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Legislative Updates: January 2011


Capitol Call

With the holidays over, the 96 freshmen Congressmen and 13 freshmen Senators have begun working towards fulfilling their campaign promises. Even before their swearing in, they made a start in December by assembling their staffs, learning the legislative process and trying to figure out how to get to the Chamber to vote.

In addition to the freshmen learning the ropes, the establishment has been hard at work doling out committee assignments and electing chairmen to head those committees. Spencer Bachus (R-Alabama) was elected, as expected, to chair the House Financial Services Committee (HFSC). Barney Frank (D-Massachusetts) was also kept on as the top Democrat on the Committee. A few of the subcommittee chairmanships did raise some eyebrows, however. Jeb Hensarling (R-Texas) was named Vice-Chairman of the HFSC, a newly-created position. It is unclear what role he will play in his new position. Judy Biggert (R-Illinois) becomes chair of the Insurance, Housing and Community Opportunity Subcommittee. Insurance is a new component of this Subcommittee, which used to only oversee housing issues, excluding government sponsored enterprises (GSEs). Shelly Moore Capito (R-West Virginia) is the new chair of the Financial Institutions Subcommittee, which oversees banks and depository institutions along with the FDIC.

Scott Garrett (R-New Jersey) continues his role as the leading Republican on the Capital Markets and GSE Subcommittee, this time as Chairman. This subcommittee has jurisdiction over the SEC, exchanges and clearinghouses, so Mr. Garrett is very important to OCC and others in the exchange world. Ron Paul (R-Texas), the famous foe of the Fed, has, unluckily for Ben Bernanke, been named Chairman of the Domestic Policy Subcommittee, which oversees the Fed, currency, precious metals and the valuation of the dollar. Rounding out the subcommittee assignments, Gary Miller (R-California) will chair the International Monetary Policy Subcommittee and Randy Neugebauer (R-Texas) will control the Oversight and Investigations Subcommittee.

In regulatory news, on December 15, the SEC voted unanimously to seek comment on an end-user exemption measure that matches one approved by the Commodity Futures Trading Commission on Dec. 9. In addition, on December 13, the CFTC published proposed regulations in the Federal Register that would establish compliance standards for Derivative Clearing Organizations (DCO), including the creation of a chief compliance officer for DCOs and the establishment of a portfolio margining program for customer accounts that were included in Dodd-Frank.

Finally, in the area of taxes, the lame-duck Congress approved a last-minute bill to extend the current capital gains tax rates and personal income tax rates. Both policies should help promote trading in options.

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