WASHINGTON BUREAU — Democrats are trying to round up the votes they need to get the H.R. 4173 financial services bill conference report through the Senate.
Financial pundits talked on television Friday as if getting the conference report through Congress was a done deal. But the death of Sen. Robert Byrd, D-W.Va., Monday has added a new twist, raising the possibility that Democrats might have difficulty getting H.R. 4173, the Dodd-Frank Wall Street Reform and Consumer Protection Act bill, through the Senate before the Independence Day recess begins Friday.
A key concern is the potential loss of support from Sen. Scott Brown, R-Mass., a moderate who voted for the bill when it passed the Senate in late May. Brown now appears to be backing off from the bill, in the wake of a decision by Democrats to add a tax on large financial services firms.
The tax was added about 3 a.m. Friday as delegates to the conference committee responsible for reconciling the House and Senate versions of the bill struggled to complete work on it. They finally finished at 5:49 a.m. Friday.
The tax, to be imposed on financial institutions with more than $50 billion in assets over the next 5 years, would help pay for the cost of implementing the legislation.
“I was surprised and extremely disappointed to hear that $19 billion in new assessments and fees were added in the wee hours of the morning by the conference committee,” Brown says in a statement about the provision. “While I’m still reviewing the bill’s details, these provisions were not in the Senate version of the bill which I previously supported. My fear is that these costs would be passed onto consumers in the form of higher bank, ATM and credit card fees and put a strain on lending at the worst possible time for our economy.”
Joseph Lieber, who covers Congress for Washington Analysis, Washington, a firm that advises institutional investors, says there is a good possibility that Democrats might have to wait until after the Independence Day recess to get a bill to President Obama.
Democratic Senate leaders will have to wait until Byrd’s funeral for West Virginia Gov. Joe Manchin, D, to appoint a successor.
Brown is not the only senator who voted for the bill who is now expressing doubts about the conference report, Lieber says.
Sen. Charles Grassley, R-Iowa, “is also voicing concerns,” Lieber says.
“If they can’t get Sen. Russ Feingold, D-Wis., and Sen. Maria Cantwell, D-Wash., to switch from their previous ‘no’ vote, there is also the possibility they could be forced to open up the conference to make changes,” Lieber says.
An insurance lobbyist says Democrats do not appear to be panicking about Byrd’s death.
“Ms. Cantwell opposes the bill because she doesn’t think it is strong enough, but she won’t let it fail on the Senate floor,” the lobbyist says.
Regan Lachapelle, a spokesman for Senate Majority Leader Harry Reid, D-Nev., says the Senate will await action by the House. “But it is still possible that we will consider the conference report this week,” Lachapelle says.
Jeffrey Schuman, a securities analyst with Keefe, Bruyette and Woods Inc., New York, discounted the impact of the financial institutions tax added Friday.
He says in an investor’s note that the tax will be imposed on all financial companies with more than $50 billion in assets, including insurers, as well as hedge funds with more than $10 billion in at-risk assets.
He says the assessment would start no later than late 2012 and would be spread over 4 years. “Exact details of the calculation methodology are currently unknown, but it appears assets will be risk-weighted based on several factors,” he says.
He assumes a tax equal to roughly 0.04% of affected assets per year and sees the tax having a “modest impact” on insurer earnings.