Legislative Updates: January 2012
All was calm in Washington around the holidays, as Congress quickly vacated the Capitol to retreat back to their districts after a tumultuous 2011. With the 2012 elections looming and President Obama, the entire House and 1/3 of the Senate up for re-election, the legislative agenda for both the Congress and the White House will, in all likelihood, be light on controversial issues. To that end, a White House spokesman recently declared that a long-term payroll tax break extension is the "last must-do item of business on the president's congressional agenda."
The passage of the current short-term tax break extension involved an internal battle waged among the Republicans in Congress. The Senate passed a two-month extension in order to give themselves more time to negotiate a longer-term solution, but many House Republicans wanted a longer extension of the payroll tax break and voted against the Senate's short-term proposal. This threw both the House and Senate into another fit of disarray, with the Senate basically forcing the House to pass their bill or risk raising taxes on up to 160 million workers. Ultimately, the House blinked, passing the two-month extension two days before Christmas.
In early December, three different Congressional committees lined up to grill former MF Global CEO Jon Corzine about the actions he took that led to the untimely bankruptcy of his former company. To the surprise of many, he answered all the questions asked of him, however vaguely. The House and Senate Agriculture Committees and the House Financial Services Oversight Subcommittee held several hearings on the matter, the shortest of which ran more than three hours, while the House Agriculture Committee held one on December 8 that ran a marathon 8.5 hours.
After all the hearings and testimony, the Committees were left almost where they started. Customer funds were used inappropriately and perhaps illegally, but neither the investigators nor anyone at MF Global knows where the funds are now, or exactly for what purpose they were used. Ongoing investigations into the missing customer funds are being conducted independently by the CME, CFTC and Congress, and additional hearings are expected as soon as new information emerges.
With the New Year, there is hope in DC that the second session of the 112th Congress will bring with it a renewed sense of fresh optimism and bipartisan cooperation.
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