ICANN only knows it has to get by the MoU deadliine this fall. The only things the USG are concerned about are maintaining US control of the root, giving preference to US businesses (read big businesses, they're the ones with the campaign donations), and guarding intellectual property interests (again particularily US IP, the US is apparently responsible for over 40% of the world's creative output, I suppose if you allow them to count TV reruns like Hogan's Heroes and Gilligan's Island at 5% each they might have a case).|
How does letting the registrars run amok hurt ICANN's cause? It does nothing to lessen US control of the root, it rewards the bigger existing registrars and registries (mostly US based, particularily VeriSign), it protects IP to an absurd extent beyond US law (or that of any other country SFAIK, although its long arm reaches there), and it cons speculators (many of them not in the US) into giving up money they might otherwise use to register a possibly IP infringing name, into instead buying thin air. Looks like a win-win for ICANN and the USG so far.
Admittedly some of the more shady registrars have gone a bit overboard and could cause a minor blip on the radar, but, as in the present case, some of the worst actors aren't US based, which allows the US to point at them as evidence for why they must maintain control, and to show that other 60% of creative output is inferior. -g