–House-Senate Regulatory Reform Panel Continues To Work On Reg Bill
–Conference Panel To Assess Wide-Ranging GAO Audit or Narrower Exam
–Panel May Also Consider Fed’s Emergency Lending Powers

By John Shaw

WASHINGTON (MNI) – The House-Senate conference panel on financial
regulatory reform resumed another day of deliberations Wednesday and one
of the issues on the agenda pertains to a possible audit of the Federal
Reserve Board by the Government Accountability Office.

The House’s regulatory reform bill called for wide-ranging,
intrusive and regular GAO audits of the central bank.

House Financial Services Committee Chairman Barney Frank has
modified the House passed bill and his proposal would allow ongoing GAO
reviews of the Fed’s management of lending through the discount window.

But Frank has said the GAO audit would stay clear of the Fed’s
conduct of monetary policy.

“We will be sure that we’re not doing monetary policy,” Frank said.

The Senate bill called for a more limited one time audit of the
Fed, focusing on its recent emergency lending programs during the
financial crisis.

Frank is proposing a provision that would require the Fed to
disclose the names of discount window borrowers two years after they
received loans from the Fed.

The House-Senate conference panel will also debate a provision that
would require that the U.S. president appoint the president of the New
York Fed, subject to Senate confirmation.

Frank has said the conference committee’s meeting Wednesday will
also consider the Fed’s emergency lending powers, it’s so-called 13(3)

The House-Senate conference panel first convened last Thursday for
opening statements and to elect Frank as the panel’s chairman. Senate
Banking Committee Chairman Chris Dodd is the lead Senate participant.

The panel Tuesday considered provisions related to credit rating
agencies, hedge funds, insurance, and federal bank regulations.

The issue of regulating over-the-counter derivatives is not on the
formal agenda Wednesday, but is a topic of great concern and ongoing

Senate Agriculture Committee Chairman Blanche Lincoln continues to
push a proposal that would force banks to spin off their derivatives
units or risk losing access to the Fed’s discount window and FDIC

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.

Several Democrats have said that the provisions preventing banks
from buying and selling securities solely for the firm’s profit —
proprietary trading — would be a more effective tool to control risk
than preventing banks from trading derivatives.

Lawmakers have said resolving the OTC derivatives regulatory issue
will be one of the central challenges of the House-Senate conference

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

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

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

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