Dodd limits Fed's 13(3) powers in overhaul

Senate Banking Committee Chairman Chris Dodd (D-Conn.) is circulating a manager's amendment with changes to financial overhaul legislation slated for markup this evening.

Dodd's amendment would remove the authority of the Federal Reserve to lend under 13(3) powers -- used extensively during the crisis -- to financial market utilities that a new council of regulators has deemed systemically important. The 13(3) provision refers to the Fed's ability to lend money under "unusual and exigent" situations.

The Federal Deposit Insurance Corporation (FDIC) had raised concerns about the provision.

Dodd's measure also would empower the FDIC rather than the systemic risk council to determine liquidity events.

The overhaul language is not expected to face a contentious markup after Republicans over the weekend decided to pull hundreds of amendments. A source familiar with the negotiations said Republicans decided the best procedure would be to oppose the bill in committee and work to change the measure prior to floor action.