Brown: Don’t Take Financial Overhaul Offsets to the Bank

Major legislation reforming the financial regulatory process hit a snag today as Senator Scott Brown (R-MA) said he would not support the bill because it relies primarily on a $19 billion levy on large financial institutions and hedge funds to pay for its costs. At least a couple of Republicans will need to vote for the bill in order to overcome a Senate filibuster and Brown was one of the few GOPers to vote for a previous version of the measure.

It looks like, once again, the matter of offsets has, at least temporarily, derailed major legislation. Leaders in Congress will have to reopen the House-Senate conference process to consider changes to the bill. One option being discussed is to replace the bank tax with bringing the Troubled Assets Relief Program to an early conclusion. Terminating TARP ahead of the scheduled October 3 end date could save $11 billion to use towards the financial overhaul, but we oppose the use of this since it is essentially double-counting savings. A better option is to institute another increase in the fees banks pay to the FDIC.

Congress is still feeling its way through this whole paying-for-legislation thing.