–Senate Majority Leader Says Senate To Resume Voting at 10 AM
–Sen. Reid: ‘Have A Lot Of Amendments To Get To’
–Senate Minority Leader McConnell: Bill Is Moving In ‘Right Direction’
–Sen. McConnell: Opposes ‘European Style’ Consumer Reg Entity

By John Shaw

WASHINGTON (MNI) – Senate Majority Leader Harry Reid said Thursday
the Senate will soon resume voting on amendments to financial regulatory
legislation, adding that he hopes to arrange a full day of voting.

“We have a lot of amendments we need to get to,” he said, adding
the Senate will work well into the night on the bill.

Reid said the Senate will vote on an amendment soon that would
require large banks to pay more into the FDIC’s insurance fund.

The Senate will then vote later on an amendment to overhaul the
proposed consumer protection entity and on an amendment to provide for
much broader auditing of the Federal Reserve Board.

Senate Minority Leader Mitch McConnell said Thursday the regulatory
reform bill is “moving in the right direction.”

McConnell blasted the proposed consumer protection agency as an
example of “European style regulatory bureaucracy.”

“Congress would have no power over it,” McConnell said on the
Senate floor.

The Senate approved Wednesday on a 93 to 5 vote on an amendment
that was drafted by Senate Banking Committee Chairman Chris Dodd and
Sen. Richard Shelby, the ranking Republican on the Banking panel.

The Dodd-Shelby amendment would strip the underlying bill of a
provision creating a $50 billion resolution fund that would have covered
the costs of a major financial collapse.

Under the amendment, the FDIC would have the ability to liquidate
large losses and could tap a credit line from the Treasury Department to
cover any costs. The FDIC could recover its losses by selling off the
assets of the failed firm.

The creditors of the collapsed firm would be required to pay back
funds they received during a financial failure that is above what they
would have been awarded through a traditional bankruptcy process.

Under the amendment, the Federal Reserve could use its emergency
lending powers to help solvent firms.

The Senate also approved an amendment by Democratic senator Barbara
Boxer, 96 to 1, that would explicitly ban taxpayer bailouts of financial
firms.

The Senate bill was largely drafted by Dodd. It establishes a new
independent Consumer Protection Bureau at the Federal Reserve Board,
creates a process to liquidate failed financial firms, sets up a council
of regulators to oversee systemic risk in the economy, establishes a
regulatory structure for over-the-counter derivatives, requires hedge
funds that manage over $100 million to register with the SEC and creates
a new office within Treasury to monitor the insurance industry.

Dodd’s bill has been merged with a package that was approved by the
Senate Agriculture Committee which requires OTC markets to adopt aspects
of the regulated markets such as mandatory clearing through derivatives
clearing organizations and trading on exchanges or exchange-like
facilities.

It has a narrow exemption for commercial “end users” who use
derivatives to hedge against economic contingencies such as fluctuations
in fuel prices, currency and interest rates.

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

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