Financial Regulatory Forum

By Rachelle Younglai

WASHINGTON, Jan 11 (Reuters) – Key U.S. senators are considering the creation of a special bankruptcy court for troubled financial services firms, a person familiar with the plans said on Monday.

Senate Banking Committee members are trying to toughen up parts of a draft bill that overhauls how the financial system is supervised. The draft, introduced by Senate Banking Committee Chairman Christopher Dodd, would create a system to unwind troubled financial firms.

But members of the committee want a more specific and tougher regime to deal with troubled financial firms after the federal government used billions of dollars in taxpayer funds to prop up firms like Bank of America.

Members are discussing a two-stage process that would create a preferential option for bankruptcy followed by a regulator-managed resolution if bankruptcy fails, the person said. The source requested anonymity because the draft is in flux and has not been made public.

Dodd’s proposal would give the Federal Deposit Insurance Corp the authority to dismantle large troubled financial services firms. The FDIC would be able to guarantee debts of firms in receivership.

By Karey Wutkowski and Rachelle Younglai

WASHINGTON, Jan 6 (Reuters) – South Dakota Democratic Senator Tim Johnson, a champion of community banks and credit card companies, is expected to take over the chairmanship of the influential U.S. Senate Banking Committee in 2011.

With the announcement on Wednesday by Connecticut Senator Christopher Dodd that he will not seek re-election in November, Johnson is next on the seniority list to lead the panel, which is in the midst of a debate over financial regulation reform.

In a flurry of speculation following Dodd’s news, financial services industry lobbyists and analysts said that the banking committee under Johnson would likely be more favorable to some business sectors than it has been under Dodd.

By Rachelle Younglai

WASHINGTON, Jan 6 (Reuters) – As Congress moves to reform U.S. financial regulation, key senators are nearing bipartisan agreement on stripping the Federal Reserve of its authority to supervise banks, two people familiar with the matter said.

Senate Banking Committee Chairman Christopher Dodd, in charge of shepherding reform legislation through the Senate, has introduced a bill aimed at preventing a recurrence of the 2008 financial crisis that shook economies worldwide.

The outlook for that legislation and Dodd’s handling of it shifted suddenly on Wednesday, however, with news that he has decided not to seek re-election in November.

By Thomas Ferraro and Steve Holland

WASHINGTON, Jan 6 (Reuters) – Veteran Democratic Senator Christopher Dodd,  leader of a financial regulation overhaul in the Senate, said on Wednesday he will not seek re-election in November in recognition that he faced an uphill battle and underscoring upheaval facing President Barack Obama’s Democrats.

Dodd, 65, chairman of the Senate Banking Committee, has been dogged by questions over his financial industry connections and was trailing badly in polls in his home state of Connecticut.

Dodd’s decision may well help Democrats hang on to his seat. Republicans conceded that Democratic chances would improve in the event that Connecticut’s attorney general, Richard Blumenthal, runs for the seat, and he told CNBC that he planned to do so.

By Kevin Drawbaugh and Huw Jones

WASHINGTON/LONDON, Jan 6 (Reuters) – Global financial regulation has changed little since the 2008 banking crisis, but that won’t be the case much longer.

U.S. and EU authorities are expected to hammer out the definite shape of a new regulatory order in 2010 that will fundamentally change how world banks and markets operate.

Stricter limits on leverage and capital will emerge, leading eventually to slimmer profits for banks, policy analysts said. Formerly unregulated off-exchange derivatives markets will have to conform to new procedures.

By Thomas Ferraro

WASHINGTON, Jan 6 (Reuters) – U.S. Senate Banking Committee Chairman Christopher Dodd, a key player in still-unfinished work to overhaul U.S. financial regulations, will announce on Wednesday he will not seek re-election in November, two senior Democratic party aides said.

The news, coupled with another Democrat’s retirement announcement, underscored the fragility of the Democrats’ Senate majority, which is just enough to push President Barack Obama’s agenda past Republican procedural obstacles.

The aides offered no reason for Dodd’s decision, but it had been clear for months the Democratic lawmaker from Connecticut, dogged by questions over his financial industry connections, had faced the prospect of being voted out of office.

By Kevin Drawbaugh
WASHINGTON, Nov 17 (Reuters) – A key U.S. congressional panel moved toward toughening a plan for dealing with “too big to fail” financial firms on Tuesday, while rejecting a Republican alternative backed by Wall Street.

(more…)

By Kevin Drawbaugh
WASHINGTON, Nov 16 (Reuters) – Some of the world’s largest financial firms on Monday urged a top U.S. lawmaker not to pursue big bank break-up legislation, an idea attracting interest in Congress and causing alarm on Wall Street.

(more…)

   By Kevin Drawbaugh
WASHINGTON, Oct 26 (Reuters) – The Obama administration within days will move to get tougher with large financial firms that are in trouble by urging Congress to let the government seize control, wipe out shareholders, boot management and restructure debts, an administration official said on Monday.

(more…)