Corporate Governance

The Treasury Department will provide language to Congress outlining its proposed reforms of the financial regulatory system within the next few days, Secretary Tim Geithner said Thursday.

Speaking after a meeting of the "working group" to overhaul financial regulations, Geithner said that the Obama administration would start working with relevant congressional officials to begin crafting legislation for the regulatory overhaul.

"We expect to provide the Congress within the next few days legislative language for this important, new consumer protection agency," Geithner told reporters.

President Obama announced the initiative to reshape regulations earlier this month, and House and Senate committee heads said that they'd hoped to begin holding hearings on the issue late this summer or early in the fall.

The Treasury secretary said that the administration would lay out its proposals on other core elements, such as new capital requirements and supervisory authority, a bit later.

"We're going to move forward with detailed legislative proposals on the other remaining core parts of the agenda in the coming weeks and months," he said.

Federal Reserve Chairman Ben Bernanke denied Thursday that he acted in a way to force Bank of America (BoA) to take over the troubled Merrill Lynch, maintaining he only advised BoA of the possible effects of the deal.

"I did not tell Bank of America's management that the Federal Reserve would take action against the board or management if they decided to proceed with the MAC," Bernanke said in testimony before the House Oversight and Government Reform Committee.

Bernanke referred to BoA's last-minute worries about the Merrill deal, in which the former threatened to invoke the "Material Adverse Event Clause" (MAC) to nix a final deal after Merrill incurred heavy losses in the 4th quarter of 2008.

"Moreover, I did not instruct anyone to indicate to Bank of America that the Federal Reserve would take any particular action under those circumstances," Bernanke added.

Bernanke's leadership at the Fed has come under fire from congressional Republicans, who have accused the Fed of having inappropriately acted to force the BoA-Merrill deal.

Rep. Darrell Issa (R-Calif.), the ranking member of the Oversight Committee, alleged Wednesday that Bernanke had orchestrated a "cover-up" by deliberately withholding information about the merger from shareholders and federal regulators.

Bernanke also denied the "cover-up" allegation in his prepared testimony on Thursday.

"Neither I nor any member of the Federal Reserve ever directed, instructed, or advised Bank of America to withhold from public disclosure any information relating to Merrill Lynch, including its losses, compensation packages or bonuses, or any other related matter," he said.

Read Bernanke's entire prepared remarks here.

Federal Reserve Chairman Ben Bernanke might have engaged in a "coverup" to obscure details about the merger between Bank of America and Merrill Lynch from federal regulators, Rep. Darrell Issa (R-Calif.) said Wednesday.

Issa accused Bernanke of purposefully withholding facts from the Securities and Exchange Commission (SEC) that might have scuttled a deal between the two big banks late last year.

"We think that he overstepped and used his position to support both he and [then-Treasury Secretary Henry] Paulson's attempt to make this happen," Issa said on CNBC. "There's nothing wrong with the deal as it turns out, but there is something wrong with interfering with businesses making normal due diligence and informing their stockholders."

Republicans have accused Bernanke and Paulson of threatening and pressuring Bank of America CEO Ken Lewis into accepting a deal with Merrill, whose books were stocked with toxic assets from mortgage-backed securities.

While Issa was initially reluctant to use the word "coverup," he relented, accusing Bernanke of consciously withholding facts relevant to the deal.

"We think it goes to the level of a coverup because we think that they made a conscious decision not to make these facts known," Issa said.

Issa said Bernanke should be "held accountable" for his handling of the merger.

The chairwoman of Congress's bailout oversight board slammed big bank Citigroup on Wednesday for raising salaries at a hefty clip while receiving government funds.

"I just have to say: These guys just don't seem to get it," said Elizabeth Warren, the head of the congressional oversight board for the Troubled Asset Relief Program (TARP), during an appearance on Bloomberg News.

Citi announced today that it would increase base salaries for many of its employees as a way to attract top talent. According to the AP, some Citi employees may see their salaries increased by as much as 50 percent.

"They're taking taxpayer dollars in order to keep this business alive, and yet they think that, when Americans are out of work, when people are struggling, when this comes out of taxpayers' pockets, that they can double their salaries?" Warren incredulously asked.

Warren has been an aggressive advocate of curtailing compensation for employees of companies receiving financial assistance from the government -- an idea the Obama administration partially endorsed when it announced new rules for compensation structuring and bonuses for executives at firms on federal support.

"This is more about: Does anyone really understand what's going on here?" Warren added.

Warren appeared before the House Financial Services Committee this morning to discuss financial regulation reform and enhancing consumer protections.

Update, 2:06 p.m.: Senate Banking Committee Chairman Chris Dodd echoed Warren's language in a short statement about the salaries on Wednesday afternoon.

"They just don't get it," Dodd said.

Montana's two Democratic senators projected some coyness about their support for the Employee Free Choice Act (EFCA) after having previously sponsored the labor legislation.

Both Sens. Max Baucus (D-Mont.) and Jon Tester (D-Mont.) refused to say how they'd plan to vote on the bill, though they were both sponsors of EFCA in 2007.

"It would be very hard to support the bill in its current form, but that is why I'm working with my colleagues in the Senate to bring some common-sense modifications to the bill to make sure it balances workers' interests with small-business interests," Baucus told The Missoulian, which did a two-part series on EFCA's potential impact on Montana.

Tester's spokesman meanwhile said EFCA "isn't ready for a Senate vote yet," and added that Tester would weigh the bill's pros and cons before deciding on how to vote.

Neithner Baucus nor Tester are sponsors of the most recent iteration of the labor bill.

The statements mark more potential woes for organized labor, which has been lobbying other centrist Democrats to support the legislation, with some reported success.

Attorneys general from 11 states have filed an objection to General Motors' government-backed bankruptcy plan, arguing the terms of the deal would significantly weaken protections for consumers.

Attorneys general from California, Illinois, and Kansas joined those from eight other states to file objections to GM's restructuring plan in bankruptcy court Friday.

The state AGs are concerned that provisions of the GM bankruptcy agreement would limit liability for the automaker in lawsuits regarding defective manufacturing.

A consumer group that has led the effort to block the government-financed bankruptcy praised the move Monday.

"It is outrageous that the bankruptcy plan requires GM to fix defective parts, but leaves consumers unprotected if they get hurt by defective cars," said Joanne Doroshow of the Center for Justice and Democracy. "We commend the Attorneys General for standing up for consumers at this critical time."

The Federal Reserve has "utterly failed" as a regulator of banks, and cannot see its powers expanded under new financial regulations, Senate Banking Committee Ranking Member Richard Shelby (R-Ala.) said Thursday.

"I agree with your concerns about the Federal Reserve being the powerful systemic regulator," Shelby said on Fox News radio's "Brian and the Judge" program. "They have utterly failed the American people as a bank regulator."

Shelby spoke in reaction to the Obama administration's proposed reforms to the financial regulatory structure, laid out in detail yesterday. Many Republicans and some centrist Democrats have expressed skepticism about vesting as much new, regulatory power with the Fed as is called for in the bill.

"We cannot -- should not consider seriously putting this power in the Federal Reserve," Shelby said. "That would further empower the Federal Reserve...it's just too much power in one place, no accountability to the people."

The top Republican on the Banking Committee also condemned the Obama administration's repeated intervention in the economy via bailouts.

"At the rate at which we're going with the Obama administration...we're down the road to financial destruction," Shelby said.

Listen to the audio of the interview here.

Chrysler Group LLC announced Wednesday it would resume production at seven North American plants after emerging from bankruptcy, and into a government-backed partnership with Italian automaker Fiat.

Chrysler will restart production at four U.S. plants, two in Canada, and one in Mexico by the end of the month.

The plants won't be online for too long, though -- all Chrysler plants will cease work for a two-week furlough between July 13 and 24.

One plant has come back online already, a small plant that produces the Dodge Viper sports car.

Two of the U.S. plants to restart are in the district of Reps. Sander Levin (D-Mich.), while one is represented by Rep. Marcy Kaptur (D-Ohio), and the other is in Rep. Todd Akin's (R-Mo.) district.

The Obama administration hopes the financial regulatory reform announced Wednesday will help stem a "race to the bottom" by deregulation across the globe.

National Economic Council Director Larry Summers told CNBC that the administration would work with partners to "harmonize" regulations in other countries, as well.

"One of the real problems has been that too much of the energy in regulatory discussions has been around winning a race to the bottom, trying to deregulate faster than other people do so you're able to attract business," Summers told Maria Bartiromo in an interview to air this afternoon.

Summers said that the administration would emphasize strengthening financial regulations internationally at the G-20 meeting scheduled in Pittsburgh this September.

On international business, Summers hinted that the administration would seek to impose new taxes on U.S. companies' foreign holdings as part of a "comprehensive" review of the tax code.

"I think most people who've looked at the international tax system have seen how much profits are located in jurisdictions where there's a very low tax rate, but where the economies are small, so there can't be that much actual economic activity," Summers said. "And that's got to be something that we view with concern and want to take a serious look at."

The entire Michigan congressional delegation wrote General Motors Wednesday asking them to build their promised new plant in their home state.

The letter marks maybe the most concerted public effort by lawmakers to influence GM's actions while on government support since Rep. Barney Frank (D-Mass.) convinced the company to keep open a service and parts operation in his district.

"As you engage in the process of determining which facility will assemble these new small cars, we want to emphasize how strongly we feel that Orion Assembly represents the best business choice for GM," the lawmakers said, referencing an idled plant in the far-fetched northern suburbs of Detroit.

GM had announced that it had narrowed its choices to Orion, Spring Hill, Tenn., and Janesville, Wisc. as its choices for locations to begin production of a small car for domestic consumption.

The lawmakers touted the proximity to GM's headquarters, the local workforce, and existing ties to the industry as reasons to locate production in Orion.

"No industry has been hit harder by the global credit crisis and economic downturn than the automobile industry, and no state has suffered as much as Michigan has," they said. "For all of these reasons, we believe that as GM invests in its future by opening a new, state of the art small car assembly facility, it is in the best interest of the company to build upon its one hundred years of shared history with Michigan and locate that facility at Orion Assembly."

Read a copy of the entire letter after the jump: Read more...