September 30, 2022

House Again Seeks Votes, After Failing to Pass Debt Plan

“Any solution to avoid default must be bipartisan,” Mr. Obama said. “I urge Democrats and Republicans in the Senate to find common ground on a plan that can get support from both parties in the House, a plan that I can sign by Tuesday.”

Mr. Obama urged Republicans in the House and Senate to abandon a bill that “does not solve the problem” and has no chance of passage in the Senate.”

“There are a lot of crises in the world that we can’t always predict or avoid, he said. “This isn’t one of those crises.”

But there was no clear signal what the next step would be. Among the several possibilities were changes to the House bill, an attempt by Senate Democrats to leapfrog forward with their own plan, or a new attempt to reach a compromise on the part of all the major players.

In an effort to break the logjam, Senator Harry Reid, the majority leader, called on Senator Mitch McConnell, the Republican leader, to meet with him on Friday to try to resolve to the stalemate, given the failure of House Republicans to advance their own budget proposal.

“My door is open,” Mr. Reid said as the Senate convened. “I will listen to any idea to get this done in a way that prevents a default and a dangerous downgrade to America’s credit rating. Time is short, and too much is at stake, to waste even one more minute.

“The last train is leaving the station,” he said. “This is our last chance to avert default.”

Mr. McConnell, who had earlier been working with Mr. Reid on a fallback plan, abandoned that attempt and has been supporting the effort by the House speaker, John A. Boehner, to push through a proposal that would raise the debt limit in two stages — an approach flatly rejected by Senate Democrats and the White House. Mr. McConnell also had been talking with Vice President Joseph R. Biden Jr. but broke the conversation off while the Boehner plan was pending.

Mr. McConnell, too, came to the Senate floor and offered little indication that he was ready to deal, accusing Democrats of devoting recent days to undermining the House plan. “Our Democratic friends in the Senate have offered no solutions to the crisis that can pass either chamber,” he said.

Mr. Reid said he would be moving within hours to force votes on his own plan to cut spending by about $2.5 trillion over 10 years and raise the debt limit through 2012, a move that would lead to a crucial showdown vote over the weekend. He said he would be making changes to his measure to attract more support but made clear that he considered the Senate plan the final effort to avert a default next week.

“There will be no time left to vote on another bill or consider another option here in the Senate,” he said. “None.”

Mr. Reid said he had also had a “sobering” conversation on Friday with Treasury Secretary Timothy F. Geithner about the consequences of a default.

“It is really precarious for our country,” he said. Just minutes from a roll-call vote on the plan pushed by Mr. Boehner, Republicans stunned the House on Thursday by interrupting the debate and turning to routine matters while Mr. Boehner and his lieutenants tried to pressure reluctant conservatives into backing their plan. The House then went into a recess and shortly before 11 p.m., the leadership announced that no vote would be held.

The surprise postponement threw the endgame of the debt limit clash into confusion and raised concerns among some on Capitol Hill that the government was lurching toward a default. The White House and Senate Democratic leaders had been waiting for the House to act before making their next move with an eye on the Tuesday deadline set by the Treasury Department for raising the debt ceiling or facing the possibility that the government would not be able to meet all its financial obligations.

Republicans had expressed confidence throughout Thursday that they would round up enough recalcitrant conservatives to pass their plan, but they obviously miscalculated.

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Senate Bill Seeks to Raise Revenue by Closing Tax Havens

A bill introduced by Carl Levin of Michigan and Kent Conrad of North Dakota would tighten rules that allow hedge funds and corporations in the United States to skirt federal taxes by opening shell companies overseas.

The measure would also change the I.R.S. regulations that allow traders of credit-default swaps to avoid paying federal taxes on many transactions that begin in the United States. And to help tax collectors track down hidden assets overseas, the proposal would empower the Treasury Department to ban any foreign bank that refused to cooperate with the I.R.S.

By closing the loopholes, the plan could bring the Treasury as much as $100 billion a year, according to various estimates cited by Mr. Levin.

“The idea that we have all these companies that avoid paying taxes through all these gimmicks is disgraceful,” said Mr. Levin, the chairman of the Senate Permanent Subcommittee on Investigations. “And that we tolerate it is disgraceful.”

Mr. Conrad, who is chairman of the Senate Budget Committee, said that by cracking down on offshore abuses, Congress and the Obama administration could make a substantial reduction in the deficit without resorting to either tax increases or severe cuts to programs like Medicare or Social Security.

Mr. Conrad said the proposal might also break the logjam that has stalled the deficit negotiations. Mr. Obama has refused to approve a deal that does not include increased revenue, while Congressional Republicans have said they will oppose any measure that increases taxes.

The proposal got a cool reception from House Republicans, some of whom of consider ending any tax break a form of tax increase. Representative Eric Cantor, the Virginia Republican who is majority leader, has vowed to oppose any deficit reduction plan that includes tax increases and has said that loopholes can be addressed in some future debate on tax reform.

“As Eric has made clear, tax increases cannot pass the House,” said his spokeswoman, Laena Fallon. “While the president has been seemingly obsessed with certain special-interest loopholes in the debt-limit debate, Eric believes the broad discussion of tax policy belongs in the larger debate on fundamental tax reform.”

While Mr. Levin has sponsored an assortment of bills to limit offshore tax havens over the last decade, the plan introduced Tuesday included several sweeping new features.

One provision would change the way the tax code treats derivatives trades. Under current law, the I.R.S. defines the “source” of derivative income as the location where a trade is paid rather than where the money originates. That allows many traders to legally sidestep federal taxes by routing trades offshore.

Mr. Levin called that “absurd” and said his proposal would institute a common sense source rule for trades involving credit-default swap: sourcing — and taxing — it according to where the money originates.

Another proposal would try to discourage United States companies from using bookkeeping maneuvers to shift their profits to tax havens. In recent years many multinationals — including pharmaceutical giants like Pfizer and technology companies like I.B.M. — have cut their United States taxes by booking increasing amounts of their profits abroad. Mr. Levin’s proposal would require all United States multinationals to provide more information in their regulatory filings, including a country-by-country breakdown of their sales, employment, financing and tax payments.

The bill would also prevent companies and hedge funds from escaping American taxes by filing incorporation documents abroad and declaring themselves foreign companies. During public hearings in 2008, Mr. Levin’s subcommittee heard testimony from three hedge funds — Highbridge Capital, Angelo Gordon and Maverick Capital — which were incorporated in the Cayman Islands, but had no offices or employees there. Mr. Levin’s proposal would allow the I.R.S. to define a domestic company as one that is managed and controlled within the United States.

Mr. Levin said he was “hopeful” that President Obama, who supported two similar bills when he was a senator, would make the issue of offshore tax havens a part of the deficit negotiations. When asked if the president intended to do so, an administration official declined to comment.

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A Bank Regulatory Logjam May Be Easing

Mr. Curry, a lawyer who served as state banking commissioner in Massachusetts, now sits on the board of the Federal Deposit Insurance Corporation.

The White House would like to send Mr. Curry’s name to the Senate at the same time that it moves on its widely reported plan to nominate Martin J. Gruenberg as the new chairman of the F.D.I.C., those people said. Mr. Gruenberg, a longtime Democratic Senate staff member, has served since 2005 as the vice chairman of the F.D.I.C.

Officials have not settled on a candidate to lead another regulator, the new Consumer Financial Protection Bureau, but they are focusing on Raj Date, a former banker who is helping to establish the bureau, those people said. They spoke on condition of anonymity because they were not authorized to discuss the selection process.

Even a single nomination would be the first time since last fall that the Obama administration has moved to reduce the growing number of vacancies at the top of the agencies charged with overhauling the nation’s financial regulations. The White House has promised for several months to send names to Congress as soon as possible, and earlier this week a spokeswoman said action would come “in short order.” The spokeswoman, Amy Brundage, declined to comment Thursday, citing a policy of not commenting on personnel decisions before they are announced by the president.

Mr. Curry and Mr. Gruenberg declined to comment. Mr. Date could not be reached.

The comptroller’s office has lacked permanent leadership since John C. Dugan completed a five-year term in August. John Walsh, one of Mr. Dugan’s deputies, has served as acting comptroller in his stead.

At a celebration for Mr. Dugan shortly before his departure, Treasury Secretary Timothy F. Geithner told staff members that it could take time to find a suitable successor. It was taken as praise but came to seem like prophecy as the administration was turned down by some candidates, and set aside others.

Mr. Curry served as commissioner of banks in Massachusetts from 1995 until 2003, when he was nominated to the F.D.I.C. board by President George W. Bush. His term on the board expired last year, but he has remained in the absence of a replacement. The comptroller holds a permanent seat on the five-member F.D.I.C. board, so Mr. Curry could remain on the board even longer if confirmed as comptroller.

That would be politically expedient for the Obama administration. Mr. Curry is a registered independent and federal law stipulates that no more than three members of the board may belong to the same party.

Mr. Gruenberg, a Democrat, would replace Sheila C. Bair, who plans to step down as chairwoman when her term ends in July. The F.D.I.C. under Ms. Bair’s leadership has gained prominence and power, advocating for the interests of consumers and community banks and, at times, infuriating administration officials and other regulators.

Mr. Gruenberg, who has provided reliable support for Ms. Bair, is seen as likely to advocate the same priorities in a more conciliatory style. He was a longtime aide to former Senator Paul S. Sarbanes of Maryland and retains relationships on Capitol Hill with members of both parties, which could ease his path to confirmation.

If both men are confirmed, the administration would need to fill two new vacancies on the F.D.I.C. board. There are also two vacancies on the Federal Reserve’s Board of Governors, and a vacancy atop the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac. Several positions created by the Dodd-Frank Act also remain to be filled, including a Fed vice chairman for supervision, a head for the new Office of Financial Research and an insurance oversight position.

The most significant vacancy, however, is at the consumer protection bureau, which opens in July but does not gain full powers until it has a permanent head.

The president last year appointed Elizabeth Warren, a Harvard Law professor who was the most forceful advocate for the agency’s creation, to bring it to life. Ms. Warren’s many supporters believe she should be nominated to lead the agency, but her unsparing criticism of financial abuses has made her a polarizing figure.

Mr. Date is seen as a compromise candidate. He worked in the financial industry as an executive at Capital One and Deutsche Bank, then headed a research group that advocated for regulatory reforms before coming to work for Ms. Warren.

Senate Republicans have said that they will not allow a vote on any nominee to lead the new agency until Democrats agree to rewrite the law to reduce its powers. That could force the White House to make an appointment this summer while the Senate is away.

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