DealZone

The afternoon deal: Regulation overdrive

MOTOR-RACING-NASCAR/A joint Senate-House of Representatives conference committee convened at 2:15 p.m. EDT to begin merging competing bills from each chamber into what will be the biggest overhaul of the financial rules since the 1930s. Columnist John Kemp explains the simple conference process and the not so simple reality of merging the House of Representatives and Senate versions of the financial reform bill. The “base text” for the regulatory bill is here.

Not to be overshadowed by the financial regulation bill, the Commodity Futures Trading Commission said it plans to boost scrutiny of high-frequency trading, which now accounts for as much as half of all U.S. futures volume, and was fingered for its role in the May 6 stock market “flash crash.” Get the details of the co-location proposal here.

The SEC approved new so-called circuit breakers. The rules will require the exchanges to pause trading in certain stocks across U.S. equities markets if the price moves 10 percent or more in a five-minute period.

Also on the regulatory front is news of the SEC hunting for fresh dirt on Goldman Sachs, hoping to bolster their lawsuit against the bank and perhaps force it to settle on terms more to the regulators’ liking. Read the FT article here.

Following is a collection of regulatory factboxes:

The afternoon deal: Regulation overdrive

New York State Attorney General Andrew Cuomo arrives at a news conference in New York, February 24, 2010.     REUTERS/Brendan McDermid It’s been a busy day on the regulatory front. The New York Attorney General’s office is investigating eight banks for possibly misleading ratings agencies on the quality of mortgage securities, a source says. The Fed is conducting a broad criminal investigation into whether major Wall Street financial firms misled investors on mortgage bond deals, another source says.

Adding to the mix:
–the Senate voted to impose tighter regulations on credit-rating agencies.
–Federal Reserve Chairman Ben Bernanke is concerned about a Senate proposal that could force banks to spin off their swaps business
–the White House and two state attorneys general said they don’t like an amendment to the Wall Steet reform bill that would give the federal government more power than states to regulate banks

From the Web:

Goldman, BofA, Citigroup….Did Prosecutors Leave Anybody Out - WSJ
“It’s Thursday, and one thing is clear from this morning’s headlines: Pretty much all of Wall Street is under investigation.”

Senate’s roast of AIG regulators

AIGNow that the government has yet again propped up the embattled insurer, Congress is hauling regulators over hot coals as they try to figure out what happened. Here are some highlights from testimony today:  

Senate Banking Committee Chairman Christopher Dodd:
“That we find ourselves in this situation at all, is in my mind, and in the minds of many of my constituents, quite frankly, sickening. …

“The lack of transparency and accountability in this process has been rather stunning. Throughout the entire fourth quarter last year, it was frankly never clear, who owned AIG, or who was in charge.”