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Legislative Updates: December 2011


Capitol Call

Elections are a never-ending process; as soon as one occurs, the winner begins to prepare for the next one. About half of the emails that end up in the inbox of OCC DC are solicitations for some sort of fundraiser. Eleven months before the election, many voters are already suffering from severe campaign fatigue even before a single delegate has been counted.

The point is that while issues may come and go, some things in Washington are constant. Money in politics is one of them, and so is dysfunction in Congress. A fitting example of the latter is the so-called Super Committee that was tasked with reducing the federal deficit by at least $1.5 trillion over the next 10 years. If the Committee could not complete its assignment, an unappealing combination of defense and entitlement cuts would automatically occur in 2013.

Even though the pressure was very high for the members of the Committee to get a deal done, they admitted defeat in November, saying that the differences between the Republican and Democratic members could simply not be bridged. Even after weeks of good-faith negotiation and discussion, the members ultimately held very different beliefs on the proper role of the federal government in the lives of Americans, and they couldn't forge a compromise that they were all comfortable supporting. It was an interesting, albeit frustrating and not unsurprising, outcome.

Another Washington constant that manifested itself in November was the fact that someone will always eventually break the rules, no matter the consequences. It appears that Jon Corzine, disgraced former CEO of MF Global, did just that when he allegedly used customer money to cover the risky bets on European bonds that his firm made earlier in the year. Now the customers (including many farmers and ranchers who used MF Global to hedge their agriculture investments) have seen their accounts dry up and are looking to Congress for answers.

Congress responded by hauling the regulators before the proper committees of jurisdiction, starting with the House and Senate Agriculture Committees, to try to get to the bottom of the mess. Mr. Corzine has also been subpoenaed to appear before the House and Senate Agriculture Committees and the House Financial Services Oversight Subcommittee. Unfortunately, he is expected to follow the lead of many before him and exercise his Fifth Amendment rights against self-incrimination, thereby depriving Congress and the public of his take on what exactly happened at MF Global earlier this fall.

It seems likely that Congress will spend the rest of 2011 dealing with the consequences of the actions of a small number of people: Congress is basically gridlocked, and the 12-member Super Committee could not get a deal done because our elected representatives hold very different views on the role of government. The House and Senate Agriculture Committees, along with the Senate Banking and House Financial Services Committees, will spend the remainder of the year dissecting and investigating the actions of MF Global and the dealings of its former CEO.

And, in less than a year, we will decide either to re-hire President Obama for four more years or have him suffer the consequences of being in charge when unemployment and frustration with Washington are at historically high levels.

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