–House Financial Services Chief Says Panel Will Tackle Key Issues Soon
–House-Senate Conference Panel Resumes After House, Senate Votes

By John Shaw

WASHINGTON (MNI) – Having spent Thursday morning and early
afternoon on a raft of important but second-tier issues, House Financial
Services Committee Chairman Barney Frank said the House-Senate
conference committee on regulatory reform is now ready to work on the
Volcker rule and regulation of over-the-counter derivatives.

“Cartoons are over and we’re ready to get into the double feature,”
Frank said, referring to the Volcker rule and OTC derivatives
regulation.

The conference panel has just resumed after a short recess for
House and Senate votes.

Frank has said that the conference panel will consider a “very
tough” variation of the Volcker rule. The underlying package now bans
banks from most proprietary trading.

Two Senate Democrats, Carl Levin and Jeff Merkley, have offered a
strong version of the Volcker rule by limiting the discretion of
regulators when the provisions are implemented.

“Merkley-Levin will, I believe, be adopted,” Frank said this week.

Senate Banking Committee Chairman Chris Dodd has said that he wants
to exempt some industries, such as mutual funds, from its impact. Frank
said earlier in the day that it makes sense to tackle the Volcker rule
first and then shift to OTC derivative regulation.

House Speaker Nancy Pelosi acknowledged Thursday that she met
Wednesday with Senate Agriculture Committee Chairman Blanche Lincoln on
OTC derivatives.

She declined to discuss the specifics of her meeting, but lawmakers
have said that the Speaker is pushing for softer restrictions on banks
than is in the underlying bill.

Lincoln backs a provision that would force banks to spin off their
derivatives units or risk losing access to the Fed’s discount window and
FDIC insurance.

The provision which requires a bank which qualifies as a swap
dealer to “push out” its swap desk to an affiliate of the bank holding
company has attracted strong opposition from major banks.

Frank has indicated that much of what Lincoln is calling for will
be preserved in the final package, but suggested that her language could
be modified.

The House passed its regulatory reform bill in December of 2009
while the Senate approved its bill several weeks ago.

Both Frank and Dodd have said they would like a final bill to be
approved by Congress and sent to President Obama by July 4th.

If a final package is agreed to this week, the final compromise
would be debated and voted upon by the House and Senate next week.

** Market News International Washington Bureau: (202) 371-2121 **

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