CCH Financial Reform News Center

Wall Street Profiting From Jobs Legislation

By Serena Lynn, Editor, the CCH Federal Banking Law Reporterand Bank Digest.

Ranking Member of the Finance Committee, Sen. Chuck Grassley, R-Iowa, made the following comment about the House “jobs” legislation’s expansion of the Build America Bonds provision. “Build America Bonds were created in the stimulus last year as a temporary program. A recently-passed House bill included an expansion. The Senate then passed a further expansion and sent the bill back to the House. The House took the Senate’s bill and made it richer. Now a temporary program is becoming bigger, and Wall Street is seeking to make it permanent. Wall Street is profiting and cheering the expansion. Build America Bonds are portrayed as an easy way to help school kids and green energy. What’s left out is that this is a spending program disguised as a tax cut, getting bigger each year, and Wall Street takes a healthy share. In an era of bailouts and disgust with government spending, House members should have to answer for giving yet more taxpayer dollars to Wall Street and foreign investors. Senators should understand the vote they’re about to take.”

President to Announce New Details on Small Business Incentives

By Paula Cruickshank, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter.

President Obama on January 29 will outline several proposals to spur new hiring by small businesses and to increase wages or hours of work for existing employees. Under the president’s plan, small businesses and non-profit organizations would receive a $5,000 tax credit for every new employee hired in 2010. The credit would be capped at $500,000 per business and $250,000 for start-up businesses.

Small businesses would be reimbursed for the Social Security payroll taxes paid on real increases in their payrolls. According to a White House release, businesses that increase wages, expand hours or hire new workers would get a credit against the added payroll taxes. The bonus would be based on Social Security payrolls and would not apply to wage increases above the current taxable maximum of $106,800. A senior administration official said the proposal is tantamount to a “de facto payroll tax holiday” but emphasized that it should not be confused with a payroll tax.

New Efforts to Improve to Small Businesses Credit for Announced

This story appeared in Bank Digest.

The Obama Administration has announced new measures as part of an ongoing effort to help small businesses access credit and create jobs. These measures include:

• Taking further steps to provide small businesses with access to credit by supporting community bank lending through the Financial Stability Plan.
• Seeking legislation to increase maximum SBA loan sizes to allow more businesses to access the credit they need to expand and create new jobs.
• Convening a Treasury/SBA Small Business Lending Conference to work with regulators, lenders and congress to ensure credit is available to small business

House Speaker Nancy Pelosi, D-Calif, commended the plan, stating, "Providing incentives for community banks and community development financial institutions to lend in low- and moderate-income communities will help create jobs, fueling our economic recovery."

President Signs Legislation Strengthening Securities Fraud and Financial Fraud Enforcement; Creating Commission to Examine Causes of Financial Crisis

James Hamilton, J.D., LL.M., Principal Analyst, CCH Federal Securities Law Reporter; and CCH Derivatives Regulation Law Reporter.

President Obama has signed the Fraud Enforcement and Recovery Act (FERA) improving the enforcement of securities and commodities fraud and financial institution fraud involving asset-backed securities and fraud related to federal assistance and relief programs. The legislation expands the scope of securities fraud provisions to include commodities and derivatives fraud and extends the prohibition against defrauding the federal government to the TARP program and to the stimulus bill. The legislation also provides the Department of Justice with the tools it needs to fight fraud in the use of funds under TARP and the American Recovery and Reinvestment Act. The legislation creates the Financial Crisis Inquiry Commission to examine and report on the causes of the financial crisis.

Financial Services Committee Approves Bill to Prohibit Bonuses from TARP Recipient Companies

This story appeared in Bank Digest.

The Financial Services Committee approved H.R. 1664, the Grayson-Himes Pay for Performance Act of 2009, which would prohibit certain compensation payments by companies that have received direct capital investments under the Troubled Assets Relief Program and the Housing and Economic Recovery Act until those investments have been repaid. The bill would prohibit any compensation payments that were unreasonable or excessive, restrict all non-performance based bonuses and repeal a provision in the American Recovery and Reinvestment Act that permits bonuses to be paid if they are due under employment contracts entered into on or before Feb. 11, 2009. Annual reporting requirements also would be imposed on covered institutions.

Practitioners Await Guidance on ARRA Executive Compensation Limits

By George L. Yaksick Jr., CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter, March 20, 2009.

The Treasury Department is expected to release guidance soon on executive compensation limitations in the American Recovery and Reinvestment Act of 2009 (2009 Recovery Act) (P.L. 111-5), practitioners said during a Web cast sponsored by the American Bar Association’s Joint Committee on Employee Benefits on March 19. In the meantime, practitioners are left questioning if many of the 2009 Recovery Act limitations apply now or when the Treasury Department issues guidance

Small Businesses to Benefit from Recovery Package and Unlocking Credit Initiative

By Paula Cruickshank, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter, March 16, 2009.

Several provisions of the recently enacted economy recovery package will provide tax cuts for small businesses or tax incentives to encourage investment in them, President Obama said on March 16. The president noted the tax incentives during his announcement of a new Treasury plan to jumpstart credit markets for small business owners and entrepreneurs.

The American Recovery and Reinvestment Act of 2009, P.L. 111-5, includes provisions to allow small businesses to immediately write off up to $250,000 in plant and equipment investment and to reduce estimated tax payments to 90 percent of the previous year’s taxes.   The 2009 Recovery Act also allows small businesses to carry back their losses for up to five years.

FTC Warns of Economic Stimulus Scams

Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter, March 5, 2009.

Scammers are taking advantage of President Obama’s economic stimulus package to lure unsuspecting consumers into disclosing bank account and credit card information over the Internet, the Federal Trade Commission (FTC) warned March 4. Eileen Harrington, acting director of the FTC’s Bureau of Consumer Protection, said the scams have “literally mushroomed up overnight.”

FAQs Address CPP Changes under Stimulus Act

The Treasury Department has issued a set of frequently asked questions addressing Capital Purchase Program changes under the American Recovery and Reinvestment Act of 2009. http://www.ustreas.gov/press/releases/reports/CPP-FAQs.pdf

White House Budget Includes $250 Billion Contingent Reserve for Financial System

Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter, Feb. 26, 2009.

President Obama’s fiscal year 2010 budget blueprint includes a $250 billion contingent reserve in case further efforts are needed to stabilize the financial system. The reserve, which is in addition to the $700 billion already allocated by Congress to bolster the financial system, would support $750 billion in asset purchases, according to the budget documents released February 26.