Senator Yanks Financial Reform Support Due to Last Minute Bank Tax Change
[Update 1: Bank tax now out, FDIC fees in]
As politicians currently sit on the fence on financial reform, U.S. Senator Scott Brown (R-MA) has made the decision to withdraw his support.
The bank tax is since removed from the legislation and additional FDIC fees added, which is now drawing fire from industry groups. Edward Yingling, American Bankers Association president and CEO, said his trade organization is concerned about the new fees.
"Bankers have paid tens of billions of dollars to keep the FDIC fund strong, and we are committed to continue to do so," he said. "However, this is yet another regulatory cost imposed on the many traditional banks that had nothing to do with causing the financial crisis."
Senator Brown sent a letter to sponsors Sen Christopher Dodd (D-CT) and Rep Barney Frank (D-MA) citing the addition of a $19bn bank tax included in the House, but not the Senate versions, as the reason for pulling support. The bill reconciled late last week.
"It is especially troubling that this provision was inserted in the conference report in the dead of night without hearings or economic analysis," Brown wrote. "While some will try to argue this isn’t a tax, this new provision takes real money away from the economy, making it unavailable for lending on Main Street, and gives it to Washington."
Brown added that the Congressional Budget Office claims such fees are passed on to bank clients at all levels, from retail to small businesses. Brown suggests reducing federal spending as a possible alternative to the bill.
"There are hundreds of billions in unspent federal funds sitting around, some authorized years ago for long-dead initiatives," he adds, without elaborating on how those frozen funds could be thawed for the purpose of bank liquidity.
Brown is one of a handful of republicans to in0itially stand by the reform. His withdrawal, coupled with the recent death of Sen. Robert Byrd (D-WV), may postpone the passage of financial reform past the July 4 deadline set by President Obama.
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