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Financial Planning > Tax Planning

Brown Talks, Democrats Listen

By Arthur D. Postal

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WASHINGTON BUREAU — The congressional delegates responsible for reconciling the House and Senate versions of the H.R. 4173 financial services bill today went back to work to try to remove a bank tax provision.

Negotiators acted after Sen. Scott Brown, R-Mass., told Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking, Housing and Urban Affairs Committee, and Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, he was withdrawing his support for the bill because of the bank tax.

Negotiators were meeting this afternoon because the House Rules Committee was scheduled to meet at 3 p.m. today to clear the bill for House action. A vote could take place Wednesday.

Senate leaders also want to have the Senate vote Wednesday, so senators can take off Thursday and Friday to honor Sen. Robert Byrd, D-W. Va., who died Monday.

Byrd’s casket will lie in repose on the Senate floor from 10 a.m. to 4 p.m. Thursday, a senior Senate aide said Tuesday. The ceremony will be the first of its kind to take place in the U.S. Capitol in 51 years. A funeral service will be held at 11 a.m. Friday in West Virginia.

Members of the conference committee that came up with a compromise version of H.R. 4173 planned to pay for some of the cost of implementing the bill by imposing a tax on banks, insurers, hedge funds and other financial companies with more than $50 billion in assets.

Jeff Schuman, a life analyst in the Hartford office of Keefe Bruyette Woods Inc., says the total cost of the tax would amount to just 1% to 2% of net earnings at 9 large life insurers he covers.

Dodd and Frank, who chair the conference conference committee, are proposing to replace the financial institutions tax by increasing Federal Deposit Insurance Corp. levies, and adding a provision that would end the Troubled Asset Relief Program earlier than its scheduled Oct. 3 termination date.

Dodd has talked about talking to senators to see what needs to be done to get the 60 votes, and Frank has said he thinks Dodd will succeed.

“I don’t have any doubt that he’s going to get it,” Frank said, according to published reports. “The question is what has to be done. We’re going to wait until he tells us and then we’ll move forward.”

Revenue is needed to keep H.R. 4173 “deficit-neutral.” Congressional Budget Office have estimated implementing the bill will cost $19 billion over 5 years.

Democrats need at least 4 Republicans to vote for the bill because the death of Byrd left them with only 56 of the 60 votes needed for passage.

Two Democrats, Sen. Maria Cantwell, D-Wash., and Sen. Russ Feingold, D-Wis., have said they plan to vote “no” on the bill because they don’t think it goes far enough to prevent an economic crisis similar to the one that hit in 2008.

Democrats have been counting on Brown, Sen. Charles Grassley, R-Iowa; and Sens Olympia Snowe and Susan Collins, both Maine Republicans, to vote for the bill.

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