Lame Duck Session Is Crunch Time for Key Bank Bills
WASHINGTON — A number of critical industry bills that languished over the summer and fall are once again gaining prominence in the waning days of the lame duck session.
Even as most lawmakers focus on the fiscal cliff, many other banking issues are in play, including an extension of the Transaction Account Guarantee and renewal of a law that provides tax relief for consumers that receive a mortgage modification.
At least two bills appear headed for passage — one that would protect information banks share with the Consumer Financial Protection Bureau and another that would end a requirement for banks to place a physical placard disclosing ATM fees in addition to an electronic notice.
"We're very optimistic about both of those bills making their way through the Senate during the lame duck," said James Ballentine, executive vice president of congressional relations and political affairs at the American Bankers Association. "If this is a 100-yard race, we're on the 90th yard and trying to get over those last 10 yards this last month of the session."
But negotiations over the bills, which have both passed the House, are still in flux. The discussion continues to center on Sen. Jim DeMint, who some say is preparing to drop a hold he placed earlier this year on a standalone CFPB privilege bill and then on a bill that combined the CFPB information sharing and ATM fee-disclosure provisions. DeMint has been trying to force Democrats to agree to an up-or-down vote on repeal of the Dodd-Frank reform law.
A spokesman for DeMint declined to comment.
"Our understanding is he's willing to release the hold because of pressure from the industry to get this done. They don't want this information to be subject to Freedom of Information Act requests," said Edward Mills, a financial policy analyst at FBR Capital Markets and former Hill aide. "Now that we've had the election, it's time to move on and deal with a technical fix that is actually kind of important for anyone that communicates with the CFPB."
Paul Merski, executive vice president for congressional relations and chief economist for Independent Community Bankers of America, added that banks continue to be subject to new lawsuits over the ATM fee-disclosure issue as the battle in Congress over the legislation continues. Banks have argued they shouldn't have to post a physical notice on ATM fees when they already provide such notice when a non-customer makes a transaction.
"We're still getting calls weekly from community bankers that have fresh lawsuits coming against them on ATM placard issue — it's still a live and active lawsuit, which is irritating when there is pending legislation that could shut this down," said Merski.
It's unclear what form the bills could take as Congress devotes its energies to the fiscal cliff and then winds down for the holidays. Observers said the measures could pass as standalone legislation, a package of bills or as amendments to larger legislation on the fiscal cliff or the defense authorization bill, which the Senate continues to debate this week.
"Besides the fiscal cliff, it's the only other vehicle out of town — the one everyone looks to attach anything and everything on. I wouldn't be surprised if a lot of things go on that. There's less politics on it, and it's almost certain to pass," said Mills.
Another relatively uncontroversial bill that could come up for a vote is an extension to the Mortgage Forgiveness Debt Relief Act, which exempts homeowners from paying taxes on short sales, principal reductions and other forms of mortgage forgiveness. Industry groups, consumer advocates and others have been urging congressional leaders for an extension of the 2007 law, warning that its expiration at yearend could slow down the housing recovery and hinder the $25 billion mortgage servicer settlement signed in February.
While analysts and other industry sources said an extension is critical, it's not certain when Congress would address the bill.
"Extending the current tax treatment for mortgage debt forgiveness is one of those issues that stands a good chance for passage. However, the path is unclear. Will it stand alone, or be attached to a larger bill on the fiscal cliff, that could risk becoming like a Christmas tree?" said Scott Talbott, senior vice president for public policy at the Financial Services Roundtable.
Banking groups and credit unions have also been waging an ongoing battle over a bill to double a cap on credit union business lending to 27.5% of assets, which bankers adamantly oppose. The ABA and ICBA sent a letter last month to congressional leaders urging them against passing the bill, as both sides continue lobbying efforts over the issue.
Separately, banks are also battling each other as lawmakers weigh whether to extend the Transaction Account Guarantee before it sunsets at yearend.
Some influential financial institutions are fighting an extension, despite support from the ABA and ICBA, which have made renewing the crisis-era deposit guarantee a top priority in the lame-duck session. Money-market funds and numerous large banks may both benefit from the program's expiration and want it to end.
"Extending the TAG program may create the misperception of instability, at the very time that the financial services sector has made significant and positive reforms," former Minnesota Gov. Tim Pawlenty, chief executive of the Financial Services Roundtable, said in a Nov. 29 letter to Senate leaders.
Any consensus among lawmakers about an extension of TAG is also unclear, though it appears to be falling along party lines. Senate Majority Leader Harry Reid introduced a bill that would extend the program for two years.
But Reid's bill was followed by a statement from Sen. Bob Corker, R-Tenn., opposing an extension, and House Majority Leader Eric Cantor, R-Va., reportedly told the Wall Street Journal he would fight a continuation of the program.