the nation’s largest public utility losing its quorum because the approval process has been stalled for over a year is the definition of dysfunction. And that’s not even getting into how terrible the board’s lingering appointees are. RDP’s Dorothy Slater has previously written for The New Republic on the TVA’s corruption and potential here and here, and joined Mekedas Belayneh in detailing how the EPA could stop the TVA from building new gas plants. 

Independent Agencies

Don’t miss RDP’s Timi Iwayemi in the Prospect on crypto-billionaire Sam Bankman-Fried and his “multimillion-dollar game” to influence how crypto is regulated. Timi details the serial CFTC revolving door hires at Bankman-Friend’s crypto trading exchange FTX, part of his strategy to push the CFTC instead of the SEC to become the primary regulator of cryptocurrencies. This is no doubt because the SEC is a much more able regulator: 

In 2021, the SEC’s $1.9 billion budget was over six times larger than the CFTC’s $300 million budget, and its 4,500 full-time staff is over six times more than the CFTC’s about 700 full-time workers. Moreover, the SEC has a clear mandate of investor protection and a more demonstrable history of regulating securities markets—and make no mistake, the overwhelming majority of crypto assets are securities, not commodities. In addition, the SEC has been more inclined to enforce rules in the digital assets area. Just last month, the agency nearly doubled the size of its Enforcement Division Crypto Assets and Cyber Unit. Gensler is currently asking Congress for more funding to further expand that unit.

With Lummis and Gilibrand’s proposed bipartisan (read: industry approved) crypto bill out yesterday, which would enshrine the CFTC as crypto’s primary regulator, progressive pushback against institutionalizing this volatile, fraud-prone, despicably energy-intensive asset is more imperative than ever. 

Want more? Check out some of the pieces that we have published or contributed research or thoughts to in the last week:

RELEASE: Revolving Door Project Applauds Use Of Defense Production Act For Clean Energy Projects

Sam Bankman-Fried’s Multimillion-Dollar Game

New Papers Explore Biden’s Climate Options At Justice Department, Economics Agencies

The Justice Department has gone far and wide in its Jan. 6 probe. Some want more

‘Slow-walked or watered down’: Friendly fire strafes Biden’s climate office

Confirmation CrisisExecutive BranchIndependent Agencies

More articles by Hannah Story Brown

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