Fin. Svcs. Conferees Reconvene To Address Tax Disputes

NU Online News Service, June 29, 3:45 p.m. EDT

WASHINGTON–Negotiators on financial services reform legislation reopened the conference this afternoon to remove a $19 billion bank tax that potentially imperiled Senate passage this week.

They acted after Sen. Scott Brown, R-Mass., sent a letter to Sen. Chris Dodd, D-Conn., and Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, withdrawing his support for the bill because of the bank tax.

The tax would be assessed to 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.

Jeff Schuman, a life analyst at Keefe Bruyette Woods in Hartford, discounted the impact of the tax and calculated the cost of the levies to the nine large life insurers he covered would be 1-to-2 percent of their net earnings.

The House Rules Committee was scheduled to meet at 3 p.m. today to clear the bill for House action, probably Wednesday.

And the Senate wants to vote Wednesday as well because it plans to take off Thursday and Friday to honor Sen. Robert Byrd, D-W. Va., who died early Monday.

According to various sources, Sen. Dodd and Rep. Frank, who chair the conference, are proposing to replace the tax with an increase in FDIC levies plus adding a provision that ends the Troubled Asset Relief Program earlier than its scheduled Oct. 3 termination date.

Sen. Dodd was quoted by various sources as saying he was talking to senators to see what needs to be done to get the 60 votes."

Various sources quoted Rep. Frank as saying: "I don't have any doubt that he's going to get it. The question is what has to be done. We're going to wait until he tells us, and then we'll move forward."

Democrats need at least four Republicans to vote for the bill because the death of Sen. 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.–plan to vote "no" on the bill because they don't think it goes far enough in preventing a similar economic crisis.

As a result, Democrats were counting on Sen. Brown, Sen. Charles Grassley, R-Iowa, and Sens. Olympia Snowe and Susan Collins, both R-Maine, to vote for the bill.

Sen. Byrd's casket will lie in repose on the Senate floor between 10 a.m. and 4 p.m. Thursday, a senior Senate aide said Tuesday. It will be the first ceremony of its kind in 51 years. A funeral service will be held in West Virginia on Friday beginning at 11 a.m.