Overnight Finance: Congress strikes five-year highway deal

CONGRESS REACHES ANOTHER DEAL: Say what you will, but there’s a rash of getting stuff done at the Capitol. On Tuesday, House and Senate negotiators put the finishing touches on a five-year highway bill, with ample time to spare before a Dec. 4 deadline. Per The Hill’s own Keith Laing, the bill would shell out $205 billion for highways, and another $48 billion for transit projects. If passed, it would mark the first transportation bill to exceed two years since 2005 (that sound you hear is a sigh of relief from state and local governments planning projects). http://bit.ly/1ltEMte

{mosads}EX-IM, IN: Beyond oodles of funds for transportation projects, the highway deal also would bring the Export-Import Bank back from the dead, much to the chagrin of conservatives that fought long and hard to let its charter expire in July. The bill includes a four-year reauthorization of the bank, despite the fact it is still opposed by GOP heavyweights including Senate Majority Leader Mitch McConnell (R-Ky.) and Speaker Paul Ryan (R-Wis.). Big win for the business community there. http://bit.ly/1O1VpmF

MIXED BAG FOR BANKS: Banks are grumbling about the final highway bill, which still covers some of the costs of the projects by trimming bank payouts from the Federal Reserve. Banks fought tooth and nail to kill a pay-for in the Senate highway bill that would trim dividend payments they receive from the Federal Reserve. They succeeded in removing it in the House, but it’s back in a modified version in the final deal.

Under the compromise package, banks would see their dividend payouts capped at the current six percent rate, but allowed to float below that alongside the borrowing rate of Treasury bonds (which now stands just above 2 percent). Also, banks with less than $10 billion in assets would be exempted from the rate cut.

The compromise package also would trim a reserve fund held by the Fed to help make up the difference.

Banks are making their displeasure known with the change, even as the final package appears set for passage. Rob Nichols, chief of the American Bankers Association, said banks are being used “like an E-ZPass” to pay for highway projects. And even smaller banks are opposed to the provision, despite being exempted from it — the Independent Community Bankers of America also blasted it in a statement.

AG IS A WINNER: Pushback from farm state lawmakers bore fruit in the highway bill, where they were able to secure a provision that killed a pay-for in the two-year budget accord that cut payments on crop insurance.

NOT HIGHWAY NEWS, OMNIBUS EDITION: We are 10 days away from a potential government shutdown, and the conversation remains focused on policy riders. No funding bill is public yet, but there are some hints as to where things are heading. McConnell said Tuesday he expects something on Syrian refugees will be part of the spending package, per Jordain Carney:

“I think the refugee issue is likely to be dealt with in some way in the omnibus,” the Kentucky Republican told reporters, when asked if the House-passed bill halting incoming refugees or changes to the Visa Waiver Program could be included in the spending bill. 

The Republican leader, however, stressed the catch-all proposal is still being negotiated, calling it a “work in progress” with “a lot of different ideas.” http://bit.ly/1YFOlng

And House Republicans are weighing including their previously passed Syrian refugee bill in the omnibus, despite opposition from Democratic leaders and the White House. From The Hill’s Scott Wong:

GOP leaders and appropriators are considering tucking the House-passed bill tightening screening for Syrian and Iraqi refugees into the must-pass omnibus spending measure, Homeland Security Chairman Michael McCaul (R-Texas) told The Hill.

The refugee bill cleared the House just before the Thanksgiving break on a big 289-137 vote, with support from 47 Democrats and all but two Republicans. Senate Democrats, however, have vowed to filibuster the bill in the upper chamber, leaving McCaul and other backers focusing on the massive omnibus as another option to get it to President Obama’s desk. http://bit.ly/1PZnTU4

Senate Minority Leader Harry Reid (D-Nev.) struck an optimistic tone Tuesday about the funding package, but Democrats are still warning that “poison pills” slipped into the bill could upend the whole thing.

ELSEWHERE…

IRS VOWS NO SPYING WITHOUT WARRANTS: Julian Hattem with the story: The IRS is pledging to only use controversial phone-tracking technology after acquiring a warrant, in a concession announced slightly more than a month after the agency’s use of the tools was first revealed.

IRS Commissioner John Koskinen told Sen. Ron Wyden (D-Ore.) in a letter released on Tuesday that the tax agency would have a policy to “obtain a search warrant supported by probable cause” before using the secretive devices, known as Stingrays, “IMSI-catchers” or “cell-site simulators.”

Furthermore, Koskinen told Wyden that the IRS has not used the technology since the Justice Department announced in September that it was going to start requiring warrants before using the cellphone-tracking devices, and “has placed a hold on its use until the new policy is issued.” http://bit.ly/1IniHHl

PUERTO RICO TO CONGRESS – WE’RE BROKE: Per yours truly: Puerto Rican officials struck a dire tone about the island’s fiscal state before lawmakers Tuesday as the territory flirts with a catastrophic default.

On the same day Puerto Rico was due to make a $355 million payment on its general obligation bonds, island officials were in Washington again urging lawmakers to provide support to the debt-burdened territory.

“Let us be clear, we have no cash left,” said Gov. Alejandro Javier García Padilla before the Senate Judiciary Committee. “The emergency measures we have taken to avoid default and maintain essential services are unsustainable.” http://bit.ly/1SvjjLp

GETTING THE GANG TOGETHER: If you ever wanted to hear from a financial regulator, next Tuesday at the House Financial Services Committee will be as good a shot as any. At a hearing devoted to the Financial Stability Oversight Council, the panel will hear from eight of the council’s 10 voting members. That includes chiefs of the CFPB, CFTC, FDIC, FHFA, NCUA and SEC — only Treasury Secretary Jack Lew and Fed Chairwoman Janet Yellen will not be in attendance. Impressive haul.

ON THE TRADE FRONT: House Ways and Means Committee Democrats will hold their second in a series of hearings on the Trans-Pacific Partnership (TPP).

Led by Ways and Means Committee ranking member Rep. Sander Levin (D-Mich.) it will put a microscope to the TPP’s investment chapter with a variety of witnesses.

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