As the euphoria from Tuesday fades, the President, Congress, regulators and lobbyists face a staggering agenda for the 2012 lame-duck session, which starts next week and runs to the end of the year. Many of the agenda items to be considered during what is usually a lackluster session will have a major impact upon financial services firms great and small.
Some of the top items on the to-do list affecting financial services are:
The much-ballyhooed need to craft a deal to sidestep the “fiscal cliff” of automatic tax increases coupled with cuts in defense spending and governmental services that many groups predict will crater a weak economic recovery; More discussions among the SEC, bank regulators and legislators about the finer points of the Volcker Rule, which is a Dodd-Frank provision intended to end proprietary trading at banks and securities firms;
- Major steps forward for over-the-counter (OTC) swaps reforms, also via Dodd-Frank;
- New faces leading the SEC, CFTC and the US Treasury;
- And the near certainty that the CFTC will issue a new version of commodity position limits after the first iteration was struck down in the courts.
These items and more will need all parties to work together in ways they haven’t been over the past four years. While President Obama, key Congressional leaders and even regulators have been talking bipartisanship, they have more often than not wound up engaged in bitter struggles that take things to the brink of disaster.
The better way is to revive the art of compromise—something that needs to happen in order for the lame-duck session to be a success. President Obama and Governor Chris Christie showed in the days after Hurricane Sandy that cooperation and coordination can happen even if both parties are from two very different sides of the aisle.
As CFTC commissioner Bart Chilton pointed out in a recent interview with FTF News, natural disasters and terrorist attacks bring out the best in people and bring people together—if only temporarily. “That’s one of the silver linings for these very sad circumstances,” Chilton says.
But promises and speeches can undercut bipartisanship. “All too often these political campaigns have a rhetoric that’s unfortunate and goes too far,” Chilton adds. “I’m pleased that there appears to be some bipartisan understanding of how to go forward in the aftermath of the hurricane. But we’ll see how long that exists.”
Of course, it shouldn’t take a disaster to bring politicians together to make the case that government works best when there is cooperation from all parties. Chilton has seen it work.
“I miss it. I’m frustrated and disappointed in today’s politicians. I worked on Capitol Hill for three decades and I saw a lot of great Republicans and a lot of really great Democrats who have worked together to get the peoples’ work done,” he says.
“And quite frankly it’s a sad circumstance where we are today in how things are done in Washington,” Chilton says. “I certainly understand the frustration in the country with how Washington operates. I operate in Washington and I’m frustrated too.”
But time is running out. Circumstances are not allowing the winners and losers of Tuesday’s elections much of a breather.
During the lame-duck session, the first big test will be whether Congress and the President can really hammer out in record time a “fiscal cliff” compromise or a framework for one. If they can, it will lay the groundwork for more deals and negotiations next year.
After such a long election season, maybe both sides will be tired of speechifying and will be more than ready to get something done. The alternative is a return to the cycle of gridlock, bickering and brinksmanship that brings government to a standstill and strangles the financial markets.
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