The new year may have just started, but we already have a good idea of where the big stories in finance politics and policy are heading. Below we take a look at the debates that could dominate 2015. And if you missed it earlier, check out our review of 2014’s most important finance stories.
1) Chipping Away at Dodd-Frank
One of the last bills to pass the 113th Congress was a $1.1 trillion spending measure that included a provision to rollback part of the Dodd-Frank law, marking a legislative victory for big banks. Some Republicans say that’s just a taste of what’s to come in the GOP-led Congress. The ask from Wall Street is to further ease restrictions on derivatives and curtail some of the mortgage requirements that have emerged since the financial crisis, as well as a general reining in of the Consumer Financial Protection Bureau’s far-reaching authority to oversee activities ranging from lending practices to credit card agreements. Critics of the CFPB will have a particularly strong ally in Sen. Richard Shelby (R-Ala.), who will serve as chairman of the Senate Banking, Housing and Urban Affairs Committee. But Shelby, a former Democrat who voted against the Troubled Asset Relief Program in 2008, isn’t considered a friend to big banks on all issues, nor is it clear what level of collaboration he’ll have with House Financial Services Committee Chairman Jeb Hensarling (R-Texas).
And while there’s some support among congressional Democrats to make some tweaks to the Dodd-Frank law, a landmark piece of legislation right up there with the Affordable Care Act, Republicans a veto-proof majority in both chambers, meaning negotiation with the White House will be necessary to get such measures signed into law by President Barack Obama.
The Hill: Wall Street Prepares Dodd-Frank Assault
2) Reauthorizing Terrorism Risk Insurance
In a surprising move this month the Senate adjourned before holding a vote on extending the Terrorism Risk Insurance Act, or TRIA, a federal program that provides a government backstop for terrorism-related insurance purchased by businesses in areas such as Manhattan. Retiring Sen. Tom Coburn (R-Okla.) had objected to a provision in the compromise bill and the statutes will now expire on Dec. 31. Outgoing Majority Leader Harry Reid (D-Nev.) has called on Sen. Mitch McConnell (R-Ky.) to bring the measure up for a vote as soon as possible in the new year, and it appears as though there’s bipartisan support to do so, especially since both chambers have already reached an agreement on the provisions. House Speaker John Boehner (R-Ohio) has said he expects his caucus to act quickly on a TRIA bill. The compromise measure, which has strong industry support, would extend the federal program for six years.
Politico: Industry anxious over TRIA lapse
3) Rewriting Part of the Tax Code
Grand aspirations for the first overhaul the U.S. tax code since 1986 have once again been tempered. Now talk has shifted to taking a stab at rewriting corporate tax statutes and tackling taxes for individuals another day. The reluctance to pursue both stems from each party thinking the 2016 elections will be in their favor. Meanwhile, House Ways and Means Chairman Paul Ryan (R-Wisc.) said this month that he’ll focus on making legislative changes to business tax rates starting next year. Both congressional Republicans and the White House want to see the current 35 percent rate lowered, but the GOP has its eyes set on 25 percent while Democrats have made 28 percent their target. There’s also the matter of what tax credits will be eliminated for companies in order to pay for the lower rate. Another component of the debate will pertain to corporate inversions, a legal maneuver in which U.S. companies relocate their headquarters abroad in order to reduce their IRS bill.
The Wall Street Journal: Paul Ryan to Pursue Business Tax Overhaul in 2015
4) Senate Confirmation Battles
Two prominent Obama nominees face surprisingly different prospects for their upcoming Senate confirmation proceedings. Loretta Lynch, the White House’s pick to succeed U.S. Attorney General Eric Holder, has already garnered some support from Republicans, in addition to the expected Democratic backing. But the nomination of Antonio Weiss to become undersecretary of domestic finance at the Treasury Department has prompted a backlash from progressive and mainstream Democrats alike, as well as some Republicans. Weiss’s critics say his role in facilitating corporate inversions and his overall ties to Wall Street make him unfit for the position. Nevertheless, the White House is sticking by its man. Neither Lynch nor Weiss has had a confirmation hearing scheduled.
Politico: Republicans Warm to Loretta Lynch
Bloomberg News: Obama to Keep Pushing Weiss for Treasury