Regulation and Deregulation of Industry

More stories

  • 125 Shares119 Views

    in Economy

    U.S. Limits China’s Ability to Benefit From Electric Vehicle Subsidies

    by

    The Biden administration issued new rules to prevent Chinese firms from supplying parts for electric cars set to receive billions of dollars in tax credits.The Biden administration proposed new rules on Friday aimed at shifting more production of electric vehicle batteries and the materials that power them to the United States, in an attempt to build up a strategic industry now dominated by China.The rules are meant to limit the role that firms in China can play in supplying materials for electric vehicles that qualify for federal tax credits. They will also discourage companies that seek federal funding to build battery factories in the United States from sourcing materials from China or Russia.The rules could encourage shifts in automotive supply chains, which continue to rely heavily on China for materials and components of electric vehicles. Automakers are also facing intense cost pressures as they try to modify their factories to make electric cars, and China offers some of the most advanced and lowest-priced battery technology in the world.The Biden administration is trying to use billions of dollars in new federal funding to change that dynamic and create a U.S. supply chain for electric vehicles.The climate law that President Biden signed in 2022 includes up to $7,500 in tax credits to consumers who buy electric vehicles made in the United States using largely domestic materials. The law also included a general ban on Chinese products. Lawmakers mandated that firms in China, Russia, North Korea and Iran be prohibited from providing certain materials to cars that received those tax breaks.But the law left open several questions, including what constitutes a Chinese or Russian company. Administration officials said those definitions included any entity that was incorporated or had headquarters in China or Russia, as well as any firm in which 25 percent of the board seats or equity interest was held by Chinese or Russian governments.Chinese companies that set up operations outside China appear to be able to benefit from the rules as long as the Chinese government is not a significant shareholder. That provision came as a relief to some automakers, which feared that the Biden administration might bar them from contracting with Chinese-owned mines or factories in the United States or other parts of the world.Lithium hydroxide is processed at a facility in Bessemer City, N.C. American companies are investing in factories and technologies aimed at developing the materials needed for electric vehicle.Travis Dove for The New York TimesThe law also requires battery makers that strike contracts or licensing agreements with Chinese firms to ensure that they are retaining certain rights over their projects. That provision is intended to make sure a Chinese firm is not effectively in control of such a project.Some conservative lawmakers had challenged Ford Motor’s plans to license technology from the Chinese battery giant known as CATL for a plant in Marshall, Mich., arguing that such a partnership should not be eligible for federal tax credits. Some Republican lawmakers suggested on Friday that the Treasury Department’s guidance did not go far enough to lessen the country’s dependence on China.“At a time when China is using massive subsidies to undercut U.S. manufacturers and throttle the global market for battery components, Treasury’s naïve new regulations would open the floodgates for American tax dollars to flow to Chinese companies complicit in trade violations and forced labor abuses,” said Representative Mike Gallagher of Wisconsin, chairman of the House Select Committee on the Chinese Communist Party. The rules kick in for battery components in 2024, and in 2025 for critical minerals like lithium, cobalt and nickel. They could be adjusted depending on industry comment.The rules could have a profound impact on the U.S. electric vehicle market, which is rapidly growing — battery-powered vehicles made up about 8 percent of new cars sold in the third quarter. Car and battery makers said Friday that they were still reviewing the rules, and that it would take time to determine how many models would qualify for tax credits.Tesla said on Friday that the two least expensive versions of its Model 3 sedan would qualify for only half the $7,500 credit starting in January. The Model Y sport utility vehicle also might not qualify for the full credit after Dec. 31, Tesla said. The Model Y and Model 3 are the top two electric vehicles by sales in the United States. Tesla buys some batteries from CATL.John Bozzella, the chief executive of Alliance for Automotive Innovation, wrote in a blog post Friday that the rules struck “a pragmatic balance,” including by exempting trace materials. If the administration had banned all minor Chinese parts from the supply chain, no car models might have qualified for tax credits next year, he said.Many cars have already been disqualified from purchase credits by other rules, like a requirement that vehicles be assembled in North America. Only about 20 vehicles currently qualify for the program out of more than 100 electric vehicles sold in the United States.The rules also raised new questions about whether stricter requirements for supply chains could continue a trend of driving more shoppers to lease, rather than buy, vehicles.The prohibition on sourcing from China applies only to vehicles that are sold, not to those that are leased. Consumers can receive tax credits for electric vehicles they lease from auto dealers, and that has led to a boom in E.V. leasing.Jack Fitzgerald, chairman of Fitzgerald Auto Malls, which operates dealerships in Florida, Maryland and Pennsylvania, said he had seen a spike in customers leasing electric vehicles. But he said concern about electric vehicle range and the availability of chargers, more than price, was holding back electric vehicle sales.“That’s the principal thing,” Mr. Fitzgerald said.Auto industry lobbyists have warned that extremely strict rules could stifle electric vehicle sales, and they have urged the administration to strike more trade deals to secure supplies of scarce battery minerals. But Paul Jacobson, the chief financial officer of General Motors, said the company had structured its electric vehicle operations to be successful regardless of the federal rules.“We’re not anchoring the business on saying this has to happen” with regard to regulations, Mr. Jacobson told reporters on Thursday. If regulations change, he added, “it’s not a backbreaking thing for us.”While the rules may create headaches for automakers, they are likely to benefit companies planning to supply batteries from factories in the United States.“It’s actually good news for us,” said Siyu Huang, chief executive of Factorial, a Massachusetts company that is developing next-generation electric vehicle batteries with support from Mercedes-Benz, Hyundai and Stellantis, the owner of Dodge, Jeep and Ram.Acquiring large amounts of lithium, an essential ingredient in batteries, could be difficult because most of the metal is processed in China, Ms. Huang said. But the rules will encourage investment in U.S.-based refineries, she continued. “Its definitely going to be another incentive to build more domestic supply,” Ms. Huang said.John DeMaio, chief executive of Graphex Technologies, which is building a factory in Michigan to process graphite for batteries, said the rules might temporarily slow electric vehicle sales by making it harder to qualify for the tax credit. But in the long run, he added, they will encourage investment in domestic suppliers.“It might be a hiccup,” he said, “but in general it provides certainty and clarity to get people off the fence.”Wally Adeyemo, the deputy secretary of the Treasury Department, said in a briefing with reporters that the rules would help advance the administration’s goals of building up an American clean energy supply chain while also cutting emissions in the transportation sector.“These changes take time, but companies are making the investments and Americans are buying these cars,” he said.Over the past year, companies have invested $213 billion in the manufacturing and deployment of clean energy, clean vehicles, building electrification and carbon management technology in the United States, according to tracking by the Rhodium Group and the Center for Energy and Environmental Policy Research at the Massachusetts Institute of Technology. That is a 37 percent increase from a year earlier..A lithium mine in northern Quebec. A majority of the world’s lithium and cobalt is processed in China.Brendan George Ko for The New York TimesStill, the global electric vehicle industry remains heavily anchored in China, which is the world’s largest producer and exporter of electric vehicles. China produces about two-thirds of the world’s battery cells, and refines most of the minerals that are key to powering an electric vehicle.The rules also restrict automakers from sourcing nickel used in their batteries from Russia, which is one of the world’s largest nickel producers.One of the challenges for automakers will be developing systems to track all the components of their battery through a long, and often opaque, supply chain.Vehicles that are reported incorrectly will be subtracted from an automaker’s eligibility for tax credits, Treasury said, and automakers that commit fraud or intentionally disregard the rules could be declared ineligible for the credit in the future. More

  • 150 Shares99 Views

    in Economy

    U.S. Debates How Much to Sever Electric Car Industry’s Ties to China

    by

    Some firms argue that a law aimed at popularizing electric vehicles risks turning the United States into an assembly shop for Chinese-made technology.The Biden administration has been trying to jump-start the domestic supply chain for electric vehicles so cleaner cars can be made in the United States. But the experience of one Texas company, whose plans to help make an all-American electric vehicle were upended by China, highlights the stakes involved as the administration finalizes rules governing the industry.Huntsman Corporation started construction two years ago on a $50 million plant in Texas to make ethylene carbonate, a chemical that is used in electric vehicle batteries. It would have been the only site in North America making the product, with the goal of feeding battery factories that would crop up to serve the electric vehicle market.But as new facilities in China came online and flooded the market, the price of the chemical plummeted to $700 a ton from $4,000. After pumping $30 million into the project, the company halted work on it this year. “If we were to start the project up today, we would be hemorrhaging cash,” said Peter R. Huntsman, the company’s chief executive. “I’d essentially be paying people to take the product.”The Biden administration is now finalizing rules that will help determine whether companies like Huntsman will find it profitable enough to participate in America’s electric vehicle industry. The rules, which are expected to be proposed this week, will dictate the extent to which foreign companies, particularly in China, can supply parts and products for American-made vehicles that are set to receive billions of dollars in subsidies.The administration is offering up to $7,500 in tax credits to Americans who buy electric vehicles, in an effort to supercharge the industry and reduce the country’s carbon emissions. The rules will determine whether electric vehicle makers seeking to benefit from that program will have the flexibility to get cheap components from China, or whether they will be required instead to buy more expensive products from U.S.-based firms like Huntsman.After pumping $30 million into the project, Huntsman halted work on it. “If we were to start the project up today, we would be hemorrhaging cash,” said Peter R. Huntsman, the company’s chief executive.Callaghan O’Hare for The New York TimesCan the World Make an Electric Car Battery Without China?From mines to refineries and factories, China began investing decades ago. Today, most of your electric car batteries are made in China and that’s unlikely to change soon.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.We are confirming your access to this article, this will take just a moment. However, if you are using Reader mode please log in, subscribe, or exit Reader mode since we are unable to verify access in that state.Confirming article access.If you are a subscriber, please  More

  • 138 Shares179 Views

    in Economy

    Polluting Industries Say the Cost of Cleaner Air Is Too High

    by

    As the Biden administration prepares to toughen air quality standards, health benefits are weighed against the cost of compliance.The U.S. Environmental Protection Agency is about to announce new regulations governing soot — the particles that trucks, farms, factories, wildfires, power plants and dusty roads generate. By law, the agency isn’t supposed to consider the impact on polluting industries. In practice, it does — and those industries are warning of dire economic consequences.Under the Clean Air Act, every five years the E.P.A. re-examines the science around several harmful pollutants. Fine particulate matter is extremely dangerous when it percolates into human lungs, and the law has driven a vast decline in concentrations in areas like Los Angeles and the Ohio Valley.But technically there is no safe level of particulate matter, and ever-spreading wildfire smoke driven by a changing climate and decades of forest mismanagement has reversed recent progress. The Biden administration decided to short-circuit the review cycle after the E.P.A. in the Trump administration concluded that no change was needed. As the decision nears, business groups are ramping up resistance.Last month, a coalition of major industries, including mining, oil and gas, manufacturing, and timber, sent a letter to the White House chief of staff, Jeffrey D. Zients, warning that “no room would be left for new economic development” in many areas if the E.P.A. went ahead with a standard as tough as it was contemplating, endangering the manufacturing recovery that President Biden had pushed with laws funding climate action and infrastructure investment.Twenty years ago, generating electric power caused far higher soot emissions, so “there was room” to tighten air quality standards, said Chad Whiteman, vice president of environment and regulatory affairs at the Chamber of Commerce’s Global Energy Institute, in an interview. “Now we’re down to the point where the costs are extremely high,” he said, “and you start bumping into unintended consequences.”Research shows that in the first decades after the passage of the Clean Air Act in 1967, the rules lowered output and employment, as well as productivity, in pollution-intensive industries. That’s why the cost of those rules has often drawn industry protests. This time, steel and aluminum producers have voiced particularly strong objections, with one company predicting that a tighter standard would “greatly diminish the possibility” that it could restart a smelter in Kentucky that it idled in 2022 because of high energy prices.Technically, there is no safe level of particulate matter, and ever-spreading wildfire smoke driven by a changing climate and decades of forest mismanagement has reversed recent progress.Max Whittaker for The New York TimesNew factories, however, tend to have much more effective pollution control systems. That’s especially true for two advanced manufacturing industries that the Biden administration has specifically encouraged: semiconductors and solar panel manufacturing. Trade associations for those industries said by email that a lower standard for particulate matter wasn’t a significant concern.Regardless, public health advocates argue that the averted deaths, illnesses and lost productivity that air pollution caused far outweigh the cost. The E.P.A. pegs the potential benefits at as much as $55 billion by 2032 if it drops the limit to nine micrograms per cubic meter, from the current 12 micrograms. That is far more than the $500 million it estimates the proposal would cost in 2032.So how are communities weighing the potential trade-offs?On a state level, it depends to a large degree on politics: Seventeen Democratic attorneys general wrote a joint comment letter in support of stricter rules, while 17 Republican attorneys general wrote one in favor of the status quo.But it also depends on the mix of industries prevalent in a local area. Ohio offers an illuminating contrast.Take Columbus, a longstanding hub of headquarters for consumer brands that in recent years has leaned more into professional services like banking and insurance. The Mid-Ohio Regional Planning Commission, a coalition of metropolitan-area governments, called for the E.P.A. to impose the nine-microgram standard.“There may be some economic costs to major polluting industries, but there’s real health and environmental costs if we do nothing,” said Brandi Whetstone, a sustainability officer at the commission.Columbus would incur fewer costs from tighter regulation, having enjoyed strong job growth in recent years driven by white-collar industries. But local leaders also think that clean air is a competitive advantage, with the power to draw both new residents and new businesses that value it.Jim Schimmer is the director of economic development for Franklin County, which includes Columbus. He has been pushing a plan to turn an old airport the county owns into a low-emissions, power-generating transportation and logistics hub, complete with solar arrays and electrified short-haul trucks, and he thinks stronger rules on particulate matter could help.“This is such a great opportunity for us,” Mr. Schimmer said.The E.P.A. is about to announce new regulations governing soot — the particles that trucks, factories, wildfires, power plants and dusty roads generate.Mikayla Whitmore for The New York TimesThe Cleveland area is a different story, with a high concentration of steel, chemical, aviation and machinery production. Its regional planning council declined to comment on the prospect of stricter air quality rules. Chris Ronayne, the Democratic executive of Cuyahoga County, was cautious in discussing the subject, emphasizing the need for financial assistance to help companies upgrade to lower their emissions.“I think there is an attitude of ‘work with us, with carrot approaches, not just the big stick,’” Mr. Ronayne said. “Come at us, in a manufacturing town, with both incentives to help us get there as well as the regulation.”Ohio has an entity to help with that. The Ohio Air Quality Development Authority was created 50 years ago to clean up the brown clouds that came out of smokestacks, using a combination of grants and low-cost revenue bond financing to help businesses fund upgrades like solar panels and scrubbers that filter exhaust from industrial facilities like incinerators and concentrated animal feeding operations.Now, more funding than ever is available — through the Inflation Reduction Act, which set up a $27 billion “green bank” at the E.P.A. to finance clean energy projects. Christina O’Keeffe, the executive director of the Ohio agency, said she hoped that would allow her to get into direct lending as well when more companies needed her help to meet a stricter air standard. There are also billions in the offing to help heavy industries retrofit to lower their carbon emissions, which tends to help with particulate matter as well.Public health advocates argue that the E.P.A. should set its standard regardless of the assistance available to cover the cost of compliance.California, for example, has spent more than $10 billion to help factories and farmers pollute less. The state’s Central Valley is still the only area that is in “serious” violation of meeting the set standard of 12 micrograms per cubic meter of particulate matter. The country’s six most polluted counties, which include the cities of Fresno and Bakersfield, have annual readings above 16 micrograms.The Central Valley Air Quality Coalition, an advocacy group, has been pushing for more aggressive enforcement for decades. The group’s executive director, Catherine Garoupa, points out that despite the persistent air problems, the federal government has not imposed strict curbs, like holding back highway funding.“One of the huge imbalances in our region is that the trend has been to cater to industry, treat them with kid gloves, give them billions of dollars in incentive money for them to continue their practices,” Dr. Garoupa said. “They’re generating wealth, but not for the people that actually live in the valley and are breathing the air.”California has spent more than $10 billion to help factories and farmers pollute less.Max Whittaker for The New York TimesThe San Joaquin Valley Air Pollution Control District, which includes four of the country’s six most polluted counties, has a different take. It filed a comment letter warning of “devastating federal sanctions,” including financial penalties, if the standard was toughened further.The chair of that air district is Vito Chiesa, a Stanislaus County commissioner who grows walnuts and almonds and used to lead the local farm bureau. His operation has to comply with any limitations on agriculture that might be imposed, like the prohibition on open-air burning of farm waste that the air district adopted after years of demands from public health advocates. He fears that further curbs without adequate support for smaller farmers would jeopardize his employees’ jobs.“I have like 15 employees out here, and I feel completely responsible for their families,” Mr. Chiesa said. “So how is it going to affect them? Our charge here on the air board is not to do death by a thousand cuts.”One point of agreement between proponents and many foes of a stronger standard: If the E.P.A. moves forward with tougher rules, it should also crack down on pollution sources, including railroads, ships and airplanes, under its sole jurisdiction. (The agency has proposed a stronger standard for heavy-duty trucks, around which a similar fight is playing out.)Rebecca Maurer is a City Council member representing a Cleveland neighborhood that has some of the area’s worst pollution. Her office frequently hears from constituents seeking help with housing that is safer for children with asthma, which occurs at alarming rates. The district encompasses an industrial cluster that includes two steel plants, an asphalt plant, a recycling depot, rail yards and assorted small factories.That’s the most visible source of emissions, but Ms. Maurer thinks her district’s many highways — and the diesel-powered trucks driving on them — offer the greatest opportunity for cleaning up the air, which requires state and federal action. And light manufacturing jobs are needed to employ the two-thirds of the county’s residents who lack college degrees, she said.“What we don’t want is another asphalt plant, and we don’t want e-commerce,” Ms. Maurer said. “We want something in between. We’re trying to thread this needle between these hugely polluting plants and low density, low-wage warehouse jobs.” More

  • 125 Shares119 Views

    in Economy

    The Multimillion-Dollar Machines at the Center of the U.S.-China Rivalry

    by

    The United States is taking unusual action to clamp down on sales of chip-making machinery to China, even as Chinese firms are racing to stockpile the equipment.They are smooth white boxes, roughly the size of large cargo vans, and they are now at the heart of the U.S.-Chinese technology conflict.As the United States tries to slow China’s progress toward technological advances that could help its military, the complex lithography machines that print intricate circuitry on computer chips have become a key choke point.The machines are central to China’s efforts to develop its own chip-making industry, but China does not yet have the technology to make them, at least in their most advanced forms. This week, U.S. officials took steps to curb China’s progress toward that goal by barring companies globally from sending additional types of chip-making machines to China, unless they obtain a special license from the U.S. government.The move could be a significant blow to China’s chip-manufacturing ambitions. It is also an unusual flexing of American regulatory power. American officials took the position that they could regulate equipment manufactured outside the United States if it contains even just one American-made part.That decision gives U.S. officials new sway over companies in the Netherlands and Japan, where some of the most advanced chip machinery is made. In particular, U.S. rules will now stop shipments of some machines that use deep ultraviolet, or DUV, technology made mainly by the Dutch firm ASML, which dominates the lithography market.Vera Kranenburg, a China researcher at the Clingendael Institute, a Dutch think tank, said that while ASML had made clear that it would follow the regulations, the company was already chafing under earlier regulations that barred it from exporting a more sophisticated lithography machine to China.“They’re of course not happy about the export controls,” she said.After being thrust into geopolitics yet again, ASML has been careful in its response, saying in a statement this week that it complies with all laws and regulations in the countries where it operates. Peter Wennink, the chief executive, said the company would not be able to ship certain tools to “just a handful” of Chinese chip factories. But “it is still sales that we had in 2023 that we’ll not have in 2024,” he added.In a statement, the Dutch foreign trade minister, Liesje Schreinemacher, said that the Netherlands shared U.S. security concerns and continuously exchanges information with the United States, but that “ultimately, every country decides for itself what export restrictions to impose.” She pointed to more permissive restrictions announced by the Dutch government in June.A spokesman for the U.S. Department of Commerce declined to comment.ASML’s technology has enabled leaps in global computing power. The increasing precision of its machines — which have tens of thousands of components and cost as much as hundreds of millions of dollars each — has allowed circuitry on chips to get progressively smaller, letting companies pack more computing power into a tiny piece of silicon.The technology has also given the United States and its allies an important source of leverage over China, as governments compete to turn technological gains into military advantages. Although Beijing is pouring money into the semiconductor industry, Chinese chip-making equipment remains many years behind the prowess of ASML and other key machine suppliers, including Applied Materials and Lam Research in the United States and Tokyo Electron and Canon in Japan.But U.S. efforts to weaponize this technological advantage against China appear to be straining alliances. In Europe, government officials increasingly agree with the United States that China poses a geopolitical and economic threat. But they are still wary of undercutting their own companies by blocking them from China, one of the world’s largest and most vibrant tech markets.Dutch technology, in particular, has been the focus of a multiyear pressure campaign from the United States. In 2019, the Trump administration persuaded the Dutch to block shipments to China of ASML’s most state-of-the-art machine, which uses extreme ultraviolet technology.After months of diplomatic pressure from the Biden administration, the governments of the Netherlands and Japan agreed in January that they would also independently curb sales of some deep ultraviolet lithography machines and other types of advanced chip-making equipment to China.The United States and its allies have viewed sales of the deep ultraviolet lithography machines as less of a national security risk. The chips they produce are considerably less advanced than those built with the most cutting-edge machines, which now power the latest smartphones, supercomputers and A.I. models.But that position was tested this summer when a Chinese firm used ASML’s deep ultraviolet lithography technology along with other advanced machines to blow past a technological barrier that U.S. officials had hoped to keep China from reaching.In August, the Chinese telecom giant Huawei unexpectedly released a new smartphone containing a Chinese-made chip with transistor dimensions rated at seven nanometers, just a couple of technology generations behind the latest chips made in Taiwan. Analysts have concluded that China’s Semiconductor Manufacturing International Corporation made the chip with the use of the Dutch deep ultraviolet lithography machinery.Gregory C. Allen, a technology expert at the Center for Strategic and International Studies, a Washington think tank, said the new export control rules had been in the works long before the Huawei announcement. But, he said, the development “helped leaders throughout the U.S. government understand that there was no more time to waste and that updated controls were urgently needed.”Mr. Allen said the controls would not necessarily break China’s most advanced chip-makers immediately, since they had already stockpiled a lot of advanced machinery. But it would “dramatically restrict” their ability to manufacture the most advanced kinds of semiconductors, like seven-nanometer chips, he said.For now, ASML is still doing brisk business with China. In its earnings report this week, ASML said sales to China had surged in the third quarter to account for 46 percent of the company’s global total, far above historical levels.Analysts at TD Cowen estimated that ASML’s China sales would reach 5.5 billion euros (about $5.8 billion) this year, more than double the total last year. Next year, the new export controls could cut 10 to 15 percent off the company’s China revenues, they projected.Roger Dassen, ASML’s chief financial officer, said in the earnings call that most of the orders that ASML was completing this year had been placed in 2022 or even the year before, and were largely for machines that would make slightly older types of chips.All the shipments were “very much within the limits of export regulation,” Mr. Dassen said.For the machines that face new U.S. restrictions, the Dutch company will now be barred from supplying replacement parts and helping to service those systems. That will mean Chinese companies are likely to have manufacturing problems at some point.These hugely expensive machines rely on regular software and maintenance support to continue churning out chips, said Joanne Chiao, a semiconductor analyst at TrendForce, a market research firm.ASML is not the only equipment supplier caught up in the latest restrictions. Other kinds of advanced machines that are essential to produce the most advanced chips, like those from the U.S. companies Applied Materials and Lam Research, are detailed in the latest restrictions.Lam, in a conference call on Wednesday, said revenue from China jumped 48 percent in its first fiscal quarter as companies stocked up on machines to make both mature chips and advanced products. It had already estimated that restrictions on sales to China would hold down revenue this year by $2 billion; executives added that the expanded rules issued this week wouldn’t materially change that estimate.An Applied Materials spokesman said the company was still reviewing the new rules to gauge their potential impact.John Liu More

  • 150 Shares129 Views

    in Economy

    The Upshot of Microsoft’s Activision Deal: Big Tech Can Get Even Bigger

    by

    President Biden’s top antitrust officials have used novel arguments over the past few years to stop tech giants and other large companies from making deals, a strategy that has had mixed success.But on Friday, when Microsoft closed its blockbuster $69 billion acquisition of the video game publisher Activision Blizzard after beating back a federal government challenge, the message sent by the merger’s completion was incontrovertible: Big Tech can still get bigger.“Big Tech companies will certainly be reading the tea leaves,” said Daniel Crane, a law professor at the University of Michigan. “Smart money says merge now while the merging is good.”Microsoft’s purchase of Activision was the latest deal to move forward after a string of failed challenges to mergers by the Federal Trade Commission and the Justice Department, which are also confronting the big tech companies through lawsuits arguing they broke antimonopoly laws. Leaders at the two agencies had tried to block at least 10 other deals over the past two years, promising to dislodge longstanding ideas from antitrust law that they said had protected behemoths like Microsoft, Google and Amazon.But their efforts ran headlong into skeptical courts, largely leaving those core assumptions untouched. In the case of Microsoft’s Activision deal, the idea that the F.T.C. questioned was a “vertical” transaction, which refers to mergers between firms that are not primarily direct competitors. Regulators have rarely sued to block such deals, figuring that they generally do not create monopolies.Yet “vertical” deals have been especially common in the tech industry, where companies like Meta, Apple and Amazon have sought to grow and protect their empires by spreading into new business lines.In 2017, for instance, Amazon bought the high-end grocery chain Whole Foods for $13.4 billion. In 2012, Meta acquired the photo-sharing app Instagram for $1 billion and then shelled out nearly $19 billion for the messaging service WhatsApp in 2014. Of the 24 deals worth more than $1 billion completed by the tech giants from 2013 to mid-August of this year, 20 were vertical transactions, according to data provided by Dealogic.The sealing of the Microsoft-Activision deal has buttressed the notion that vertical deals generally are not anticompetitive and can still go through relatively unscathed.“There continues to be the presumption that vertical integration can be a healthy phenomena,” said William Kovacic, a former chair of the F.T.C. The F.T.C. is proceeding with its challenge to the Microsoft-Activision deal even as it has closed, said Victoria Graham, a spokeswoman for the agency, who added that the acquisition was a “threat to competition.” The Justice Department declined to comment. The White House did not immediately have a comment.The idea that vertical transactions were less likely to harm competition than combinations of direct rivals has been ingrained since the late 1970s. In the ensuing decades, the Justice Department and F.T.C. took no challenges to vertical deals to court, instead reaching settlements that allowed companies to proceed with their deals if they changed practices or divested parts of their business.Then, in 2017, the Justice Department sued to block the $85.4 billion merger between the phone giant AT&T and the media company Time Warner, in the agency’s first attempt to stop a vertical deal in decades. A judge ruled against the challenge in 2018, saying he did not see enough evidence of anticompetitive harms from the union of companies in different industries.Mr. Biden’s top antitrust officials — Lina Khan, the F.T.C. chair, and Jonathan Kanter, the top antitrust official at the Justice Department — have been even more aggressive in challenging vertical mergers since they were appointed in 2021.That year, the F.T.C. sued to stop the chip maker Nvidia from buying Arm, which licenses chip technology, and the companies abandoned the deal. In January 2022, the F.T.C. announced it would block Lockheed Martin’s $4.4 billion acquisition of Aerojet Rocketdyne Holdings, a missile propulsion systems maker. The companies dropped their merger.But judges rejected many of their efforts for lack of evidence and denied Ms. Khan and Mr. Kanter a courtroom win that would have set new precedent. In 2022, after the D.O.J. sued to block UnitedHealth Group’s acquisition of Change Healthcare, a judge ruled against the agency.Lina Khan, the chair of the Federal Trade Commission, challenged Microsoft’s deal for Activision last year. Tom Brenner for The New York TimesThe F.T.C.’s move to block Microsoft’s purchase of Activision last year was a bold effort by Ms. Khan, given that the two companies do not primarily compete with one another. The agency argued that Microsoft, which makes the Xbox gaming console, could harm consumers and competition by withholding Activision’s games from rival consoles and would also use the deal to dominate the young market for game streaming.To show that would not be the case, Microsoft offered to make one of Activision’s major game franchises, Call of Duty, available to other consoles for 10 years. The company also reached a settlement with the European Union, promising to make Activision titles available to competitors in the nascent market for game streaming, which allowed the deal to go through.In July, a federal judge ultimately ruled that the F.T.C. didn’t provide enough evidence that Microsoft intended to forestall competition through the deal and that the software giant’s concession eliminated competition concerns.The agencies are “facing judges who have said 40 years of economics show that vertical mergers are good,” said Nancy Rose, a professor of applied economics at M.I.T. with an expertise in antitrust, who is among a group of scholars who say vertical deals can be harmful to competition. She said the agencies should not back down from challenging vertical mergers, but that regulators would need to be careful to choose cases they can prove with an abundance of evidence.Ms. Khan and Mr. Kanter have said they are willing to take risks and lose lawsuits to expand the boundaries of the law and spark action in Congress to change antitrust rules. Ms. Khan has noted that the F.T.C. has successfully stopped more than a dozen mergers.Mr. Kanter has said that challenges to mergers from the Justice Department and the F.T.C. have deterred problematic deals.“There are fewer problematic mergers that are coming to us in the first place,” he said in a speech at the American Economic Liberties Project, a left-leaning think tank, in August.Still, bigger companies that have the resources to fight back will probably feel more confident challenging regulators after the Microsoft-Activision deal, antitrust lawyers said. The aggressive posture by regulators has simply become the cost of doing business, said Ryan Shores, who led tech antitrust investigations at the D.O.J. during the Trump administration and is now a partner at the law firm Cleary Gottlieb.“A lot of companies have come to the realization that if they have a deal they want to get through, they have to be prepared to litigate,” he said. More

  • 125 Shares199 Views

    in Economy

    Women Could Fill Truck Driver Jobs. Companies Won’t Let Them.

    by

    Three women filed a discrimination complaint against a trucking company over its same-sex training policy, which they say prevented them from being hired.The trucking industry has complained for years that there is a dire shortage of workers willing to drive big rigs. But some women say many trucking companies have made it effectively impossible for them to get those jobs.Trucking companies often refuse to hire women if the businesses do not have women available to train them. And because fewer than 5 percent of truck drivers in the United States are women, there are few female trainers to go around.The same-sex training policies are common across the industry, truckers and legal experts say, even though a federal judge ruled in 2014 that it was unlawful for a trucking company to require that female job candidates be paired only with female trainers.Ashli Streeter of Killeen, Texas, said she had borrowed $7,000 to attend a truck driving school and earn her commercial driving license in hopes of landing a job that would pay more than the warehouse work she had done. But she said Stevens Transport, a Dallas-based company, had told her that she couldn’t be hired because the business had no women to train her. Other trucking companies turned her down for the same reason.“I got licensed, and I clearly could drive,” Ms. Streeter said. “It was disheartening.”Ms. Streeter and two other women filed a complaint against Stevens Transport with the Equal Employment Opportunity Commission on Thursday, contending that the company’s same-sex training policy unfairly denied them driving jobs. The commission investigates allegations made against employers, and, if it determines a violation has occurred, it may bring its own lawsuit. The commission had brought the lawsuit that resulted in the 2014 federal court decision against similar policies at another trucking company, Prime.Critics of the industry said the persistence of same-sex training nearly a decade after that ruling, which did not set national legal precedent, was evidence that trucking companies had not done enough to hire women who could help solve their labor woes.“It’s frustrating to see that we have not evolved at all,” said Desiree Wood, a trucker who is the president and founder of Real Women in Trucking, a nonprofit.Ms. Wood’s group is joining the three women in their E.E.O.C. complaint against Stevens, which was filed by Peter Romer-Friedman, a labor lawyer in Washington, and the National Women’s Law Center.Companies that insist on using women to train female applicants generally do so because they want to avoid claims of sexual harassment. Trainers typically spend weeks alone with trainees on the road, where the two often have to sleep in the same cab.Critics of same-sex training acknowledge that sexual harassment is a problem, but they say trucking companies should address it with better vetting and anti-harassment programs. Employers could reduce the risk of harassment by paying for trainees to sleep in a hotel room, which some companies already do.Women made up 4.8 percent of the 1.37 million truck drivers in the United States in 2021, according to the most recent government statistics, up from 4 percent a decade earlier.Long-haul truck driving can be a demanding job. Drivers are away from home for days. Yet some women say they are attracted to it because it can pay around $50,000 a year, with experienced drivers making a lot more. Truck driving generally pays more than many other jobs that don’t require a college degree, including those in retail stores, warehouses or child care centers.Women made up 4.8 percent of truck drivers in 2021, according to the most recent government statistics.Mikayla Whitmore for The New York TimesThe infrastructure act of 2021 required the Federal Motor Carrier Safety Administration to set up an advisory board to support women pursuing trucking careers and identify practices that keep women out of the profession.Robin Hutcheson, the administrator of the agency, said requiring same-sex training would appear to be a barrier to entry. “If that is happening, that would be something that we would want to take a look at,” she said in an interview.Ms. Streeter, a mother of three, said she had applied to Stevens because it hired people straight out of trucking school. She told Stevens representatives that she was willing to be trained by a man, but to no avail.Bruce Dean, general counsel at Stevens, denied the allegations in the suit. “The fundamental premise in the charge — that Stevens Transport Inc. only allows women trainers to train women trainees — is false,” he said in a statement, adding that the company “has had a cross-gender training program, where both men and women trainers train female trainees, for decades.”Some legal experts said that, although same-sex training was ruled unlawful in only one federal court, trucking companies would struggle to defend such policies before other judges. Under federal employment discrimination law, employers can seek special legal exemptions to treat women differently from men, but courts have granted them very rarely.“Basically, what the law says is that a company needs to be able to walk and chew gum at the same time,” said Deborah Brake, a professor at the University of Pittsburgh who specializes in employment and gender law. “They need to be able to give women equal employment opportunities and prevent and remedy sexual harassment.”Ms. Streeter said she had made meager earnings from infrequent truck driving gigs while hoping to get a position at Stevens. Later this month, she will become a driver in the trucking fleet of a large retailer.Kim Howard, one of the other women who filed the E.E.O.C. complaint against Stevens, said she was attracted to truck driving by the prospect of a steady wage after working for decades as an actor in New York.“It was very much a blow,” she said of being rejected because of the training policy. “I honestly don’t know how I financially made it through.”Ms. Howard, who is now employed at another trucking company, said she had worked briefly at a company where she was trained by two men who treated her well. “It’s quite possible for a woman to be trained by a man, and a man to be a professional about what the job is,” she said.Other female drivers said they had been mistreated by male trainers who could be relentlessly dismissive and sometimes refused to teach them important skills, like reversing a truck with a large trailer attached.Rowan Kannard, a truck driver from Wisconsin who is not involved in the complaint against Stevens, said a male trainer had spent little time training her on a run to California in 2019.At a truck stop where she felt unsafe, Ms. Kannard said, the trainer demanded that she leave the cab — and then locked her out. She asked to stop the training and was flown back to Wisconsin. Yet she said she did not believe that same-sex training for women was necessary. “Some of these men that are training, they should probably go through a course.”Desiree Wood, the president of Real Women in Trucking, says the trucking industry has not evolved to hire and train more women.Mikayla Whitmore for The New York TimesMs. Wood, of Real Women in Trucking, said trucking companies’ training policies were misguided for another reason — there is no guarantee that a woman will treat another woman better than a male trainer. She said a female trainer had once hurled racist abuse at her and told her to drive dangerously.“I’m Mexican — she hated Mexicans and wanted to tell me all about it the whole time I was on the truck,” Ms. Wood said, “She screamed at me to speed in zones where it was not safe.”Still, some women support same-sex training policies.Ellen Voie, who founded the nonprofit Women in Trucking, said truck driving should be treated differently from other professions because trainers and trainees spent so much time together in close quarters.“I do not know of any other mode of transportation that confines men and women in an area that has sleeping quarters,” Ms. Voie said.Lawyers for Prime, the company that lost the E.E.O.C. suit in 2014 challenging its same-sex training policy, called Ms. Voie as an expert witness to defend the practice. In her testimony, she contended that women who were passed over by companies that didn’t have female trainers available could have found work at other trucking companies. She still believes that.But Ms. Voie added that trucking companies also needed to do more to improve training for women, including placing cameras in cabs to monitor bad behavior and paying for hotel rooms so trainers and trainees can sleep separately.Steve Rush, who recently sold his New Jersey trucking company, stopped using sleeper cabs over a decade ago, sending drivers to hotels. He said fewer of his drivers quit compared with the rest of the industry, as a result.“What woman in her right mind wants to go out and learn how to drive a truck and have to jump into the sleeper that some guy’s just crawled out of,” he said.Ben Casselman More

  • 175 Shares169 Views

    in Economy

    Crypto’s Wild D.C. Ride: From FTX at the Fed to a Scramble for Access

    by

    FTX’s demise and its leader’s upcoming trial haven’t stopped a major lobbying push by the industry this week, but the events have changed its tone.Cryptocurrency lobbyists were riding so high in early 2022 that an FTX executive felt comfortable directly emailing Jerome H. Powell, the chair of the Federal Reserve, to ask him to meet with Sam Bankman-Fried, the soon-to-be-disgraced founder of the cryptocurrency exchange.It worked.“The day that would work for me is February 1,” Mr. Powell replied to a Jan. 11 email from Mark Wetjen, an FTX policy official and former commissioner at the Commodity Futures Trading Commission.Mr. Powell’s public calendar shows that he and Mr. Bankman-Fried met as planned. And Mr. Wetjen went on to send the Fed chair two policy papers that FTX had recently published, according to emails obtained through a public records request. “Hope you’re finding these useful!” Mr. Wetjen wrote. “Great to have people like you serving our country.”Mr. Powell has long been cautious about the digital currency industry, but, like many in Washington, he was trying to learn more. FTX was eager to do the teaching. According to newly released records, Mr. Wetjen managed to gain access to a range of federal officials. The records show that Mr. Bankman-Fried secured a virtual meeting in October 2021 with another top Fed official, Lael Brainard, who is now the director of the White House National Economic Council. And public calendars show that Mr. Bankman-Fried went on to meet with another top financial regulator, Martin Gruenberg, head of the Federal Deposit Insurance Corporation.The crypto industry faces a more difficult landscape in Washington after last fall’s collapse of FTX. Mr. Bankman-Fried was arrested on fraud charges in December, and his trial is set to start on Tuesday. The industry has also faced a wide-ranging government crackdown that has sent some crypto entrepreneurs abroad in search of friendlier governments.The companies that have survived crypto’s downturn are still pouring millions of dollars into lobbying, but they are having a harder time gaining access to the halls of power. Some congressional offices have become reluctant to meet with industry representatives. Crypto lobbyists appear less frequently on the public calendars of key officials at the regulatory agencies, and companies have had to shift strategy, straining to distinguish themselves from FTX.“There are a bunch of people who’ve had trouble having meetings,” said Sheila Warren, who runs the Crypto Council for Innovation, an advocacy group. “I have heard from some offices that they will not meet with certain people anymore.”With Mr. Bankman-Fried’s trial approaching, the crypto industry is scrambling to change the subject from FTX.Stand With Crypto, a nonprofit backed by the giant digital currency exchange Coinbase, is planning to hold a “fly-in” on Wednesday, bringing in industry players from around the country to talk with lawmakers.“It has been quieter — and more circumspect, in some respects — but the push from the industry hasn’t abated,” said Mark Hays, who tracks cryptocurrency regulation at Americans for Financial Reform. “The crypto industry knows that its star has been tarnished on Capitol Hill, to some extent.”The mood in Congress was friendlier to the industry in early 2022, when FTX was at its zenith: Mr. Bankman-Fried had been positioned as a sort of wunderkind, eccentric and brilliant. But since its collapse, many lawmakers have argued that the industry should be overseen more strictly.“The tone has certainly changed among Democrats — they’re much more skeptical,” said Bart Naylor at Public Citizen, a government watchdog that has been tracking cryptocurrency lobbying.Regulators were more hesitant to embrace crypto firms even in 2022. It was unusual that FTX directly landed a meeting with the Fed chair.Read the emailsA selection of correspondence between FTX and the Federal Reserve, pulled from a series of Freedom of Information Requests submitted by The New York Times.Read DocumentMr. Powell’s only other listed private-sector meetings in February 2022 were with Jane Fraser, the chief executive of Citigroup; David Solomon from Goldman Sachs; Suzanne Clark from the U.S. Chamber of Commerce; James Gorman, the chief executive, and Tom Wipf, a vice chair, from Morgan Stanley; Jamie Dimon, the chief executive of JPMorgan Chase; the Business Council, a group of chief executives; and the head of Singapore’s sovereign wealth fund.Mr. Powell has met with other financial technology companies — he talked with a representative from the payment processor Stripe in March 2022, for example. But he has not listed similar meetings in 2023, based on his calendars released to date.At the meeting with Mr. Bankman-Fried, Mr. Powell and the FTX officials discussed stablecoins as well as central bank digital currencies, a form of electronic cash backed by the government, a person familiar with the matter said.Mr. Powell has met with other financial technology companies in the past. But he has not listed similar meetings in 2023, based on his calendars released to date.Kevin Dietsch/Getty ImagesMr. Wetjen knew many of the agency officials with whom he was setting up meetings from his previous policy role in Washington. He and Mr. Powell had worked on regulatory issues together while Mr. Powell was a Fed governor, for instance.Dennis Kelleher, the head of the regulatory watchdog Better Markets, said FTX had exercised an extensive web of influence in broader regulatory circles, partly through Mr. Wetjen’s connections.“This is the problem: These relationships, which are not visible to the public, pay dividends year after year after year once these guys swing through the revolving door,” Mr. Kelleher said. FTX also flooded Washington with money, which helped it gain a foothold in congressional offices and at think tanks, he and several lobbyists said.The Fed did not provide a comment for this article, nor did Mr. Wetjen. The White House had no comment on Ms. Brainard’s meeting with Mr. Bankman-Fried. An F.D.I.C. spokesman noted that chairs of the agency often held courtesy visits with financial firm leaders.Back in 2022, FTX was trying to shape how the Commodity Futures Trading Commission regulated it, as Mr. Wetjen made clear to Mr. Powell in one email from that May.“We have an application before the C.F.T.C. that lays out for the agency how to do so,” Mr. Wetjen wrote of regulating FTX. “All the C.F.T.C. has to do is approve it.”The Fed had little control over such matters, but Mr. Powell does sit on the Financial Stability Oversight Council, an interagency regulatory body that includes the director of the Commodity Futures Trading Commission.Mr. Wetjen continued: “To the extent the crypto industry comes up in discussions” at the Financial Stability Oversight Council, “we wanted you to have this context and our views at FTX.”The company clearly failed to make much headway with the Fed chair. Mr. Powell supported an October decision by the Financial Stability Oversight Council to further study the kind of setup that FTX and other trading platforms wanted for crypto asset exchanges, rather than greenlighting it.Now, FTX’s demise has only bolstered the arguments of regulators who wanted to approach crypto firms carefully. This year, the Securities and Exchange Commission has sued Coinbase and Binance, FTX’s two largest competitors, amid a broader government crackdown. With Mr. Bankman-Fried out of the picture, other financial technology companies are spending millions to make sure that the future of regulatory oversight favors them.Mr. Hays of Americans for Financial Reform said the industry was hardly being shunned in Washington, because “money talks.”“I still think they’re getting doors opened.” More

  • 88 Shares169 Views

    in Economy

    Meet the Man Making Big Banks Tremble

    by

    Michael Barr, whom President Biden appointed as the Federal Reserve’s top bank cop, has drawn blowback for his bank regulation push.Yelling at Michael Barr, the Federal Reserve’s top banking regulator, has never been particularly effective, his friends and co-workers will tell you. That hasn’t stopped America’s biggest banks, their lobbying groups and even his own colleagues, who have reacted to his proposal to tighten and expand oversight of the nation’s large lenders with a mix of incredulity and outrage.“There is no justification for significant increases in capital at the largest U.S. banks,” Kevin Fromer, the president of the Financial Services Forum, said in a statement after regulators released the draft rules spearheaded by Mr. Barr. The proposal would push up the amount of easy-access money that banks need to have at the ready, potentially cutting into their profits.Even before its release, rumors of what the draft contained triggered a lobbying blitz: Bank of America’s lobbyists and those affiliated with banks including BNP Paribas, HSBC and TD Bank descended on Capitol Hill. Lawmakers sent worried letters to the Fed and peppered its officials with questions about what the proposal would contain.The Bank Policy Institute, a trade group, recently rolled out a national ad campaign urging Americans to “demand answers” on the Fed’s new capital rules. On Tuesday, the organization and other trade groups appeared to lay the groundwork to sue over the proposal, arguing that the Fed violated the law by relying on analysis that was not made public.Some of Mr. Barr’s own colleagues have opposed the proposed changes: Two of the Fed’s seven governors, both Trump appointees, voted against them in a stark sign of discord at the consensus-oriented institution.“The costs of this proposal, if implemented in its current form, would be substantial,” Michelle Bowman, a Fed governor and an increasingly frequent critic of Mr. Barr’s, wrote in a statement.The reason for all of the drama is that the proposal — which the Fed released alongside two other banking agencies — would notably tighten the rules for both America’s largest banks and their slightly smaller counterparts.Michelle Bowman, a Fed governor, has become increasingly critical of Mr. Barr. Ann Saphir/ReutersIf adopted, it would mark both the completion of a process toward tighter bank oversight that started in the wake of the 2008 financial crisis and the beginning of the government’s regulatory response to a series of painful bank blowups this year.For the eight largest banks, the new proposal could raise capital requirements to about 14 percent on average, from about 12 percent now. And for banks with more than $100 billion in assets, it would strengthen oversight in a push that has been galvanized by the implosion of Silicon Valley Bank in March. Lenders of its size faced less oversight because they were not viewed as a huge risk to the banking system if they collapsed. The bank’s implosion required a sweeping government intervention, proving that theory wrong.Mr. Barr does not seem, at first glance, like someone who would be the main character in a regulatory knife fight.The Biden administration nominated him to his role, and Democrats tend to favor tighter financial rules — so he was always expected to be harder on banks than his predecessor, a Trump nominee. But the Fed’s vice chair for supervision, who was confirmed to his job in July 2022, has a knack for coming off as unobtrusive in public: He talks softly and has a habit of smiling as he speaks, even when challenged.If the proposal is adopted, it would mark both the completion of a process toward tighter bank oversight that started in the wake of the 2008 financial crisis and the beginning of the government’s regulatory response to a series of bank blowups earlier this year.Stephen Crowley/The New York TimesAnd Mr. Barr came into his job with a reputation — correct or not — for being somewhat moderate. As a top Treasury official, he helped design the Obama administration’s regulatory response to the 2008 financial crisis and then negotiated what would become the 2010 Dodd-Frank law.The changes that he and his colleagues won drastically ramped up bank oversight — but the Treasury Department, then led by Secretary Timothy Geithner, was often criticized by progressives for being too easy on Wall Street.That legacy has, at times, dogged Mr. Barr. He was in the running for a seat on the Fed’s Board of Governors in 2014, but progressive groups opposed him. When he was floated as the likely candidate to lead the Office of the Comptroller of the Currency in 2021, a similar chorus objected, with powerful Democrats including Senator Sherrod Brown, the chair of the Banking Committee, lining up behind another candidate.Mr. Barr’s chance to break back into Washington policy circles came when Sarah Bloom Raskin, a law professor nominated for vice chair for supervision at the Fed, was forced to drop out. In need of a new candidate, the Biden administration tapped Mr. Barr.Suddenly, the fact that he had just been accused of being too centrist to lead the Office of the Comptroller of the Currency was a boon. He needed a simple majority in the 100-seat Senate to pass, and received 66 votes.By then, the idea that he would have a mild touch had taken hold. Analysts predicted “targeted tweaks” to regulation on his watch. But banks and some lawmakers have found plenty of reasons to complain about him in the 14 months since.Wall Street knew that Mr. Barr would need to carry out the U.S. version of global rules developed by an international group called the Basel Committee on Banking Supervision. Banks initially expected the American version to look similar to, perhaps even gentler than, the international standard.But by early this year, rumors were swirling that Mr. Barr’s approach might be tougher. Then came the collapse this spring of Silicon Valley Bank and other regional lenders — whose rules had been loosened under the Trump administration. That seemed destined to result in even tighter rules.In one of his first acts as vice chair, Mr. Barr wrote a scathing internal review of what had happened, concluding that “regulatory standards for SVB were too low” and bluntly criticizing the Fed’s own oversight of the institution and its peers.Mr. Barr’s conclusions drew some pushback: Ms. Bowman said his review relied “on a limited number of unattributed source interviews” and “was the product of one board member, and was not reviewed by the other members of the board prior to its publication.”But that did little to stop the momentum toward more intense regulation.When Jerome H. Powell, the Fed chair, gave his regular testimony on the economy before Congress in June, at least six Republicans brought up the potential for tighter regulation, with several warning against going too far.After Silicon Valley Bank and other regional lenders collapsed this spring, Mr. Barr wrote a scathing internal review concluding that “regulatory standards for SVB were too low.” Jim Wilson/The New York TimesAnd when the proposal was finally released in July, it was clear why banks and their allies had worried. The details were meaningful. One tweak would make it harder for banks to game their assessments of their own operational risks — which include things like lawsuits. Both that and other measures would prod banks to hold more capital.The plan would also force large banks to treat some — mostly larger — residential mortgages as a riskier asset. That raised concerns not just from the banks but from progressive Democrats and fair housing groups, who worried that it could discourage lending to low-income areas. News of the measure came late in the process — surprising even some in the White House, according to people familiar with the matter.Representative Andy Barr, a Kentucky Republican, said that aspects of the proposal went beyond the international standard, which “caught a lot of people off guard,” and that the Fed had not provided a clear cost-benefit analysis.“Vice Chair Barr is using some of the bank failures as a pretext,” he said.The banks “feel like he’s being obstinate,” said Ian Katz, an analyst at Capital Alpha Partners, a research firm in Washington. “They feel like he’s the guy making the decisions, and there are not a lot of workarounds.”Andrew Cecere, the chief executive of U.S. Bancorp, said of Mr. Barr, “We may not agree on everything, but he tries to understand.”Andrew Harnik/Associated PressBut he does have fans. Andrew Cecere, the chief executive of U.S. Bancorp and a member of a Fed advisory council, said Mr. Barr was “quite collaborative” and “a good listener.”“We may not agree on everything, but he tries to understand,” Mr. Cecere said.The Fed did not provide a comment for this article.The question now is whether the proposal will change before it is final: Bankers have until Nov. 30 to offer suggestions for how to adjust it. Colleagues who worked with Mr. Barr the last time he was reshaping America’s bank regulations — in the wake of the 2008 financial collapse — suggested that he could be willing to negotiate but not when he viewed something as essential.Amias Gerety, a Treasury official during the Obama administration, joined him and other government policymakers for those discussions over consumer protection and big bank oversight. He watched Mr. Barr leave some ideas on the cutting-room floor (such as an online marketplace that would allow consumers to compare credit card terms), while fighting aggressively for others (such as a powerful structure for the then-nascent Consumer Financial Protection Bureau).When people disagreed with Mr. Barr, even loudly, he would politely listen — often before forging ahead with the plan he thought was best.“Sometimes to his detriment, Michael is who he is,” Mr. Gerety said. “He is very willing to sacrifice small-p interpersonal politics to achieve policy goals that he thinks are good for people.”Some tweaks to the current proposal are expected: The residential mortgage suggestion is getting a closer look, for instance. But several analysts said they expected the final rule to remain toothy.In the meantime, Mr. Barr appears to have shaken his reputation for mildness. Dean Baker, an economist at a progressive think tank who, in 2014, was quoted in a news article saying Mr. Barr could not “really be trusted to go after the industry,” said his view had shifted.“I definitely have had a better impression of him over the years,” Mr. Baker said. More