Business

How Biden Is Seeking to Reshape Business via the CHIPS Act


When the bipartisan CHIPS Act passed last year to provide $52 billion to promote chip-building in America, trade experts hailed it as the most significant investment in industrial policy in a half-century.

But new disclosures about what companies must do to get the CHIPS money — including guaranteeing child care for workers and refraining from stock buybacks — show that the Biden administration is also keen on using federal dollars to reshape corporate America.

The CHIPS Act is increasingly about more than, well, chips. To be sure, the law is meant to revive America’s semiconductor industry by funding research and manufacturing in the U.S., reducing a reliance on foreign production for critical tech components. It’s also been described as a national security measure. (It’s worth noting that lawmakers from both parties have already questioned whether the already-profitable chip industry needs such funding.)

But there are strings attached to the money:

  • Those seeking $150 million or more must guarantee affordable, high-quality child care for plant workers. (Some of the federal subsidies can go toward meeting the requirement.) Commerce Secretary Gina Raimondo said this was a way to ensure women can stay in the work force.

  • Companies also need to share part of any unanticipated profits with the U.S., a move that federal officials said was meant to ensure accurate financial projections.

  • Preference for funding will go to companies that promise not to buy back stock. The requirement is rooted in growing Democratic opposition to a financial maneuver that critics say diverts money to Wall Street investors when it could be reinvested in the company.

It’s perhaps the White House’s broadest effort yet to use policy to influence business. While the U.S. government has attached conditions to federal funding in the past — the Biden administration already imposed tougher labor standards and “Buy American” provisions on the Inflation Reduction Act — this goes further.

Altria reportedly plans to abandon its failed bet on Juul. The tobacco giant is in talks to buy NJOY, a vaping start-up, for nearly $3 billion, according to The Wall Street Journal. More notably, Altria is said to be weighing the sale of its 35 percent stake in Juul, which it bought for $12.8 billion; it now values the entirety of the embattled vaping company at just $714 million.

The Supreme Court has agreed to hear a case that could determine the future and the past of the Consumer Financial Protection Bureau — and may even provide a legal road map for limiting the power of independent government agencies.

The watchdog’s many (mostly Republican) critics and its long list of targets — including Wells Fargo, which was hit with a $3.7 billion C.F.P.B. fine in December — will be following closely.

The dispute centers on the C.F.P.B.’s funding. Trade groups representing payday lenders have challenged the bureau’s constitutional authority. They argue that the agency gets money from the Fed, not Congress, a violation of the Constitution’s Appropriations Clause, as the funding is not part of the annual congressional budget process. Three judges on the Fifth Circuit Court of Appeals concurred.


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The White House disagreed and sought Supreme Court review. Senator Elizabeth Warren, Democrat of Massachusetts, who championed the agency’s formation in the wake of the global financial crisis, has also urged the Supreme Court to strike down the lower court’s decision.

A loss for the C.F.P.B. could harm other regulators. An agency spokeswoman said that its funding is constitutionally sound, and that it forms “a vital part of the nation’s financial regulatory system.” But if justices uphold the lower court’s ruling, it could lead to legal challenges to other agencies’ oversight powers. John Coleman, a partner at the law firm Orrick in Washington and a former C.F.P.B. staffer, said it could also “hobble the agency, call into question the validity of its past actions and throw its fate to a divided Congress.” Similar arguments about Appropriations Clause violations could be used as a cudgel against other regulators, like the Fed, experts say.

Rupert Murdoch, acknowledging in a deposition that several Fox News hosts promoted the false narrative, pushed by Donald Trump, that the 2020 election was stolen. Experts said the admission bolstered the defamation lawsuit filed by Dominion Voting Systems against the network.


It might seem like bad timing to launch a blockchain-based start-up right now, given public skepticism of crypto-adjacent companies. But Really, a company that promises to marry blockchain with a new cellphone network, is pushing ahead. (Other telecom start-ups are using blockchain as well, including Pollen Mobile and Helium, but the market remains small for now.)

DealBook is first to report that Really has raised an $18 million seed round, one of the largest by a U.S. telecom, to create a decentralized wireless provider, rolling out first in Austin, Tex. Backers include the venture firm Polychain and Mike Maples Jr., a founding partner of Floodgate Fund.

It wasn’t originally about blockchain. Adam Lyons, Really’s founder, first came up with a wireless provider comparison site, similar to what his previous company, The Zebra, which was backed by Mark Cuban, had done for insurance. But starting early last year, he and his team got more ambitious. (The comparison site will initially be Really’s biggest source of revenue.)

How it works:

  • Really is built on a network of small wireless towers. The towers, mounted on the roof or balcony of a user’s home or business, draw on the owner’s internet connection to provide service. Regular users would get mobile service starting at $7 a month.

  • Really uses blockchain software to monitor network coverage and process what tower owners should be paid.

  • Really will help certain tower owners, including schools, hospitals and nonprofits, with blockchain access and subsidies for internet service. “With decentralized wireless, the idea is that the community itself can create cell coverage,” Mr. Lyons told DealBook.

There’s still plenty to be worked out. Tower owners will initially get paid in tokens created by Really, meaning the company will have to navigate U.S. securities rules, as the S.E.C. is increasingly finding that most tokens are securities. (The plan is for owners to eventually be paid in dollars.) Mr. Lyons said the company was consulting with legal counsel to ensure it complies with telecommunications and securities rules.



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