It's as though this reform idea has taken on a life of its own, with lawmakers waking up to the idea that being tough on Wall Street is smart politics, and smart policy. After the opening day of the conference yesterday, consensus seems to have emerged between Chairmen Barney Frank and Chris Dodd on a few key issues. Ryan Grim reports:
The House and Senate have reached "conceptual agreement" on strengthening what's known as the Volcker Rule in the Wall Street reform bill, House Financial Services Chairman Barney Frank (D-Mass.) said after a conference committee hearing Thursday....
Frank said that conference negotiators were moving in the direction of Merkley and Levin's amendment. "I think there's conceptual agreement. You have several things: You have tough regulation of derivatives, which I prefer much of what the Senate did. You're going to have a tougher version of the Volcker Rule." A reporter asked what the tougher rule would look like.
"I would say the general direction that Senators Merkley and Levin were moving in is a direction a lot of people are supportive of, but the final version, we'll see. It will be tougher than the House. The House simply empowers the regulators. There will be some direction" given to regulators, he said. Conceptual agreements, of course, are much different than final agreements on financial regulatory reform.
Republicans are left to complain that the conference is "off to a rocky start" because "Democrats for releasing a revised version of the base bill only hours before the conference committee was set to meet."
They said the last-minute changes belied Democratic pledges to make the committee’s work fully transparent.
"It appears that we are off to a rocky start because the base text before the conference was negotiated and compiled behind closed doors and without any Republican participation," Shelby said. "Granted, our respective chairmen have scheduled a number of public meetings, but I suspect there have been a number of private meetings where legislative language has been coordinated and drafted without any public access or Republican input.
There were changes made to that base text by Dodd and Frank that "attaching a House-passed bill placing new restrictions on mortgage lending, including elimination of prepayment penalties and a requirement that lenders ensure that borrowers have the ability to repay mortgages before offering the loan." These mortgage restrictions, Shelby says, are "liberal activist's dream come true." This from one of the people screeching about how Freddie Mac and Fannie Mae should be shuttered because they weren't stringent enough in making loans.
Aside from the Lincoln provision and the stronger Volcker Rule, other issues that are important to the overall effectiveness of the bill remain. House Dems are pushing leadership to fight to keep the House's independent Consumer Finance Protection Agency. The Senate bill has the CFPA as an agency within the Federal Reserve.
One that hasn't gotten too much attention is Collins' amendment that's created some internecine warfare between the FDIC and the Fed and Treasury. The amendment makes bank holding companies adhere to the same capital standards as bank subsidiaries and would force banks with more than $250 billion in assets to meet higher capital requirement. This is a big deal amendment that found its way into the Senate bill without much attention. It needs to stay in it.
The conference resumes on Tuesday.