TUESDAY’S BIG STORY:
Making a sale: The Senate Banking Committee on Tuesday is set to tackle the last remaining major policy revamp left over from the financial crisis more than five years ago — housing finance reform.
The panel will aim to amend and vote on a housing overhaul bill offered by the panel’s chairman, Sen. Tim Johnson (D-S.D.), and its top Republican, Sen. Mike Crapo (Idaho).
{mosads}The bill makes the elimination of federal mortgage giants Fannie Mae and Freddie Mac a stronger possibility.
The Johnson-Crapo proposal would dismantle Fannie and Freddie and replace them with a Federal Mortgage Insurance Corporation over a period of at least five years.
More focused policy ideas have emerged in recent months and many housing industry experts give the Johnson-Crapo measure the best chance for success because it meshes a broad range of policy ideas into its legislation.
Still, while there is plenty of agreement that the housing market needs an overhaul, there are still concerns about how it will all come together and whether it will work to bolster the still-recovering sector or create more problems.
Supporters say a strong bipartisan vote in the committee will provide the momentum needed to get the measure onto the Senate floor and, eventually, apply pressure on the House to act.
Last week, Shaun Donovan, the secretary of Housing and Urban Development, gave the legislation a strong endorsement, calling it Congress’s best chance to rework the housing market.
“This is the best chance we have this decade to achieve reform,” he said. “This is the time to finally make reform reality. We have a chance in our hands to bring this across the finish line.”
WHAT ELSE WE’RE WATCHING
Hot topic: All of a sudden, Congress has tax extenders fever.
The House Ways and Means Committee is set to consider a half-dozen tax incentives that expired at the end of 2013, all part of Chairman Dave Camp’s (D-Mich.) efforts to either extend preferences for the foreseeable future or toss them on the scrap heap.
The six provisions Ways and Means will consider on Tuesday include extenders with fairly broad support across the aisle, including the research and development credit and the deduction for business expenses known as Section 179. In all, more than 50 tax breaks expired at the end of 2013.
But that doesn’t mean the permanent extensions of those tax breaks, with a price tag of more than $300 billion combined over a decade, will sail through Ways and Means without any resistance.
Democrats, for instance, have noted that Republicans will give the thumb’s up to extending the tax provisions without an offset but have demanded that the costs of renewing unemployment insurance be paid for.
The liberal group Citizens for Tax Justice said that the priorities set for Tuesday’s markup proves that lawmakers “are grossly out of step with the vast majority of the people they represent.”
But business groups like the National Association of Manufacturers said Camp and the Ways and Means panel has their full support.
Camp, who is not seeking reelection this year, has said that the permanent extensions could help spur momentum for tax reform.
But his approach also makes it even harder to predict what will happen this year to extenders, which is about all the major tax legislation that could reasonably be expected to get across the finish line. Most tax writers and observers don’t expect anything on extenders to get wrapped up before the November elections.
In the Senate, Finance Committee Chairman Ron Wyden (D-Ore.) has taken the approach of past tax writing chairmen in seeking a two-year extension of most of the lapsed tax breaks. Majority Leader Harry Reid (D-Nev.) has said he expects the Senate to vote on that package during the current work period.
SEC sesh: The House Financial Services Committee will open its doors tomorrow to Mary Jo White, the chairwoman of the Securities and Exchange Commission.
Republicans have long been critical of the financial watchdog and its work on Dodd-Frank, and that will be on Tuesday’s agenda.
In addition, lawmakers are likely to talk with the SEC about its implementation of the JOBS Act, its funding request and whether it is doing anything on the contentious world of high-frequency trading.
For her part, White will be looking to defend her agency’s work, while defending another budget boost it requested earlier this year.
CFPB examination: On Tuesday afternoon, a House Financial Services subcommittee will gather to vote on whether it should compel answers from two directors at the Consumer Financial Protection Bureau about claims of employee mistreatment at the upstart agency.
Earlier this month, a bureau attorney told the panel the agency discriminated against and punished a group of employees, including herself. The bureau itself refused to allow the panel to invite directors to testify, citing its own investigation into the matter. But the committee hopes to force their appearance, along with a representative of the National Treasury Employees Union who also refused to testify.
Fed votes: The Senate Banking Committee will vote Tuesday on three nominees to join the central bank, which is facing several vacancies on its seven-member policy-setting board.
The nominees up for consideration are Stanley Fischer, to be the next vice chairman, and Lael Brainard and Jerome Powell, to serve as Fed governors.
Fischer previously served as the head of Israel’s central bank, Brainard most recently was a top Treasury Department official on international finance, and Powell is serving as a Fed governor but is seeking a full 14-year term after wrapping up an abbreviated stint.
None of the nominees faced substantial opposition in March during a panel hearing.
A speedy confirmation would come as welcome news for the Fed, which needs to fill four spots. The fourth will open when Jeremy Stein steps down in May to return to his teaching post at Harvard University.
Budget defense: Treasury Secretary Jack Lew will testify on Tuesday before House appropriators about spending levels for his agency.
LOOSE CHANGE
Another round: U.S. and European Union trade officials will meet from May 19-23 in Washington for the fifth round negotiations for a Transatlantic Trade and Investment Partnership.
ECONOMIC INDICATORS
Consumer Confidence: The Conference Board’s monthly report could show that confidence improved in April. The report can be helpful in predicting shifts in consumer spending.
S&P/Case-Shiller 20-city Index: Home prices may have ticked up in February in the nation’s 20 largest metropolitan areas, a housing price index report could say on Tuesday.
WHAT YOU MIGHT HAVE MISSED
— Republicans reject Lerner meeting
— Forbes vows to keep the USS George Washington
— Labor pledges $150 million for new job-training program
— Vilsack: Japan must open agricultural sector to remain part of TPP talks
— US takes Philippines off intellectual property watch list
— Pending home sales make first gain in nine months
— Fed orders new capital data from Bank of America after math error
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