FACING US NOW: A concise outline of critical national issues and their implications for your business

The Patton Boggs law firm is a national leader in public policy and related areas. We present their thinking on what faces us as citizens and business leaders. S.A.

To put matters in perspective: Unless current law is amended, all of the Bush tax cuts will expire at the end of the year, as will various other temporary tax provisions (e.g., AMT relief for middle class Americans, extension of estate tax relief, and a variety of tax credits that are enjoyed by individuals, as well as the R&D tax credit and a host of other tax credits relied upon by the business community, some of which need to be extended retroactively to the beginning of 2012).

CRITICAL PROBLEMS FACE ALL SECTORS OF THE ECONOMY– INCLUDING FINANCIAL SERVICES PATTON BOGGS LLP PRESENTS THE ISSUE.

With President Barack Obama having been reelected and the Senate and the House having stayed in Democratic and Republican hands, respectively, attention now will turn to the lame duck session.. Based on past experience, we expect to hear sleigh bells before the 112th Congress leaves town. Since so much that will happen next year will be driven by what happens in the next two months, we principally focus this introduction on the challenges facing the President and the Congress in the lame duck session.

To put matters in perspective: Unless current law is amended, all of the Bush tax cuts will expire at the end of the year, as will various other temporary tax provisions (e.g., AMT relief for middle class Americans, extension of estate tax relief, and a variety of tax credits that are enjoyed by individuals, as well as the R&D tax credit and a host of other tax credits relied upon by the business community, some of which need to be extended retroactively to the beginning of 2012). Congress and the Administration also must decide how to protect physicians serving Medicare patients from sustaining steep cuts in reimbursement rates and whether to extend enhanced unemployment insurance for the long-term unemployed. In addition, decisions need to be made whether to extend, replace, or allow to lapse the two percentage point payroll tax cut for all working Americans. Finally, $109 billion in across-the-board spending cuts (“sequestration”) mandated by the Budget Control Act of 2011 will begin to kick in on January 2. Half of the automatic spending cuts will hit the Pentagon, while the other half will reduce spending by the rest of the government, with most agencies facing funding cuts of 8.2%. In popular parlance, the United States will fall off a fiscal cliff with potentially no safety net in place unless the President and the Congress agree to amend current law.

Recognizing the dangers to the economy, the Administration reportedly is analyzing the extent to which it could use existing authority to buy additional time to reach an agreement with Congress early next year, such as by freezing the amount of money taken out of payroll checks by not updating tax withholding tables to reflect expiration of the Bush tax cuts on December 31. The Administration also could seek to delay to later in the year automatic spending cuts that otherwise would begin on January 2. We do not expect the Administration to make its plans public any time soon, not least because identifying an escape hatch early could create the very outcome it hopes to avoid. And, in any event, it doesn’t have to come to this. A great deal was accomplished in the lame duck session of 2010, in large part because Democrats and Republicans agreed to compromise. Both sides recognized that the economy needed a boost and that, by working together, they could resolve issues that until then had eluded resolution. In that environment, the President agreed to extend all the Bush tax cuts, as well as to extend other expiring or expired tax provisions, such as AMT relief. He also succeeded in pushing a major arms control treaty through the Senate. We expect a comparable effort this time as well, though the details on the tax policy side will likely be subject to intense negotiations, particularly on whether to limit extension of the Bush tax cuts to a particular income threshold. To date, Congress has been unable and unwilling to agree to do anything, in part because of intransigence by both parties over whether to impose an income limit on an extension of the Bush tax cuts and in part because the “cost” of extending current law has been well beyond what Congress has been willing to “pay.” As one example, a two-year extension of an AMT patch for middle-class families plus routine extension of expired and expiring tax provisions would cost $205 billion. In addition, delaying sequestration for an additional year would require $109 billion in new revenues or cuts to non-targeted programs (unless, of course, Congress punted by forcing nine years of cuts into eight, increasing the pain in future years).

Over the last year, there has been bipartisan agreement that the fiscal cliff must be avoided and that a comprehensive overhaul of our tax code is necessary. Nonetheless, the parties have fundamentally disagreed about how to approach these issues, with President Obama and Congressional Democrats arguing for significant tax increases as a means of deficit reduction and Governor Romney and Congressional Republicans rejecting the idea that any direct tax increases are necessary, preferring that any new revenue come from assumed economic growth once tax reform is enacted.

The result has been a continued legislative stalemate, with a heavy dose of political posturing by both sides. But even close elections can be clarifying. A narrowly divided electorate now having spoken, we expect discussions to begin anew with some urgency in the lame duck session. Given major philosophical differences on tax policy issues between the parties, it remains to be seen whether these discussions will lead to an agreement to avert the fiscal cliff while, at the same time, clearing the way for comprehensive tax reform. In our view, it is likely both will occur in the lame duck session (or shortly thereafter), beginning with agreement on a Bush tax cut extension coupled with a broad framework for a tax reform agreement, with the hard work of tax reform to span across 2013. Although there are a range of possible outcomes in the lame duck session and beyond, one thing is certain: in stark contrast to the last year, over the next few months we will finally see the parties undertake a serious discussion about tax policy. In the lame duck session, for example, Congress might agree to legislation that would extend all (or most) expired and expiring tax breaks for six months to a year, tied to fundamental tax reform generating some agreed-upon amount in the hundreds of billions of dollars (or more) in overall deficit reduction over the next decade, with the threat of greater deficit reduction if the 113th Congress were to fail to act by then. Democrats will likely raise eliminating or modifying some tax measures, including those aimed at the oil and gas industry, to help offset the cost of forestalling the spending sequester or to make a “down payment” on future deficit reduction. Such an agreement also could mandate some further level of deficit reduction by seeking to compel the 113th Congress to reform entitlement programs such as Medicare and Medicaid next year.

Forcing hard decisions as a means of achieving deficit reduction of course is what the Budget Control Act of 2011 was supposed to accomplish by establishing the “Super Committee” and creating the threat of sequestration next year if Congress failed to agree to legislation reducing the deficit by at least $1.2 trillion over a decade. And it is precisely that failure that has the nation confronting the fiscal cliff. Many Senators and Representatives recognize the irony that the best way to prevent going over the fiscal cliff this year is to cut a deal that merely creates a bigger cliff that would arrive in another six or twelve months. But doing so would at least keep us at the precipice.

With the elections behind them, the President and the 112th Congress have an opportunity to succeed where they have failed before. Assuming Congress is willing to support legislation putting off the day of reckoning for an additional six months to a year, we expect the President to ask for an increase in the debt ceiling as part of the final negotiations. (As a result of increased tax receipts, the Treasury Department now anticipates that the debt ceiling will not be reached until early in the first quarter, with action to address the problem probably necessary by late February or early March.) Whether the President can secure congressional support for an increase by the end of the year will be a matter to be negotiated and ultimately will depend on the magnitude of whatever deal is reached. The President will not want to ask Congress to increase the debt ceiling early next year in a situation in which House Republicans would be in a very strong position to extract additional concessions without having to give up something meaningful. For them, the trade off in the lame duck session might be a one-year extension of the Bush tax cuts, including for married couples making more than $250,000, tied to an agreement to pursue fundamental tax and entitlement reform next year. Even that might be a stretch. Given the election results, Congressional Republicans may have to accept an income limitation for any Bush tax cut extension, if not at $250,000 then at $500,000 or $1,000,000. What else beyond addressing the fiscal cliff can we expect Congress to accomplish during the lame duck session? Unfortunately, not much. Majority Leader Harry Reid (D-NV) agreed to bring a cybersecurity bill to the Senate floor, but action on it was blocked. The leadership of the Armed Services Committees will endeavor to move a defense authorization bill that would not be subject to contentious amendments on the floor. Beyond that, a backlog of noncontroversial bills has been building for a long time, but most if not all of them will have to move in the Senate by Unanimous Consent.

When it adjourned for the elections, the 112th Congress had approved only 196 bills that were enacted into law, well below the output of the 104th Congress, which produced legislation resulting in 333 public laws. Along with many others, we will be pressing to get things done in an environment we hope will be more hospitable to legislating than the first 22 months of the 112th Congress.

In our State of the Union Analysis this past January, we pointed out that “[t]he first session of the 112th Congress is likely to be remembered as one of the least productive in decades.” When the President signed the National Defense Authorization Act for FY 2012 on New Year’s Eve, it became Public Law No. 112-81. Having fallen seven short of the 88 bills enacted in 1995, the first session of the 112th Congress produced the fewest number of public laws since Congress formally began keeping track in 1947. With a flurry of signatures on January 3, however, the President helped this Congress eke out of last place with a total of 90 bills signed into law in the first session. Having barely picked up the pace since then, the 112th Congress is now on track to be the least productive ever as measured by bills enacted into law. Congressional Republicans would argue that the slow pace of legislation is the natural and desired result of divided government. But the public’s record low approval rates for this Congress no doubt reflect the perception that partisan activity has prevented necessary legislation from becoming law.

What else can we expect in the next few months? With the President having won re-election, we anticipate that many major rules will soon be published in final form, which will likely trigger a political reaction on Capitol Hill as Republicans invoke the Congressional Review Act in an effort to block them from becoming law. The EPA, for example, has many major rules on track to become final later this year or early next year. In addition, dozens of rules required under the Dodd-Frank Act are in the works. Finally, the President’s re-election puts his Administration in a commanding position to finalize numerous rules that solidify the regulatory framework for implementing the Affordable Care Act. Republican efforts to invoke the Congressional Review Act later this year and next year are unlikely to succeed in the Democratic-controlled Senate. Even if one or more do, a certain Presidential veto virtually ensures forthcoming rules will stand unless struck down by the courts. In its next term, the Administration is likely to face high Cabinet turnover, beginning early in 2013, not least because so many senior officials have been in position so long. (Turnover to date has been historically low for the post- World War II era.) In addition to moving forward with his regulatory agenda, the President may be able to effectuate long-lasting policy changes through Supreme Court and lower-court appointments as well. Four Supreme Court Justices, for example, are in their mid to late 70s and could opt to retire prior to the end of the President’s second term. On Capitol Hill, there will be a great deal of turnover, in particular among Republicans currently serving in committee leadership positions. This will provide the Administration with an opportunity to forge some new relationships in the 113th Congress. In the Senate, Republican caucus rules limit time served as a Ranking Member to six years (and time served as a Chairman to an additional six years). While most current Ranking Members have time left to serve as chairmen, many of them are completing their sixth year as the Ranking Member, which will lead to a significant reshuffling of the decks for the 113th Congress.

As a result of House Republican Caucus term limit rules, we expect to see as well a great deal of turnover among Republicans chairing House committees. In fact, of the Members who are completing six years of service, House Budget Committee Chairman Paul Ryan will be the only Member to secure a waiver to serve an additional two-year term.

Except for changes triggered by retirements, all Senate Democratic Chairmen will maintain their gavels in the new Congress since they are not subject to term limit rules. Only the Budget Committee, the Energy and Natural Resources Committee, the Homeland Security and Governmental Affairs Committee, and the Veterans’ Affairs Committee will likely have new leaders. Among House Democrats, there will be a similar level of continuity, with little turnover among Members serving as Ranking Members.

With the balance of this analysis, we offer our thoughts on major policy areas that will drive the agenda in Washington for the next two years and thus how potential developments might affect you. Given the still narrow margin enjoyed by Senate Democrats (55-45), not much will get through the Senate unless each party commits to putting aside partisan differences to get something done on the deficit, fundamental tax reform, and a host of other pressing national issues. Under Republican control, the House leadership will be in a strong position to move whatever their membership supports. But bills written with only the interests of one party in mind stand virtually no chance of moving in the Senate, as House Republicans have seen over and over again in the 112th Congress.

Ironically, the voters have elected a 113th Congress that may be even more partisan than the 112th Congress, at least on paper. Both chambers will have a substantial number of new Members, in part because of redistricting and because so many Senators and House Members have thrown in the towel over their dismay that so little gets done anymore. (The House, for example, had 62 Districts in which an incumbent was not on the ballot.) By casting their votes, we have a sense the public wants the 113th Congress to get something done, to address the big issues that confront the country, and to do so working together.

Now that the voters have spoken, will the 113th Congress keep in mind Thomas Jefferson’s advice and make more of an effort to cross ideological divides, compromise, and solve the major policy challenges that confront our nation? As Jefferson recognized, major policy changes demand broad support to be successful. Addressing the deficit, for example, is too important and too big an issue for one party to hope to dictate the outcome to the other. We thus remain optimistic that the President and the Congress will work together in the lame duck session and establish the framework by which they can continue to work together next year. In the pages that follow, we sketch out our sense of what is in store in the areas of agriculture policy, budget and sequestration, defense and national security, education, energy and environmental policy, financial services, food and drug policy, foreign investment in the United States, government contracts, health care, homeland security, Native American affairs, tax policy, technology and telecommunications policy, trade policy, and transportation and infrastructure policy. Among the big issues likely to be addressed by the President and the 113th Congress is one we think worth mentioning here: immigration reform. There is broad support in the business community for Congress to finally address the issue. Leaders of the high-tech community, for example, have been calling on Congress for years to adopt legislation that would help them attract skilled engineers and software programmers, especially those who have graduated with advanced degrees from American universities and then are forced to return to their home countries. Moreover, the demographics of the voting population is changing so dramatically that neither party can risk failing to address the issue before the next Presidential election. In an interview with the Des Moines Register last month, the President signaled that he wants to take up the issue once the deficit has been addressed. He made the case for reform on both substantive and political grounds, saying in part: “I am fairly confident that [Republicans] are going to have a deep interest in getting that done.” As part of this effort, we expect there to be a renewed focus on the DREAM Act, which removes certain barriers to access for undocumented children who wish to attend college. Senator Marco Rubio (R-FL), who has expressed great interest in crafting a compromise, may lead the Republican effort, possibly joined by two incoming Republican Senators from Southwest border states—Ted Cruz of Texas and Jeff Flake of Arizona. As in addressing the deficit and fundamental tax reform, both parties will need to compromise to get something meaningful done. A policy change of this magnitude simply cannot be forced on a slender majority.

As a firm with deep public policy roots, we are proud of our ability to help clients exercise the right enshrined in the U.S. Constitution of petitioning their government. We have been at it since 1965, when Jim Patton encouraged a young White House aide named Tom Boggs to help him build a different kind of law firm, one that understood that all three branches of government could provide solutions to challenging problems. They had a vision for helping clients achieve success by combining political know-how, legislative and regulatory experience, and substantive knowledge of the law. For our paying and pro bono clients alike, we look forward to helping them achieve their legislative objectives as President Obama engages with the 113th Congress.

FINANCIAL SERVICES Major Issues Two years after the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), regulatory agencies such as the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) continue working steadily to implement financial services reform in the United States. Of the nearly 400 rules required under the Dodd-Frank Act, only about one-third have been finalized, with the rest not yet finalized or not yet proposed. With growing criticism over the international implications of the law, the delayed rulemaking process, and potentially burdensome regulations, the 113th Congress will face important questions regarding whether to make technical, or even substantial, amendments to the law. During the 113th Congress, we expect financial services legislative activity to focus on continuing oversight of the regulatory process arising out of the Dodd-Frank Act to ensure that regulators stay within the “intent” of the Congress. In the regulatory space, a recently successful judicial challenge to a CFTC position limits rule may cause regulatory agencies to prolong implementation of the Dodd-Frank Act, as they seek to avoid promulgating rules that will not withstand judicial scrutiny.

Given the relatively narrow control of the House and the Senate, it is unlikely that the 113th Congress will modify substantially or repeal the Dodd-Frank Act. Instead, we believe that legislative changes will focus on technical corrections where there was a clear error or in areas where the new Congress believes regulators require a clearer statement of congressional intent. Nonetheless, House Republicans will continue pushing for substantive changes to the law and may attempt to use the CFTC reauthorization as a vehicle to make them. This will make for a contentious reauthorization process in an already divided Congress. Further, the Obama Administration can be expected to strongly resist substantive changes to the Dodd-Frank Act.

In 2013, there will be continued criticism over the regulatory agencies’ funding and the importance of addressing housing finance reform. Indeed, both the Democratic Senate and the Republican House of Representatives can be expected to put forth proposals to address the reform of governmentsponsored enterprises (GSEs) and the privatization of the housing market. Of note, passage of comprehensive housing finance reform will require bipartisanship and compromise, which will not be an easy feat to achieve in the 113th Congress. This could empower the Federal Housing Finance Administration (FHFA), the conservator of Freddie Mac and Fannie Mae, to play an even more direct role in the reformulation of those GSEs while the legislative process sputters, as evidenced by the recent Securitization Platform White Paper released by FHFA. An important Presidential appointment to watch will be the Director of the FHFA. This position has been held on an Acting basis by the previous Deputy Director, Edward DeMarco. The Democratic margin in the Senate is not significant enough to make it easier to confirm a permanent head of FHFA, but there nonetheless will be pressure on the Administration to fill the position and take control of these issues for the President.

Regulatory agencies will remain focused on implementation of the Dodd-Frank Act in 2013 and newly created agencies such as the Consumer Financial Protection Bureau (CFPB) and the Financial Stability Oversight Council (FSOC) will play important roles in regulating the financial services industry. The CFPB, the establishment of which was broadly opposed by Republicans, will increase its role of protecting consumers as it begins to finalize key rules such as those governing mortgage servicing standards, the qualified mortgage definition, credit insurance financing, and the treatment of larger participants in certain consumer financial products markets. The FSOC will make its initial designations of non-bank companies to be considered systemically important financial institutions (SIFIs) subject to enhanced prudential standards. Similarly, the CFTC and SEC will begin the implementation phase for various rules and will have to address difficult industry questions on issues such as the impact of the new regulatory regime for over-the-counter derivatives on end users, the registration of swap and security-based swap dealers and major swap and security-based swap participants, and various clearing, execution, recordkeeping and reporting requirements. Other agencies including the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency will continue interpreting numerous other Dodd-Frank Act provisions including those focused on enhanced prudential standards for SIFIs, orderly liquidation authority, and the U.S. implementation of international capital requirements for banks.

President Obama will likely have several SEC and CFTC Commissioner positions to fill, including potentially the two chair positions. SEC Chairman Mary Schapiro’s term expires in June 2014, although press reports indicate she will resign with President Obama’s re-election. Similarly, Commissioner Elisse Walter’s term expired in June 2012 and, according to press reports, she is likely to leave the Commission as well. At the CFTC, Chairman Gary Gensler can continue serving until the end of 2013 despite his term having already expired. It remains unclear whether Chairman Gensler will seek another term (requiring Senate confirmation) or vacate his position. Commissioners Bart Chilton, a Democrat, and Jill Sommers, a Republican, have positions expiring in 2013 and 2014, respectively. While new appointments in the SEC and the CFTC will not change the political balance on the Commissions as the President selects the fifth member to each Commission, new members typically change the culture, tone, and chemistry of these independent regulatory bodies.

Another major appointment that will surely influence financial markets and financial services regulation is that of the Secretary of the Treasury. Secretary Timothy Geithner is widely expected to step down, leaving that crucial position to be filled, with rumors of potential appointees including former Clinton White House Chief of Staff Erskine Bowles, Current White House Chief of Staff Jacob Lew, Evercore CEO and Former Deputy Treasury Secretary Roger Altman, or BlackRock CEO Larry Fink. The Administration may also move to approve other pending financial regulatory agency nominations, including that of Federal Deposit Insurance Corporation Acting Chairman Martin Gruenberg, whose nomination has been pending since June 2011. Forecast for the 113th Congress Financial Regulatory Reform Agency Implementation. The CFTC began implementation of various Dodd-Frank rulemakings on October 12, prior to the elections. This implementation date came after dozens of open meetings, proposed rules, and industry comment letters, all of which are expected to continue in 2013. During the 113th Congress, we can expect the House Republican majority to continue promoting an implementation strategy for financial regulatory reform rulemaking that follows the principles of (1) individual choice over government supervision and (2) privatesector solutions over a “government only” approach. This can be expected to come into conflict with the perspective of the Obama Administration and the heads of the principal regulatory agencies involved in Dodd-Frank Act rulemaking. In 2013, the CFTC will address the position limits rulemaking and will finalize rules related to the operation of swap execution facilities and the international application of the new swap regulatory regime. Further, the CFTC must continue its work in designating swaps subject to mandatory clearing and trade execution, registering and regulating swap dealers and major swap participants, and implementing the reporting requirements for swap transaction data. Moreover, following the collapse of MF Global and Peregrine, the CFTC will take on new rulemakings to bolster customer protection requirements. The CFTC will also increase its scrutiny over high frequency trading activity, including a forthcoming concept release on this matter. Financial Regulatory Reform Technical Corrections. During the 113th Congress, we expect to see Republicans and Democrats in the House pursuing technical corrections to the law, as identified by the industry and relevant regulators. In any lengthy piece of legislation such as the Dodd-Frank Act, technical errors, omissions or other mistakes are bound to occur, and thus need to be corrected with subsequent legislation. Such an effort could be a platform for discussions about total or partial “repeal” of the Dodd-Frank Act. However, there is some speculation that Republicans, including House Agriculture Committee Chairman Frank Lucas (ROK), will be reluctant to address technical corrections if Democrats, including Senate Agriculture Committee Chairman Debbie Stabenow (D-MI), are unwilling to consider actual substantive changes to the law. In any event, any changes that come out of the split chambers of Congress will remain focused on slight modifications to the legislation, as opposed to repealing it. Even technical changes will be tough to achieve. The inability to legislate modifications to the Dodd-Frank Act and the expectation that regulators in a second Obama Administration could continue on a path of a more aggressive approach to Dodd- Frank implementation could lead to further legal challenges to the rulemaking process. Housing Finance Reform. Government-sponsored enterprises were not addressed in the Dodd-Frank Act. As noted above, the 113th Congress is expected to attempt to deal with issues related to GSEs reform and the housing finance market in general. The FHFA and the Department of Housing and Urban Development have also begun dedicating significant resources to the reform effort in 2013, as demonstrated by the FHFA’s recently released white paper on a new securitization platform and rumors regarding an Administration-supported “HARP 3.0” to increase access to refinancing for homeowners. Congress may consider a legislative proposal referred to as a legislative “HARP 3.0” authored by Senators Menendez and Barbara Boxer that would provide immediate refinancing relief to qualifying homeowners during the lame duck session. Insurance Reform. Almost a year after missing the Dodd- Frank mandated deadline of January 2012, the Federal Insurance Office (FIO) has not released a report to Congress on how to modernize the regulation of the insurance industry. After this report is submitted, Congress will likely address insurance reform in proposed legislation. The FIO report is expected to consider systemic risk regulation, capital standards, and the relationship between capital allocations and liabilities. The report will also look at consumer protection and gaps between States, the degree of national uniformity of State insurance regulation, and the regulation of insurance companies and affiliates on a consolidated basis. Finally, the report will study the international coordination of insurance regulation and the impact of foreign insurance laws on potential federal regulation. Although the FIO Director, Michael McRaith, has engaged in dialogue with E.U. insurance regulators as recently as October 2012, there is still no estimated timeline for the release of the FIO report. Consumer Financial Protection Bureau. This agency, created under the Dodd-Frank Act, was one of the most controversial developments during the legislative process. Director Richard Cordray was a recess appointment by President Obama and is allowed to serve as a recess appointee until the end of 2013, unless his nomination is confirmed by the Senate for the full five-year term. During the 113th Congress, Republicans in the House and Senate will continue to be critical of the CFPB and Director Cordray. Financial Stability Oversight Council. The Dodd-Frank Act established the FSOC to identify and monitor excessive risks by financial institutions, including SIFIs and systemically important Financial Market Utilities (FMUs). The FSOC consists of ten voting members, including an independent insurance expert, and five non-voting members. Of the ten voting members, four are from agencies where a change in leadership is expected (Secretary of the Treasury, SEC Chairman, CFTC Chairman, and Director of the FHFA). Roy Woodall, the independent insurance expert with voting power, was confirmed in 2011 to serve a six-year term as an FSOC member. Anticipated Committee Developments House Financial Services Committee. The committee will face significant changes in the 113th Congress, with Chairman Spencer Bachus (R-AL) reaching his six-year term limit and Ranking Member Barney Frank (D-MA) retiring. Representative Jeb Hensarling (R-TX) is expected to become the next Chairman and Representative Maxine Waters (DCA) is expected to take Representative Frank’s role as Ranking Member and the new chief Democratic defender of the Dodd-Frank Act. With both leaders already invested in housing finance reform—Representative Hensarling introduced an ambitious GSE reform bill in 2012 and Representative Waters was the outspoken Ranking Member of the Subcommittee on Capital Markets and GSEs—the committee will hold numerous hearings on housing reform and will look at ways to address the need to decrease the role of GSEs in the housing market. The Committee is also expected to continue hearing from market participants about issues related to market structure and high frequency trading, setting the stage for potential future legislative action on the topic. The committee will see some changes in membership as Republican Committee Members Judy Biggert (R-IL) (current Chair of the Subcommittee on Insurance, Housing, and Community Opportunity), Francisco Canseco (R-TX), Robert Dold (R-IL), Frank Guinta (R-NH), and Nan Hayworth (RNY) were defeated and Ron Paul (R-TX) is retiring. Democrats also are le
aving the committee. Representative Joe Baca (DCA) was defeated, Representative Joe Donnelly (D-IN) was elected to the Senate, and Representatives Gary Ackerman (D-NY) and Brad Miller (D-NC) are retiring. Senate Banking, Housing, and Urban Affairs Committee. Current Chairman Tim Johnson (D-SD) will continue his leadership of the committee. Ranking Member Richard Shelby (R-AL), who will step down as Ranking Member due to caucus term limits, is expected to be replaced by the committee’s second highest ranking Republican, Senator Mike Crapo (R-ID). With neither party having a sixty vote majority for a filibuster-proof Senate, we expect slow progress on all issues. However, Chairman Johnson and Ranking Member Crapo can be expected to attempt to explore where there is common ground, particularly on a Dodd-Frank Act technical corrections bill and housing finance reform. This potential collaboration could give the Senate leverage in negotiating deals regarding changes to the Dodd-Frank Act coming out of the Republican-controlled House of Representatives. The committee will see at least two new Members on the Democratic side, with the retirements of Senator Herb Kohl (D-WI) and Senator Daniel Akaka (D-HI). Senator Chris Coons (D-DE) and Senator-elect Elizabeth Warren (D-MA), who defeated incumbent Republican Scott Brown, are most likely to be appointed to the Committee.

The Senate and House Agriculture Committees will continue playing a significant role in the implementation of the Dodd- Frank Act, as these committees oversee the CFTC and were central to the debate on regulating over-the-counter derivatives markets. For a further discussion of the Senate and House Agriculture Committees and the 113th Congress, please see the Agriculture Policy portion of our analysis.

Contact Information For additional insights about likely policy developments, please feel free to contact the authors of this section: Micah Green at 202-457-5258 or msgreen@pattonboggs.com; Carolyn Walsh at 202-457-6531 or cwalsh@pattonboggs.com; Michael Dunn at 202-457-6148 or mvdunn@pattonboggs.com; Vince Frillici at 202-457- 6021 or vfrillici@pattonboggs.com; Daris Meeks at 202-457- 5205 or dmeeks@pattonboggs.com; Matthew Kulkin at 202- 457-6056 or mkulkin@pattonboggs.com; Lindsey Weber at 202-457-5686 or lweber@pattonboggs.com; and Mara Giorgio at 202-457-6522 or mgiorgio@pattonboggs.com.