Category Archives: Heck

Heck’s Jolting Idea: H.R. 1401

Heck photo Nothing illustrates the tenuous GOP grasp on the concept of job creation quite so well as Representative Joe Heck’s JOLT Act of 2015.  H.R. 1401:

“Amends the Immigration and Nationality Act to authorize the Secretary of Homeland Security (DHS) to admit into the United States a qualifying Canadian citizen over 50 years old and spouse for a period not to exceed 240 days (in a single 365-day period) if the person maintains a Canadian residence and owns a U.S. residence or has rented a U.S. accommodation for the duration of such stay.”

By the Numbers

There are 35.16 million people living in Canada. 4.7 million of them are between the ages of 55 and 64. [StateCan]  The 2011 Canadian census counted 4,945,060 individuals over the age of 65. [CanCensus] Of these numbers, approximately 500,000 can be classified as Snowbirds – those owning property in the United States. [FinancialPost] To apply some context, 500,000 is about 0.00157 of the U.S. population estimated at 317 million.

Some Canadians did take advantage of the housing bust in the U.S. to purchase retirement properties in California, Arizona, and in Mexico, but even in 2012 this was described in the Canadian press as a “small but growing group.”  It would be small considering the travel related expenses, and the tax liabilities incurred. [GlobeMail] Not to mention the affluence required to maintain two residences.

Now comes the part wherein Nevada’s representative from the 3rd Congressional District tries to explain how wonderful this bill would be.

Representative Heck wrote:

“Boosting our economy and improving national security are two of the most critical challenges we face as a nation and the JOLT Act addresses them both,” Heck said in a statement.

“Expediting the visa interview process and expanding the Visa Waiver Program will bring more international travelers and tourists to destinations around our country and creates jobs,” he continued. “Making discretionary visa waiver security programs mandatory will improve our security at home and aid our intelligence community in the fight against global terrorism.”  [The Hill]

Notice the attempt to tie the 500,000 Snowbirds to a booming tourism economy; “Expediting the visa interview process and expanding the Visa Waiver Program will bring more international travelers and tourists to destinations around our country and creates jobs.”  We might venture to ask how increasing the temporary population of the U.S. by 0.00157 or 0.157%  is exactly a big “job creator?”

Who Wants This?

The U.S. Travel Association wants it, as does the Canadian Snowbird Organization.  And, from the Snowbirds we learn that Canadians purchased $2.2 billion in Florida real estate, making the National Association of Realtors very happy. [CSB]  Representative Heck’s interest in this bill may be peaked by the $92,449 in contributions he received (2013-2014) from real estate interests, including $60,559 from individuals and another $31,890 from PACs. [OpenSec]

To sum up the situation: This bill isn’t about jobs.  It really isn’t all that much about tourism.  It is about serving the interests of a relatively few wealthy Canadians who want to retire to Sun States – anything has to be sunnier than Newfoundland – and the real estate interests who want to serve them.

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Filed under Economy, Heck, House of Representatives, Nevada politics

To Heck With Your Service? Again?

Heck photo

The issue of protecting military families from egregious practices by predatory payday lenders gets a bit mired in Congressional legislative processes.  However, it’s not hard at all to figure out what the Republicans on the House Armed Services Committee wanted to do.

“House lawmakers narrowly voted to remove controversial language delaying new rules on payday lenders from their annual defense authorization bill early Thursday morning, calming concerns from advocates who saw the move as potentially undoing financial protections for military families.

By a 32 to 30 vote, members of the House Armed Services Committee stripped provisions from the legislation that would have delayed Defense Department plans to expand the scope of the 2006 Military Lending Act by requiring a new report due next spring on DoD’s rule-making procedures in that regard.” [MilTimes]

Congressman Joe Heck (R-NV3) has a seat on that committee.  Further, Representative Heck is the chair of the subcommittee on Military Personnel. The blurb from the subcommittee’s web page reads:

“The Military Personnel Subcommittee is responsible for military personnel policy, reserve component integration and employment issues, military health care, military education, and POW/MIA issues. This subcommittee makes sure that our troops and their loved ones are receiving the first class benefits that they deserve.”

Remember this for future reference.  For the moment ask how the statement squares with the effort to “delay new rules on payday lenders…?”  And, how does this align with comments made by subcommittee chairman Joe Heck:

“The 2006 lending law was passed by Congress after reports of payday lenders charging unusually high interest rates to troops — 400 percent or more, in some cases — and misleading borrowers about the long-term debt they could incur.

Implementation of the law initially was confined to payday loans, vehicle title loans and tax refund anticipation loans. But last September, defense officials proposed new rules that would expand the types of credit covered by the maximum 36-percent interest rate that can be charged to service members and their dependents.

Rep. Joe Heck, R-Nev., chairman of the armed services committee’s military personnel panel, said those moves have raised concerns that defense officials are applying rules too broadly.”  [MilTimes]

It’s the Pentagon’s belief that service members need protection from predatory forms of credit cards, deposit advance loans, installment loans, and unsecured open ended lines of credit.  The bottom line is simple – members of our armed forces can be charged no more than the quite nearly usurious 36% interest rate. Too broadly?  How does applying rules saying no member of the military can be charged no more than 36% cut off credit options? If a lender can’t profit with a 36% margin perhaps they ought not be in business?

Representative Heck’s idea was to have the Pentagon conduct ANOTHER study of the effects of the Military Lending Act, in spite of the completion of the original study. Translation: Congressional studies can be used to delay the implementation of regulations interminably. Meanwhile, member of the military remain threatened by the terms of predatory lenders. [More at TP]  And, was Representative Heck proud of his delaying maneuver?

“The one-year delay of new financial protections for the military appears to come from Rep. Joe Heck (R-NV), who chairs the subcommittee that produced the provision without discussion. Heck’s office did not respond to requests for comment on the provision.”  [TP]  (emphasis added)

Members of the Armed Forces should welcome the amendment by Representative Tammy Duckworth (D-IL) which stripped Heck’s language from the appropriations bill, and was adopted by the committee on a 32-30 vote.

But wait, there’s more.

“The House voted 213-210 Thursday against an amendment that would have allowed Veterans Administration doctors to discuss medical marijuana with soldiers suffering from post-traumatic stress disorder and other conditions. Opponents of the amendment underscored marijuana’s federally illegal status and said veterans shouldn’t be prescribed pot for psychological problems.” [IBT]

Representative Heck voted in favor of the amendment, but Nevada Representatives Hardy and Amodei voted against it.  Perhaps Hardy and Amodei are clinging to the old War on Drugs theme, a stale leftover from those days when it seemed like every candidate for every office was running for county sheriff?

The amendment certainly wouldn’t have required the VA to prescribe marijuana or related products to veterans, but it would have aligned the services of the VA more closely with NRS 435A on the medical usage for marijuana.  The state of Illinois is currently hearing a report on studies related to the use of marijuana to assist in the treatment of PTSD.  The American Glaucoma Society isn’t thrilled with the side effects of marijuana, but acknowledges that it does reduce intraocular pressure (IOP) in glaucoma patients.

Contrary to the drum beating of the Old Drug Warriors, marijuana has been used successfully to treat moderate to severe “refractory spasticity” in multiple sclerosis patients, to alleviate loss of appetite associated with HIV/AIDS cachexia, and to inhibit chemotherapy induced nausea and vomiting among cancer patients.

In short, given Representative Heck’s attempt to give a handout to the predatory lenders, and Old Drug Warriors Hardy and Amodei’s conviction that medical and marijuana don’t fit together – it wasn’t a complete loss of members of the Armed Forces and Veterans in the House, but it was a near thing.

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Filed under Amodei, Defense Department, Heck, Veterans

A Simple Question for Rep. Amodei

Amodei 3

Here’s a simple question for Representative Mark Amodei (R-NV2):  What have you done for us lately? And, please don’t try to tell me your vote to repeal the estate tax for the top income earners in the country is “doing something” for the remainder of working America.  Nevada representatives Amodei, Heck, and Hardy were pleased to vote for H.R. 1105, which is essentially a $269 Billion handout to the richest families in these United States.

First, if the country has $269 billion – with a B – to give up in revenue, then I’d really not like to hear any more from any of the three GOP representatives about “cutting the deficit,” or “balancing the budget,” because cutting revenue has the same effect as increasing the spending – it’s the arithmetic of the matter.

Secondly, labels are essentially useless. Calling the estate tax a “death tax” may do well in focus groups but if we’re serious about fiscal matters, and we ought to be, then we’re not taxing a person – we’re taxing the value of the estate left to the very select few.  The Paris Hilton Legacy Protection Act would be a far more enlightening label.

Is your “estate” worth more than $5.43 million?  Because that’s the size of the legacy which under the current system which is liable for taxation purposes.   And, spare me the “small business” and “family farm” arguments. Please.  As of the moment only 0.2% of Americans would owe any estate tax, meaning of course that the remaining 99.8% of Americans who may own family farms or small businesses are NOT liable for this tax.

“Only roughly 20 small business and small farm estates nationwide owed any estate tax in 2013, according to TPC.[10]  TPC’s analysis defined a small-business or small farm estate as one with more than half its value in a farm or business and with the farm or business assets valued at less than $5 million.  Furthermore, TPC estimates those roughly 20 estates owed just 4.9 percent of their value in tax, on average.[11]

These findings are consistent with a 2005 Congressional Budget Office (CBO) study finding that of the few farm and family business estates that would owe any estate tax under the rules scheduled for 2009, the overwhelming majority would have sufficient liquid assets (such as bank accounts, stocks, bonds, and insurance) in the estate to pay the tax without having to touch the farm or business.[12]  The current estate tax rules are even more generous.” [CBPP]

And then there’s the “taxed twice” argument, which doesn’t make any more sense in the real world than protecting those 20 business and farm estates nationwide – here’s the trick – most of the biggest estates consist of “unrealized capital gains” which have NEVER BEEN TAXED in the first place. [CBPP]

From this point forward, Representatives Hardy, Amodei, and Heck have no room to speak of the “income inequality gap” in the country.  They’ve just voted to increase the beast.  Again, it’s not even mathematics, it’s arithmetic. If the GOP wants to increase spending for its Pentagon projects then someone has to pay for that. At present discretionary spending in the federal budget amounts to about 29% of the total, and of that 29% some 65% is related to the U.S. military. [NPorg]  Thus, the increases sought for Defense Department spending, and the hole created by losing another $2.69 billion in revenue – to protect the 0.2% – has to be made up by the remaining 99.8%.

So, what have Representatives Heck, Hardy, and Amodei done for us (the 99.8%) lately?  Not to put too fine a point to it – they’ve just told us it’s up to us to make up that $269 billion handout to the ultra-rich, and accept that we “can’t afford” to feed children, the disabled, and the elderly, to promote agricultural development, to help provide housing for the nation, to guarantee student loans for middle income families, to promote and encourage industrial and manufacturing technologies…..  And, all to protect the precious 0.2%.

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Filed under Amodei, Heck, tax revenue, Taxation

GOP: Protect the Sharks!

Pay Day Lending Shark Some dots connect.  Dot Number One:

“A bill passed Wednesday by the House would set new limits on, and effectively cut, the amount of money the Consumer Financial Protection Bureau can spend.

The legislation, passed with nearly exclusive Republican support, was originally aimed at placing new limits on agencies writing regulations, requiring them to conduct more analysis on their impact and subjecting them to additional legal review.” [The Hill]

First, the amount cut from the Consumer Financial Protection Bureau would be some $36 million dollars less than the expected expenses for the CFPB in FY 2016.  Secondly, the “more analysis” part translates to “cost/benefit analyses” which have been a crucial part of the Republican litany.  There’s a reason to suspect that this particular dot comes with some major freight.

The “cost/benefit” analysis nearly always comes skewed in favor of the corporations.  The Institute for Policy Integrity found this to be the case in the instance of coal ash regulation in 2010, and while the major impact of the bill would be to the Environmental Protection Agency – a popular whipping boy for the Right – the abuse of the cost/benefit analysis regime could be equally unhelpful for American consumers.  The problem can be summarized as follows:

“Regulatory cost-benefit analyses are inherently vulnerable to challenge. The long-term benefits of regulations are often difficult to quantify, while the costs can be immediate and straightforward. The calculations can be even more complex with public health and safety issues, where the value of human lives must be weighed against corporate costs.” [HuffPo]

In this case we have to ask do the short term losses to the payday lenders outweigh the long term benefits of not having working Americans subject to usurious lending rates?  Evidently, Representatives Heck (R-NV3), Hardy (R-NV Bundy Ranch), and Amodei (R-NV2) [rc 64] believe that the short term losses which might accrue to the payday lenders are of more significance than the long term problems associated with payday lenders in underserved communities?   At the least, they’ve voted in favor of placing more hurdles – in the form of more litigation – in the way of any agency such as the CFPB seeking to curtail some of the more egregious business practices of payday lenders. (For more information on Cost/Benefit Analysis see Better Markets.)

Dot Number Two:

“But a late amendment from the bill’s primary sponsor, Rep. Virginia Foxx (R-N.C.), would also place new limits on the funding for the CFPB.

Foxx’s amendment, added to the bill at the House Rules Committee before it reached the House floor, would cap CFPB funding at $550 million — $36 million less than the Congressional Budget Office estimated the CFPB would spend in fiscal 2016.”  [The Hill]

Now, why would this particular agency be mentioned in this “late amendment?”  If Dot Number One makes it more difficult for an agency, such as the CFPB, to finalize regulations on corporate activity,  Dot Number Two makes it even more difficult for the CFPB to defend its proposed regulations.  Leading us to Dot Number Three.

Dot Number Three: The Consumer Financial Protection Bureau is, in fact,  about to release rules governing payday lending practices [NYT] against which the $46 billion a year industry is lobbying hard and fast.

“The rules are expected to address expensive credit backed by car titles and some installment loans that stretch longer than the traditional two-week payday loan, according to industry lawyers, consumer groups and government authorities briefed on the discussions who all spoke on the condition of anonymity because the deliberations are private. Certain installment loans, for example, with interest rates that exceed 36 percent, the people said, will most likely be covered by the rules.

Behind that decision, the people said, is a stark acknowledgment of just how successfully lenders have adapted to keep offering high-cost products despite state laws meant to rein in the loans.” [NYT]

Translation: Because the payday lenders have been relatively successful thus far in avoiding or mitigating the attempts by the states to rein in some of their more egregious practices, the CFPB has stepped in to assist consumers avoid these financial pitfalls.  And, the Republicans are quite obviously marching in step with payday lending industry lobbyists.  Now, we can see why this was one of the first bills introduced in the 114th Congress, the timing isn’t simply a matter of coincidence.

Dot Number Four: There is a secondary market for payday lender loans. [HoustonSmallBus] [ABA]  And, wouldn’t you know it – AIG and private equity group Fortress Investment Group launched a securitization of sub-prime personal loans (read: payday) in February 2013. [WallStJ]

“The $604 million issue from consumer lender Springleaf Financial, the former American General Finance, will bundle together about $662 million of loans secured by assets such as cars, boats, furniture and jewelry into ABS, according to a term sheet. Some loans have no collateral.” [WSJ]

The last time someone tried this – Conseco Finance Corporation – things did not end well. Conseco ended up in bankruptcy in 2002.  ZeroHedge opined that the Springleaf Financial deal was a resurrection of the worst of the pre-Great Recession credit bubble.   With this in mind, should it come as any surprise that Springleaf Financial partnered with private equity firm Centerbridge Partners LLP in wanting to buy into Citigroup’s One Main Financial – the big banks subprime lender? But wait, there are more suitors.  Citigroup is trying to offload that subprime business, to focus on “the affluent customer,” and Apollo Global Management has joined the potential buyers list as of January 2015.  [BloombergBus]

Let’s muse: If the Consumer Financial Protection Bureau announces regulations that might put a crimp in the profitability of payday loans, particularly those subprime personal loans which have been securitized (ABS) then the bidders from the Springleaf/Fortress operations and Apollo Global Management might not want to pay more for Citigroup’s One Main Financial – which it would very much like to offload onto someone – Lonestar, Springleaf/Fortress, or Apollo Global Management?

Or, to muse and speculate less kindly:  There’s a deal in the works to sell a subprime personal loan unit from a major U.S. bank; there are bidders from private equity firms, and it would be better for the Big Bank if the CFPB would butt out of any activity which would make the subprime personal loan units less attractive.  Further, the subprime personal loan securitization schemes might be less profitable if the CFPB puts the brakes on some of the more “profitable” practices.   If the subprime personal loan lenders aren’t as “profitable” then they might not be able to bid as much as wished for the One Main Financial spin off?

Hence, it’s necessary, nay Vital, that the CFPB be made to back off the subprime personal loan regulations and allow the bankers to continue to securitize those loans and to deal for a bigger share of the subprime personal loan pie?  Would this be part of the reason for the rush to get H.R. 50 through a compliant House of Representatives?

The Republicans have not demonstrated any particular interest in protecting the sharks of the natural variety, but they seem bent on protecting the financial ones.  And, the bigger the shark the better?  Nevada Representatives Amodei, Heck, and Hardy played right along.  Representative Titus (D-NV1), to her credit,  voted “no.”

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Filed under Amodei, banking, Economy, financial regulation, Heck, Nevada politics

Heck, Hardy, Amodei vote for Big Government in Women’s Health

Woman's Womb 

H.R. 7 is a beauty, that would be Beauty with scare quotes around it. Here’s what Nevada Representatives, Hardy (R-Bundy Ranch), Amodei (R-NV2), and Heck (R-NV3) voted in favor of: [RC 45]

No funds authorized or appropriated by Federal law, and none of the funds in any trust fund to which funds are authorized or appropriated by Federal law, shall be expended for any abortion.

Someone missed the message from the Hyde Amendment, there is NO federal funding for abortion procedures.  But wait! It gets worse.

None of the funds authorized or appropriated by Federal law, and none of the funds in any trust fund to which funds are authorized or appropriated by Federal law, shall be expended for health benefits coverage that includes coverage of abortion.

No funds subsidized by federal monies may to applied to health care insurance which includes abortion procedures.

No health care service furnished–`(1) by or in a health care facility owned or operated by the Federal Government; or`(2) by any physician or other individual employed by the Federal Government to provide health care services within the scope of the physician’s or individual’s employment,may include abortion.

There can be no abortion procedures in any federal facility or by any doctor employed by the federal government.

Nothing in this chapter shall be construed as prohibiting any individual, entity, or State or locality from purchasing separate abortion coverage or health benefits coverage that includes abortion so long as such coverage is paid for entirely using only funds not authorized or appropriated by Federal law and such coverage shall not be purchased using matching funds required for a federally subsidized program, including a State’s or locality’s contribution of Medicaid matching funds.

If a family or individual wants health insurance coverage which includes abortion services it must be purchased privately.

Nothing in this chapter shall be construed as restricting the ability of any non-Federal health benefits coverage provider from offering abortion coverage, or the ability of a State or locality to contract separately with such a provider for such coverage, so long as only funds not authorized or appropriated by Federal law are used and such coverage shall not be purchased using matching funds required for a federally subsidized program, including a State’s or locality’s contribution of Medicaid matching funds.

Insurance companies are ‘perfectly free’ to draft and sell individual health insurance policies covering abortion procedures.  For a price? Probably a hefty one?

The limitations established in sections 301, 302, and 303 shall not apply to an abortion–`(1) if the pregnancy is the result of an act of rape or incest; or`(2) in the case where a woman suffers from a physical disorder, physical injury, or physical illness that would, as certified by a physician, place the woman in danger of death unless an abortion is performed, including a life-endangering physical condition caused by or arising from the pregnancy itself.

Notice the big gap in this section! Only if the pregnancy is the result of rape or incest, or is PHYSICALLY dangerous can an abortion be provided.  A woman who is at serious risk for debilitating postpartum depression would be denied abortion procedures under the terms of this bill.  We should drill down more deeply on this one, because this is the point at which the politicians are getting between the woman, her family, and her physician.

Postpartum depression is NOT a “mood swing,” and it’s not merely the old “baby blues” after delivery.  There’s postpartum depression, which can be treacherous, and worse still in some cases the situation devolves into post partum psychosis.   Evidently, the three male Representatives from Nevada aren’t all that concerned about the symptoms described by the Mayo Clinic, including: loss of appetite, insomnia, intense irritability and anger, overwhelming fatigue, feelings of shame/guilt/inadequacy, severe mood swings, difficulty bonding with the new baby, withdrawal from family and friends, and thoughts of harming self or the baby. The psychosis element includes confusion and disorientation, hallucinations and delusions, paranoia, and actual attempts to harm self or the infant.

However, the provisions of H.R. 7 would not consider the needs of a family in which the mother had previously been treated for postpartum depression (or psychosis for that matter) when it comes to a recommendation from the family doctor that should a pregnancy occur, then it should be terminated before the mother’s mental health issues worsen.

Let’s be clear, postpartum depression occurs in an estimated 9-16% of all postpartum women. Among women who have already experienced PPD after a previous pregnancy the odds of a relapse go up to 41%.  [APA] We’re not speaking of small numbers here.  As of the CDC’s last report, there were 3,932,181 births registered in the United States (2013). A quick resort to the calculator and we’re speaking of 353,896 women who are projected to have postpartum depression using the conservative estimate of 9%.  And, yes, postpartum psychosis is rare, occuring in about 0.1% of all births, but that’s still 3,932 instances taking the 0.1% rate. [PPN]  If a mother has a history of bipolar disorder or has had a previous psychotic episode there is a significant risk of postpartum psychosis, which unfortunately can lead to a 5% suicide rate and a 4% infanticide rate associated with the illness. [PPN]

It takes a bit of intelligence and sensitivity to think through the difference between the “baby blues” common in about 80% of perinatal women and the postpartum depression in up to 16%, or even postpartum psychosis at the 0.1% rate.  Quite evidently, our male Representatives to the Congress of the United States are still stuck on the hackneyed and debunked myths; myths like “postpartum depression is rare,” or “PPD will go away on its own,” or “if you just stay positive you won’t get PPD,” or “if she’s not crying all the time it’s not PPD.”  What makes the voting record all the more astonishing is that one of our Representatives is a health care professional who should know better.

Omitting the mental health component in the bill is tantamount to saying women’s perinatal mental health issues aren’t important, or women just use the “baby blues” to rationalize an unwanted child, or women and their physicians can’t be trusted to determine the best outcome for the family. Or, all of the above.   And, yes – Nevada’s three male Representatives just said We’re All For A Government Big Enough To Control Every Woman’s Womb.

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Filed under Amodei, Health Care, health insurance, Heck, Nevada politics

Death and Resurrection: Attacks on Financial Regulation Reform

Avarice Dante

Watch enough television and a person could get the impression that the greatest threats to mankind are bloody minded terrorists and crashing aircraft.  However, the “If It Bleeds, It Leads” brand of modern journalism tends to distract us from some much more realistic threats to our well being.

The odds of being killed in a terrorist attack are approximately 1 in 20,000,000.  The odds that our financial and economic well being are in jeopardy are being created right now in a Congress which has thus far in its short existence catered to the Financialists – those “weary souls” who will never have enough gold (wealth) to relax.   Witness the attempt at unraveling the Dodd-Frank Act financial regulation reforms during the first week in the 114th Congress.  [Business Day, NYT]

The bill was called the “Promoting Job Creation and Reducing Small Business Burdens Act.” [H.R. 37]  Nothing could have been much further from the truth of the matter. The opponents of bank regulation are depending on a public which doesn’t know a “counter-party” from a “counter-pane.”  This bill was an attack on the imposition of the Volcker Rule, and would have allowed some private equity funds from having to register with the S.E.C.   There is nothing in the bill about “creating jobs” except the old hoary delusion that making bankers more wealthy will “trickle down” eventually – sometime after the Second Coming?

Nor are any “small businesses” being “burdened,” unless of course we mean wealth management, hedge, and other financial services corporations with a small number of employees and massive amounts of money under management.  We are not, repeat NOT, speaking here of Joe’s Garage, Maria’s Dress Shop, or Anderson’s Bodega and News-stand.  In addition to the two big blasts at the Dodd Frank Act reforms, H.R. 37 contained provisions for lots of other goodies the financialists would like to find in their 4th Circle.

There were changes in margin requirements, changes in the accounting treatment of affiliate transactions, the registration of holding companies, a registration threshold for savings and loan holding companies, a ‘brokerage simplification act,’ a registration exemption for merger and acquisition brokers, a repeal of indemnification requirements for SWAP repositories and clearinghouses, changes to benefit “emerging growth companies,” – an EGC is any company with less than $1 Billion in gross revenue in a given year, extended deadlines for dealing with collateralized loan obligations, and various provisions to make fewer required reports from the financial sector EGC’s to the regulators.   In short, nothing in the bill had anything to do with the garage, the dress shop, or the neighborhood bodega.  This was a bill BY the financial services industry, FOR the financial services industry, or as Minority Leader Pelosi called it, “An eleven bill Wall Street Wish List.”

The good news is that this bill was defeated in the House on January 7, 2014 [rc 9] – the bad news is that the defeat came because the Republican leadership went for expedited passage and Democrats who had previously supported some provisions bailed out on them leaving the leadership without the 282 votes necessary for passage.  [Bloomberg] And, there’s more bad news – next time the Republican leadership won’t make the same error, and the bill will come up in another form, this time requiring only a simple majority.

As the bills come back in resurrected form, perhaps a short glossary of Republican rhetoric is desirable:

Small Business – any private equity or wealth management firm with less than a BILLION dollars in annual revenue.

Job Creation – any bill which allows financial sector (Wall Street) banks to make more money; see “Trickle Down Hoax.”

Burdensome Regulation – any requirement that a private equity or other investment entity doesn’t want to follow, even if it means leaving the public (and investors) in the dark about financial transactions.

Simplification Act – provisions in a bill to make it easier for private equity or any investment/wealth management firm to conceal what it is doing from financial regulators – and from anyone else.

Improving Financing – provisions in a bill to let the Wall Street bankers revert to the old Casino format of complicated, convoluted, and “creative,” financing of the variety best known for crashing and burning in 2007 and 2008.

Encouraging Employee Ownership – a provision in a bill to — “to increase from $5,000,000 to $10,000,000 the aggregate sales price or amount of securities sold during any consecutive 12-month period in excess of which the issuer is required under such section to deliver an additional disclosure to investors. The Commission shall index for inflation such aggregate sales price or amount every 5 years to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, rounding to the nearest $1,000,000.”  (This is NOT a joke.)

Since the people who want the enactment of these provisions are not satisfied with “all the gold under the moon, or ever has been,” the specifics of H.R. 37 will be resurrected, re-introduced, and the Republicans will seek passage of every item on the Wall Street Wish List.

Voting in favor of the H.R. 37 Wall Street Wish List were Representatives Heck (R-NV3), Amodei (R-NV2), and Hardy (R-Bundy Ranch). Representative Titus voted against the roll back of the Dodd Frank financial regulations reforms.

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Filed under Amodei, Economy, financial regulation, Heck, Titus

Citigroup’s Coup

Citigroup 2

Oh, how those investment bankers deplore the “burdensome,” “onerous” regulations – you know, the ones that prevent them from gambling with money in depositor’s accounts.  And, oh how they’d love to have Freedom to create jobs (their own) … so they got it in the spending bill.  In short, the Christmas gift from the House of Representatives to Wall Street is a spending bill that allows the bankers to privatize their profits and socialize their losses.  If the next round of fun in the Wall Street Casino goes haywire, the taxpayers will be on the hook to bail them out – again.

Senator Elizabeth Warren called the bill the “Citigroup Shutdown,” or ‘let us get out from under the regulations of the Dodd Frank Act – or the government will face a shutdown.’  There might not have been such a blatant  situation since the Beslan School hostage crisis of 2004.  Among those making the demands on behalf of the provision drafted by Citigroup lobbyists was none other than JPMorganChase’s Jamie Dimon.

What’s inside the Christmas Gift from the taxpayers?  A way to get as far as possible from the push-out rule in the Dodd Frank Act.

“Banks hate the push-out rule…because this provision will forbid them from trading certain derivatives (which are complicated financial instruments with values derived from underlying variables, such as crop prices or interest rates). Under this rule, banks will have to move these risky trades into separate non-bank affiliates that aren’t insured by the Federal Deposit Insurance Corporation (FDIC) and are less likely to receive government bailouts. The bill would smother the push-out rule in its crib by permitting banks to use government-insured deposits to bet on a wider range of these risky derivatives.”  [MJ]  (emphasis added)

No longer are insured deposits immune from being put on the table in the Wall Street Casino – there is no ‘Chinese Wall’ between depositors money and the ‘chips’ for the Wall Street traders – there isn’t even a wicker fence between your money and the trading desks.  What could possibly go wrong?

Can we say HOUSING BUBBLE?  Can we say MORTGAGE BACKED DERIVATIVES?   And, just as the American Banker predicted, we’re reminded of the role played by the bankers in the Debacle of 2007-08:

“What they won was the repeal of a Dodd-Frank Act provision that requires them to push out a portion of their derivatives business into subsidiaries. Big banks fought against its inclusion in the 2010 financial reform law and have been steadily fighting to repeal it ever since. The spending bill is expected to pass the Senate in the coming days.

But in finally getting what they wanted, big banks also thrust themselves back into the limelight in the worst possible way, simultaneously reminding the public of their role in causing the financial crisis and in their continuing influence over the various levers of the U.S government. In one fell swoop, they undid whatever recovery to their battered reputation they’d made in the past four years and once again cast themselves as the prototypical supervillain in a comic book movie.”

Yes. They. Did.  By a 219-206 vote the Cram-nibus bill made it through the House of Representatives.  Nevada Representatives Amodei, Heck, and Horsford voted in favor of the bill.  Representative Titus voted against it. [roll call 563]

On the Senate Side

Senate Majority Leader Harry Reid (D-NV) is expecting a quick vote.

Senate Democratic leader Harry Reid said he hoped the bill would pass on Friday to spare Americans the drama of yet another budget crisis. While there could be some opposition to the measure from both the left flank of the Democrats and some Republicans, it appeared it would garner the 60 votes needed in the 100-seat Senate to overcome any procedural blocks. [Reuters]

Let’s assume that most of the Republicans will be in favor of the bill, there may be some outliers in that camp who’d like to do a bit of show-boating but it wouldn’t be prudent to assume they’ll oppose it in the final analysis.  However, with the Citigroup Draft included in the bill the remaining supporters will have some explaining to do to the folks back home, for example:

How can you say you are against bank bail outs and vote in favor of a bill which lets banks gamble in the derivatives market with insured deposits?

This can be accomplished with a bit of verbal legerdemain, such as practiced by Senator Dean Heller (R-NV).  Senator Heller is fond of criticizing the provisions of the Dodd Frank Act (financial regulation reform), he’s even called for its outright repeal. [DB, FreedomWorks, DB]

The junior Senator is quite fond of citing his vote against the TARP bill as “proof” he’s against bank bail outs.”  While he’s telling Nevadans how much he disapproves of bank bail outs, his actual voting record is a banker’s delight and he added to his bank talking point repertoire by hauling out the “community banks” card during a Senate Banking Committee meeting in 2013 about the ‘evils’ of the Dodd Frank Act.  However, mostly he’s railed on about “onerous, burdensome,” … oppressive, weighty, worrisome, stressful, demanding, taxing, difficult, irksome, heavy, wearing, crushing, exacting, and maybe even superincumbent … government regulations. That’s his “out.”

Oh, yes, he’s all in favor of good banking practices – he just doesn’t want to burden, concern, load, strain, trouble, afflict, encumber, hinder, or grieve the bankers. He doesn’t want to cause them hardship, put the onus on them, hold them accountable, or bedevil them with obstructions, millstones, or balls and chains.   The upcoming vote on the spending bill will be highly instructive – If Senator Heller is SO opposed to bank bail outs that he never wants to see another one, will he vote for a measure which all but guarantees the bank trading desks will engineer another bubble, and take down the U.S. economy with it? – creating the necessity of yet another bail out?

The ABA was right – the provision in the spending bill puts the banks in some unwanted limelight, and puts a spotlight on members of the Senate like Dean Heller – will he have to find yet one more excuse to explain away his Banker’s Best Boy reputation?

We do need some fast action on the bill, but Senator Reid would be well advised to give support for an amendment stripping the Citigroup gutting of the Dodd Frank Act from the measure.  The Citigroup insertion is a ‘poison pill’ – swallow it and the financial reforms become a travesty – don’t swallow it and face the wrath of right wing talkers and pundits about how the “Democrats caused the shutdown.”  Rock meet hard place.

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Filed under Amodei, Economy, financial regulation, Heck, Heller, Politics