Gavel Down: Closing Out the Week in Congress

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Both House and Senate were in recess this week for President's Day. Apple contested a court order involving unlocking the phone of San Bernardino shooter. Minneapolis Federal Reserve President Neel Kashkari said many banks are still "too big to fail" and proposed breaking banks up. FCC voted 3-2 to let consumers swap their cable TV boxes for cheaper devices and apps. Public discussion about the process or potential for Justice Scalia's success continued.


Top Search on POPVOX this week:
"abortion"


Most active bill on POPVOX this week:

H.R. 3293 SCIENTIFIC RESEARCH IN THE NATIONAL INTEREST ACT
 

Apple Contesting Court Order to Help FBI Unlock Phone of San Bernardino Shooter

On February 17, a federal judge ordered Apple to comply with an FBI request for technical assistance to access the iPhone of the San Bernardino shooters. Here are some details in the case:

  • The phone belongs to the gunman’s employer, the San Bernardino County Department of Public Health, which has given the FBI permission to search the phone.

  • However, the FBI has not been able to crack the passcode to open the phone because the phone locks after several incorrect attempts, which means they cannot access messages or photos.

Technical Details:

Trail of Bits blog explains in a breakdown of the technical issues, “the FBI wants Apple to create a special version of iOS that only works on the one iPhone they have recovered. This customized version of iOS will ignore passcode entry delays, will not erase the device after any number of incorrect attempts, and will allow the FBI to hook up an external device to facilitate guessing the passcode.”

Legal Details:

Apple argues that the FBI’s request would compel it to write new code that will compromise the security of its product in the future. U.S. Magistrate Sheri Pym ruled that Apple must comply with the FBI’s request.

Apple CEO, Tim Cook, in a letter to customers, explained that Apple will challenge the ruling:

We can find no precedent for an American company being forced to expose its customers to a greater risk of attack. For years, cryptologists and national security experts have been warning against weakening encryption. Doing so would hurt only the well-meaning and law-abiding citizens who rely on companies like Apple to protect their data.

The FBI cites the 227-year old “All Writs” statute from the 1879 Judiciary Act to make its case. That provisions states:

(a) The Supreme Court and all courts established by Act of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law.
(b) An alternative writ or rule nisi may be issued by a justice or judge of a court which has jurisdiction.

Ars Technica explains: “While the All Writs Act is not used every day, the act has been successfully invoked by the government to compel telephone companies to install wiretaps, for phone companies to hand over call records, and to obtain CCTV footage, handwriting exemplars, and DNA samples. It has even been cited to force a defendant to cough up his computer password.”

Stanford Law School explains the All Writs Act.

The Justice Department said Apple's refusal is a "marketing strategy" rather than based on legal rationale. Today, DOJ filed a motion asking a federal judge to immediately force Apple to assist in unlocking the phone.

More on the topic from Engadget, Wired, The New York Times, The Verge
 

The Apple FBI debate upped the ante on encryption legislation. Senate Intelligence Chairman Richard Burr [R, NC] is weighing how best to address encryption legislation but has decided against proposal to criminalize a company's refusal to aid decryption efforts as part of a governmental investigation. Sen. Dianne Feinstein [D, CA] will introduce a bill that would give the government access to encrypted communications. Rep. Michael McCaul [R, TX-10] and Sen. Mark Warner [D, VA] are working on a bill that would create a commission to find a solution without creating a "backdoor." House Judiciary Committee announced it will hold encryption hearing on March 1.


Deep Dive: New Minneapolis Fed Chair Proposes Breaking Up Banks

In his first speech as President of the Minneapolis Federal Reserve, former Bush official and Goldman Sachs Banker, Neel Kashkari, said that many banks are still “too big to fail” and should be broken up: “I believe the [Dodd-Frank] Act did not go far enough. I believe the biggest banks are still too big to fail and continue to pose a significant, ongoing risk to our economy.”

Kashkari, who led the Troubled Assets Relief Program (TARP) in the wake of the 2007-2009 financial meltdown and recently ran for governor of California, suggested giving “serious consideration” to policies such as (1) breaking up large banks into "smaller, less connected, less important entities,” (2) forcing large banks to hold so much capital that they literally cannot fail and instead act more like public utilities, (3) “Taxing leverage throughout the financial system to reduce systemic risks wherever they lie.”

He listed three lessons learned from the financial crisis:

  1. There is no set definition of “too big to fail” — in normal times a big bank can fail with little impact to the overall system; in a crisis, it takes much less to cause major damage.

  2. Regulators will not see the next crisis — They rarely do, even when they are looking.

  3. “Externalities” (impact on people and things that did not choose to participate in the cause) of bank failures are massive. Kashkari compared it to a nuclear reactor: “The cost to society of letting a reactor melt down is astronomical. Given that cost, governments will do whatever they can to stabilize the reactor before they lose control.”

The speech at Brookings kicks off a series of policy symposiums hosted by the Minneapolis Fed to see input from experts, academics, regulators and financial professionals. Read full remarks.

The speech took some by surprise — Politico said: “Kashkari drops a bomb,” Reuters called the plan “radical”, Business Insider proclaimed it “quite an entrance.

Several proposals are pending in Congress that would impact Dodd-Frank, including proposals to repeal completely, strengthen Dodd-Frank, and implement a new Glass-Stegall Act (separating investment and retail banks).

S. 1709 THE 21ST CENTURY GLASS-STEAGALL ACT
Sponsor: Sen. Elizabeth Warren [D, MA]     BIPARTISAN   

H.R. 3054 THE 21ST CENTURY GLASS-STEAGALL ACT
Sponsor: Rep. Michael Capuano [D, MA-7]     BIPARTISAN   

H.R. 171 REPEALING DODD-FRANK WALL STREET REFORM
Sponsor: Rep. Adrian Smith [R, NE-3] 

H.R. 381 RETURN TO PRUDENT BANKING ACT OF 2015
Sponsor: Rep. Marcy Kaptur [D, OH-9]      BIPARTISAN   

H.R. 37 PROMOTING JOB CREATION AND REDUCING SMALL BUSINESS BURDENS ACT
Sponsor: Rep. Michael Fitzpatrick [R, PA-8]

H.R. 2474 WALL STREET ACCOUNTABILITY THROUGH SUSTAINABLE FUNDING ACT
Sponsor: Rep. Rosa DeLauro [D, CT-3]

H.R. 3118 ELIMINATING THE BUREAU OF CONSUMER FINANCIAL PROTECTION
Sponsor: Rep. John Ratcliffe [R, TX-4]

H.R. 2094 TO REPEAL TITLES I AND II OF THE DODD-FRANK WALL STREET REFORM AND CONSUMER PROTECTION ACT
Sponsor: Rep. Lynn Westmoreland [R, GA-3]


FCC Proposal to Unlock the Set Top Box

Your home cable box is now the subject of hot debate in Washington. On Thursday, the FCC approved a “notice of proposed rulemaking” to “unlock” the set top box:


U.S. consumers spend $20 billion a year to lease these devices. Since 1994, according to a recent analysis, the cost of cable set-top boxes has risen 185 percent while the cost of computers, televisions and mobile phones has dropped by 90 percent. Congress recognized the importance of a competitive marketplace and directed the Commission to adopt rules that will ensure consumers will be able to use the device they prefer for accessing programming they’ve paid for.”

Read the full proposal.


Supreme Court Nomination Update

Thousands stood in line at the Supreme Court building on Friday, where Justice Antonin Scalia lay in state. Mourners left mementos and reminders of the memorable Scalia phrases that colored his decisions and dissents, including broccoli, applesauce, and fortune cookies. A private ceremony for friends and colleagues was held at the Court in the morning, and the funeral will be 11 AM Saturday at the Basilica of the National Shrine of the Immaculate Conception.

(Photo/Melinda Heim)

(Photo/Melinda Heim)

The public discussion about the process or potential for a successor to be appointed continues. White House spokesman Josh Earnest told reporters that President Obama has called Majority Leader McConnell, Minority Leader Reid, Judiciary Committee Chairman Grassley and Ranking Member Leahy to talk about the nomination process. (h/t Jennifer Bendery). See: what Senator Grassley has said about holding nomination hearings.

Bloomberg News spoke to noted Constitutional Law professor and dean of the University of California Irvine School of Law, Erwin Chemerinsky (who literally wrote the book[s]) about the issues involved:

[Chemerinsky] said the framers expected the Senate to act. If senators could simply ignore a president’s nomination, they would have the power to undermine the judiciary.

"The Constitution has to be interpreted to make sense, and it doesn’t make sense unless you say the president nominates and the Senate has to give advice and consent," he said.

Chemerinsky said that, even if the Senate is obligated to take up a nomination, the only way to enforce that requirement would be public pressure.

"You can’t sue the Senate to make them hold a hearing or to make them confirm somebody," he said.


#DataDrop


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Weekend Reads

"What growing life expectancy gaps mean for the promise of Social Security" by Barry Bosworth, Gary Burtless, and Kan Zhang, Brookings

"Why Apple is Right to Challenge an Order to Help the F.B.I" by The New York Times Editorial Board

"Let's Change the Conversation Around Mental Health" by First Lady Michelle Obama, The Huffington Post