Senate Takes Different Approach from House for Highway and Bridge Fund
Earlier this week, according to a New York Times article, the Senate agreed to fill the coffers of the fund that pays for highway and bridge repairs with an $8.1 billion infusion. This is a different approach from the House, noted the article, which said that it would create "last-minute trouble for legislation that Congress must pass in the next several days to prevent the fund from becoming depleted."
The Senate bill would extend the Highway Trust Fund through Dec. 19, while the House bill would take funding through May. The Senate proposal also would focus on improving tax collections as well.
Sen. Ron Wyden (D., Ore.), the Senate Finance Committee chairman said that the Senate would "cede its ability to influence the debate" if it didn't offer its own version. He said there was still time to work out a law acceptable to both houses and pass it later this week. Speaker John Boehner (R., Ohio) has said he would send his original bill back to the Senate, taking out the changes.
Restatements Decline Over Decade, According to Study
An article in Compliance Week notes that there are now fewer restatements, and they tend to be less severe than they were in the past. Meanwhile, stock prices have shown little reaction, according to the study.
Susan Scholes, a professor at the University of Kansas, who conducted the study, said there were 856 restatements in 2003 before Sarbanes-Oxley took effect. They peaked in 2006 at 1,784, and then fell sharply to 738 in 2012. She also found that the number of restatements disclosed on Form 8-K Item 4.02 (particularly severe) also fell. Those 8-K restatements represented 61 percent of the 1,600 restatements filed in 2005, but declined to only 35 percent of the 738 restatements filed in 2012, the article noted.
As for the seriousness of the restatement, the study had ways of measuring those factors. Restatements generally involve fewer accounting issues, in noted. In 2005, 70 percent of restatements involved multiple accounting issues compared with only 28 percent of restatements in 2012. "The accounting issues themselves have become less serious as well, the study says, and cover shorter periods of time over the course of the decade."
Why Can't the Banking Industry Solve Its Ethics Problems?
In the New York Times Upshot Column, Neil Irwin wondered about what he called "the aggressive culture and spotty ethics within the world's biggest banks." Why do banks have so many problems, he asked. Why are there so many banking scandals, as opposed to scandals in other large companies like retailers, airlines, and manufacturers.
Maybe it's time to take a closer look: "Some of the world's leading bank regulators are trying to figure that out. And they have taken to sounding like parents who have grown increasingly exasperated at teenage children who keep wrecking the family car," he said. He noted that Bill Dudley, the president of the Federal Reserve Bank of New York, said in a speech last November that "there is evidence of deep-seated cultural and ethical failures at many large financial institutions."
He concluded by quoting Richard Posner, the federal judge and University of Chicago professor, who said that such business models "attracts people who have a taste for risk and attach a very high utility to money. The complexity of modern finance, the greed and gullibility of individual financial consumers, and the difficulty that so many ordinary people have in understanding credit facilitate financial fraud, and financial sharp practices that fall short of fraud, enabling financial fraudsters to skirt criminal sanctions."
GOP Report Floats IRS Changes on Tax-Exempt Group Oversight
As noted in a WSJ blog, congressional Republicans are trying to find a way to make sure the IRS doesn't unfairly target conservative groups again. As the article puts it, while the Republicans "don't call for ripping up the floorboards at the agency's Washington headquarters, they come pretty close." The House Oversight and Government Reform Committee report, recommends the IRS get out of politics. According to the article, the Service should no longer have the authority for regulating political activities by tax-exempt groups.
One of the most shocking ideas in the report is the proposal to eliminate the IRS commissioner job entirely. According to the article, "Republicans say the commissioner structure has provided insufficient oversight of the agency at a time when its workload has been expanding rapidly." Replacing the commissioner would be a bipartisan commission.
The article quotes a Democratic aide as saying: "It is difficult to count how many times the chairman has released partisan staff reports to the press before letting his own committee members read them first. If history is any guide, this report will also be something less than a fair and comprehensive account of the facts before the Committee."
When Advisers Charge You to Fire Them
Is this the way it's working now: you have to pay good money to get rid of a financial professional? A WSJ MoneyBeat article explains how this happens: if advisors owe you a fiduciary duty, they must put your benefit ahead of their own. That means avoiding conflicts of interest and making full disclosures.
But what about termination fees on clients who leave the firm after being with an advisor for a relatively short period? Although the article agrees the advisor has a right to recoup certain costs, the fees should not be exorbitant. "Otherwise such fees would seem to violate the spirit, if not the letter, of fiduciary duty."
The article quoted David Tittsworth, president of the Investment Advisers Association, a trade group in Washington. He said regulators have taken the position in the past "that some termination fees may violate an investment adviser's fiduciary duty." He believes that such fees may be unfair if they "penalize a client just for terminating an adviser or keep a client from ending a bad advisory relationship."
Some experts note that the law in this area is ambiguous, according to the article. It said a person familiar with the SEC's thinking says that the agency views each such situation based on the facts and circumstances.
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- Windstream Cleared to Cut Taxes by Forming a REIT (WSJ)
- McDonald's Ruling Sets Ominous Tone for Franchisers (WSJ)
- U.S. Homeownership Rate Falls to Lowest in 19 Years (Bloomberg)
- The ACA's Impact on Small Business (New Jersey CPA)
- U.S. lawmaker takes soda tax battle to Capitol Hill (Reuters)
- Celebrities Struggle in Prepaid-Card Business (WSJ)
- Airlines win House battle over ticket tax transparency (Don't Mess with Taxes)
- Economy rebounds to 4% growth pace in Q2 (USA Today)