Ready for Prime Time...Almost
For over a year, financial regulatory reform has taken a backseat to health care. With the passage of the health care bill, financial reform will finally be at the top of the agenda when Congress returns from its two-week spring recess on April 12th. While several Senators, including Republicans Judd Gregg (R-NH) and Bob Corker (R-TN), have said financial reform has an 80 to 100 percent chance of passing, there are still many loose ends to tie before the bill goes to the floor.
On March 22nd, the Senate Banking Committee approved the Restoring American Financial Stability Act of 2010 along a party line vote of 13 to 10, taking up no amendments other than Chairman Dodd’s manager’s package. If Dodd wants to bring a bipartisan bill to the floor, which he has said he does, that work will mostly take place behind the scenes between now and mid-May, when Senate Majority Leader Harry Reid (D-NV) said the bill could receive floor time.
Banking Committee Ranking Member Richard Shelby (R-AL) yesterday sent a letter to Treasury Secretary Tim Geithner criticizing the Dodd bill for not eliminating the “Too Big to Fail" problem and leaving taxpayers on the hook for big bailouts. Then there is the unresolved issue of over-the-counter derivatives, which needs to be addressed by the Senate Agriculture Committee in addition to the Banking Committee. Ag Chairman Blanche Lincoln (D-AR) said this week that her panel would work on the derivatives piece in April.
Another lingering issue is the Volcker Rule, which would ban proprietary trading by banks and institutions that own banks. Several Republicans and some Democrats – including Banking Committee members Warner (D-VA), Bayh (D-IN), and Johnson (D-SD) – may not be in favor of this provision as currently written. The proposed Consumer Financial Protection Bureau, with its strong independence and vast jurisdiction, is another source of contention for Republicans and even some Democrats.
Many think Sen. Dodd wants to pass financial reform decisively in the Senate with 80 or more votes. We understand that he and his staff are working with House Financial Services Committee Chairman Barney Frank (D-MA) in the hopes that the Senate will pass a bill that the House will then approve. If Sen. Dodd can resolve all of these issues, financial regulatory reform could possibly be enacted by Memorial Day.
The IMF has done some really interesting research on the role that lobbying played in bringing on the financial crisis. Overview and more info: http://www.youtube.com/watch?v=ey2S4-qOIRc