Lawmakers to delve into financial overhaul plan

House and Senate lawmakers this week will begin digging into the specifics of the Obama administration's plan to overhaul the financial system.

House Financial Services Committee Chairman Barney Frank (D-Mass.) has laid out a packed schedule for June and July, with 14 hearings slated by July 30. The first is Wednesday, when Frank's committee considers enhanced consumer financial products regulation, a key part of President Obama's proposal.

ADVERTISEMENT
Committee hearings will also cover derivatives, the Securities and Exchange Commission (SEC) and broader issues of regulatory restructuring.

Frank said that the committee would also be scheduling hearings in September on financial reform.

Frank and others are awaiting legislative text from the Obama administration. Unlike healthcare reform and climate change legislation, the administration is planning on sending legislative text on financial reform to Capitol Hill. Frank and Senate Banking Committee Chairman Chris Dodd (D-Conn.) said they hoped to deliver a bill for Obama to sign this year.

Obama went on offense over the weekend, using his Saturday radio address to tout his proposal. He singled out his proposed consumer financial protection agency, which has come under attack from the U.S. Chamber of Commerce.

The business lobby said the new agency would add a duplicative level of regulation to the financial sector, but Obama said it would protect ordinary Americans.

"This is essential, for this crisis may have started on Wall Street. But its impacts have been felt by ordinary Americans who rely on credit cards, home loans and other financial instruments," Obama said in the address.

Elizabeth Warren, the head of the committee overseeing Troubled Asset Relief Program (TARP) payments, also praised the proposal for a new consumer agency in an address to the American Constitution Society on Saturday.

Warren, who had called for the creation of the agency, said the country needs "an agency that can change over time, an agency that can get smarter."

Dodd on Monday will hold a hearing with SEC Chairwoman Mary Schapiro and Gary Gensler, head of the Commodity Futures Trading Commission (CFTC), to look into regulation of over-the-counter derivatives.

ADVERTISEMENT
Another controversial part of Obama's proposal is his call for the Federal Reserve to act as a "systemic risk regulator" for the financial industry. Lawmakers in both parties have warned this would place too much power in the central bank.

These questions are likely to come to the forefront on Thursday when the House Committee on Oversight and Government Reform digs into the federal government's role in Bank of America's acquisition of Merrill Lynch.

Lawmakers have been looking at whether the government, particularly then-Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, pressured Bank of America head Kenneth Lewis into completing the deal.

Rep. Edolphus Towns (D-N.Y.), chairman of the committee, issued a second subpoena for documents and internal information related to the acquisition.

Sam Youngman and Reid Wilson contributed to this story.