Insurance News

Bank-regulation bill headed for Senate fight

Posted on: March 23, 2010

WASHINGTON (Insurance Headlines) – Republicansabandoned their effort to alter Wall Streetregulatory legislation in a key Senatecommittee yesterday, leaving the fight for the full Senate, and clouding prospects for a bipartisan bill.

Republicans had offered more than 300 amendments to legislation proposed by Senate Banking Committee Chairman Christopher Dodd,but they withdrew them over the weekend. That cleared the way for aquick party-line vote yesterday: The committee approved Dodd’s bill,with the 13 Democratsin favor and the 10 Republicans opposed.

The surprise development by the committee’s Republicans did nothingto mend the partisan fissures over the legislation and adds moreuncertainty to Congress’ ability to pass a sweeping rewrite offinancial regulations this year. The full Senate would take up the billin April at the earliest.

“You’ll have Easterrecess,and that’s when, I guess, over the course of the next several weeks . .. the real negotiations will be taking place,” said Sen. Bob Corker(R., Tenn.), a member of the committee who had held negotiations with Dodd.

Dodd unveiled his bill on March 15, 18 months after Wall Street’s failures helped plunge the U.S. into the worst recessionsincethe 1930s. The legislation would give the government unprecedentedpowers to split up firms so large that they are considered a threat tothe economy, put together a council of regulators to watch for risks inthe financial system, and create an independent consumer watchdog.

With more than 300 Republican amendments and nearly 100 Democraticchanges, committee members had prepared themselves for a long andarduous week of debate and votes on the bill.

Dodd did accept 25 Democratic amendments, including one sought by Federal Deposit Insurance Corp. chairwoman Sheila Bairthat she said would prevent unintended bailouts of large financial institutions.

Democrats and Republicans are split over the need for an independentconsumer entity. But other issues also divide the parties, includinghow to regulate complex trading instruments, such as derivatives, andwhat firms should be exempt from new rules. (Derivatives, securitieswhose value is based on underlying assets, were at the root of thefinancial system’s 2008 meltdown.)

Industry lobbyists said the decision to move swiftly throughcommittee made it much more difficult to predict what the full Senatewould ultimately do with the legislation.

Corker suggested that the bill, the subject of months ofnegotiations by Dodd and members of his committee, needed a newenvironment.

“It’s probably true that we have a better opportunity with adifferent cast of characters, the full Senate, to do something that issound policy-wise,” Corker said.

By Jim Kuhnhenn

Associated Press

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