Senate Passes Small Business Tax Credits Bill
On Thursday, the Senate passed a long-stalled small business tax credit measure, 61-38, with all fifty-nine Democrats and two Republicans, George Voinovich (Ohio) and George LeMieux (Fla.), voting for the bill. The bill will extend a number of tax provisions, including liberalized and expanded expensing for 2010 and 2011, revived bonus depreciation for 2010, a five-year carryback of unused general business credits for eligible small businesses, removal of cell phones from the listed property category, and liberalized Code Sec. 6707A penalty rules. The bill now heads back to the House where it is expected to pass and then be signed into law by the President.
Warren Appointed as Special Adviser to the Bureau of Consumer Financial Protection
On Friday, President Barack Obama formally appointed Elizabeth Warren as a “Special Adviser” to temporarily lead the new Bureau of Consumer Financial Protection. In her interim post, which will eventually be filled by a permanent chief, Warren will oversee all aspects of the Bureau’s creation, including staff recruitment and immediate decisions about the Agency. While many Congressional Democrats praised the appointment, Senator Chris Dodd (D-CT), who sponsored the financial reform bill which created the Bureau, said that Warren was too liberal to win Senate approval for the job on a permanent basis and therefore only the interim post was possible.
Basel Committee Passes New Global Bank Capital Standards
As expected, last Sunday the Basel Committee passed new rules ordering banks to raise their minimum core tier one capital from 2 percent to 7 percent of their risk weighted assets by 2019 or face restrictions on pay and bonuses. This new protocol more than tripled the old requirement of 2 percent to force banks to hold more top quality capital against potential losses. Banks will also be required to subtract items such as goodwill, some tax credits and minority investments from equity and retained earnings.
Geithner Testifies on Chinese Currency Policy
On Thursday, Treasury Secretary Timothy Geithner testified before the Senate Banking Committee and the House Ways and Means Committee on China’s trade and currency policies. During his testimony, lawmakers demanded a crackdown on Beijing’s policies, and Geithner vowed to push China on trade and currency reforms. Geithner said the United States would use a Group of 20 Summit in November to mobilize trading partners to pressure Beijing to allow the Yuan to rise. Lawmakers are weighing new legislation to punish China for practices they say keep the Yuan artificially low. The consensus in Congress seems stronger than ever for new rules targeting China, but the tight legislative calendar leaves little time to pass a bill in the coming weeks. Geithner said the Obama administration has not endorsed the current House bill that would slap duties on goods from countries with “fundamentally misaligned” currencies.
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