Leading tax policy lawmakers are questioning a possible move by the Treasury Department that would reverse a policy that trial lawyers may not deduct loans to clients as business expenses in certain contingency cases.  

House Ways and Means ranking member Dave Camp (R-Mich.) and Senate Finance ranking member Chuck Grassley (R-Iowa) expressed concern in a letter Friday to Treasury Secretary Timothy Geithner asking about the implementation of the new policy that would benefit trial lawyers while bypassing Congress and IRS precedent.

They estimate the change could cost the federal government more than $1.5 billion over 10 years.

"We urge you not to make such changes in the government’s enforcement of the tax laws, absent a clear direction from Congress or to comply with court decisions," Grassley and Camp wrote.

The issue cropped up after Michael Mundaca, Treasury's assistant secretary for Tax Policy, said the department may change the policy. 

"While the Ninth Circuit Court of Appeals ruled such deductions are allowable fifteen years ago, the IRS has continued to enforce its rule disallowing such tax deductions in all other Circuits," the lawmakers said. 

The extension of unemployment benefits signed into law by President Obama on Thursday is missing a key exemption.

The amendment offered by Republican Sen. George LeMieux (Fla.) successfully navigated a procedural hurdle Thursday night.

“The problem now is weak growth and high unemployment rather than outright economic collapse,” budget director Peter Orszag said.

Democrats launched an offensive Friday to play up voters' concerns about a Republican return to power this fall by releasing a new Web video.

The Democratic National Committee (DNC) released a new Web video seizing on remarks by top Republicans criticizing Wall Street reform legislation that President Obama signed into law this week.

The video features remarks by House Minority Leader John Boehner (R-Ohio) and Minority Whip Eric Cantor (R-Va.) criticizing Wall Street reform as an overreaction, as well as National Republican Congressional Committee (NRCC) Chairman Pete Sessions's (Texas) comment last weekend that GOP rule would return Congress to the "exact same agenda" Republicans had sought when they were last in charge.

"Given Republicans’ knee-jerk partisanship and obstruction, it’s not surprising that they would label legislation that takes bold steps to reform our financial system and puts consumers back in control of their finances an ‘overreaction,’" said DNC spokeswoman Brandi Hoffine. "I’m sure it’s a shock to their systems."

The video more or less amounts to a victory lap for Democrats on the new financial industry regulations after they shepherded the legislation through the House and Senate over the past few months. It also reflects a sense among Democrats that the legislation will be a political boon going into the fall's midterm elections.

"Only those longing for the fat-cat days of the Bush administration that allowed the super-wealthy to get wealthier at the expense of the middle class would call Wall Street reform an ‘overreaction,'" said Hoffine.

The House and Senate are still working on an agreement to pass a bill to fund the Federal Aviation Administration. 

Senate Commerce, Science and Transportation Chairman Jay Rockefeller (D-W.Va.) had expected the final product to be ready this week but delays continued on the measure. House aides said the bill still had several contentious issues left to be worked out.

An aide for Senate Majority Leader Harry Reid (D-Nev.) said the reconciled bill could still be completed before leaving for the August recess. Reid could file cloture on the measure early next week. The latest extension on the measure runs through Aug. 1. 

The Senate is in session for two more weeks and the House plans to leave by the end of next week, giving lawmakers limited time to move the bill. 

Sens. Mike Crapo (R-Idaho) and Mark Udall (D-Col.) have introduced estate tax legislation aimed at preserving family farms and land.

A top staffer at the Office of the Comptroller of the Currency (OCC) will take the reins at the agency on a temporary basis beginning in August, the Obama administration announced Friday.

Treasury Secretary Timothy Geithner said John Walsh, the OCC’s chief of staff and public affairs, will assume duties as acting comptroller when John Dugan leaves the top job on Aug. 14.

Before joining the OCC in 2005, Walsh served as the executive director of the Group of 30, an economic consulting group. He has also held positions with the Treasury Department, the Senate Banking Committee and the Office of Management and Budget.

Dugan, 55, was appointed to a five-year term as comptroller by President George W. Bush in 2005. He wrote a letter to President Obama in early July saying he would depart on Aug. 14 after serving through “two administrations and under three Secretaries of the Treasury.”

The OCC is the regulator for nationally chartered banks, which hold more than 60 percent of the nation’s banking and thrift assets.

Sen. Chuck Grassley (R-Iowa) has asked a government watchdog to look into General Motor’s $3.5 billion purchase of an auto loan company instead of paying back federal bailout debt. 

Grassley sent a letter to Neil Barofsky, special inspector general for the Troubled Asset Relief Program, asking for an investigation of GM’s and the Treasury’s role in the purchase. 

“If GM has $3.5 billion in cash to buy a financial institution, it seems like it should have paid back taxpayers first,” Grassley wrote. “After GM’s experience with GMAC, which left GM seeking a taxpayer bailout, you have to think the company and, in turn, the taxpayers would be better off if GM focused on making cars that people want to buy and stayed clear of repeating its effort to make high-risk car loans.”

GM announced Thursday the purchase of Fort Worth, Texas-based AmeriCredit Corp., a profitable company that specializes in auto loans to borrowers with below-average credit.