Key Democratic lawmakers are skeptical of a new White House effort to create a powerful banking regulator and dont want to sidetrack their own financial sector proposals that have been in the works for months.
You hear the administration say theyd like it sooner rather than later, Senate Banking, Housing and Urban Affairs Chairman Chris Dodd (D-Conn.) said recently. I have to take the temperature of my colleagues.
House Financial Services Chairman Barney Frank (D-Mass.) has been more explicit in rejecting the idea of a unilateral banking regulator. Aides say Frank is more interested in solving problems with existing regulators rather than consolidating them into a new, powerful oversight agency.
The White House circulated a draft proposal last week calling on Congress to create a new regulatory agency that would provide oversight of both the banking and insurance industries and also propose other new regulations. The administration believes this would serve as a safeguard against future banking crises, such as the one that plunged the United States into an economic crisis last fall, and would provide greater protections for consumers.
Franks committee has been among the most aggressive in holding hearings and marking up housing, banking and consumer protection bills in response to the financial crisis. His panel led the push for legislation cracking down on credit card lenders that the president signed into law last month.
Now, Frank favors creating a risk regulatory panel, composed of representatives from several existing oversight agencies, to monitor financial firms that would pose a risk to the economy if they failed. Hed give a separate body resolution authority to carefully dismantle or wind down failing banks and insurance agencies to prevent broader problems.
Frank said creating a new panel with wind-down authority is a sensible first step before creating a more powerful federal regulator. He conceded that adding new regulations would likely spark a political fight with the powerful banking and insurance lobbies.
Dodd, meanwhile, has signaled some interest in a more comprehensive approach. However, any Senate proposal would likely face opposition from Republicans, who have successfully forced changes to soften the impact of some consumer protection measures, including the recent credit card bill.
As a start, Dodd would back legislation creating a risk regulatory panel and a separate entity with wind-down authority, but he has not ruled out tacking on House-passed provisions that would seek to end predatory mortgage lending practices.
The White Houses ambitious plan, meanwhile, could draw pushback from lobbyists and split lawmakers.
Financial trade groups say they strongly oppose the White Houses call for a single banking regulator, citing the inherent bias against state-regulated banks it would create. They also oppose the administrations proposal to give the Federal Deposit Insurance Corp. authority to wind down failing bank holding companies, saying they doubt the FDIC can handle such complex resolutions.
Financial groups have raised concerns about the administrations plans for merging the Commodity Futures Trading Commission and Securities and Exchange Commission. They say the proposed merger could intensify jurisdictional battles between the Senate Banking panel and House and Senate Agriculture committees, which now oversee financial products regulated by both entities.
When theres power shifts there are winners and losers and that will create political tension, one banking lobbyist said.
United We Dream protesters carry a mock coffin to the office of Sen. Ted Cruz, R-Texas, in the Dirksen Senate Office Building on Monday, July 21, 2014, to hold one of their "funeral services for the Republican Party" due to GOP positions on immigration. The immigration reform group visited several other Senate Republican offices to hold similar funeral services.