–House Expected To Take Up Conference Committee Vote As Early As Tues
–Senate Banking Chief Believes 60 Senate Votes Will Be There
–Final Agreement Not Subject to Amendments on Floor of House, Senate

By John Shaw

WASHINGTON (MNI) – If the congressional effort to pass sweeping
regulatory reform legislation is thought of as a 26-mile marathon, the
two main runners, Senate Banking Committee Chairman Chris Dodd and House
Financial Services Committee Chairman Barney Frank, are at about mile
24.

There are still technical refinements to the final agreement to
conclude and votes in the House and Senate to round up–but the end is
in sight.

Speaking to reporters after the House-Senate conference committee
concluded its final 20-hour session early Friday morning, both Frank and
Dodd spoke confidently the final bill will be approved by Congress next
week.

Frank said the House vote could occur as early as Tuesday, adding
that he expects it to pass with almost exclusively Democratic votes.

“I believe there will be a majority,” he said.

Frank added that he believes the final agreement on derivatives
will assuage the concerns of several dozen moderate House Democrats,
many from New York, who were troubled by the proposal by Senate
Agriculture Committee Chairman Blanche Lincoln.

Dodd said he assumes he will need 60 votes to pass the measure in
the Senate, adding that he has been in contact with four Senate
Republicans who supported the first Senate version of the bill.

“I feel like we’re in good shape,” to pass the bill in the Senate
next week, Dodd said.

At one point in the middle of the week, Dodd was seen holding a
detailed discussion with Republican senator Susan Collins of Maine,
briefing her on the talks to craft a final bill.

Collins was one of four Senate Republicans to vote for the
regulatory reform bill when it first came up in the Senate on May 20.
The others were Chuck Grassley of Iowa, Scott Brown of Massachusetts,
and Olympia Snowe, also of Maine.

Two Democrats–Russ Feingold of Wisconsin and Maria Cantwell of
Washington–voted against the bill, arguing it wasn’t tough enough on
Wall Street.

Under congressional rules, a conference committee report can not be
amended on the floor of the House and Senate.

While it will only require a majority vote in the House and Senate
to pass, Senate supporters will have to marshall 60 votes to cut off the
debate in the Senate.

If this is done, Senate rules allow for an additional 30 hours of
debate, but this time is often yielded back–especially as a holiday
weekend looms.

To avoid any budgetary points of order that could derail the
legislation, Dodd and Frank assembled a $22 billion package of offsets
to pay for the cost of the bill over a decade as estimated by the
Congressional Budget Office. About $19 billion over five years will be
raised through assessments of large financial institutions and hedge
funds. Firms with assets of $50 billion or more and hedge funds managing
assets over $10 billion would have to pay into the fund.

“To go to the Goldman Sachs, JP Morgan Chases and Blackstones and
ask them to make a small contribution is reasonable,” Frank said just
before the financing package was approved.

The House-Senate conference committee approved early Friday
legislation which would make the most sweeping changes to the U.S.
regulatory system since the Great Depression.

The final vote for passing the package fell along party lines, with
all 27 Democrats voting for the bill and all 16 Republicans voting
against it. Among the House members on the conference committee, the
vote for the bill was 20 to 11. Among Senate members of the conference
committee, the vote was 7 to 5.

The legislation creates a council of regulators to monitor to
economy against systemic threats. It institutes new regulations on hedge
funds and over-the-counter derivatives. The bill creates a Bureau of
Consumer Financial Protection that will oversee mortgage, credit cards
and other credit products.

The bill provides for expanded regular audits of the Federal
Reserve by the Government Accountability Act.

The package includes a variation of the Volcker-rule, banning banks
from proprietary trading and limiting them from investing in or
sponsoring hedge funds and private equity funds.

It limits bank investments in private equity or hedge funds to 3%
of a fund’s capital. Total investment in private equity and hedge funds
can’t exceed 3% of a company’s tangible common equity.

The bill would push most OTC derivatives through third party
clearinghouses and onto exchanges or electronic trading systems. It
would force banks to push some of their swaps trading into subsidiaries.

Under the bill, banks will be allowed to keep their derivative
trading operations as long as they are used to hedge risk or trade
interest rates or foreign exchange swaps.

The bill will give federally insured banks up to two years to send
instruments such as uncleared credit default swaps off to a separately
capitalized subsidiary.

Frank and Dodd said the details of the bill will be released over
the coming days on their committee’s websites.

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

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

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