Title VII Legislative Outlook

What can we expect on Title VII legislation as Congress comes back into session after Labor Day? I don’t expect any legislation to pass both chambers but It’s hard to tell for sure. The answer, as they say, is blowing in the wind.

In the House, we can expect Republicans on the Financial Services Committee and those on the Agriculture Committee (the latter may push ahead first) to move forward with bills, in some cases with bipartisan support, on margin requirements, inter-affiliate transactions, cost-benefit analysis, and product and entity definitions, among other topics. The plan as of now is for both committees to take up these bills shortly after Labor Day, with markups being completed by the end of September. Of course, this is a tentative timetable that may not hold; when Congress returns, the oxygen in the room will be sucked out by the Supercommittee charged with debt reduction. The work of every other committee will in some ways (substance, timing, process or all of the above) be dependent on what the Supercommittee and party leaders decide to do. While the Supercommittee is scheduled to release its final report on November 23 (just before Thanksgiving) and its recommendations are scheduled to be acted upon by means of a congressional vote before December 23 (just before Christmas), an interim report from the Supercommittee is scheduled for the end of October.

The affiliates bill is being sponsored by Congressman Steve Stivers (Republican) and Congresswoman Marcia Fudge (Democrat), both from Ohio. The margin bill has also attracted bipartisan support, and is being pushed primarily by Rep. Michael Grimm (R – NY) and Rep. Gary Peters (D – MI). It is expected that the margin bill will be favorable to non-financial end-users.

On the Senate side, the controlling Democrats do not want to take up any Title VII or Dodd-Frank related bills. CMC has learned that even bills that are meant to be mere technical corrections (such as correcting innocuous and simple typographical or grammatical errors in the original Dodd-Frank Act) are not being taken up by Senate Banking Committee or Agriculture Committee Democrats, for fear of allowing the Republicans any vehicle whatsoever to chip away at the mammoth regulatory edifice that Dodd and Frank built. So even if the House does pass its bills on the aforementioned topics, it remains to be seen if the Senate picks them up. If the House gets 300 votes for a bill (not entirely inconceivable for bills that have bipartisan support and are couched in the language of job-creation), there will be some pressure on the Senate to debate them. But passing them with a 60-vote majority in the Senate (to overcome a filibuster) is another matter altogether, especially when there are presently only 47 Republicans in that body.

So bottomline is that some Title VII bills might pass the House this fall or early next year, but they are likely to die in the Senate, resulting in no changes to Dodd-Frank until at least January 2013, when the next Congress takes over. But the Democrats are on the defensive on their economic and job-creation ideas and policies, and if the president’s poll numbers tank even more, they may feel the pressure to do something – anything – to shore them up. As the wisest political minds in Washington, DC usually say with sharp insight and unequivocal clarity ….. we shall see.


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