Washington's most powerful business lobby, the U.S. Chamber of Commerce, says it supports financial regulatory reform, but contends that changes need to be made in the Senate bill in order to avoid hurting the economy.

"It's not too late to get this right," said David Hirschmann, president and CEO of the chamber's Center for Capital Markets Competitiveness. "We need financial reform."

Legislation aimed at preventing a repeat of the financial crisis that hit in 2008 is headed for a vote soon in the Senate.

The chamber has long opposed plans for a new Consumer Financial Protection Agency, contending that it would create an unnecessary layer of bureaucracy and make credit harder to get. Unlike the financial-reform bill that passed the House, the Senate bill wouldn't create an agency. Instead, it calls for an independent bureau housed at the Federal Reserve, but not subject to the Fed's oversight.

Nonfinancial firms, such as dentists or furniture stores with layaway plans, could be subject to the new bureau's regulations if they allow customers to pay in four or more installments, Hirschmann said. That provision needs to be changed in order to ensure that the bureau only regulates financial firms, he said.

The chamber also objects to how the Senate bill would wind down large financial firms that are failing. This provision is aimed at ending the "too big to fail" situation that required taxpayers to bail out Wall Street firms.

The bill passed by the Senate Banking Committee would establish a $50 billion fund, prepaid by large financial institutions, that would be used to keep failing firms operating as regulators sell off their assets in an orderly liquidation process.

The problem with this fund, Hirschmann said, is that its existence guarantees that it would be used. Failing firms could be kept alive for months, or even years, subsidized by their competitors.

"The goal should be to package a failing firm up for bankruptcy and put it out of its misery as quickly as possible," Hirschmann said.

The chamber also wants to make sure that nonfinancial businesses that use derivatives to hedge their risks can continue to do so without having to clear them through new exchanges. In addition, it objects to corporate-governance provisions in the bill that it claims would allow large activist investors to advance agendas that aren't related to corporate performance.

For more information, see www.uschamber.com.

IRS won't have to hire 16,000

The commissioner of the Internal Revenue Service dismissed reports that his agency will have to hire 16,000 new agents to enforce mandates in the new health-care-reform law.

Douglas Shulman told the House Small Business Committee that those reports are examples of "irresponsible demonizing" of the IRS.

But he declined to estimate how many people the IRS will need to hire.

"I don't have a number for you," he said, under persistent questioning by Rep. Steve King, R-Iowa.

The IRS will have to build computer systems to administer the health-insurance tax credits that are available this year to employers with fewer than 25 full-time workers and average wages of less than $50,000, he said. The agency has begun mailing out postcards to more than 4 million small businesses and tax-exempt organizations to make them aware of the tax credit.

Shulman said the IRS has not worked through how it will enforce a health-care-reform-law provision that requires businesses with more than 50 employees to pay a fee of $2,000 per employee (minus a firm's first 30 employees) if they don't offer insurance and a worker receives government-subsidized insurance through new exchanges. Those exchanges, and this penalty, don't go into effect until 2014.

The requirement for all individuals to buy insurance also goes into effect in 2014. Shulman said enforcement of this mandate will be rather simple.

Insurers will send a form to the IRS indicating that an individual has health insurance, similar to how businesses report payments to independent contractors on Form 1099.

The IRS will mail a letter to individuals who lack these forms. If they can't prove they're covered, they will have to pay a penalty, starting at a minimum of $95 in 2014 and increasing to $695 or more in 2016. The IRS can't impose liens or levies to enforce this penalty, but it can adjust an individual's tax return, such as reducing the amount of any refund, Shulman said.

For more information, see www.irs.gov.

Export-Import loans up 125 percent in first half of year

Export loans authorized by the Export-Import Bank of the United States more than doubled to $13.2 billion in the first half of fiscal 2010, compared with the same period a year earlier.

The independent federal agency provides loan guarantees, export-credit insurance and direct loans to help U.S. businesses export their products and services. The loans are supported by the interest and fees it collects; the agency receives no taxpayer dollars.

Ex-Im Bank loans to small businesses jumped 28 percent during the first six months of the fiscal year to $2.3 billion.

"Working with private lenders, we are helping U.S. exporters put Americans to work producing the high-quality goods and services that foreign buyers prefer," said Ex-Im Bank Chairman and President Fred Hochberg.

For more information, see www.exim.gov.

Kent Hoover is Washington Bureau chief for American City Business Journals.