Banking/Financial Institutions

Sen. Tom Harkin (D-Iowa) on Wednesday questioned if the U.S. Commodity Futures Trading Commission will have the manpower to enforce legislation by Senate Agriculture Chairman Blanche Lincoln (D-Ark.) that broadens oversight of the derivatives market. 

CFTC Chairman Gary Gensler told Harkin that the CBO expects the agency to hire an additional 250 staffers to enforce the bill. 

Lincoln also said that revenue to the agency will likely increase to give Gensler the resources to enforce the bill. 

"He's going to need more staff and he's going to need more resources to be able to do a lot of what's being asked," she said.  

Rep. Darrell Issa (R-Calif.) sent a letter to SEC Chairwoman Mary Schapiro asking if Friday's filing of fraud charges against Goldman Sachs for misleading investors was timed to coincide with Democratic efforts to reform the financial industry. 

"The events of the past 5 days have fueled legitimate suspicion on the part of the American people that the Commission has attempted to assist the White House, the Democratic Party and Congressional Democrats by timing the suit to coincide with the Senate's consideration of financial regulatory legislation," Issa wrote. "The American people have a right to know whether the Commission, or any of its officers or employees, may have violated federal law by using the resources of an independent regulatory agency to promote a partisan political agenda."  Read more...

Democrats hope they can fix a political problem with seniors by passing their Wall Street reform bill.

Some large banks doubled their spending on lobbying in the beginning of 2010 as the Senate debated new financial regulations.

A majority of Americans support tighter government regulations when "Wall Street" firms are specified as the target, a new Gallup poll showed Tuesday. 

In the poll, 50 percent of Americans backed more government regulations for "Wall Street" firms versus 46 percent who want stricter controls of "large banks and major financial institutions." 

When Wall Street is mentioned 36 percent oppose stronger regulations while 43 percent oppose regulations for large banks. 

As rhetoric has heated up during the past couple of weeks on a pending financial regulatory reform bill in the Senate, 42 percent of Americans say they trust Democrats to put together a bill compared to 34 percent who trust Republicans and 25 percent who say neither, both or no opinion. 

When asked along party lines the numbers diverge. About 72 percent of Democrats support giving more power to the federal government to keep an eye on the financial system and "large financial institutions" while only 22 percent of Republicans support a change. 

When Democrats were asked specifically about Wall Street banks, 67 approved of giving government more leeway while 20 percent opposed. 

When Republicans were asked about regulating Wall Street banks, 35 percent approved of more regulations while 53 percent opposed changes, according to the poll. 

Legislation that would put tough controls on the over-the-counter-derivatives market will be melded with a financial regulatory reform, Senate Majority Leader Harry Reid (D-Nev.) said Tuesday. 

The derivatives measure set for mark up in the Senate Agriculture Committee on Wednesday morning will be merged on the floor, most likely as an amendment, Reid said. 

"There are many different ways it could be done, so I hope we don't have to worry about that," Reid said. "I hope we can work something out."

The Senate Banking Committee and Agriculture share jurisdiction over the bill that would crackdown on the multi-trillion dollar derivatives market. 

Bill sponsor Sen. Blanche Lincoln (D-Ark.), chairwoman of the Agriculture Committee, spent most of the day trying to sell her bill to skeptical Republicans and members of her own party who think the bill goes too far to regulate the OTC market. 

The financial reform measure sponsored by Senate Banking Chairman Chris Dodd (D-Conn.) probably won't come to the floor until late this week or early next week at Banking panel leaders attempt to hammer out an accord on the bill.  

A $50 billion fund to provide a financial bridge for failing firms remains in a financial regulatory reform bill, Senate Majority Leader Harry Reid (D-Nev.) told reporters Tuesday. 

Reid said his caucus discussed the fund during its party lunch today but didn't make any final decisions on what to do with it. A majority of Republicans say the account, which would get its funding from large Wall Street firms, resembles a bailout fund. 

"That's something we're all going to take a look at. It's in the bill," he said. "And we'll see what goes on with the discussions that are taking place. Right now it's in the bill."

Clearer rules and stronger protections are needed in the financial system to limit damage to the nation's economy when large investment banks fail, Treasury Secretary Tim Geithner said Tuesday on Capitol Hill. 

The bankruptcy of Lehman Brothers in 2008 brought the economy to the brink of collapse and exposed major weaknesses within the financial system, including large firms skirting government regulations, Geithner said before the House Financial Services Committee.

"The best strategy is to force the financial system to operate with more transparency and with clear rules that set unambiguous limits on leverage and risk so that taxpayers never have to come in and protect the economy by saving firms from their mistakes," he said. 

Lawmakers are looking into how often Wall Street firms used an accounting device known as Repo 105 that Lehman used to temporarily shift $50 billion in bad assets off its balance sheet. 

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After meeting with Treasury Secretary Tim Geithner, Republican Sen. Mike Johanns (Neb.) added his name to a long list of his fellow party members who say they could vote for a financial regulatory reform bill if a few fixes are made. 

"I think we're really down to being able to list the items that are still outstanding on a single page of paper, and now we've just got somehow to negotiate," Johanns told reporters Tuesday. 

Johanns said he and Geithner discussed going further on the bill's 'too big to fail' strategy on how to unwind failed companies.

He also voiced his opposition to the $50 billion fund that would provide failed companies with a financial bridge. 

"I've reasserted privately that fund never made much sense to me," he said. It looks too much like a bailout fund."

Senate Republican Leader Mitch McConnell (R-Ky.) said Tuesday that bipartisan negotiations have resumed on Wall Street reform.