Senate Financial Regulatory Reform Bill
On Thursday, Senate Banking Committee Chairman Chris Dodd (D-CT) announced he was ending negotiations with Senate Banking Committee Republicans Bob Corker (R-TN) and Richard Shelby (R-AL) and moving forward with releasing his draft bill the week of March 15 with a likely markup in the Committee the week of March 22. Corker responded by announcing that he was disappointed that Dodd had ended negotiations but that he would continue to work towards a bipartisan bill.
The move by Dodd to abandon bipartisan negotiations was caused by the increasing pressure from Committee Democrats and House Financial Services Committee Chairman Barney Frank (D-MA) to move a bill with stronger consumer protections than what Republicans would agree to during the bipartisan negotiations. A sign of the increasing pressure on Dodd by fellow Democrats was seen on Thursday when Sens. Jeff Merkley (D-OR) and Carl Levin (D-MI) announced they would be introducing legislation that would expand the proposed Volcker Rule to limit propriety trading and other risk-taking activities to include nonbank financial institutions. Dodd has till this point been resistant to including the Volker provisions in the legislation.
While the compromise between Dodd and Corker to house the new consumer protection agency in the Federal Reserve seems to have remained intact, Dodd has now acknowledged that the biggest outstanding issues remain how to regulate over-the counter “OTC” derivatives and how to finance the new “resolution” authority. Senate Majority Leader Harry Reid (D-NV) said Thursday that the Senate would pass the financial reform bill before its Memorial Day recess, which is scheduled to begin May 31.
Senate Passes Tax Bill
On Wednesday, the Senate passed the American Workers, State and Business Relief Act which extends unemployment insurance benefits and eligibility for the 65 percent COBRA health care tax credit during Dec. 31, 2010. The legislation retroactively extends tax cuts for middle-class families and businesses that expired at the end of 2009. The bill also provides relief for pension plans by allowing companies to amortize their obligations over a longer time period and prevents a reduction in the federal poverty level from taking effect through 2010. The scheduled reduction is caused by a decrease in the average cost of goods resulting from the economic downturn. It allows families to continue to qualify for programs such as stamps, Medicaid and home-heating assistance. Likewise, the legislation allows individuals living below the poverty level to continue to disregard refundable tax credits and refunds as part of their income for 12 months after receipt.
The bill also extends tax cuts for research and development, allows restaurant owners and retail stores to depreciate improvements over 15 years rather than 39.5 years, extends tax credits for small businesses that continue to pay employees who have been called to active duty in the military, extends tax credits biodiesel and renewable energy, extends tax credits for teachers who buy classroom supplies, creates tax credits for home energy efficiency improvements, and allows taxpayers to continue to deduct state sales tax on their federal tax returns.
The bill also extends the increased federal assistance for state Medicaid programs, made available through the American Recovery and Reinvestment Act, for six months. In addition, the legislation continues funding for loan programs for small businesses, extending funding to reduce or eliminate fees under the Small Business Administration’s 7(a) loan guarantee program and the 504 loan program through the end of this year. In addition, the legislation reverses a scheduled 21 percent payment cut for doctors who provide services through Medicare and Tricare. The legislation also extends several other Medicare protections, including the exceptions process for Medicare beneficiaries who exceed their cap on therapy services and provisions affecting doctors and other health care providers who serve rural communities.
The Senate passed the bill by a 62-36 margin, but getting a final bill to President Obama’s desk might prove more difficult. New Ways and Means Chairman Sander Levin (D-MI) said Tuesday he “wouldn’t be surprised” if the House forced a conference committee on the extenders bill to iron out the significant revenue issues.