Banking/Financial Institutions

Senate Democrats are moving to resolve internal splits over the federal government’s ability to preempt state consumer financial regulations.

A key issue under the Wall Street overhaul bill now under debate in the Senate is whether states will be able to pursue tougher regulations than those set by the federal government.

Democrats have clashed on the preemption issue, with several centrists arguing in favor of retaining the current system of strong federal powers. The White House and consumer advocacy groups have pushed for more than a year to allow state officials to go beyond the federal minimum.

Sen. Tom Carper (D-Del.) is slated to unveil a modified amendment Tuesday that would alter Senate Banking Committee Chairman Chris Dodd’s (D-Conn.) legislation by limiting the powers of state attorneys general to enforce consumer financial regulations.

Carper’s amendment, a copy of which was circulating widely on Tuesday, would allow state attorneys general to enforce consumer regulations against any state-licensed or chartered bank. 

State officials would also have limited powers to enforce regulations on national banks that are prescribed by the new consumer protection office.

The Carper amendment would also change Dodd’s bill by removing a requirement that the federal government, prior to preempting states, must find in current federal law a substantive standard that already applies.

The Senate could vote on the amendment on Tuesday.

A joint panel examining unusual events in the financial markets earlier this month will hold its first meeting May 24. 

The Joint Commodity Futures Trading Commission-Securities and Exchange Commission Advisory Committee on Emerging Regulatory Issues will meet later this month to discuss the near 1,000 point tumble and quick recovery the market experienced May 6, according to an SEC release on Monday. 

SEC Chairman Mary Schapiro and CFTC Chairman Gary Gensler, who announced the joint panel during Congressional testimony last week, are co-chairmen of the panel. 

Joseph Stiglitz, Nobel Laureate and professor at the Columbia School of Business, was added to the committee Monday. 

Panel members include: Brooksley Born, former chairman of the CFTC; Jack Brennan, former CEO and chairman, Vanguard Group; Robert Engle, professor of finance, NYU Stern School of Business; Richard Ketchum, chairman and CEO, FINRA; Maureen O'Hara, professor of finance and management, Cornell University; Susan Phillips, dean and professor of finance, The George Washington University School of Business; and David Ruder, former SEC chairman, professor of law emeritus, Northwestern University. 

Senate Democratic leadership may take the first step sometime today to ending debate on financial regulatory reform legislation. 

Majority Leader Harry Reid (D-Nev.) said if Republicans "stick to their strategy of indefinite delay" he will file cloture as soon as Monday night so a final vote can be taken later this week on the measure. 

At the same time, Reid urged the bill's managers -- Senate Banking Chairman Chris Dodd (D-Conn.) and ranking member Richard Shelby (R-Ala.) -- to continue negotiating amendments to strengthen the measure. 

"I remind all of my colleagues that the amendment process does not end with cloture is filed, or after it is invoked," Reid said. 

The Senate also has a full plate of work before the rapidly approaching Memorial Day recess arrives, Reid reminded the chamber. 

Upcoming items include an emergency supplemental for the wars in Iraq and Afghanistan and U.S. disaster relief, as well as a tax extenders measure being worked out between the House and Senate. 

Rain didn't dampen the enthusiasm of nearly 2,000 protesters who marched on K Street in support of financial regulatory reform legislation on Monday. 

Union members clogged downtown streets today, targeting some of Washington's biggest and most influential lobbying firms and banks, including The Podesta Group and Bank of America. 

Monday's march follows protests Sunday night at the homes of top lobbyists and the government affairs staff of Bank of America and JP Morgan Chase to demand the firms stop fighting Wall Street reform efforts. 

Union leaders say lobbying firms have hired 1,500 people and are spending $1.4 million a day to defeat Congressional and White House efforts to tighten Wall Street regulations. 

Several Wall Street firms -- Goldman Sachs and Citigroup -- have said they support financial reform but are being accused of hiring lobbyists to fight against the changes. 

The unions recently gathered 10,000 members to march on Wall Street and at banks around the country. The AFL-CIO, National People's Action, Service Employees International Union, Jobs with Justice and MoveOn.org have rallied supporters for the marches. 

Sen. Sam Brownback (R-Kan.) is fighting back against a Defense Department push to regulate auto dealers under the Wall Street overhaul bill.

In a letter to Undersecretary of Defense Clifford Stanley and Defense Secretary Robert Gates, Brownback is seeking specific information about how auto dealers and auto-loan financing impact members of the military. 

The Defense Department, alongside the Obama administration, has pushed loudly for auto dealers to be covered under a new consumer financial protection office that is included in the Wall Street overhaul bill.

The House exempted auto dealers, and Brownback is the main backer of an amendment to the bill that would carve out the dealerships. The amendment could come up for a vote in the Senate this week. The National Automobile Dealers Association is strongly supporting the Brownback amendment.

In the letter, Brownback is seeking specific cases and examples of how auto dealer practices are hurting members of the military.

"Is it the position of the department that auto dealers pose a specific threat to military readiness?" Brownback wrote.

Brownback also took issue with the Defense Department relying on a "non-scientific poll" of complaints against dealerships. Brownback is asking the department why it did not look at a broad database of complaints maintained by the Federal Trade Commission.

Provisions to regulate the over-the-counter derivatives market will be modified, an Obama administration official said Friday. 

"I'm very confident they'll work out an appropriate solution that preserves the key thing, which is we bring these markets out of the dark, make them stabler, more stable, better protection for investors," Treasury Secretary Tim Geithner told Bloomberg News.

Geithner didn't suggest what changes would be made and said he would leave that to the authors of the financial regulatory reform bill -- Senate Banking Chairman Chris Dodd (D-Conn.) and Senate Agriculture Chairman Blanche Lincoln (D-Ark.), who wrote the derivatives provisions that would regulate the $600-trillion market. 

Geithner said he expects Dodd and Lincoln to work through concerns around forcing big banks to divest their derivatives trading desk. 

Other than that issue, Geithner called the bill "very strong" and said "we're very close now," on completing the bill. 

U.S. Chamber of Commerce President Tom Donohue said Friday he will meet with Chinese leaders next week to discuss intellectual property, currency, counterfeiting and their strategy to reward indigenous innovation. 

Donohue, whose visit comes ahead of a bilateral Strategic & Economic Dialogue in Beijing on May 24-25, opposes China's strategy to require companies to register intellectual property in China to qualify for government incentives. 

"China is using industrial policies and an array of regulatory tools to foster national champions and to promote the transfer of technology and innovative capacity to their country," he said during a speech at the National Press Club on Friday. 

Lawmakers and business leaders have widely complained about China stealing American intellectual property that has harmed competitiveness. 

On the issue of currency, Donohue said that while the exchange rate with China should be adjusted, he is more concerned about the "theft of intellectual property" and counterfeiting of American products, he said today. 

Treasury Secretary Tim Geithner has been trying to convince China to let their currency, the yuan, strengthen against the dollar, which critics argue is severely undervalued. He has yet to embrace calls from Congress to sanction China for currency manipulation, preferring a diplomatic approach. 

A top financial regulator said Friday the government would look for new regulations on agricultural swaps after broader Wall Street overhaul legislation is enacted.

Commodity Futures Trading Commission Chairman Gary Gensler said in a speech that pending congressional legislation is likely to leave untouched current regulations on agricultural swaps. Gensler said current regulations allow for agricultural swaps only if they are between eligible parties and if they are not on a clearinghouse.

Gensler said the CFTC would pursue new rules to make regulation of agricultural swaps "consistent" with regulations of other types of swaps.

"We would address whether to generally allow the clearing of agricultural swaps or to continue to make decisions on clearing on a case-by-case basis as we do now," Gensler said.

The Senate on Thursday passed controversial legislation clamping down on fees that card issuers charge merchants, handing Senate Majority Whip Dick Durbin (D-Ill.) a major victory.

The Senate Thursday postponed voting on a controversial amendment to Wall Street overhaul legislation that would carve out auto dealers from a new consumer protection regulator.

The amendment is sponsored by Sen. Sam Brownback (R-Kan.) and is supported by the National Automobile Dealers Association (NADA). The Senate will not vote on the amendment until next week.

The Obama administration has strongly opposed an exemption for auto dealers from a new consumer financial protection regulator housed at the Federal Reserve.

NADA said it is planning to bring 150 auto dealers to Washington next week to lobby lawmakers on the issue.