Legislative Updates: May 2013
Unlike last year, 2013 has no major elections to distract Congress, so some of the most pressing issues affecting the financial services industry have been working their way through the legislative process this spring.
The new chairman of the House Committee on Financial Services, Jeb Hensarling (R-TX), has dedicated most of his first months to housing finance, holding many hearings on what the proper role of government should be in the housing industry. It is expected that his Committee will introduce and mark up a comprehensive bill reforming the housing finance industry sometime in the next few months.
The tax reform movement is another major bipartisan effort, with two leaders of different parties in different parts of Congress being lauded in the press for their cooperation. House Ways and Means Committee Chairman Dave Camp (R-MI) plans on using his remaining months as Chair to attempt to reform the tax code, and has proposed major changes in the tax treatment of financial products, including options.
Representatives of the options industry submitted a comment letter to the Committee on April 22, 2013, voicing their concerns. Since then they have continued to communicate with the staffs of the members of the House Ways and Means Committee. While it is still not known when Chairman Camp will introduce formal legislation to reform the tax code and pass a bill out of his Committee, he has publicly stated that he wishes to do so by the end of the year.
Since he decided not to run for re-election in 2014, Senate Finance Chairman Max Baucus (D-MT) is free to work on his own version of tax reform without having to worry about offending sensitive constituencies. Despite this, Chairman Baucus has not yet released his own draft proposal. The options industry will engage with Senate staff about its concerns with the Camp draft proposal with the hope of preventing similar language being included in Chairman Baucus’ new proposal.
In other news, the Farm Bill was passed by the House on May 15 and is soon coming up for debate on the Senate floor, with hopes a bipartisan compromise will be reached this summer. Also the immigration reform legislation, recently passed out of the Judiciary Committee with bipartisan support, will be debated for several weeks on the Senate floor in June. The long security lines filled with immigration advocates waiting to enter the Senate office buildings every morning indicate that the immigration debate will be a top priority for a while. Therefore, other topics of interest to the financial services industry, such as the aforementioned tax and housing finance reform and cybersecurity legislation, will likely have to wait for attention from the Senate until later this year.
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