Monday, December 21, 2015

10 'Omnibus' Takeaways

By Mark S. Nelson, J.D.

The omnibus appropriations bill and its tax extenders are headed to the president’s desk now that the House and Senate have passed the entire package. The bill funds the SEC and CFTC while offering new relief to swaps end users. But lawmakers omitted broader Dodd-Frank Act fixes and left out a wider aid package for Puerto Rico. The Administration said in an earlier statement that the president is expected to sign the omnibus ahead of the December 22 deadline.

Vice President Joe Biden issued a statement calling the omnibus and imperfect step towards “permanent resurgence” for the U.S. economy. “But this agreement reverses self-inflicted wounds like sequestration, averts another unnecessary government shutdown, and lays a path forward to the type of governing by consensus that the American people deserve and expect.”

But final passage came only after a short-lived drama played out in the Senate. The House moved first to pass the funding amendment to the omnibus by a vote of 316-113 after having separately passed the tax extenders amendment by a vote of 318-109 the day before.

Meanwhile, Sen. Joe Manchin, III (D-W Va) asked members to vote separately on the funding and tax amendments, calling the Senate’s planned single vote on the entire package the “cowardly way out.” Yet senators voted 73-25 to waive Sen. Manchin’s Budget Act objection. The Senate eventually voted 65-33 to approve the omnibus.

10 takeways. Beyond its funding-specific items, this year’s omnibus has a few significant provisions on a range of topics, including companies’ political donations, inter-affiliate swaps, and the SEC’s own reporting duties. Yet missing from the omnibus is the much-criticized wider Dodd-Frank Act corrections bill (S. 1484) that Senate Banking Committee Chairman Richard C. Shelby (R-Ala) tacked on to the Senate’s version of the financial regulators’ funding legislation (S. 1910).

Here are some omnibus basics:
  • SEC barred from using funds for rules on corporate political donations. 
  • Treatment of inter-affiliate swaps clarified for central treasury units of end users. 
  • Repeals outdated SEC reporting duty under Exchange Act Section 21(h)(6). 
  • SEC allocated $1.605 billion ($117 million under White House request), but strips $25 million from the agency’s Dodd-Frank Act reserve fund. 
  • CFTC granted $250 million (same as FY 2015, but $72 million below request). 
  • Economic and IT spending: $68 million to SEC’s Division of Economic and Risk Analysis; $50 million for CFTC information technology. 
  • Inspectors general: $11.3 million to SEC; $2.6 million to CFTC. 
  • Office of Management and Budget to report on Dodd-Frank Act implementation costs. 
  • Repeals country-of-origin labeling requirement for some meat products (this was the subject of a federal appeals case related to a First Amendment challenge to the SEC’s conflict minerals rule). 
  • Includes Cybersecurity Information Sharing Act of 2015. 
The omnibus also will let the PCAOB fund scholarships under the Sarbanes-Oxley Act. But the big question heading into 2016 remains when, if ever, Congress may pass a big Dodd-Frank Act corrections bill. In 2015, the most extensive securities law updates came via Division G of the Fixing America’s Surface Transportation (FAST) Act, which the president signed into law on December 4.