House Financial Services Chairman Barney Frank (D-Mass.) is aiming to get the final amended package to the House floor by Thursday. That package will include Treasury's proposal to:
Senate Majority Leader Harry Reid (D-Nev.) stated it is necessary to add Treasury’s proposal to the housing bill now, instead of trying to pass a separate bill later. Yet, House Minority Leader John Boehner (R-Ohio) argued that the housing package should be considered separately and encouraged having a thorough hearing on the Treasury recommendations.
The Republican leadership position is in direct opposition to President Bush has argued that Treasury's proposal, along with oversight changes, are needed in the housing package moving through the House in order to stabilize them and increase confidence.
The underlying bill, which the Senate passed 63-5 on July 11, would revamp oversight Fannie Mae, Freddie Mac and the Federal Home Loan Bank System (FHLBS). The bill also would overhaul the Federal Housing Administration’s (FHA) mortgage insurance program and allow FHA to guarantee up to $300 billion in new loans for at-risk sub-prime borrowers.
One House-passed amendment considered and offered by Senate Banking Chairman Christopher Dodd (D-Conn.) and Ranking Member Richard Shelby (R-Ala.) establishes a new, independent regulator for Fannie Mae, Freddie Mac and FHLBS. The Dodd-Shelby language endows this regulator with broad new authority, equivalent to the authority of other federal financial regulators. However, the Senate measure would have the new regulator in place immediately, while the House version would wait until the next administration.
The Senate bill also has lower conforming loan limits, and raises the limit on the value of mortgages eligible for purchase by Fannie Mae and Freddie Mac to about $625,000 for the highest-price metropolitan areas, compared to a $730,000 limit in the House version.
Finally, the Senate bill contains a $14 billion package of tax incentives. Unfortunately, in order to comply with pay-go budgetary rules, the Senate chose to use the electronic payment reporting requirement as an offset--a provision NSBA opposes.
The electronic payment reporting requirement would require credit and debit card companies as well as banks and financial institutions to report to the IRS each year the total credit card, debit card and electronic payment transactions for businesses. That information would be used to develop trends for determining industry “average” incomes, and used by the IRS in the future.
In addition to increased reporting, this provision would require credit and debit card companies to verify businesses' taxpayer identification number. If they are unable to do so, the credit and debit card companies will withhold and remit to the IRS 28 percent of the business sales until accurate information is confirmed.
According to Senate Finance Committee Chairman Max Baucus (D-Mont.) and Ranking Member Charles Grassley (R-Iowa), the provision would raise $9.8 billion in new revenues over 10 years and would exempt reporting of transactions for $10,000 or less in cases in which a third-party settlement organization handles fewer than 200 transactions. However,
these new requirements will lead to costly new processes for credit and debit card companies which will lead to increased fees being passed on to small-business owners.
According to many, the differences between the Senate bill and an earlier House-passed version are minimal and leadership is confident a bipartisan, bicameral compromise will be reached later this week.
Please click here for more information on the electronic payment reporting requirement.