The Hill, IMO, misinterprets Kerry's questioning of Geitner on the Finance committee

[karynnj]

Here is the Hill article:

"Senate Finance members from both parties on Tuesday repeatedly questioned a notion espoused by Treasury Secretary Timothy Geithner that the availability of credit, such as to start-up companies or individuals, would not be restricted by the bank tax.

Geithner argued that most institutions serving small businesses and individuals would not subjected to the tax. He also said that institutions subjected to the levy would likely lose customers if they passed the cost of the tax on to end users.

<snip, Geitner also said that 99% of firms giving SB loans were not affected>

Sen. John Kerry (D-Mass.) countered the Secretary's rationale by noting a report from the Congressional Budget Office that found that the availability of credit would be restricted by creating a tax on banks that take extraordinary risks.

"I'm concerned that however it works in practice it may not be that clean cut," Kerry said. "And the result could be that small business may have an impact."
<followed by a sentence with Roberts speaking of $1 trillion!>

http://thehill.com/blogs/on-the-money/domestic-taxes/95885-capital-would-not-be-limited-by-bank-tax-geithner-said

Seeing this, I was stunned as this is a Republican argument. Now, before posting this luckily I decided to look at the hearing. The fact is that this is pretty distorted article, even though the Kerry quote is accurate. What is missing is the context.

John Kerry's interaction with Geitner was not confrontational at all. His first several questions dealt with getting greater clarity in terms of which financial organizations were impacted and which weren't. The intent seemed to be to prevent some unintended consequences of firms being affected that were never meant to be. The response to both questions was that Geitner people would work with the Senate people to insure complete clarity - and one of Kerry's examples was something that Geitner said had not been figured out yet, but it had to be done. (If anything, Kerry seemed to be working to help Geitner strengthen his answer to Grassley and to insure that he knew where the CBO estimate came from and possibly how to fix it. )

Then at the very end of his time, Kerry referenced Grassley's comments that small businesses would be hurt. Kerry noted that the CBO said that small businesses could SLIGHTLY be hurt. Kerry emphasizes the word "slightly". Kerry spoke of wanting Geitner's analysis of how the CBO's conclusion was made - something Kerry spoke of wanting to look at as well. Geitner agreed with Kerry that that should be done and said he shared that objective.

Kerry's time was then up and Olymphia Snowe followed on the same topic. The article by jumping from Kerry's comment to Robert's statement speaking of $1 trillion dollars completely leads to a very wrong impression of Kerry's positions here.

In case anyone picks up on what is a strange spin here, here is a link to the hearing - Kerry and Snowe are about 1/3rd of the way through - http://finance.senate.gov/hearings/watch/?id=8e5b624f-5056-a032-52e9-12425ef455f8

(unlike the SFRC, you can't see minutes.)

[beachmom]

1. Thank God for the internet and c-span video so we can

check up on the journalists.

[karynnj]

2. True - reading the Hill article I was really disgusted

that Kerry could be giving any credibility to the Republican talking point - which is what they essentially say. In fact, he was doing his job trying to get to the bottom of where the SLIGHT impact was from the CBO report. It was very clear that he was doing what a lawmaker should do - trying to intelligently anticipate who is impacted and insure it was just those intended. On that, he and Geitner were completely in sync. Words like clarity and "crystal clear" were used.

The bad thing could have been that through lack of resources or sheer laziness, that Hill report seems to be becoming the credited source of other reports. But I found only one - which credited the Hill and is a source I really haven't heard of.

At present finance reform legislation the Senate is considering does not include this financial crisis fee.

Both Democrat and Republican committee members questioned Geithner on whether the bank fee would reduce credit available to borrowers.

Senator John Kerry (D-Mass.) said the fee may affect small business by reducing available credit, reports The Hill. He quoted a Congressional Budget Office report that found a tax on banks taking extraordinary risks would reduce available credit at smaller banks.

http://www.theepochtimes.com/n2/content/view/34705/

This is actually truer of Grassley's questions than Kerry's. Like the Hill comments, they aren't strictly untrue, but important pieces are missing - like the word "slight" and more importantly, the agreement of both Geitner and Kerry to do further work on this.

(I wish Finance had their viewer set up like SFRC, so you could give the exact time something is said.)

[Mass]

3. Here is what it is about

Given the way Kerry has always tried to protect MA financial firms, I think this is probably a correct interpretation, even from the Herald.

I am not sure whether I agree or not with him (not enough background knowledge of this issue for that), but I think this is about protecting local financial interests.

http://news.bostonherald.com/news/politics/view/20100506us_sen_john_kerry_seeks_limits_on_fees_so_mass_finance_firms_wont_pay_into_bailout_fund/

U.S. Sen. John Kerry seeks limits on fees

So Mass. finance firms won’t pay into bailout fund

U.S. Sen. John Kerry is pressuring Treasury Secretary Timothy Geithner to exclude Massachusetts financial firms from new bank taxes designed to pay for past or future Wall Street bailouts.

Kerry, a member of the Senate Finance Committee, was set to meet with Geithner late yesterday at his Senate office to review various financial-reform proposals floating around Washington.

Kerry’s major concerns are recent proposals to tax a broad segment of the financial industry to raise funds for a new “resolution” trust and to pay back past bailout funds extended to banks. Some Bay State firms, including Fidelity Investments and Liberty Mutual, have howled they may end up paying into funds even if they didn’t contribute to the 2008 financial debacle.

A proposed $50 billion fund was nixed earlier this week by Senate negotiators.

...

In Senate testimony earlier this week, Geithner backed away from any suggestion that a new bank fee might be applied to smaller banks or other financial institutions that didn’t have anything to do with the subprime-mortgage meltdown.

In an interview yesterday, Kerry said he was meeting with Geithner to “further clarify” that smaller banks wouldn’t get hit by a new tax. “That’s the key ingredient,” Kerry said of any new agreement.

He said he can’t support a final bill if it harms taxpayers or Massachusetts firms that weren’t involved in the 2008 financial fiasco.

If only Wall Street firms get hit for a new tax, Kerry indicated he could support Geithner’s proposal.

Kerry, a Massachusetts Democrat, and U.S. Sen. Scott Brown, a Bay State Republican, now appear to be on the same policy page of fighting efforts to slap taxes or fees on financial firms in general.

[karynnj]

4. I think the Boston Herald has it both right and wrong

Listen to Kerry's segment of the hearing. The Boston Herald is right - Kerry uses Massachusetts examples of two types of companies that could unintentionally be brought into the group of companies on which the tax was levied. On the first example, Geitner agreed with Kerry that they would not be included - for the reason Kerry had suggested. On the other, Geitner agreed that there was a problem and he did not have a solution, but he agreed that they should not be included. (The BH, to their credit, admit that.)

Here, Kerry and his staff were doing a very good job trying to insure that the language did what they indented it to do - rather than having some unintended consequences. Among others likely to be protected by this are Massachusetts firms. Kerry as a MA Senator should look out for MA, but here he was not doing something parochial, but identified an example of firms pulled in inadvertently and he and Geitner committed to fixing it. (The mutual funds get pulled in for some complex reason that I don't understand - something like they include within their company a "thrift" needed for custody of 401 accounts only. ) So, at least from my understanding of Kerry's and Geitner's conversation is that Kerry was doing his job looking through the proposal and finding holes that needed fixing. That fixing them is important to MA is icing on the cake.

Where I thing they are wrong is their conclusion at the end that he is on the same page as Brown. Brown is simply against the bill. As the Herald states, Kerry is for it if they fix these problems - which at least in the meeting Geitner agreed needed to be done.

Judging from the hearing, Geitner and Kerry sounded as though they were on the same page about fixing this. If that is true, the proposal will be fixed and Kerry will support it. It is not clear what Brown will do, because his objection was confusing and broader brush.