House Dems introduce bill merging SEC, CFTC

By Peter Schroeder - 11/29/12 06:15 PM ET

A pair of House Democrats is pushing to combine two of the nation's top financial regulators into a single entity.

Reps. Barney Frank and Michael Capuano, both of Massachusetts, introduced a bill Thursday that would merge the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission. Frank, retiring at the end of 2012, is the top Democrat on the House Financial Services Committee.

Frank called the existence of the two separate regulators, which both are tapped with monitoring financial markets, "the single largest structural defect in our regulatory system." The outspoken lawmaker has long advocated combining the two regulators, but acknowledged that there are longstanding "cultural, economic and political factors" keeping both agencies intact.

He went on to say that he believed that pushing to combine the two as part of the landmark financial reform law bearing his name, Dodd-Frank, would have sunk the bill. Two and a half years later, the time for action has come, he added.

"I file this bill now because I believe it is time for this to be on the agenda of the next Congress," he said.

Capuano, also on the banking panel, added that the bill is a "common sense step" that would help eliminate regulatory gaps that threaten the financial system.

The two lawmakers will enjoy some bipartisan cover on the idea. Republicans on the Financial Services Committee called on Congress to consider merging the two agencies in their report dissecting the high-profile collapse of the futures firm MF Global. The report noted that the two agencies failed to communicate on the firm as it hurtled towards an insolvency that left more than $1 billion in customer funds missing, leaving both with an incomplete picture of the risks. Members behind the report stopped short of saying they believed legislation should be introduced towards that goal; instead they said they simply wanted to start the conversation.

But even that opening gambit led to some intra-party grumbling, as Republicans at the top of Congress's Agriculture committees, which enjoy jurisdiction over the CFTC, pushed back against the idea as a waste of time.

"Instead of discussing a hypothetical merger of two longstanding agencies, a better use of everyone's time would be to ask why no one involved with the MF Global bankruptcy, specifically Jon Corzine, has yet to be held accountable," said House Agriculture Committee Chairman Frank Lucas (R-Okla.). "Customers are still waiting on their money to be returned and have no idea if they will ever be made whole."