By Silla Brush - 09/21/09 10:46 AM EDT
The debate over revamping the nation's financial regulatory system will pick up steam next week when Treasury Secretary Timothy Geithner heads to Capitol Hill on Wednesday to testify before House lawmakers.
House Financial Services Committee Chairman Rep. Barney Frank (D-Mass.) has laid out a series of 11 hearings on new financial regulations this fall, and he aims to hold the first mark up hearing by mid-October.
House lawmakers and lobbyists appear to be most closely focused on two parts of the administration's plan.
Obama is pushing for the creation of a new Consumer Financial Protection Agency (CFPA) with broad powers over the markets for products such as credit cards and mortgage loans. Lawmakers and lobbyists are now awaiting new legislative text from Frank.
Financial lobbyists are broadly opposed to the proposal, and the U.S. Chamber of Commerce is leading a multi-million dollar campaign against the plan. Some lobbyists are also making the case that certain of the agency's proposed powers be modified, including provisions on federal preemption of state laws, the agency's rulemaking authority and also the scope of the new agency's enforcement provisions.
Some lobbying groups are also pushing for the agency to have most of its authority over lenders and firms that are not regulated by the federal banking regulators.
"The central message is that we are not safe until we change the rules that brought us into the crisis. Regulatory reform cannot be: 'we woke up this morning and found a better way to organize the closets.' It needs to be real change," said Elizabeth Warren, professor at Harvard University and early supporter of a new agency, in an interview with The Hill.
"To say that we should have one set of rules when products are issued by banks and another set when they are issued by non-banks defeats the purpose of leveling the playing field among all competitors and providing meaningful protection to all consumers,” she said.
The second issue House lawmakers have been focused closely on is new regulations over the market for financial derivatives, the complicated financial instruments that many blame for exacerbating the crisis. The House Agriculture Committee is holding a hearing on Tuesday that will be closely watched on the administration's proposal on derivatives.
Staff for Senate Banking Committee Chairman Sen. Chris Dodd (D-Conn.) and the committee's ranking member, Sen. Richard Shelby (R-Ala.), have been working closely for weeks to draw up a schedule and plan for legislation.