The Office of the Comptroller of the Currency (“OCC”) requested public comment on the Volcker Rule. The request was published in the Federal Register and comments are due by September 21, 2017.
As reported previously, the OCC identified four areas of the rule for consideration: (1) the scope of the entities to which the final rule applies, (2) the proprietary trading restrictions, (3) the covered fund restrictions, and (4) the compliance program and metrics reporting requirements.
The OCC requested public input in order to improve and inform proposed changes that could be made to the rule (without requiring revisions to the underlying statute). The OCC also asked for comments on how regulators could implement the existing rule more effectively.
The United States Senate confirmed the nomination of David J. Kautter as Assistant Secretary for Tax Policy at the U.S. Treasury Department. Previously, Mr. Kautter was Partner-in-Charge at RSM US LLP, an audit, tax and consulting firm in Washington, D.C.
In a letter addressed to President Donald Trump, Senate Majority Leader Mitch McConnell (R-KY) and Senate Finance Committee Chair Orrin Hatch (R-UT), 45 Senate Democrats (collectively, the “Democrats”) expressed a willingness to work with Republicans on “bipartisan tax reform.”
The Democrats asserted three “prerequisites” for a successful bipartisan tax reform plan. First, a reform plan “should not increase the tax burden on the middle class,” and should not be advantageous for the wealthiest subset of Americans. The Democrats observed that wealthy Americans continue to enjoy “outsized benefits from recent economic gains” even though wages for working-class individuals have not increased. The Democrats vowed they would not back a tax reform plan that “includes tax cuts for the top one percent.”
Second, any tax reform legislation must “go through regular order rather than reconciliation.” The Democrats criticized the potential effects of fast-tracking legislation through reconciliation:
“Using a fast-track process like reconciliation would undoubtedly result in outsized political influence on the process and significantly hinder lawmakers’ ability to close loopholes and end special interest favoritism that plagues our current tax system. As such, reconciliation is just a tool to jam through partisan short-term tax cuts that would result in economic uncertainty and instability and significantly increase our budget deficit.”
Third, reform legislation should not include deficit-financed tax cuts. The Democrats stated that they would not support deficit-financed tax cuts that could jeopardize the continuation of “critical programs,” including Medicare, Medicaid and Social Security.
The MSRB advised municipal securities issuers against designating or influencing the selection of an underwriter’s counsel in the process of offering bonds.
In a Regulatory Notice (“notice”), the MSRB explained that conflicts of interest can arise from an issuer playing a role in the selection of an underwriter’s counsel. According to the MSRB, underwriters must maintain their independence in order to effectively perform due diligence responsibilities and make fair assessments. A key resource for an underwriter is the presence of an experienced, unbiased, expert counsel. The MSRB warned that “conflicted loyalties” could arise if an issuer-designated counsel is used, which could call into question the “integrity and thoroughness of the due diligence process as well as the quality of representation provided by such counsel.”
While the MSRB acknowledged that an issuer may want to ensure that a sufficiently qualified counsel is selected, the MSRB also noted the significance of protecting the integrity of the underwriting process. The MSRB advised that an underwriter is subjected to financial risk and legal liability by representing an issuer; as such, it is in the best interest of the underwriter to choose a suitable counsel.
The MSRB reiterated that issuers should “refrain from [involvement] in selection of counsel,” or limit involvement to “concerns regarding competency, conflicts of interest and the avoidance of excessive costs.”
Lofchie Comment: Without a means of enforcement, will this notice change conduct? Although the MSRB cautions underwriters that they may be at greater risk of missing required disclosure if they rely on an issuer-selected counsel, it is not clear that this risk is urgent enough to discourage the practice (if it were, the notice would likely not be necessary).
The White House released a joint statement (the “statement”) with congressional Republican leadership expressing a “shared vision” for comprehensive tax reform. The group of Republican leaders consisted of House Speaker Paul Ryan (R-WI), Senate Majority Leader Mitch McConnell (R-KY), Treasury Secretary Steven Mnuchin, National Economic Council Director Gary Cohn, Senate Finance Committee Chairman Orrin Hatch (R-UT), and House Ways and Means Committee Chairman Kevin Brady (R-TX).
The Republican leaders asserted a commitment to introduce a “simpler, fairer” tax system with lower rates for American families. As described, the shared framework would reduce taxes for “small businesses so that they can compete with larger ones” and “all [U.S.] businesses so they can compete with foreign ones.” The Republican leaders called for a permanent system allowing more capital expensing to facilitate economic growth. They also indicated the following priorities: (i) to create an environment where American companies are incentivized to keep jobs in America rather than outsource them overseas, (ii) to create a more “level playing field” between domestic and foreign companies,” and (iii) to protect the U.S. tax base.
The Republican leaders set aside the idea of adopting a border-adjustment tax (“BAT”).
“While we have debated the pro-growth benefits of border adjustability, we appreciate that there are many unknowns associated with it and have decided to set this policy aside in order to advance tax reform.”
The Republican leaders announced that they expect a tax reform plan to move through the Senate Finance Committee and House Ways and Means Committee by the fall of 2017.