Senator blocks Treasury nominees

Senate Minority Whip Jon Kyl, R-Ariz., is blocking pending Treasury Department nominees with jurisdiction over tax policy and international finance in response to the Obama administration's delay of new Internet gambling prohibitions, according to Senate aides.

Kyl, a longtime foe of Internet gaming, helped push through the law banning the processing of online wagers in 2006, when it was tucked into a port security bill. The final regulations were issued in late 2008, in the waning days of the Bush administration, and were to be enforced beginning Dec. 1, 2009.

But a blizzard of petitions from gaming industry groups and financial services firms charged with blocking the transactions, as well as influential lawmakers such as Senate Majority Leader Harry Reid, D-Nev., and House Financial Services Chairman Barney Frank, D-Mass., convinced the administration to delay the law's implementation. On Nov. 27, the Treasury Department and Federal Reserve jointly announced they would delay the new regulations until June 1.

Kyl was among the few arguing against a delay. "We strongly oppose this request and believe there is no justification for delaying the compliance deadline of the [gaming law] regulations," he and House Financial Services ranking member Spencer Bachus, R-Ala., wrote Nov. 3 to Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke.

"[S]imply delaying the compliance date serves no interest except that of the Internet gambling enterprises that have long evaded American gambling laws and will continue to do so until effective enforcement is in place," they wrote.

Just before the Senate adjourned in late December, the Senate Finance Committee approved the nominations of Lael Brainard for undersecretary for international affairs; Michael Mundaca for undersecretary for tax policy; Mary John Miller for assistant secretary for financial markets, and Charles Collyns for undersecretary for international finance. Kyl was the lone "no" vote in each case.

The nominations appeared headed for smooth sailing after Finance ranking member Charles Grassley, R-Iowa, lifted his hold when the IRS agreed to lift certain small-business tax penalties. A year-end deal between the White House and Senate Republicans cleared a path for several long-stalled nominees, including Miriam Sapiro for deputy U.S. trade representative, to be confirmed.

But the Treasury nominees were still in limbo when senators went home for Christmas. A Kyl spokesman was unavailable for comment in time for publication, but other Senate officials confirmed his hold.

The fact that Sapiro got through and others did not was something of a surprise. Her nomination had been held up for months by Sen. Jim Bunning, R-Ky., due to a dispute with the Canadian Parliament over tobacco regulations that he wanted USTR to adjudicate.

Senate Minority Leader Mitch McConnell, R-Ky., was able to pry Sapiro loose in exchange for Democrats to allow fellow Kentuckian Michael Khouri to be confirmed as a Federal Maritime Commissioner. He was nominated in early December.

Bunning was absent for votes on Christmas Eve, when the nominees were confirmed. But that did not stop him from immediately slapping holds on two other USTR nominees who had just been approved by the Finance Committee: Michael Punke, to be U.S. ambassador to the World Trade Organization, and Islam Siddiqui, to be chief U.S. agricultural negotiator.

Both are important posts given the ongoing Doha round of global trade talks that remain in limbo. A Bunning spokesman could not be reached in time for publication, but other sources confirmed his hold.

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