Yesterday evening, the conference committee to combine the Senate and House versions of financial regulatory reform reconvened. The committee dropped a $19 billion tax on big banks and hedge funds, inserted by Rep. Barney Frank (D-Mass.) to make the bill deficit-neutral and to charge the companies most responsible for the financial crisis with the cost of implementation. The reason for the last-minute change? Sen. Scott Brown (R-Mass.) refused to vote for the bill, as he had for the Senate version, because of the addition of what he considered a new tax.
In the conference committee, House and Senate legislators from both parties seemed less than amused to be there again, with Rep. Shelley Moore Capito (R-W.Va.), for instance, noting that she did not feel she had had enough time to examine the measure. (All in all, the meeting took about two hours.)
[The] cost will mostly be paid for with unspent bank bailout funds and a few billion dollars obtained through bigger bank assessments by the FDIC. In other words, taxpayers will bear the cost.
Conference reconvened due to the protests from centrists Republicans in the Senate who didn’t like the idea of taxing the big banks and hedge funds. Instead, taxpayers will pay for the regulation, since any TARP money unspent was supposed to go towards paying down the deficit. Those billions of dollars that would have been wiped out of the deficit will now have to come from the American people. Any money from higher bank assessments will ultimately cost consumers too, since banks will just pass on the expense to them through higher fees ….
They decided to lighten the load on big banks, some of which will now just have to pay slightly higher assessments. Meanwhile, investment banks — like Goldman Sachs — will virtually escape the expense entirely, since they have few deposits. Hedge funds avoid the cost completely.
And today, Brown issued a statement saying he still has not committed to voting for the bill — which will now get a vote after the July 4 recess next week.
I appreciate the conference committee revisiting the Wall Street reform bill and removing the $19 billion bank tax. Over the July recess, I will continue to review this important bill. I remain committed to putting in place safeguards to prevent another financial meltdown, ensure that consumers are protected, and that this bill is paid for without new taxes.
But given the lengths the conference committee went to to please Brown, the bill is now likely to pass, with Brown’s support and possibly the vote of Sen. Robert Byrd’s (D-W.Va.) replacement.
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