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Obama’s Former Ebola Czar Is Now Concerned About Too Much Government

Chuck Ross Investigative Reporter
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A month after leaving his post as President Obama’s Ebola czar, longtime Democratic operative Ron Klain has penned a column warning that federal regulations will create roadblocks in several emerging technology industries.

Klain, who the White House brought on in October to manage the Ebola crisis, wrote in a column at Tech Crunch on Sunday that venture capitalists can expect to face more federal red-tape over the final 20 months of Obama’s term.

“Recent developments in Washington, especially the Obama administration’s greater desire to flex its regulatory muscles in several key areas, mean that some booming startups will have to navigate new governmental hurdles in Washington, D.C,” Klain wrote.

“The most visible conflicts between startups and the government in the next two years will be in the nation’s capital, not in city halls or state houses.”

Though Klain’s column strikes a diplomatic, inside-the-Beltway tone, the former Al Gore and Joe Biden aide gave strong indications that he thinks federal regulations will pose more of a hindrance than a boon in the realms of commercial drones, financial technology, medical devices/genetic testing and privacy/cybersecurity.

Klain left his Ebola czar post last month, as expected, and re-joined the tech venture capitalist firm Revolution LLC as general counsel. As Klain disclosed in his column, Revolution LLC invests in some of the industries he fears will suffer from onerous regulation.

On drones, Klain asserted that while the general public views them as tools of war, they will have far-reaching benefits in the commercial realm, including agriculture, shipping and commerce.

He wrote that despite a recent Obama administration proposal to liberalize regulations of their use, commercial drone prohibitions “remain restrictive and fail to permit many innovative applications of drones.”

“As with many other technologies, if regulators limit their use in a country, innovators are likely to take their manufacturing facilities elsewhere,” Klain cautioned.

Venture capitalists will also face regulatory roadblocks in financial technology, Klain claimed.

Those investors can expect to “see scrutiny from some of the most well-respected regulators in the Obama administration,” Klain wrote. He identified Security Exchange Commission director Mary Jo White and Consumer Financial Protection Bureau director Rich Cordray as the most aggressive regulators.

The SEC has delayed issuing rules concerning fundraising through crowdsourcing, much to the consternation of venture capitalists.

CFPB, which was created as part of the Dodd-Frank Act to reform Wall Street, has already set its sights on online payday lenders and prepaid credit card service providers.

Those “fintech firms that offer services similar to these may find themselves in the regulators’ focus before too long” Klain wrote.

The “festering conflict” between genetic testing and medical devices companies and the federal government will reach new levels with the departure of Food and Drug Administration commissioner Peggy Hamburg, Klain predicted.

The likelihood of a protracted nomination process for a Hamburg replacement “will likely mean inaction at the agency and less progress toward innovative approaches.”

The one realm in which investors may be the beneficiary of federal oversight is privacy and cybersecurity, according to Klain.

“Any firm that takes this lightly will find itself on the wrong end of a sharp action by the administration – and if Congress does not pick up the pace, it too will pay a political price,” he wrote.

Though he was brought on to handle the Ebola crisis and served as Vice President Joe Biden’s chief of staff, Klain is certainly no liberal Democrat in the mold of Obama. After leaving the Clinton White House and working on Gore’s 2000 presidential campaign, Klain worked as a lobbyist for medical companies and education lender Fannie Mae.

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