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[image: In this newsletter: Super-CommitteeFinancial
Shorts: Volcker Rule; Derivatives RegulationPolitical Shorts: Wisconsin
Recall Elections; Foreign Campaign Contributions]


*Washington Update– August 10,2011*
[image: In this newsletter: Super-CommitteeFinancial Shorts: Volcker
Rule; Derivatives RegulationPolitical Shorts: Wisconsin Recall Elections;
Foreign Campaign Contributions] [image: In this newsletter:
Super-CommitteeFinancial Shorts: Volcker Rule; Derivatives
RegulationPolitical Shorts: Wisconsin Recall Elections; Foreign Campaign
Contributions] [image: 1. The Super-CommitteeThe debt-ceiling
compromise measure adopted last week by President Obama and congressional
leaders established a “super-committee” tasked with finding an additional $2
trillion in cuts to government spending over the next 10 years. The
12-member bipartisan Joint Select Committee on Deficit Reduction will have
until November 23 to find an agreement or the government will automatically
cut $1.2 trillion over 10 years from hundreds of military and nonmilitary
programs, biting deeply into the priorities of both parties.Republicans are
making the case that the structure of the super-committee is such that it
will be virtually impossible for it to recommend tax increases. Any deficit
reduction proposed by the super-committee will be measured by the
Congressional Budget Office (CBO), the agency that estimates how much money
lawmakers are actually cutting from the deficit. In estimating the effects
of legislative proposals, the CBO usually assumes that current laws remain
unchanged. Therefore, according to current law, the tax cuts from 2001 and
2003 will expire at the end of 2012, adding about $3.6 trillion in revenue
to the nation’s coffers over the next 10 years. With this logic, Republicans
believe that tax increases will be “impossible.” This assumes that taxes are
set to go back to their Clinton-era levels after 2012, and so saying you are
going to raise taxes from their current levels doesn’t actually count as
“deficit reduction,” since it’s already going to happen. So Republicans
contend that the super-committee will have to complete its work by the end
of the year without raising taxes.Democrats and critics, however, have
dismissed this argument. For one, they say, there’s nothing in the law that
requires the super-committee to measure its work against the “CBO baseline.”
The committee could decide on its own to measure its deficit reduction
proposals against what some call “current policy” rather than “current law”
— i.e., what’s in place right now. Since the Bush tax cuts are currently in
effect, the super-committee could decide that letting them expire does
indeed count as deficit reduction.As of now, Congressional leadership must
name panel members. On Tuesday, Speaker John Boehner appointed three
Republican House members to the committee: Rep. Dave Camp (R-MI), who is
Chairman of the House Ways and Means Committee; Rep. Fred Upton (R-MI), who
is Chairman of the House Energy and Commerce Committee; and Jeb Hensarling
(R-TX), who is the Republican Conference Chairman. Senator Mitch McConnell,
the Minority Leader, chose three Senators: Pat Toomey (R-PA) of
Pennsylvania; Rob Portman (R-OH); and Jon Kyl (R-AZ), the minority whip, who
is retiring at the end of his term. Sen. Kyl, the No. 2 Republican in the
Senate, is a member of the Senate Finance Committee and participated in
deficit-reduction talks with Vice President Joe Biden earlier this summer.
Sen. Portman, a House member from 1993 to 2005, was White House budget
director under President George W. Bush. Throughout his time in Congress, he
has worked well with Democrats even as he voted consistently with other
Republicans. Senator Toomey is a favorite of Tea Party members and huge
opponent of tax increases as former head of the Club for Growth. All six of
the Republicans named have signed a pledge, written by Grover Norquist, not
to raise taxes. But there are various ways of raising revenues, like closing
the corporate loopholes or making adjustments to existing tax rates. All six
are also supporters of a Balanced Budget Amendment, which will be voted on
in Congress this fall.The Senate Majority Leader, Harry Reid, also named
three Democratic Senators: Patty Murray (D-WA), John Kerry (D-MA) and Max
Baucus (D-MT). Sen. Baucus is Chairman of the Finance Committee, which has
authority over Medicare, Medicaid and taxes – - three prime areas of
attention for the new 12-member panel, the Joint Select Committee on Deficit
Reduction. Sen. Murray, who won a tough re-election campaign last year, is a
member of the Senate Democratic leadership, the Senate Appropriations
Committee and the Budget Committee. She is also chairwoman of the Committee
on Veterans Affairs. Her selection to lead the new panel raised eyebrows
among some Republicans because she is also Chair of the Senate Democrats’
campaign arm, the Democratic Senatorial Campaign Committee, but she is close
to leadership and next in line to chair the Senate Budget Committee.
Representative Nancy Pelosi (D-CA), the Minority Leader, has yet to name her
three selections. Sen. Murray will join Rep. Hensarling (R-TX) as co-Chair
of the new panel. 2. Financial ShortsVolcker RuleAccording to a new report
by Deloitte, the Volcker Rule is expected to be quite demanding on banking
entities as many banks lack the trading systems needed for the new regime.
At its core, the Volcker Rule prohibits federally insured banks from trading
for their own benefit rather than for clients, a strategy known as
proprietary trading. But that does not mean proprietary trading is dead. It
is often unclear whether a trade is proprietary or part of a bank’s routine
market-making activity, which can include buying securities with an eye
toward later selling them to clients. Market making, hedging and
underwriting are fair game under the Volcker Rule.However, Dodd-Frank has
left it up to banks and regulators to decipher the gray area. So, one of the
challenges for banking entities will be the need to unambiguously
distinguish the two, making it difficult since many trading systems are not
currently designed to manage and measure trading activities to distinguish
between proprietary versus permitted activities.”Banks hardly embraced the
Volcker Rule. Still, even as they continue pushing regulators to tame it,
they also have moved to comply with the proprietary trading ban. The report
reiterated concerns raised last month in a Government Accountability Office
report, which painted the Volcker Rule as cumbersome and tough to
enforce.Derivatives RegulationAfter missing deadlines for several new
derivatives rules last month, financial regulators are now bearing down on
the industry. The Commodity Futures Trading Commission finalized a fresh
batch of regulations, giving the government new tools to help monitor the
financial industry. The rule allows the agency to collect a battery of data
on derivatives deals and operate a whistle-blower program to reward tipsters
who exposed fraud in the marketplace.In a 4-1 vote, the agency adopted an
array of requirements for so-called swap data repositories. The new entities
will collect once-private data about swap trades. Under the rules, the
repositories must authenticate and aggregate pricing information and other
data electronically so regulators can keep an eye on the market. Some on the
commission questioned whether the rule was too soft since the regulation did
not require data collectors to feature independent directors.The
whistle-blower rule, also adopted in a 4-1 vote, generated its own
controversy. The program would provide a bounty to whistle-blowers who
exposed Ponzi schemes or other wrongdoing. To qualify for the reward,
tipsters must turn over new information that spawns a “successful
enforcement action” worth more than $1 million. Republican commissioners,
one of whom voted against the program, complained that it would allow
insiders to bypass internal compliance departments and take their tips
straight to the government. The criticism echoed concerns recently raised
about the S.E.C.’s new whistle-blower program, which was adopted in May.The
agency has finalized only 11 new rules so far this summer, a small dent in
its Dodd-Frank duty. Some 40 rules remain on hold, including the most
contentious proposals that will spell out which companies are exempt from
the overhaul.3. Political ShortsWisconsin Recall ElectionsWisconsin
Republicans withstood a Democratic campaign to take control of the state
Senate, surviving in four of six recall elections. Democrats needed to win
at least three races to capture control of the narrowly divided chamber. By
keeping a majority in the Senate, Republicans retained their monopoly on
state government because they also hold the Assembly and governor's office.
Tuesday's elections narrowed their majority from 19-14 to17-16. Republicans
may be able to gain back some of the losses next week, when two Democrats
face recall elections.Democrats called for the recalls after Republican
Governor Scott Walker launched a plan to eliminate most collective
bargaining for public workers, and Tuesday's races were seen as a preview of
a plan to force a recall of Walker next year. Tuesday's recalls were
launched in March, during the turmoil in Madison over Walker's plan to
curtail collective bargaining by most public employees. Democrats tried to
recall Republicans for that vote, while Republicans tried to recall
Democrats for leaving the state for three weeks to block a vote on the
issue.Turnout levels in Tuesday's elections were substantial, approaching
those of last fall's governor's race - a striking testimony to the extreme
passions, money and attention these contests have attracted this summer. At
least five of the elections broke the $3 million spending record, set in
2000, for money spent by all parties in a Senate race. The flow of money
came as unions saw the recall elections as the best way to halt Walker's
agenda and to send a message to other states considering changing their
collective bargaining laws. Political observers are watching Wisconsin to
see what the results say about the mood of the electorate leading up to next
year's elections for president and Congress.Foreign Campaign DonationsA
three-judge federal panel has upheld a ban on campaign donations by
foreigners. It rejected a lawsuit filed last year on behalf of a Canadian
man and a Canadian-Israeli woman who have worked in the US but don't have
permanent residence here. Federal law says only US citizens and
permanent-resident aliens can give to parties or campaigns or make
independent expenditures on their behalf.Circuit Judge Brett Kavanaugh wrote
in an opinion, "The Supreme Court has drawn a fairly clear line: the
government may exclude foreign citizens from activities 'intimately related
to the process of democratic self-government. Political contributions and
express-advocacy expenditures are an integral aspect of the process by which
Americans elect officials to federal, state, and local government
offices."When the Supreme Court ruled last year in Citizens United that
corporations could make independent expenditures on behalf of candidates,
some commentators warned of a possible flood of foreign money into U.S.
elections. President Barack Obama was among those who suggested foreign
companies could take advantage of the decision to spend money on US
elections.The case was in part an effort to try to leverage Citizens United
to allow donations by foreign individuals. However, the judges rejected
that, saying "In our view, the majority opinion in Citizens United is
entirely consistent with a ban on foreign contributions and
expenditures.”Because the case arose from language in the McCain-Feingold
law, also known as the Bipartisan Campaign Reform Act of 2002, it went to an
unusual three-judge panel for the first hearing. That panel's ruling can be
appealed directly to the Supreme Court.] [image: 1. The
Super-CommitteeThe debt-ceiling compromise measure adopted last week by
President Obama and congressional leaders established a “super-committee”
tasked with finding an additional $2 trillion in cuts to government spending
over the next 10 years. The 12-member bipartisan Joint Select Committee on
Deficit Reduction will have until November 23 to find an agreement or the
government will automatically cut $1.2 trillion over 10 years from hundreds
of military and nonmilitary programs, biting deeply into the priorities of
both parties.Republicans are making the case that the structure of the
super-committee is such that it will be virtually impossible for it to
recommend tax increases. Any deficit reduction proposed by the
super-committee will be measured by the Congressional Budget Office (CBO),
the agency that estimates how much money lawmakers are actually cutting from
the deficit. In estimating the effects of legislative proposals, the CBO
usually assumes that current laws remain unchanged. Therefore, according to
current law, the tax cuts from 2001 and 2003 will expire at the end of 2012,
adding about $3.6 trillion in revenue to the nation’s coffers over the next
10 years. With this logic, Republicans believe that tax increases will be
“impossible.” This assumes that taxes are set to go back to their
Clinton-era levels after 2012, and so saying you are going to raise taxes
from their current levels doesn’t actually count as “deficit reduction,”
since it’s already going to happen. So Republicans contend that the
super-committee will have to complete its work by the end of the year
without raising taxes.Democrats and critics, however, have dismissed this
argument. For one, they say, there’s nothing in the law that requires the
super-committee to measure its work against the “CBO baseline.” The
committee could decide on its own to measure its deficit reduction proposals
against what some call “current policy” rather than “current law” — i.e.,
what’s in place right now. Since the Bush tax cuts are currently in effect,
the super-committee could decide that letting them expire does indeed count
as deficit reduction.As of now, Congressional leadership must name panel
members. On Tuesday, Speaker John Boehner appointed three Republican House
members to the committee: Rep. Dave Camp (R-MI), who is Chairman of the
House Ways and Means Committee; Rep. Fred Upton (R-MI), who is Chairman of
the House Energy and Commerce Committee; and Jeb Hensarling (R-TX), who is
the Republican Conference Chairman. Senator Mitch McConnell, the Minority
Leader, chose three Senators: Pat Toomey (R-PA) of Pennsylvania; Rob Portman
(R-OH); and Jon Kyl (R-AZ), the minority whip, who is retiring at the end of
his term. Sen. Kyl, the No. 2 Republican in the Senate, is a member of the
Senate Finance Committee and participated in deficit-reduction talks with
Vice President Joe Biden earlier this summer. Sen. Portman, a House member
from 1993 to 2005, was White House budget director under President George W.
Bush. Throughout his time in Congress, he has worked well with Democrats
even as he voted consistently with other Republicans. Senator Toomey is a
favorite of Tea Party members and huge opponent of tax increases as former
head of the Club for Growth. All six of the Republicans named have signed a
pledge, written by Grover Norquist, not to raise taxes. But there are
various ways of raising revenues, like closing the corporate loopholes or
making adjustments to existing tax rates. All six are also supporters of a
Balanced Budget Amendment, which will be voted on in Congress this fall.The
Senate Majority Leader, Harry Reid, also named three Democratic Senators:
Patty Murray (D-WA), John Kerry (D-MA) and Max Baucus (D-MT). Sen. Baucus
is Chairman of the Finance Committee, which has authority over Medicare,
Medicaid and taxes – - three prime areas of attention for the new 12-member
panel, the Joint Select Committee on Deficit Reduction. Sen. Murray, who won
a tough re-election campaign last year, is a member of the Senate Democratic
leadership, the Senate Appropriations Committee and the Budget Committee.
She is also chairwoman of the Committee on Veterans Affairs. Her selection
to lead the new panel raised eyebrows among some Republicans because she is
also Chair of the Senate Democrats’ campaign arm, the Democratic Senatorial
Campaign Committee, but she is close to leadership and next in line to chair
the Senate Budget Committee. Representative Nancy Pelosi (D-CA), the
Minority Leader, has yet to name her three selections. Sen. Murray will join
Rep. Hensarling (R-TX) as co-Chair of the new panel. 2. Financial
ShortsVolcker RuleAccording to a new report by Deloitte, the Volcker Rule is
expected to be quite demanding on banking entities as many banks lack the
trading systems needed for the new regime. At its core, the Volcker Rule
prohibits federally insured banks from trading for their own benefit rather
than for clients, a strategy known as proprietary trading. But that does not
mean proprietary trading is dead. It is often unclear whether a trade is
proprietary or part of a bank’s routine market-making activity, which can
include buying securities with an eye toward later selling them to clients.
Market making, hedging and underwriting are fair game under the Volcker
Rule.However, Dodd-Frank has left it up to banks and regulators to decipher
the gray area. So, one of the challenges for banking entities will be the
need to unambiguously distinguish the two, making it difficult since many
trading systems are not currently designed to manage and measure trading
activities to distinguish between proprietary versus permitted
activities.”Banks hardly embraced the Volcker Rule. Still, even as they
continue pushing regulators to tame it, they also have moved to comply with
the proprietary trading ban. The report reiterated concerns raised last
month in a Government Accountability Office report, which painted the
Volcker Rule as cumbersome and tough to enforce.Derivatives RegulationAfter
missing deadlines for several new derivatives rules last month, financial
regulators are now bearing down on the industry. The Commodity Futures
Trading Commission finalized a fresh batch of regulations, giving the
government new tools to help monitor the financial industry. The rule allows
the agency to collect a battery of data on derivatives deals and operate a
whistle-blower program to reward tipsters who exposed fraud in the
marketplace.In a 4-1 vote, the agency adopted an array of requirements for
so-called swap data repositories. The new entities will collect once-private
data about swap trades. Under the rules, the repositories must authenticate
and aggregate pricing information and other data electronically so
regulators can keep an eye on the market. Some on the commission questioned
whether the rule was too soft since the regulation did not require data
collectors to feature independent directors.The whistle-blower rule, also
adopted in a 4-1 vote, generated its own controversy. The program would
provide a bounty to whistle-blowers who exposed Ponzi schemes or other
wrongdoing. To qualify for the reward, tipsters must turn over new
information that spawns a “successful enforcement action” worth more than $1
million. Republican commissioners, one of whom voted against the program,
complained that it would allow insiders to bypass internal compliance
departments and take their tips straight to the government. The criticism
echoed concerns recently raised about the S.E.C.’s new whistle-blower
program, which was adopted in May.The agency has finalized only 11 new rules
so far this summer, a small dent in its Dodd-Frank duty. Some 40 rules
remain on hold, including the most contentious proposals that will spell out
which companies are exempt from the overhaul.3. Political ShortsWisconsin
Recall ElectionsWisconsin Republicans withstood a Democratic campaign to
take control of the state Senate, surviving in four of six recall elections.
Democrats needed to win at least three races to capture control of the
narrowly divided chamber. By keeping a majority in the Senate, Republicans
retained their monopoly on state government because they also hold the
Assembly and governor's office. Tuesday's elections narrowed their majority
from 19-14 to17-16. Republicans may be able to gain back some of the losses
next week, when two Democrats face recall elections.Democrats called for the
recalls after Republican Governor Scott Walker launched a plan to eliminate
most collective bargaining for public workers, and Tuesday's races were seen
as a preview of a plan to force a recall of Walker next year. Tuesday's
recalls were launched in March, during the turmoil in Madison over Walker's
plan to curtail collective bargaining by most public employees. Democrats
tried to recall Republicans for that vote, while Republicans tried to recall
Democrats for leaving the state for three weeks to block a vote on the
issue.Turnout levels in Tuesday's elections were substantial, approaching
those of last fall's governor's race - a striking testimony to the extreme
passions, money and attention these contests have attracted this summer. At
least five of the elections broke the $3 million spending record, set in
2000, for money spent by all parties in a Senate race. The flow of money
came as unions saw the recall elections as the best way to halt Walker's
agenda and to send a message to other states considering changing their
collective bargaining laws. Political observers are watching Wisconsin to
see what the results say about the mood of the electorate leading up to next
year's elections for president and Congress.Foreign Campaign DonationsA
three-judge federal panel has upheld a ban on campaign donations by
foreigners. It rejected a lawsuit filed last year on behalf of a Canadian
man and a Canadian-Israeli woman who have worked in the US but don't have
permanent residence here. Federal law says only US citizens and
permanent-resident aliens can give to parties or campaigns or make
independent expenditures on their behalf.Circuit Judge Brett Kavanaugh wrote
in an opinion, "The Supreme Court has drawn a fairly clear line: the
government may exclude foreign citizens from activities 'intimately related
to the process of democratic self-government. Political contributions and
express-advocacy expenditures are an integral aspect of the process by which
Americans elect officials to federal, state, and local government
offices."When the Supreme Court ruled last year in Citizens United that
corporations could make independent expenditures on behalf of candidates,
some commentators warned of a possible flood of foreign money into U.S.
elections. President Barack Obama was among those who suggested foreign
companies could take advantage of the decision to spend money on US
elections.The case was in part an effort to try to leverage Citizens United
to allow donations by foreign individuals. However, the judges rejected
that, saying "In our view, the majority opinion in Citizens United is
entirely consistent with a ban on foreign contributions and
expenditures.”Because the case arose from language in the McCain-Feingold
law, also known as the Bipartisan Campaign Reform Act of 2002, it went to an
unusual three-judge panel for the first hearing. That panel's ruling can be
appealed directly to the Supreme Court.] [image: 1. The
Super-CommitteeThe debt-ceiling compromise measure adopted last week by
President Obama and congressional leaders established a “super-committee”
tasked with finding an additional $2 trillion in cuts to government spending
over the next 10 years. The 12-member bipartisan Joint Select Committee on
Deficit Reduction will have until November 23 to find an agreement or the
government will automatically cut $1.2 trillion over 10 years from hundreds
of military and nonmilitary programs, biting deeply into the priorities of
both parties.Republicans are making the case that the structure of the
super-committee is such that it will be virtually impossible for it to
recommend tax increases. Any deficit reduction proposed by the
super-committee will be measured by the Congressional Budget Office (CBO),
the agency that estimates how much money lawmakers are actually cutting from
the deficit. In estimating the effects of legislative proposals, the CBO
usually assumes that current laws remain unchanged. Therefore, according to
current law, the tax cuts from 2001 and 2003 will expire at the end of 2012,
adding about $3.6 trillion in revenue to the nation’s coffers over the next
10 years. With this logic, Republicans believe that tax increases will be
“impossible.” This assumes that taxes are set to go back to their
Clinton-era levels after 2012, and so saying you are going to raise taxes
from their current levels doesn’t actually count as “deficit reduction,”
since it’s already going to happen. So Republicans contend that the
super-committee will have to complete its work by the end of the year
without raising taxes.Democrats and critics, however, have dismissed this
argument. For one, they say, there’s nothing in the law that requires the
super-committee to measure its work against the “CBO baseline.” The
committee could decide on its own to measure its deficit reduction proposals
against what some call “current policy” rather than “current law” — i.e.,
what’s in place right now. Since the Bush tax cuts are currently in effect,
the super-committee could decide that letting them expire does indeed count
as deficit reduction.As of now, Congressional leadership must name panel
members. On Tuesday, Speaker John Boehner appointed three Republican House
members to the committee: Rep. Dave Camp (R-MI), who is Chairman of the
House Ways and Means Committee; Rep. Fred Upton (R-MI), who is Chairman of
the House Energy and Commerce Committee; and Jeb Hensarling (R-TX), who is
the Republican Conference Chairman. Senator Mitch McConnell, the Minority
Leader, chose three Senators: Pat Toomey (R-PA) of Pennsylvania; Rob Portman
(R-OH); and Jon Kyl (R-AZ), the minority whip, who is retiring at the end of
his term. Sen. Kyl, the No. 2 Republican in the Senate, is a member of the
Senate Finance Committee and participated in deficit-reduction talks with
Vice President Joe Biden earlier this summer. Sen. Portman, a House member
from 1993 to 2005, was White House budget director under President George W.
Bush. Throughout his time in Congress, he has worked well with Democrats
even as he voted consistently with other Republicans. Senator Toomey is a
favorite of Tea Party members and huge opponent of tax increases as former
head of the Club for Growth. All six of the Republicans named have signed a
pledge, written by Grover Norquist, not to raise taxes. But there are
various ways of raising revenues, like closing the corporate loopholes or
making adjustments to existing tax rates. All six are also supporters of a
Balanced Budget Amendment, which will be voted on in Congress this fall.The
Senate Majority Leader, Harry Reid, also named three Democratic Senators:
Patty Murray (D-WA), John Kerry (D-MA) and Max Baucus (D-MT). Sen. Baucus
is Chairman of the Finance Committee, which has authority over Medicare,
Medicaid and taxes – - three prime areas of attention for the new 12-member
panel, the Joint Select Committee on Deficit Reduction. Sen. Murray, who won
a tough re-election campaign last year, is a member of the Senate Democratic
leadership, the Senate Appropriations Committee and the Budget Committee.
She is also chairwoman of the Committee on Veterans Affairs. Her selection
to lead the new panel raised eyebrows among some Republicans because she is
also Chair of the Senate Democrats’ campaign arm, the Democratic Senatorial
Campaign Committee, but she is close to leadership and next in line to chair
the Senate Budget Committee. Representative Nancy Pelosi (D-CA), the
Minority Leader, has yet to name her three selections. Sen. Murray will join
Rep. Hensarling (R-TX) as co-Chair of the new panel. 2. Financial
ShortsVolcker RuleAccording to a new report by Deloitte, the Volcker Rule is
expected to be quite demanding on banking entities as many banks lack the
trading systems needed for the new regime. At its core, the Volcker Rule
prohibits federally insured banks from trading for their own benefit rather
than for clients, a strategy known as proprietary trading. But that does not
mean proprietary trading is dead. It is often unclear whether a trade is
proprietary or part of a bank’s routine market-making activity, which can
include buying securities with an eye toward later selling them to clients.
Market making, hedging and underwriting are fair game under the Volcker
Rule.However, Dodd-Frank has left it up to banks and regulators to decipher
the gray area. So, one of the challenges for banking entities will be the
need to unambiguously distinguish the two, making it difficult since many
trading systems are not currently designed to manage and measure trading
activities to distinguish between proprietary versus permitted
activities.”Banks hardly embraced the Volcker Rule. Still, even as they
continue pushing regulators to tame it, they also have moved to comply with
the proprietary trading ban. The report reiterated concerns raised last
month in a Government Accountability Office report, which painted the
Volcker Rule as cumbersome and tough to enforce.Derivatives RegulationAfter
missing deadlines for several new derivatives rules last month, financial
regulators are now bearing down on the industry. The Commodity Futures
Trading Commission finalized a fresh batch of regulations, giving the
government new tools to help monitor the financial industry. The rule allows
the agency to collect a battery of data on derivatives deals and operate a
whistle-blower program to reward tipsters who exposed fraud in the
marketplace.In a 4-1 vote, the agency adopted an array of requirements for
so-called swap data repositories. The new entities will collect once-private
data about swap trades. Under the rules, the repositories must authenticate
and aggregate pricing information and other data electronically so
regulators can keep an eye on the market. Some on the commission questioned
whether the rule was too soft since the regulation did not require data
collectors to feature independent directors.The whistle-blower rule, also
adopted in a 4-1 vote, generated its own controversy. The program would
provide a bounty to whistle-blowers who exposed Ponzi schemes or other
wrongdoing. To qualify for the reward, tipsters must turn over new
information that spawns a “successful enforcement action” worth more than $1
million. Republican commissioners, one of whom voted against the program,
complained that it would allow insiders to bypass internal compliance
departments and take their tips straight to the government. The criticism
echoed concerns recently raised about the S.E.C.’s new whistle-blower
program, which was adopted in May.The agency has finalized only 11 new rules
so far this summer, a small dent in its Dodd-Frank duty. Some 40 rules
remain on hold, including the most contentious proposals that will spell out
which companies are exempt from the overhaul.3. Political ShortsWisconsin
Recall ElectionsWisconsin Republicans withstood a Democratic campaign to
take control of the state Senate, surviving in four of six recall elections.
Democrats needed to win at least three races to capture control of the
narrowly divided chamber. By keeping a majority in the Senate, Republicans
retained their monopoly on state government because they also hold the
Assembly and governor's office. Tuesday's elections narrowed their majority
from 19-14 to17-16. Republicans may be able to gain back some of the losses
next week, when two Democrats face recall elections.Democrats called for the
recalls after Republican Governor Scott Walker launched a plan to eliminate
most collective bargaining for public workers, and Tuesday's races were seen
as a preview of a plan to force a recall of Walker next year. Tuesday's
recalls were launched in March, during the turmoil in Madison over Walker's
plan to curtail collective bargaining by most public employees. Democrats
tried to recall Republicans for that vote, while Republicans tried to recall
Democrats for leaving the state for three weeks to block a vote on the
issue.Turnout levels in Tuesday's elections were substantial, approaching
those of last fall's governor's race - a striking testimony to the extreme
passions, money and attention these contests have attracted this summer. At
least five of the elections broke the $3 million spending record, set in
2000, for money spent by all parties in a Senate race. The flow of money
came as unions saw the recall elections as the best way to halt Walker's
agenda and to send a message to other states considering changing their
collective bargaining laws. Political observers are watching Wisconsin to
see what the results say about the mood of the electorate leading up to next
year's elections for president and Congress.Foreign Campaign DonationsA
three-judge federal panel has upheld a ban on campaign donations by
foreigners. It rejected a lawsuit filed last year on behalf of a Canadian
man and a Canadian-Israeli woman who have worked in the US but don't have
permanent residence here. Federal law says only US citizens and
permanent-resident aliens can give to parties or campaigns or make
independent expenditures on their behalf.Circuit Judge Brett Kavanaugh wrote
in an opinion, "The Supreme Court has drawn a fairly clear line: the
government may exclude foreign citizens from activities 'intimately related
to the process of democratic self-government. Political contributions and
express-advocacy expenditures are an integral aspect of the process by which
Americans elect officials to federal, state, and local government
offices."When the Supreme Court ruled last year in Citizens United that
corporations could make independent expenditures on behalf of candidates,
some commentators warned of a possible flood of foreign money into U.S.
elections. President Barack Obama was among those who suggested foreign
companies could take advantage of the decision to spend money on US
elections.The case was in part an effort to try to leverage Citizens United
to allow donations by foreign individuals. However, the judges rejected
that, saying "In our view, the majority opinion in Citizens United is
entirely consistent with a ban on foreign contributions and
expenditures.”Because the case arose from language in the McCain-Feingold
law, also known as the Bipartisan Campaign Reform Act of 2002, it went to an
unusual three-judge panel for the first hearing. That panel's ruling can be
appealed directly to the Supreme Court.