Senior US senator favors bank super-cop idea -aide
By Kevin Drawbaugh
WASHINGTON, Sept 20 (Reuters) – The U.S. Senate’s top legislator on financial regulation favors reducing the number of bank supervisory agencies more sharply than the Obama administration proposes, said a senior Senate aide on Sunday.
In a stance that could set up a protracted battle over bank regulation, Senate Banking Committee Chairman Christopher Dodd is among panel members planning to push for the merger of four existing bank supervisors into one, the aide said.
That approach could further delay President Barack Obama’s drive to tighten oversight of banks and capital markets, a topic expected to headline the Sept. 24-25 summit meeting of the leaders of the Group of 20 rich nations in Pittsburgh.
With the global financial system stabilizing after the crisis of late 2008, world leaders want signs of U.S. progress toward a new regulatory regime, but a set of sweeping proposals from Obama is encountering stiff resistance in Congress.
The president and Democrats in the U.S. House of Representatives are proposing a merger of two bank supervisory agencies — the Office of Thrift Supervision and the Comptroller of the Currency. They want to leave largely intact the bank oversight functions of two other agencies — the Federal Reserve and the Federal Deposit Insurance Corp.
But even this modest approach — aimed at limiting banks’ ability to shop around for the most lenient government regulator — is under attack from bank lobbyists and turf-protecting federal authorities.
Dodd, a Democrat facing a tough reelection battle next year, has been expected by policy analysts to embrace more populist financial regulation reforms as he tries to win additional votes in his home state of Connecticut.
He opted earlier this month to stay on as banking chairman, rather than take over the chairmanship of the Senate health committee left vacant when Senator Edward Kennedy died.
During Kennedy’s illness, Dodd stood in for his close friend and led Senate Democrats’ fight for healthcare reform. He has pledged recently to stay deeply involved on that issue, in addition to tackling financial regulation
White House spokeswoman Jennifer Psaki underscored the White House’s commitment to doing financial reform this year.
She said, “President Obama and Senator Dodd share a commitment to passing a bill that will usher in a stronger regulatory structure that closes loopholes, focuses on systemic risk and creates a more robust regulatory agency on behalf of consumers.
“We recognize there will be many ideas put forward and we look forward to continuing to work with the leadership of the Senate Banking Committee and the House Financial Services Committee to get a bill done that accomplishes those goals this year.”
On other reforms, Dodd has long been skeptical of giving the Fed the job of regulating systemic risk in the economy, another reform proposed by Obama.
Dodd has not ruled out giving the Fed a role in this area, but is still leaning toward a strong role for an inter-agency council of financial regulators, the aide said.
The committee chairman also still strongly supports setting up an independent consumer protection regulator, a position that matches up with that of Obama, who is calling for creation of a Consumer Financial Protection Agency.