Congress Reaches Year-End Goal

Congress made a mad dash at year-end 2009 to achieve two of its top goals: passing healthcare and financial services reform legislation. As we enter 2010, on healthcare we have at hand the Affordable Health Care for America Act (H.R. 3962), which the House passed November 8, and the Patient Protection and Affordable Care Act, which at press time the Senate was still debating but was expected to have approved by December 23.

The full House also approved December 11 by a vote of 223 to 202 its sweeping financial services reform bill, the Wall Street Reform and Consumer Protection Act (H.R. 4173). Senator Christopher Dodd (D-Connecticut), who’s also been embroiled in healthcare reform, has moved slower in securing passage in the Senate of his financial services reform bill, the Restoring American Financial Stability Act, with Washington insiders projecting that passage of the bill won’t come until early this year.

Dodd and his committee began marking up the Restoring American Financial Stability Act on November 19, but Dodd halted work on the bill after opposition from ranking minority member Richard Shelby (R-Alabama). Dodd has now asked key members of his committee to break off into bipartisan working groups to break the logjam on the financial reform legislation. Dodd has paired up with Shelby to tackle two of the most controversial elements of the bill’s discussion draft–prudential regulation of banks and consumer protection. The final form of Dodd’s reform bill is “still undetermined,” since Dodd has farmed out pieces of the bill to those groups of senators to revise, notes Mary Jane Wilson-Bilik, a partner at the law firm of Sutherland in Washington.

While passage of a final healthcare reform bill looks “increasingly unlikely” in 2009, “it is likely the Senate will pass its own healthcare reform bill by the end” of 2009, said John Savercool, UBS Wealth Management’s chief lobbyist in Washington, in UBS Wealth Management Research’s 2010 Outlook in mid-December. “This will set up a process for House and Senate leaders to reconcile their separate bills, vote on that final version, and send the legislation to President Obama for his signature early next year.” Democrats have been very anxious to complete action on healthcare, Savercool says, “so they can move on to addressing legislation about [creating] jobs and [reducing] high unemployment rate, which public polls suggest are the most important priorities for voters at this time.”

The House financial services reform bill includes reforms such as creating the Consumer Financial Protection Agency (CFPA) and Federal Insurance Office, granting broad new government powers over large financial institutions that pose a systemic risk, tighter controls of the capital markets, as well as derivatives reform, mortgage reform, and new oversight of credit ratings agencies. Savercool predicts that Congress will pass “comprehensive financial services regulatory reform legislation” by the end of the first quarter. But it is the creation of the CFPA that “will continue to generate the most debate and face fierce resistance in the Senate.”