NU Online News Service, June 28, 4:00 p.m. EDT

The death of Sen. Robert Byrd, D-W.Va., early Monday has raised the possibility that Democrats might have difficulty in getting the financial services reform legislation through the Senate before the Independence Day recess.

A key concern is the potential loss of Sen. Scott Brown, R-Mass., a moderate who supported the bill when it passed the Senate in late May but appeared to be backing off after Democrats added a small tax to be levied against large financial services firms to pay for the bill.

Joseph Lieber, who covers Congress for Washington Analysis, a firm which advises institutional investors, said, "There is a good possibility that they might have to wait until after the July 4th recess to get this done."

First, he said, the Democratic Senate leadership has to wait until after Sen. Byrd's funeral for West Virginia Gov. Joe Manchin, a Democrat, to appoint a successor.

Moreover, Sen. Brown is wavering in his support for the bill, and Sen. Charles Grassley, R-Iowa, "is also voicing concerns," Mr. Lieber said.

"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," Mr. Lieber said.

At the same time, an insurance lobbyist said, "There appeared to be no panic by Democrats over the death of Sen. Byrd. [Sen. Cantwell] opposes the bill because she doesn't think it is strong enough, but she won't let it fail on the Senate floor."

And Regan Lachapelle, deputy communications director for Sen. Harry Reid, D-Nev., Senate majority leader, said, "We will await action by the House, but it is still possible that we will consider the conference report this week."

Sen. Brown issued a statement Friday voicing concern about a last-minute decision of conferees to the bill to add a provision that imposed a tax on financial institutions, including insurers, with assets of more than $50 billion over the next five years in order to pay for the $19 billion the Congressional Budget Office estimated the legislation would cost.

"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," Sen. Brown said.

"While I'm still reviewing the bill's details, these provisions were not in the Senate version of the bill which I previously supported," he added.

"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," Sen. Brown said.

But Jeffrey Schuman, an analyst with Keefe, Bruyette and Woods, in Hartford, discounted the impact of the tax.

He said the assessment will start no later than late 2012 and will be spread over four years. He said that assuming a tax of roughly 4 basis points a year, he sees a "modest impact" on earnings for insurance companies.

Special Reports /

Sen. Byrd's Death Could Delay Fin. Svcs. Reform Bill

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