Senate panel passes sweeping financial-regulation bill
Tuesday, March 23, 2010
The Senate banking committee voted along party lines Monday to transform the regulation of financial markets, sending another piece of far-reaching legislation to the full Senate a day after Congress approved an overhaul of the nation's health system.
After Republicans decided to save their objections for the Senate floor, Sen. Christopher J. Dodd (D-Conn.), the committee chairman, pushed forward with a financial-regulation bill that sheds several compromises reached with opposition lawmakers and instead hews more closely to the blueprint advocated by the Obama administration.
With the landmark vote on health care behind them, administration officials intensified efforts Monday to get the reform of financial regulation adopted before the November midterm elections. President Obama and his senior advisers are planning to focus more on this issue, seeking to tap into the anger among many voters over Wall Street excesses, a senior administration official and congressional Democrats said.
As the country recovers from its worst economic crisis since the Depression, Obama and his allies on Capitol Hill are pressing for the most dramatic remaking of financial oversight since then.
In seeking to recast the rules that have long governed the financial sector, the bill would in part establish a bureau inside the Federal Reserve to protect consumers and set up a council of regulators to survey threats to the financial system. The legislation would also bring financial derivatives under government oversight and empower officials to seize the biggest financial firms if they face collapse.
Treasury Secretary Timothy F. Geithner on Monday escalated his attacks on banks that oppose the financial overhaul. He warned that the administration could unilaterally impose far stricter rules on the industry if the legislation falls short in Congress.
"If we fail to enact reform legislation here at home, we will be forced to use the limited and inadequate authority we have," Geithner said at a conservative think tank in Washington. He said the administration, in consultation with regulators, could impose higher capital requirements -- the amount of money banks must keep in their reserves to protect against unexpected losses. That would eat into their profits.
"To protect the American economy from the failures of the existing system, we will have to consider forcing parts of the financial system -- the parts we can regulate -- to operate with higher capital . . . than would otherwise be necessary," he said.
The Senate committee vote, which capped a hearing that lasted a mere 21 minutes, marked an abrupt acceleration and was applauded by administration officials, who have been eager to move the legislation forward after months of informal discussion among lawmakers. The committee action came three months after the House passed its version of a financial regulation bill.
"We are now one step closer to passing real financial reform that will bring oversight and accountability to our financial system and help ensure that the American taxpayer never again pays the price for the irresponsibility of our largest banks and financial institutions," Obama said in a statement.
Dodd had said earlier that he planned to spend the week considering revisions to his bill. But in voting on his bill, the committee's 23 members -- 13 Democrats and 10 Republicans -- did not consider any of the major changes that lawmakers from both parties had proposed in recent days.
Republicans did not protest Dodd's decision to send the package to the Senate floor. GOP lawmakers had crafted hundreds of amendments for the committee to consider and submitted them late last week. But with Republicans on the committee lacking consensus among themselves on some issues, Sen. Richard C. Shelby (Ala.), the ranking Republican, decided to forgo action on the proposed amendments. He plans to negotiate with Dodd behind closed doors.