–Senate Banking To Hear From Bernanke, Bair, Gensler, Wolin On Reg Law
–Congress Expected To Pass Stop-Gap Spending Bill This Week
–Hill Expected To Exchange Jabs On Tax Cut, But No Votes Expected
–Congress Hopes To Conclude Pre-Election Session This Week

By John Shaw

WASHINGTON (MNI) – As Congress prepares to leave Washington by the
end of the week for full-time work on the campaign trail, lawmakers are
expected to pass a stop-gap spending bill to fund the government until
mid-November and continue to exchange rhetorical jabs over the fate of
the expiring Bush era tax cuts.

Before the week ends, the House is expected to pass a scaled-back
currency bill, designed to send signals to both the Chinese government
that Congress is angry and to their recession-weary constituents that
they are trying to do something to fix the economy.

The House will take up Wednesday a bill that was approved by the
House Ways and Means last week.

The bill before the House would clarify current law to allow the
Commerce Department to impose countervailing duties on Chinese goods to
offset the effect of the country’s currency policies.

According to the author of the revised bill, Ways and Means
Committee Chairman Sander Levin, the legislation would allow
countervailing duties to be available to any U.S. industry that could
demonstrate it has been ‘materially injured’ by imports from the country
with the undervalued currency.

Levin said the bill is “fully consistent” with World Trade
Organization rules.

He said that WTO rules allow for the application of countervailing
duties to offset or neutralize export subsidies. He said that so far the
Commerce Department has refused to find currency manipulation a
countervailable export subsidy for the sole reason that non-exporters,
such as American tourists in China, benefit from the undervalued
currency as well.

Rep. Dave Camp, the top Republican on the Ways and Means Committee,
said the bill is a marked improvement over earlier currency bills and
appears consistent with the U.S.’s WTO obligations.

The Senate is not expected to take up any currency-related
legislation before the election. Some senators are holding out hope for
Senate action on a currency bill during the Lame Duck session, but this
appears unlikely.

On the fate of the Bush tax cuts, both the Obama administration and
congressional Democrats have repeatedly said that tax cuts for
individuals making up to $200,000 and couples earning up to $250,000
should be extended.

Congressional Republican leaders have supported extending all of
the 2001 and 2003 tax cuts.

Democratic leaders in the House and Senate have said they don’t
expect votes on the tax cuts in either chamber this week.

Regarding the stop-gap spending bill, Congress must pass before
Friday a temporary spending bill that would fund the government.

So far, Congress has passed none of 12 annual spending bills for
the 2011 fiscal year which begins Friday. A stop-gap bill that funds the
government until after the Nov. 2 mid-term elections is expected.

In other matters this week, the Senate Banking Committee will hold
a hearing Thursday at 10 a.m. on implementing the Dodd-Frank regulatory
reform law.

The Banking Committee will receive testimony from Federal Reserve
Board Chairman Ben Bernanke, Deputy Treasury Secretary Neal Wolin, FDIC
chairwoman Sheila Bair, SEC chairwoman Mary Schapiro, CFTC chairman Gary
Gensler, and Acting Comptroller of the Currency John Walsh.

The Senate Budget Committee will hold a hearing Tuesday at 10 a.m.
with the director of the Congressional Budget Office Doug Elmendorf on
the state of U.S. economic and fiscal policy. The CBO chief will not be
releasing any new estimates.

The House Financial Services Committee will hold a hearing
Wednesday at 10 a.m. on the future of housing finance. The session will
examine some reform proposals.

It remains unclear if the Senate will vote this week to confirm
Jack Lew to become White House budget director.

Lew has been approved by the both the Senate Budget and Senate
Homeland Security and Governmental Affairs Committees, but his
nomination has been held up by senators pressing issues unrelated to
Lew.

It is also unclear if the Senate will vote on any of the three
nominees to the Fed who are pending: Janet Yellen, Sarah Bloom Raskin
and Peter Diamond. Diamond must be approved again by the Banking
Committee before the full Senate takes up his nomination.

** Market News International Washington Bureau: (202) 371-2121 **

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