The failure of Congress to pass any form of law banning corporate inversions before adjourning last week probably means that the issue is dead, according to a local business leader.

Both the House of Representatives and the Senate had approved separate legislative proposals aimed at closing down the mechanism by which American companies may relocate their headquarters operations outside the US. The US legislative process called for the two sets of proposals to be knitted into a single act of legislation to which members of both Houses could agree, so that it could be passed into law.

That process proved impossible to orchestrate.

Congress is now adjourned until November 12, when a “lame duck” session will be held, a week after the mid-term elections that will alter the make-up of both chambers. Until all the newly elected members take their seats, new legislative programmes will be on hold. Federal terrorism insurance is also a likely victim of the adjournment of Congress, although under arcane regulations, a unanimous consent vote in the Senate could be approved today without any of the Senators being present.

Senate Majority Leader Tom Daschle a South Dakota Democrat said on Saturday that the Senate could pass the compromise legislation today if all 100 Senators agreed. He added that it was not clear whether the House would agree to the compromise.

“Some form of terrorism insurance, I think, they will finally agree on,” said a local insurance executive yesterday.

An American, he asked not to be further identified. “I had thought all along that the whole corporate inversions thing was so much hot air. Once those boys (Congressional representatives and Senators) drape themselves in the flag, however, as they did over corporate inversions, anything is possible.”

He continued: “A law banning breathing foreign air could have been passed on September 12, 2001, but Congress moves so slowly that an opportunity to extend US law overseas, which was the net effect of the inversions proposals, began to look less and less likely as the summer went on and we did not experience a second terrorist attack on US soil.”

Asked if he thought a reconvened Congress might take up the inversions legislation later this year, he said: “If the Republicans win control of both Houses, no. That'll be the end of it.”

Republicans mostly oppose such legislation, believing, in the words of David Aufhauser, general counsel to the US Treasury, that the inversions situation “is America's fault, not Bermuda's”.

Republicans are so confident of victory next month that, according to Sunday's Washington Post: “They have begun mapping how they would use their new power, including the possibility of speeding up tax cuts”.

The local executive continued: “Don't discount the chilling effect that all the hot air surrounding the inversions business has caused. Stanley Works passed a resolution, quite legally, to relocate here, and then got bullied by unions and local legislators into doing the wrong thing in the name of patriotism.

“You don't have to pass legislation to warn people off taking legal steps, provided you make enough noise or else speak quietly and carry a big stick.”

The stick, he suggested, was “the retroactive clause in some proposals that would have punished everyone who ever relocated away from the US to legally minimise their tax bills”.

He forecast that “Bermuda won't se many more inversions for a while. The kind of knee-jerk, my-country-right-or-wrong vindictiveness that was swilling around Washington painted all foreigners as terrorists. It had nothing to do with true patriotism and everything to do with politics. It made me embarrassed to be an American, frankly”.

As lawmakers scattered to their home states late last week for the final stretch of a closely-fought campaign to determine control of Congress, Democrats accused President Bush of wrecking the economy, while Republicans attacked Democrats for “simple incompetence”.

“You've got an economy that is in shambles as a result of decisions made by this administration; you have virtually no attention to domestic issues; you have a far greater and more poisoned political environment than we had two years ago,” said Mr. Daschle. “It's too bad that the promise of the new administration wasn't realised.”

Republicans were equally acrimonious. “When partisanship becomes so rigid it makes deal making impossible, the result is a breakdown in the system, and that breakdown is widely seen as simple incompetence, which made deal making impossible and resulted in the breakdown in the system,” said House Speaker Dennis Hastert, an Illinois Republican.