Banking & Financial Institutions

Wall Street reform conference begins with Dem-GOP bickering

Democrats and Republicans launched into sharp attacks Thursday only
minutes into conference negotiations to finalize sweeping new Wall
Street regulations.

Senate Banking Committee Chairman Chris Dodd (D-Conn.) said
Republicans “can be as relevant as they choose.” Sen. Richard Shelby
(R-Ala.), sitting inches away, said the talks were off to a “rocky
start” and were on the road to “political theater.”

{mosads}Republican colleagues criticized 300 pages of additional changes that were added after the Senate passed legislation last month.

Democrats vow to finish negotiations on the bill, now totaling 1,974
pages, and send the final version to President Barack Obama’s desk by
the July 4 recess. The legislation aims to bolster consumer financial
protections, regulate the $600 trillion market for financial
derivatives and end taxpayer-funded bailouts of financial firms.

The 43-member conference makeup is stacked in the Democrats’ favor,
and if the majority is able to resolve a few large differences,
Republicans likely will be unable to prevent the legislation from being
enacted this year. There are 20 Democrats and 11 Republicans
representing the House with either a say on the whole bill or on a
specific section. For the Senate, there are seven Democrats and five

“This is a very strong bill. It is time we get it to the president’s desk,” Dodd said.

House Financial Services Committee Chairman Barney Frank (D-Mass.),
who will also serve as chairman of the conference committee, pronounced
himself an “impatient” person and hoped to move the process along
quickly in a “very open process.” C-SPAN pledged to televise the public
conference hearings, which will reconvene on Tuesday.

Dodd warned against a “lobbying blitz” and said that despite some
improvement in the broader economy, the 2008 financial crisis still
looms large. Reminders of the depths of the crisis, in fact, were only
a few feet away.

Over their shoulders, televisions screens briefly displayed a Republican slide listing “too big to fail”
institutions: Bank of America, JPMorgan Chase & Co., Citigroup,
Goldman Sachs and Morgan Stanley. Congressional staff, sitting behind
lawmakers, looked up at the screens, which hung in a room home
to some of the most contentious hearings into how the government
committed trillions of dollars to support the economy.

Rep. Paul Kanjorski (D-Pa.) inveighed against “financial whiz kids”
and greedy Wall Street bankers who spawned a litany of ill-understood
products. Sen. Tom Harkin (D-Iowa) said part of the solution was for
lawmakers to reinstate a Great Depression-era law that drove a wedge
between commercial and investment banks. “We ought to go right back,”
Harkin said.

Such a large change, which was part of neither the House nor Senate
bill, is unlikely, but lawmakers were already staking out ground on
other controversial provisions.

The conference process will start with legislation that passed the
Senate, but staff added a series of changes before the conference
committee began. Among the changes is power for government audits of a
new council of financial regulators, a mandate for financial agencies
to set up offices of minority and female inclusion, preservation of the
thrift charter and an exemption from credit concentration limits for
Federal Home Loan Banks.

The base text of the conference also includes a new 188-page title: the “Mortgage Reform and Anti-Predatory Lending Act,” with new mortgage and
underwriting standards. The title reflects provisions from the House
bill, and some parts of the Senate bill.

Even before the new changes, lawmakers were preparing for tough
battles on a few highly controversial provisions. At the top of the
list is a provision sponsored by Senate Agriculture Committee
Chairwoman Blanche Lincoln (D-Ark.) that would require banks to push
out their derivatives trading desks.

Big banks and federal regulators oppose the provision, but it
remains and Lincoln and Harkin both praised it on Thursday. House
Agriculture Committee Chairman Collin Peterson (D-Minn.) said he was
glad the issue would be debated in the conference.

Republicans reprised their attacks on the legislation that it avoids new regulations of Fannie Mae and Freddie Mac, the two
government-sponsored enterprises bailed out by taxpayers. Frank
dismissed their concerns, as he has during the past two years. “Twelve
years of Republican rule. No legislation to regulate Fannie Mae and
Freddie Mac,” Frank said of Republican control from 1995 through 2006.
The Obama administration has pledged to regulate the two entities at a
later date.

Community banks and credit unions were ramping up their campaign
against a provision in the bill, added by the Senate, that would
direct the Federal Reserve to clamp down on rates paid by merchants to
debit card issuers. The U.S. Chamber of Commerce, meanwhile, was
preparing a grassroots campaign to target lawmakers on the bill.

Tags Barack Obama Tom Harkin

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