Funding bill rejected as shutdown nears: The Senate rejected a short-term funding bill for the government backed by Majority Leader Mitch McConnell (R-Ky.) after 13 Republicans joined nearly the entire Democratic caucus in voting no.
Senators voted 45-55 on a GOP resolution that would fund the government through Dec. 9, but not provide financial aid for Flint. Sixty votes were needed to move forward with the bill.
{mosads}Sens. Joe Donnelly (Ind.), Joe Manchin (W.Va.), Bill Nelson (Fla.) and Jon Tester (Mont.) were the only Democrats to support the continuing resolution (CR).
Democrats are digging in on their demand that funding for Flint be included in the spending bill, which already includes emergency help for flood victims in Louisiana, Maryland and West Virginia. The Hill’s Jordain Carney reports: http://bit.ly/2dqdiWC.
Dems want Flint promise ‘in writing’ from GOP: Ahead of the vote, Senate Democrats said they planned to block a governing spending bill because they don’t trust Republicans to keep their promise to separately approve funding for the Flint, Mich., drinking water crisis.
Sen. Barbara Boxer (D-Calif.), who is on the Environment and Public Works Committee, said at a press conference about two hours before the vote that Democrats are demanding a commitment to Flint aid in writing.
“We need more than just vague promises,” Boxer told reporters. “They can commit to us in writing that they can absolutely agree to our provisions. We don’t have any of that.”
GOP leaders in both chambers have said Flint funding should be part of a separate bill called the Water Resources Development Act (WRDA), which is going through the House this week.
While the Senate’s version of that bill includes money for Flint, the House’s version does not, and any agreement merging the two would likely come after the November elections. The Hill’s Sarah Ferris explains: http://bit.ly/2dpykoN.
Lawmakers clash over race claims: The Democratic lawmaker who represents Flint, Mich., in the House suggested on Tuesday that GOP leaders aren’t prioritizing aid to help the city with its water crisis because a majority of the residents are African-Americans.
Rep. Dan Kildee (D-Mich.) said during floor debate that GOP leaders “don’t see American citizens” when they look at the people of Flint, who are suffering from drinking water contaminated with lead.
“There’s something about this poor community, this poor majority-minority community, that exempts them from the kind of help that we have provided time and time again to people in crisis in this country,” Kildee said.
“I hate to come to the conclusion that there’s something about these people that causes this Congress to decide they don’t deserve that help. That is a shame,” he added.
Kildee didn’t explicitly say that Republicans are being racist, but his comments drew a sharp rebuke from Rep. Rob Woodall (R-Ga.) moments later.
“How dare you suggest that race is the basis of this?” Woodall asked fiercely. The Hill’s Cristina Marcos takes us there: http://bit.ly/2ddMCp8.
Labor Department launches Wells Fargo review: The Labor Department has launched its own probe into Wells Fargo’s business activities after Senate Democrats wondered if the bank violated wage and labor laws.
Labor Secretary Thomas Perez told lawmakers in a letter Monday that his agency was conducting a “top-to-bottom review” of any complaints or cases the government has received in recent years. Furthermore, the Labor Department has created a website specifically for current and former employees of Wells Fargo encouraging anyone with questions or concerns to reach out.
The Labor review marks the latest in a growing number of government headaches for the bank, which has been the focus of Washington ire since the regulators charged the bank with wrongdoing earlier this month. The Hill’s Peter Schroeder has it all here: http://bit.ly/2dpRKFg.
Fed to ease stress test requirements for smaller banks: The Federal Reserve will require major U.S. banks to bolster their capital and allow smaller lenders to skip a key part of regular stress testing.
The central bank will require large lenders like Bank of America, JPMorgan Chase, Wells Fargo and Citigroup to build up capital buffers to protect themselves and the financial system from another crisis, Federal Reserve Board Governor Daniel Tarullo said Monday.
“Supervisory stress testing has become a cornerstone of post-crisis prudential regulation,” Tarullo said in a speech at Yale University. “Financial regulation should be progressively more stringent for firms of greater importance.” I’ll tell you what’s changing here: http://bit.ly/2czGLYk.
Happy Tuesday and welcome to Overnight Finance, where we’re still trying to make sense of last night’s debate. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.
Tonight’s highlights include more pushback on the Treasury Department’s proposed tax rules, upcoming action on agency rules and a hacking proposal from the Commerce Department.
See something I missed? Let me know at slane@digital-staging.thehill.com or tweet me @SylvanLane. And if you like your newsletter, you can subscribe to it here: http://bit.ly/1NxxW2N.
On tap tomorrow:
- House Financial Services Committee: Hearing entitled “Semi-Annual Testimony on the Federal Reserve’s Supervision and Regulation of the Financial System,” 10 a.m. http://bit.ly/2cNgaKd.
- House Ways and Mean Committee: Hearing on healthcare fraud investigations, 10 a.m. http://bit.ly/2daGvEX.
- House Financial Services Subcommittee on Housing and Insurance: Hearing entitled “The Impact of US-EU Dialogues on U.S. Insurance Markets,” 2 p.m. http://bit.ly/2cznaL4.
- Joint Economic Committee: Hearing to examine an assessment of the economic recovery, 2 p.m. http://bit.ly/2ctxHJe.
Ohio businesses: Treasury rules would hurt job creation: A group of Ohio employers is warning that the Treasury Department’s proposed debt-equity rules would “significantly impede” their ability to invest and create jobs in the state if the rules are finalized in their current form.
The proposal is “already having a negative impact on Ohio’s business community,” the businesses said in a letter Tuesday to Treasury Secretary Jack Lew. Businesses that signed the letter include Abercrombie & Fitch, Caterpillar and Nestle.
The proposed rules would recharacterize some intercompany debt as equity. Treasury released them as part of an effort to limit the tax benefits of companies that participate in “inversions” and move their headquarters overseas for tax purposes. However, businesses and many lawmakers have argued that the rules would affect more than just businesses trying to avoid taxes. The Hill’s Naomi Jagoda explains: http://bit.ly/2cTGyjP.
Paulson: Regulators too focused on Wall Street banks: Henry Paulson, the former Treasury secretary who helped steer the country through the 2008 financial crisis, said regulators have zoomed so far in on supervising large Wall Street banks that they may be missing risks that are shifting to other parts of the financial system.
“There has been a preoccupation with the big banks,” Paulson, a Republican who served under President George W. Bush, said Tuesday at an industry conference in Washington. “The big banks have become so regulated and so capitalized. There is a cost to getting the big banks to de-risk.”
“One of those costs is shifting the risks elsewhere,” he added, citing the less-regulated activities of the financial system, such as securities lending between different sectors and smaller institutions. The Hill Extra’s Anjelica Tan has more: http://bit.ly/2di7Fbx.
Commerce chief floats protections to encourage hack reporting: Commerce Secretary Penny Pritzker is floating the idea of giving businesses protections so that they can discuss cyberattacks with officials without risking any punishment.
“Laws and regulations alone cannot protect us from the emerging cyber threats,” Pritzker said at a U.S. Chamber of Commerce conference on cybersecurity Tuesday. “The federal government cannot regulate cyber risk out of existence.”
Pritzker said that with regulations and Federal Trade Commission actions there are often civil, legal and regulatory risks that discourage businesses from acknowledging cyberattacks. She said that led to a relationship between regulators and businesses that is “inherently adversarial, not collaborative.”
That can mean that government cannot provide assistance when it would be beneficial, cannot investigate attacks or help all companies learn from past breaches. The Hill’s Joe Uchill reports: http://bit.ly/2dif1rY.
Pacific deal will boost exports for small businesses: report: The Obama administration is touting the export benefits of an Asia-Pacific trade pact for the nation’s smaller businesses in its efforts to promote the agreement to wary congressional lawmakers.
Commerce Secretary Penny Pritzker said small- to medium-sized businesses are the “biggest beneficiaries” of the Trans-Pacific Partnership (TPP) trade agreement and that failing to ratify the deal would broadly hurt the reputation of the U.S. in the rapidly growing Pacific region.
“If we cannot cross the finish line with TPP, the 11 other countries who negotiated with us, and, in many cases, made great sacrifices to reach this agreement, will be forced to rethink that faith in U.S. leadership,” Pritzker said during a Monday event on Capitol Hill. Here’s more from The Hill’s Vicki Needham: http://bit.ly/2dpyexu.
SEC chair cool on fiduciary standard: Securities and Exchange Commission Chairwoman Mary Jo White reaffirmed her desire to champion a fiduciary rule as stipulated under Section 913 of the Dodd-Frank Act, but acknowledged the challenges to getting it implemented.
“For myself, it’s enormously important to proceed under [Section] 913 to propose and adopt a fiduciary duty standard,” she said. “I’ve made very clear… A: I’m one vote. B: It needs to be a data-driven exercise so we get it just right.”
“I’ve made clear that [a formal plan] is not [coming] anytime soon, but we continue to focus on it,” she said. The Hill Extra team breaks it down: http://bit.ly/2d1IqJv.
Lawmaker seeks to investigate Obama’s foreign tax compliance law: A congressional panel is planning to examine President Obama’s signature foreign asset reporting law that aims to target offshore tax evasion, Rep. Mark Meadows (R-N.C.) told The Hill Extra.
The Foreign Account Tax Compliance Act (FATCA) requires that foreign financial institutions and other related entities report to the IRS certain foreign accounts held by U.S. taxpayers. The penalty for foreign institutions that fail to comply is a withholding rate of 30 percent on payments received from U.S. sources, including dividends and interests. The U.S. government has entered into bilateral intergovernmental agreements (IGAs) with dozens of countries to implement the tax reporting law abroad.
FATCA, enacted in 2010 as part of the Hiring Incentives to Restore Employment (HIRE) Act, has faced a wide range of criticism involving U.S. treaty obligations, intrusion of other countries’ sovereignty and privacy rules. The Hill Extra’s Kat Lucero explains: http://bit.ly/2d1Iskz.
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