Death and taxes kept the effort to reform the nation's financial industry regulations from passage last week as the unexpected exit of the longest serving U.S. senator confused and delayed the bill's supporters.
Robert Byrd (D-W. Va.) was first elected to the Senate in 1958. He died on June 28 at 92.
Despite his age, Byrd's death caught many other Senators by surprise. Media outlets reported that his office kept his physical condition a closely held secret, though he had been seen steadily weakening, for example, by abandoning his iconic cane in favor of a wheelchair.
His death had two immediate effects. It challenged the Senate schedule so close to the week-long July 4 recess and it suddenly raised questions about whether the regulatory reform bill would pass the Senate.
Without Sen. Byrd's vote, the bill's Democratic supporters had to make sure they still held the votes of wavering Republican legislators, particularly of freshman Sen. Scott Brown (R-Mass.) and that was an open question. Brown voted for the version of the bill the Senate sent to be reconciled with the House version in conference committee. But the Congressional Budget Office said the bill would cost the government, in the final analysis, $19 billion, and the conferees included a $19 billion tax on the largest banks to recoup the money.
Brown and other Republicans signaled they didn't like the tax, so the conference's chief negotiators, Sen. Christopher Dodd (D-Conn.) and Rep. Barney Frank (D-Mass.) took the extremely rare step of reconvening the conference committee to remove the tax.
Meanwhile, the House went ahead and passed the conference's version of the bill on a largely party-line vote of 237-192.
Credit unions still opposed the measure because it mandates the Federal Reserve to ensure that debit card interchange fees are "reasonable and proportional" in relation to processing costs. The legislation excludes credit unions and community banks with assets of less than $10 billion, but credit unions and community banks charged that the exclusion was meaningless because the way interchange is calculated would eventually include their cards and cut their income as well.
The legislation also allows merchants to set a minimum or maximum amount for each transaction and permits them to offer additional discounts for using a certain type of card or cash.
During last Wednesday's debate, House Financial Services Committee Chairman Barney Frank (D-Mass.) said the measure has provisions that will protect small banks and credit unions from having their debit cards discriminated against by merchants. He said lawmakers would ensure that the Fed writes regulates that spells out those provisions.
The bill also creates a Consumer Financial Protection Bureau housed in the Fed to regulate consumer financial products. Credit unions would have to comply with the bureau's rules, but the enforcement for credit unions with assets of $10 billion or less would be done by the NCUA.
The NCUA said it favored the legislation because it permanently raises the deposit amount covered by the NCUSIF to $250,000 and includes the chairman of the NCUA on the council of regulators empowered to determine what constitutes a systemic risk and to review certain rules of the CFPB.
As of press time, it remained unclear how the bill will finally play out. Ironically, after having gone to the trouble of removing the tax, Sen. Brown still did not sound like he favored the bill or could be guaranteed to vote for it.
"I appreciate the conference committee revisiting the Wall Street reform bill and removing the $19 billion bank tax," Brown said. "Over the July recess, I will continue to review this important bill. I remain committed to putting in place safeguards to prevent another financial meltdown, ensure that consumers are protected, and that this bill is paid for without new taxes."
Sources with CUNA and NAFCU who have been watching the measure and lobbying against it said they expect the legislation might come up for a vote when the Senate returns from recess during the week of July 12.