Serious Negotiations Start Tuesday
Jump-starting what is expected to be two weeks of conference negotiations over the competing House and Senate versions of financial regulatory reform legislation, this afternoon House Financial Services Chairman Barney Frank (D-MA) formally unveiled the first tranche of House proposals that will be considered – beginning on Tuesday at 11 a.m. -- to the base Senate bill.
Although Frank’s proposals are largely technical in nature, some present significant departures from the Senate bill. In particular, Frank is aiming to strike language added by Sen. Al Franken (D-MN) that targets the so-called practice of “rating shopping” by creating an SEC-regulated clearinghouse that would assign a rating agency for newly-created securities. Frank – who joins Senate Banking Committee Chairman Christopher Dodd (D-CT) in opposing the Franken proposal -- is instead offering to insert a provision that calls for a one-year SEC study to evaluate the efficacy of such a clearinghouse; and would charge the SEC with issuing recommendations to Congress.
In addition, Frank has thrown his support behind a House-passed provision that would require SEC registration and examination for private equity fund managers, contrasting with Senate language that provides for a private equity exemption. However, although both House and Senate bills require hedge fund managers to register with the SEC, Frank is proposing to broaden the Senate bill’s exemption for hedge fund managers with less than $100 million in assets to include those with less than $150 million in assets.
Frank’s proposals would amend the following titles (with links to the proposed language), which are the first titles to be considered by the conference committee on Tuesday:
- Title III - Transfer of Powers to the Comptroller of the Currency, the Corporation, and the Board of Governors
- Title IV - Regulation of Advisers to Private Funds and Others
- Title V - National/Federal Insurance Office
- Title IX, Subtitle C - Improvements to the Regulation of Credit Rating Agencies
