–Hill Panel To Also Deal With Consumer Agency, Capital Requirements
–House-Senate Panel Moving Toward Thursday Debate On OTC Derivatives
–House Financial Services Chief Says ‘Essence’ of Lincoln Plan To Stay

By John Shaw

WASHINGTON (MNI) – The House-Senate conference committee will
plunge back into a host of consequential issues Wednesday, as it seeks
to complete work on a new consumer protection agency and contemplates a
ban on proprietary trading and tougher capital rules for banks.

House Financial Services Committee Chairman Barney Frank, the
chairman of the House-Senate panel, said Tuesday that it’s “on schedule
to finish the conference” this week.

Frank said completing the conference report Thursday is critical to
securing its passage by the House and Senate next week.

“If we are not able to finish by Thursday this bill will not pass
until the middle of July. We do not think that would be wise for
economic stability,” Frank said.

The House-Senate conference panel Wednesday will try to reach a
final accord on creating a consumer financial protection bureau within
the Federal Reserve Board.

The main issue under discussion is exempting auto dealers from the
purview of this new agency’s reach. Under a key proposal, the Federal
Trade Commission would get authority to write rules banning unfair and
deceptive practices by auto dealers.

The House-Senate panel is also expected to debate a Senate proposal
to toughen capital requirements at banks. Under a provision, drafted by
Republican senator Susan Collins, banks would no longer be able to use
“trust preferred” securities in their capital calculations.

Also on the docket Wednesday is consideration of a ban on
proprietary trading by banks.

Frank said the panel would 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 Tuesday.

Frank confirmed that the House-Senate panel will focus its
deliberations Thursday on regulating over-the-counter derivatives.

This issue, widely seen as the most controversial and contentious,
has been scheduled as the final major issue to be resolved.

Senate Agriculture Committee Chairman Blanche Lincoln continues to
push a plan that would force banks to spin off their derivatives units
or risk losing access to the Federal Reserve’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 seeks will be
preserved in the final package.

“The essence of what Sen. Lincoln wanted to do on pushing
derivatives out of banks will happen and certainly they will be totally
insulated from any insured deposits,” he said.

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

Both Frank and Senate Banking Committee Chairman Chris Dodd have
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 **

[TOPICS: M$U$$$,MFU$$$,MCU$$$,M$$CR$,MK$$$$,M$$DR$]