Dodd to Offer Financial Regulation Bill Without G.O.P.
By SEWELL CHAN
nytimes.com
( Pretty weak beer! Wonder why the banks and their pet (R)'s still oppose it? )
WASHINGTON — The chairman of the Senate Banking Committee, hoping to break a months-long logjam on the biggest overhaul of financial regulations since the Depression, will unveil his own proposal on Monday, without yet having a single Republican endorsement.
The chairman, Christopher J. Dodd, Democrat of Connecticut, said on Thursday that the committee would take up the bill on March 22.
The breakdown in bipartisan talks dimmed hopes for a sweeping rewrite of Wall Street’s rules, nearly two years after the collapse of the investment bank Bear Stearns started a financial crisis that has cost taxpayers hundreds of billions of dollars.
Mr. Dodd suggested that he was acting out of a sense of urgency. The House adopted a regulatory overhaul — a priority of the Obama administration — in December on a largely party-line vote. But bipartisan negotiations in the Senate have repeatedly faltered over several critical points, notably the creation of a consumer financial protection agency to regulate mortgages, credit cards and other products.
In an unusual turn, Senator Richard C. Shelby of Alabama, the ranking Republican on the Banking Committee, has found himself largely shut out of the negotiations, while another Republican, Senator Bob Corker of Tennessee, has been directly negotiating with Mr. Dodd.
At a news conference later Thursday morning, Mr. Corker called Mr. Dodd’s plan to proceed with a bill without further negotiations “very disappointing.”
“I understand the pressure that he is under,” Mr. Corker said. “I have enjoyed immensely working with Chairman Dodd and his team. I think his staff has negotiated with us in absolute good faith.”
Mr. Corker added: “We may have disagreed on policy, but this will be the first disagreeable thing I’ve said to Chairman Dodd: this is a very important bill, and I cannot imagine a committee member, Republican or Democrat, passing a bill with this type of substance in it out of a committee in a week. I think that would be a travesty.”
Mr. Dodd’s decision to proceed, Mr. Corker said, is in part because regulatory legislation has been overshadowed by the health care overhaul. “The fact of the matter is, I think he is a victim, he is a victim of health care policy,” he said.
But Mr. Dodd said later that time, and not health care was the issue.
“Clearly we need to move along,” Mr. Dodd said, speaking after Mr. Corker’s news conference. “What I’m facing mostly is what I call the 101st senator, and that is called the clock, and particularly, in an election year, that clock becomes a rather demanding member.”
“As time moves on, you just limit the possibility of getting something done, particularly a bill of this magnitude and this complexity,” Mr. Dodd added.
While the two parties have agreed to create some form of a consumer financial protection agency, they have not agreed on where to house it, or, more importantly, how much authority it should have to write and enforce rules curbing abusive, unfair and deceptive practices.
“There has not been an issue yet, not one, not one impediment, that we have not been able to overcome. Not a single one. The fact is, on the issue that all of you have focused on the most, the consumer, we were there,” Mr. Corker said.
The banking industry has lobbied fiercely against the proposal, arguing that new consumer regulators would inevitably interfere with existing regulators whose duty is to ensure the “safety and soundness” of banks.
“In fairness, I think that what was happening was members on the left were getting very nervous about what they were reading,” Mr. Corker said at the news conference. “I think what Chairman Dodd is going to do probably is introduce a bill on Monday that is a little to the left of where we were, to try to ensure that he can do as much as he can in the way of getting Democratic support on the committee. And then I think he will move to the right.”
Another major area of contention in negotiations has been how to alter or consolidate the Depression-era regulatory patchwork.
Currently, the Federal Reserve oversees bank holding companies and state-chartered banks that are part of the Fed system; the Office of the Comptroller of the Currency oversees national banks; the Federal Deposit Insurance Corporation oversees state banks that are not members of the Fed system; and the Office of Thrift Supervision oversees savings and loans.
Mr. Dodd has expressed support for a proposal that would leave the Fed with oversight over only the largest bank holding companies, those with $100 billion or more in assets, currently totaling 23.
Under that proposal, the comptroller’s office and the thrift-supervision office would be merged into a new entity that would oversee the other bank holding companies, while the F.D.I.C. would oversee all state-chartered banks.
“The Fed no doubt is going to have its wings clipped,” Mr. Corker said.
While the consumer agency and the regulatory architecture remain in dispute, other regulatory changes have attracted bipartisan support. Among them are these:
¶Creation of an interagency council, led by the Treasury, to detect and monitor systemic risk.
¶Establishment of a new Office of Research and Analysis to give the council daily updates on the stability of individuals firms and their trading partners.
¶A new “resolution authority” to seize and dismantle any systemically important financial institution on the verge of failure.
¶Greater transparency in the trading of over-the-counter derivatives, though some of the riskiest transactions would still be shielded from the public.
¶A strengthening of the Securities and Exchange Commission’s ability to protect investors. |
