ANALYSIS – Obama tackles Wall Street reform in next big push
By Caren Bohan
WASHINGTON, March 25 (Reuters) – Fresh from his victory on landmark healthcare legislation, U.S. President Barack Obama is ready to take on Wall Street.
In the same week Obama signed into law his sweeping healthcare plan, his administration began a publicity blitz to sell his proposal to reshape the financial regulatory system.
Obama held a strategy session on Wednesday with two Democrats, Senate Banking Committee Chairman Christopher Dodd and House of Representatives Financial Services Committee Chairman Barney Frank, who are leading the effort to pass the plan in Congress.
Democrats hope the healthcare win will lend momentum to the push on financial reform, an issue the White House hopes will be a political winner as the party seeks to stave off potential losses in the November congressional elections.
“The good news is that, whereas the Republican message machine managed to convince a lot of Americans that the healthcare bill was bad for them, I think they will have a harder time with the financial reform,” said Princeton University professor Alan Blinder. “Rightly or wrongly everybody hates Wall Street and the banks right now.”
The White House has sought to tap into public fury over Wall Street’s excesses to push its case for financial reform.
ANALYSIS-Deck chairs secure aboard USS Financial Regulation
By Kevin Drawbaugh
WASHINGTON, March 21 (Reuters) – The big U.S. government agencies in charge of policing banks and markets, despite being excoriated over the severe 2008-2009 financial crisis, have successfully dodged a major structural shake-up.
While Congress may yet clamp down on the financial industry from Wall Street to Main Street, a top-to-bottom overhaul of the nation’s regulatory apparatus — which seemed like a certainty a year and a half ago — is not going to happen.
As political reality has tempered reform proposals, plans to reconfigure a patchwork bureaucracy stitched together over decades have faded from view, with just one agency closure still on the negotiating table.
Only the Office of Thrift Supervision — smallest and newest of the big seven agencies — is likely to be closed with regulatory reform bills in both the Senate and the House of Representatives targeting it for shutdown.
Otherwise, thousands of workers will stay in place at the Securities and Exchange Commission, the Federal Reserve, the Office of the Comptroller of the Currency and other agencies ensconced in stately, federal buildings across Washington.
Some of their work assignments may change — if Congress actually produces a bill this year and President Barack Obama signs it.
SCENARIOS-Three routes to swaps reform in U.S. Congress
WASHINGTON, March 16 (Reuters) – The path to government regulation of the $450 trillion market in over-the-counter derivatives must wind through the U.S. Senate Agriculture Committee, which oversees futures markets.
The journey began in the House of Representatives in December with the passage of a bill that would bring OTC derivatives under government regulation for the first time.
The Senate Banking Committee is also involved. A bill unveiled on Monday by its chairman calls for new rules for the market, which is dominated by a handful of Wall Street firms, including Goldman Sachs and JPMorgan Chase.
The Obama administration and most congressional Democrats favor an OTC derivatives crackdown, with many Republicans on board as well. But Wall Street lobbyists keen to protect the substantial profits produced by derivatives trading are pushing to write loopholes and exemptions into the new regulations.
There is wide consensus among lawmakers to require mandatory clearing and exchange trading of standardized derivatives. Trading of customized swaps would be reported, with the expectation of higher margin and capital requirements.
The details of the legislation will guide how regulators wield their new power over the market.
With only a few weeks of actual legislating time remaining before lawmakers shift their focus to the November elections, here are three potential routes for reform.
COLUMN-Volcker Rule unexpectedly revived by Dodd bill: John Kemp
– John Kemp is a Reuters columnist. The views expressed are his own –
By John Kemp
LONDON, March 16 (Reuters) – Paul Volcker’s proposed ban on banks’ proprietary trading or owning hedge funds or private equity funds has been unexpectedly revived in the financial regulation bill published by Senate Banking Committee Chairman Christopher Dodd yesterday.
The Volcker Rule’s surprise survival comes despite fierce opposition from the banking industry and after many commentators had written it off as a short-term political gimmick in the wake of the shock election defeat in Massachusetts. Dodd himself had appeared lukewarm.
In fact, Section 619 of the bill (“Restrictions on Capital Market Activity by Banks and Bank Holding Companies”) would give legislative effect to the proposals almost exactly as outlined by President Barack Obama at the press conference in January.
BANS ON PROP TRADING, HEDGE FUND SPONSORSHIP
Section 619 (b) instructs the new Financial Stability Oversight Council (FSOC) to issue rules that “prohibit proprietary trading by an insured depository institution, a company that controls an insured depository institution or is treated as a bank holding company”.
Bipartisan US financial reform deal uncertain – Sen. Dodd
By Kevin Drawbaugh
WASHINGTON, March 5 (Reuters) – Senator Christopher Dodd, chief negotiator for the Democrats in U.S. Senate talks on financial regulation reform, said on Friday he was uncertain whether bipartisan support for a compromise bill could be achieved.
With one of the Obama administration’s top domestic policy priorities in the balance, Dodd sounded wary but hopeful following weeks of discussions that have snagged on a proposal to create a new financial consumer watchdog.
“While we do not have a bipartisan agreement yet at all, we’re getting there, we’re trying. I don’t know if it will happen or not,” Dodd said in remarks on the Senate floor.
“I’m optimistic it can happen, but I’ve been around here long enough to know these things can fall apart very easily. It’s fragile, it’s complex … It’s one of the hardest tasks I’ve ever been asked to undertake,” he added.
Embracing most of the recommendations for tighter bank and capital market regulations made in mid-2009 by President Barack Obama, the House of Representatives in December approved a bill proposing the biggest U.S. regulatory changes since the 1930s.
But the Senate has yet to act and almost a year and a half since a severe banking crisis tipped the U.S. economy into a deep recession, financial regulation has changed little.
U.S. Senator Shelby counters on financial consumer watchdog
By Kevin Drawbaugh and Rachelle Younglai
WASHINGTON, March 1 (Reuters) – A senior Republican U.S. senator has made at least two counter-offers to Democrats on creating a new government watchdog for financial consumers, Reuters learned on Monday from aides and documents.
Senator Richard Shelby proposed making the watchdog a division of the Federal Deposit Insurance Corp, with some rule-writing power and a director who is appointed by the president and confirmed by the Senate, documents showed.
Shelby, the top Republican on the Senate Banking Committee, also has proposed setting up a three-member consumer protection council, said a congressional aide.
Both offers show that negotiations between Shelby and Senator Christopher Dodd, the committee’s Democratic chairman, on a bipartisan financial regulation reform bill are in full swing, but still have some ground to cover.
After marathon talks over the weekend, lawmakers remained snagged on how much rule-writing power the new watchdog should have, no matter where it is located within the government.
“We are at the start of a political dance between Dodd and Shelby. We expect more draft language — and more headlines — throughout the week,” said financial services policy analyst Jaret Seiberg at investment advisory firm Concept Capital.
ANALYSIS – Democrats bet politics favor US financial reforms
By Kevin Drawbaugh
WASHINGTON, Feb 18 (Reuters) – The next round of betting is near in a high-stakes game to tighten U.S. financial regulation and Democrats are wagering heavily on a hunch — that some Republicans cannot afford politically to block reform.
The view is strongly held at the White House, where officials remain confident, despite setbacks, that reforms will be approved by Congress this year, said congressional aides.
President Barack Obama and the Democrats need a boost as they head into November’s midterm congressional elections after disappointing outcomes on healthcare and climate change,
Financial regulation reform — an issue that has been working its way slowly through Congress — could provide that, said some policy analysts, especially with Wall Street’s recent success at making itself more unpopular every day among voters angry over massive bailouts and resurgent bonuses.
By the time a financial regulation bill moves to the Senate floor for a final vote, possibly in April, Democrats will be able to paint Republicans who oppose it as tools of the banks who have been trying for months to squash reforms.
That kind of image risks alienating not only independent voters, but also anti-establishment Tea Party conservatives, a rising and volatile force in the Republican Party.
Consumer watchdog debate threatens U.S. financial reform
WASHINGTON, Feb 12 (Reuters) – A fight over how sharp to make the teeth of a new U.S. watchdog for financial consumers threatened on Friday to derail progress toward tighter bank and capital market regulation, amid much posturing on both sides.
Democrats want an independent agency that can clamp down hard on abusive mortgages and credit cards, but Republicans and bank lobbyists want a tamer beast that won’t threaten profits too much and that answers to a higher master.
The Obama administration’s proposal to create a U.S. Consumer Financial Protection Agency (CFPA) has emerged as the main impediment to bipartisan agreement on financial regulation reform, one of the White House’s major priorities for 2010.
With the Senate Banking Committee targeting a legislative drafting session as soon as early March, the next two weeks will be crucial in deciding whether the United States keeps pace with the European Union on a global push for reform.
The White House must compromise on the issue, Senator Bob Corker, the Republicans’ chief negotiator on the issue, told Reuters in an interview. “If not, there may not be a bill,” said the first-term lawmaker from Tennessee.
White House spokesman Robert Gibbs said President Barack Obama still sees a consumer protection agency as a top goal.
“In terms of the consumer office, the president still believes it’s a great priority to have the independent authority to ensure that consumers in this reform are protected,” he said. “We need to have independent authority … that’s what consumers want for their protection.”
Republican Gregg sees common ground in U.S. Senate on financial regulation
WASHINGTON, Feb 12 (Reuters) – The top Republican on the U.S. Senate Budget Committee said on Friday there is common ground with Democrats on financial regulation legislation but the White House stance on consumer protection remains an obstacle.
“There’s a lot of common ground here. This really isn’t a partisan issue. This is an extremely complex exercise in getting governance right and the only really big philosophical difference here is how you protect consumers,” Senator Judd Gregg said in an interview with CNBC.
Judd was speaking a day after Senate Banking Committee Chairman Christopher Dodd, a Democrat, said he was discussing legislation with Senator Bob Corker, a first-term Republican member of the panel.
Just six days earlier, Dodd said he had hit an impasse with Senator Richard Shelby, the committee’s top Republican, in talks that had dragged on for more than a year over tightening oversight of banks and capital markets.
President Barack Obama has made financial regulation a top priority for 2010, as have governments in the European Union, which are also hammering out new rules meant to prevent a recurrence of the recent global financial crisis. (Reporting by David Morgan, editing by Philip Barbara) ((david.morgan@thomsonreuters.com; +1 202 898 8326; RM: david.morgan.reuters.com@reuters.net))
Talks resume in U.S. Senate on financial reform
WASHINGTON, Feb 11 (Reuters) – In an unusual move that cuts a senior Republican out of the loop, bipartisan U.S. Senate negotiations have resumed on financial regulation reform, the chairman of the Senate Banking Committee said on Thursday.
Committee chairman Christopher Dodd, a Democrat, said in a statement that he has begun talks on legislation with Bob Corker, a first-term Republican member of the panel handling a sweeping regulatory overhaul package.
Just six days ago, Dodd said he had hit an impasse with Senator Richard Shelby, the committee’s top Republican, in talks under way for more than a year.
The Obama administration has made tighter financial regulation a top priority for 2010. The U.S. House of Representatives approved a reform bill in December over the objections of Republicans and bank lobbyists.
“I am more optimistic than I have been in several weeks that we can develop a consensus bill to bring about the reforms the financial sector so desperately needs,” Dodd said in a statement on his dealings with Corker.
Corker told CNBC on Thursday that he is willing to work with Democrats on financial reform, saying it is “a piece of legislation that needs to be passed.” He said the Dodd-Shelby impasse would lead “toward a legislative train wreck.”
The U.S. Treasury Department said it welcomed Corker’s decision to work with Dodd to pass financial reform.
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