At Pershing Insite, a Plea for BDs to Scrutinize Reps’ Outside Dealings

In a separate breakout session on Thursday at Insite, Ann Costello, the head of government affairs for Pershing’s parent, BNY Mellon, looked at what Congress, President Obama and the two political parties will be focusing on this summer and following the election.

“Don’t expect much action” from Congress before the presidential election in terms of legislation or even regulation in Washington, she predicted, but do expect “mostly messaging” from congressional leadership designed to help the two parties’ presidential candidates. GOP leadership will put forward proposals on the economy, taxes and energy projects, she predicted, and to “put it on the record” that the party would extend the Bush-era tax cuts. Democratic leadership in Congress will in turn likely put forward legislation to enact the so-called “Buffett tax” on millionaires, as the Oracle of Omaha has suggested to help cut the deficit. As for the election, she said it was “up in the air” whether Republicans would gain a majority in the Senate, but she thought it unlikely that the GOP would gain a supermajority in the upper house, which would make it likely that Americans would continue to see a split government for at least the next two years beginning in 2013.

She also said that the presidential election was too close to call, but if Obama wins re-election, we can expect regulators in the SEC and the Labor Department to be “unleashed,” while if Romney wins, the directors of those agencies will be out of a job, with the result that regulators will be “able to exercise more discretion.”

Turning to what likely will be an important lame-duck session of Congress following the November election, the former Goldman Sachs lobbyist said the biggest threat was that the mandatory sequestration cuts scheduled to kick in on Jan. 1, 2013 might well lead to a recession, since (failing Congressional action on the budget) all those spending cuts and tax increases would take place in one year, dealing a blow to the economy. As for the Bush-era tax cuts, she said there may well be a bipartisan compromise that would include higher rates on the “wealthy,” with a specific definition of what constitutes wealthy to be determined. The compromise would likely include higher taxes on dividend (at some level between the current 15% rate and 30%) and that capital gains taxes would be allowed to rise, but that there would be much talk about a longer-term fix by “reforming the tax code.”