FinReg Conference Committee Reconvenes to Drop Bank Tax
In the next half hour, the conference committee to merge the House and Senate versions of financial regulatory reform will reconvene in an attempt to placate
Jul 31, 2020147.6K Shares2.2M Views
In the next half hour, the conference committee to merge the House and Senate versions of financial regulatory reform will reconvene in an attempt to placate Sen. Scott Brown (R-Mass.). Brown had initially supported the Senate version of the bill, but dropped his support of the conference committee report because it included a $19 billion tax on big banks and hedge funds, included by Rep. Barney Frank (D-Mass.) to make the bill deficit-neutral and to charge banks for the cost of implementation.
It seems likely that the conference committee will leave the bill untouched, save for the $19 billion tax. To ensure the bill does not impact the deficit, House and Senate Democrats have reportedly agreed to end one part of the $700 billion Troubled Asset Relief Program — the Treasury Department program to aid banks and ease the credit crunch — early. Here’s CNBC on the probable compromise:
“„The conferees will propose ending the Treasury Department’s authority to require banks to accept additional TARP funds. While this authority would sunset over time rather than end immediately, budget rules say that this would result in a savings of something like $10 billion to $11 billion.
“„Additional FDIC premiums also are being considered to bring in $3.5 billion, bringing the total closer to the $19 billion the lawmakers sought to raise with the bank tax. The Republicans are expected to accept this deal. The biggest banks would be subject to the higher FDIC fees, but not hedge funds, since they are not part of the FDIC system. On the other hand, smaller banks — exempted from the fee under the current bill — that operate under the FDIC system would likely find themselves footing the bill.
Rather than charging the hedge funds and big banks considered most responsible for the financial crisis a reasonable fee for implementation, the conference committee will settle for ending a government stability program and spreading the pain around to all federally insured banks — including small community-focused banks — to satisfy the demands of one Republican. So it goes in Washington.
Paolo Reyna
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Paolo Reyna is a writer and storyteller with a wide range of interests. He graduated from New York University with a Bachelor of Arts in Journalism and Media Studies.
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