–Senate Democratic Leaders Trying To Nail Down 60 Votes To Pass Bill
–Senate Banking Panel To Hold Hearing Thurs on Three Nominees To Fed
–Democrats Still Seek Plan To Pass War Spending, UI Bills

By John Shaw

WASHINGTON, July 12 (MNI) – Senate Democratic leaders are still
trying to secure 60 votes this week to pass landmark financial
regulatory reform legislation. Two weeks ago, the House passed the
sweeping package of financial regulatory reforms on a mostly party line,
237 to 192 vote. The Senate is expected to take up the same bill this
week.

While it will only require a majority vote in the Senate to pass
the bill, Democratic leaders will need 60 votes to cut off the debate in
the upper chamber.

Senate Banking Committee Chairman Chris Dodd has said he believes
he will be able to get 60 Senate votes needed for the package. But there
is still uncertainty about where those votes will come from. Of the 58
Democratic and independent senators, 57 are expected to vote for the
final bill. Only Sen. Russ Feingold, a Democrat from Wisconsin, has said
he won’t vote for the legislation.

It remains unclear when a successor to former Sen. Robert Byrd will
be appointed–or elected.

Four Senate Republicans voted for the Senate’s regulatory reform
bill in late May: Scott Brown of Massachusetts, Susan Collins and
Olympia Snowe of Maine, and Chuck Grassley of Iowa.

Collins has said she will vote for the final version of the bill
and Brown has signalled that he is strongly inclined to support the
bill. Snowe and Grassley have not yet said how they will vote.

Assuming there is no replacement for Byrd this week, Democratic
leaders need three of these four Republicans to vote to end the debate
on the bill.

The underlying bill would create a council of regulators to monitor
the economy for systemic threats. It would institute new regulations on
hedge funds and over-the-counter derivatives and create a Bureau of
Consumer Financial Protection that will oversee mortgage, credit cards
and other credit products.

The bill provides for expanded audits of the Federal Reserve by the
Government Accountability Office. The GAO would conduct a one-time audit
of all the Fed’s emergency loan programs that were created during the
financial crisis. It would also have the authority to audit future
emergency lending and other Fed transactions, with a two year delay in
releasing the results.

The bill includes a variation of the Volcker rule, banning banks
from proprietary trading and limiting them from investing in or
sponsoring hedge funds and private equity funds. It limits bank
investments in private equity or hedge funds to 3% of a fund’s capital.
Total investment in private equity and hedge funds can’t exceed 3% of a
company’s tangible common equity.

The legislation would push most OTC derivatives through third party
clearinghouses and onto exchanges or electronic trading systems. It
would force banks to push some of their swap trading into subsidiaries.

In another key financial event this week, the Senate Banking
Committee will hold a confirmation hearing Thursday at 10 a.m. ET on
President Obama’s three nominations to the Federal Reserve Board: Janet
Yellen to serve as vice chairman, and Peter Diamond and Sarah Bloom
Raskin to serve as Fed governors.

Given the still weak economy, the three nominees are expected to be
asked a number of questions related to balancing the Fed’s dual mandate
of keeping inflation low while promoting maximum, sustainable economic
growth.

A lot of focus of the hearing will likely be on Yellen, the current
president of the San Francisco Fed who has been nominated to succeed
Donald Kohn as the vice chair.

In other matters, the Senate is expected to resume debate this week
on a small-business package that includes a $30 billion lending pool and
$12 billion in tax incentives.

Some senators have viewed this bill as a possible vehicle for other
matters, including a currency bill directed at China.

The Joint Economic Committee will hold a hearing Wednesday at 2
p.m. ET on the nation’s economic outlook. Christina Romer, chairwoman of
the Council of Economic Advisers, will testify.

Congressional Democratic leaders are still trying to figure out how
to pass several fiscal items that are stalled.

Senate Democrats failed several weeks ago to secure the 60 votes
needed to pass a $109 billion package of tax cuts and benefit extensions
which the House recently approved.

The package would extend about a dozen tax cuts that expired at the
end of last year, expand unemployment benefits, and provide an extension
of current Medicare payments for doctors, the so-called “doc fix.”

Some senators are urging Democratic leaders to just pass the UI
extension package as a stand-alone bill.

Before the July 4th recess, the House passed an $82 billion
emergency spending bill, which includes $37 billion for the wars in
Afghanistan and Iraq and $22 billion to prevent a wave of teacher
layoffs.

The Senate approved a $59 billion emergency bill earlier this
summer which did not have the teacher funding.

Democratic leaders need to reconcile these two bills and then pass
that compromise in both the House and Senate.

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

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