Financial Regulatory Reform Bill
Last Wednesday, Republicans agreed to drop objections to a unanimous consent agreement to allow debate to begin after Senator Richard Shelby (R-AL), the ranking Republican on the Banking Committee, announced that his negotiations with Banking Chairman Chris Dodd (D-CT) had reached an impasse over disagreements in the bill. However, Republicans believe the standoff brought them concessions, including the removal of a $50 billion industry-financed resolution authority fund.
Last Tuesday, Republicans offered their own financial services reform plan that would have tightened regulation of Fannie Mae and Freddie Mac, and created a liquidation process of a troubled financial company, paid for by the company’s creditors and its shareholders. The Republican plan would have established a limited consumer protection agency to deal with financial companies, but the agency’s powers would regulate only smaller banks and nonfinancial companies.
Moving forward, Senate Democrats still need to resolve several internal differences, including a section of the bill regulating derivatives. The Senate bill goes farther than the Obama Administration and the Federal Reserve would like in requiring financial firms to spin off their derivatives trading operations. On Friday, FDIC Chairman Sheila Bair urged the Senate to remove the controversial provision saying it could destabilize banks and drive risk into unregulated parts of the financial sector.
The Senate will resume debate on Tuesday, and Senate Majority Leader Harry Reid (D-NV) has promised an open amendment process. Both Democrats and Republicans are preparing hundreds of amendments, including Sen. Ben Nelson (D-NE) who voted with Republicans to block debate on the bill. Nelson has expressed concern about a provision that would require companies such as his home-state’s Berkshire Hathaway to put forward billions of dollars as collateral on existing derivatives contracts. Republicans will need either a majority of Senators or sixty votes to pass amendments to the underlying bill. Senate leaders expect debate to last through the end of next week.
IRS Releases Guidance on Tax Treatment of Employer-Provided Health Care Coverage for Children under Age 27.
On April 27 the IRS issued Notice 2010-38 discussing the tax treatment of employer-provided medical care coverage for employees’ adult children up to age 27. For more information please click here for a copy of the Employee Benefits and Executive Compensation Bulletin which discusses the Patient Protection and Affordable Care Act enacted in late March and outlines the guidance provided in the IRS Notice.
Cobra Premium Subsidy Extended
On April 15 President Obama signed into law H.R. 4851, the Continuing Extension Act of 2010 extending the eligibility period for the COBRA subsidy until May 31, 2010. For more information, please click here for a copy of the Employee Benefits and Executive Compensation Client Bulletin which provides an overview of the extension provisions and highlights what group health plan sponsors need to know.
Antitrust Agencies Propose New Merger Guidelines
On April 20 the Federal Trade Commission released provisions of the Horizontal Merger Guidelines. Last updated in 1997, the Proposed Guidelines provide the business community with an overview of how antitrust agencies analyze proposed mergers between competitors. Click here for a copy of the Antitrust, Franchise & Consumer Law Client Bulletin which outlines the signficant changes proposed to the guidelines.