Top US lawmakers stress financial reform common points, delay seen
By Kevin Drawbaugh
WASHINGTON, Sept 22 (Reuters) – The U.S. Congress’ two top legislators on financial reform stressed their points of agreement on Tuesday, despite lingering differences and a prediction from one that the reform debate may be prolonged.
Senate Banking Committee Chairman Christopher Dodd said he wants his panel to act on financial regulatory reforms before the end of 2009, but warned that that deadline self-imposed by the Obama administration could slip.
“We want to clearly get something done before the end of the year in our committee, and possibly beyond that, but obviously healthcare (reform) will determine to some extent how much we can get done,” he told reporters.
Speaking after a short meeting in the Capitol with Representative Barney Frank and Treasury Secretary Timothy Geithner, Dodd said, “Nothing has been written yet. There’s been no agreement specifically on any legislative language.”
Dodd is deeply involved in the congressional debate over healthcare, in addition to leading the banking committee.
Frank, chairman of the House of Representatives Financial Services Committee, said the half-hour meeting was “not a wake” and that the participants made “substantial progress.”
President Barack Obama will attend a summit meeting in Pittsburgh this week of the Group of 20 nations with the world’s largest economies, where financial regulation is expected to be a headline issue. Congress will not produce consensus legislation in time for the summit, Dodd said.
Frank said he disagrees with his Democratic colleague Dodd on proposals to restructure U.S. bank supervisors.
Dodd wants to form a super-cop for banks by merging four existing supervisory agencies into one. Frank and the Obama administration want a more limited consolidation.
But Frank said he did not consider that a major difference. “It’s not going to break this thing up … The important issues are the substantive rules — higher capital, resolution authority, controlling derivatives, a consumer agency. There is very broad agreement on all those things,” he said.
Chances are still “very, very good” that Congress will have a financial reform bill by the end of the year, Frank said.
“There is broad agreement … We’re well under way on our side on drafting up legislation,” he said. “This is on track for us to be voting on these things in committee in October.”
He and Dodd spoke minutes before Democratic Senator Jack Reed, a banking committee member, introduced a bill to regulate over-the-counter derivatives, a free-wheeling market widely blamed for amplifying the financial crisis that began in 2008.
Like earlier proposals, Reed’s legislation would force “standardized” OTC derivatives to go through clearinghouses, while placing other new limits on the market.
Frank said he expects new legislative language “within a few days” on the administration’s proposal to form a Consumer Financial Protection Agency.
He said he believes that proposed new curbs on executive pay will be in the final legislative package.
On the administration’s proposal to designate the Federal Reserve as a regulator of systemic risk in the economy, Frank said: “It’s an issue — that it’s not going to be the Fed alone, and trying to get the appropriate mix of a council with some executive authority … We will have some specifics on that fairly soon.”
Some lawmakers, including Dodd, are skeptical about giving the Fed that much power and favor vesting more responsibility in an inter-agency council of regulators.