Joint legislative conference buckles down on financial reform

By Brady Dennis
Tuesday, June 15, 2010; 10:57 PM

With the C-SPAN cameras rolling, lawmakers involved in a rare, open House-Senate conference waded deep into the legislative weeds Tuesday, beginning to work in earnest on reconciling the two chambers' differences over new financial regulations.

There was almost a circus atmosphere at the seven-hour hearing, underscoring just how peculiar this particular democratic tradition is for many members of Congress.

Scores of congressional aides and government officials -- from the White House, Treasury and banking regulatory agencies -- lined the walls and filled the chairs of the Rayburn hearing room, conducting dozens of whispered conversations and tapping away at BlackBerrys.

Republicans peppered the conference chairman, Rep. Barney Frank (D-Mass.), with numerous questions about how he planned to conduct the proceedings. GOP members, saying they were unclear on the protocol for offering changes, passed out summaries of what they hoped to change.

"Does the clerk have an amendment," Frank said at one point, looking around and adding, "Do we have a clerk?"

They had a clerk.

Sens. Christopher J. Dodd (D-Conn.) and Charles E. Schumer (D-N.Y.) took cellphone calls while House members debated provisions across the table. At some points, no senators were in the conference room. Other times, the House side of the conference table sat empty.

Both sides did get down to business in fits and starts, moving through a series of unresolved issues in the 2,000-page legislation, including new rules governing credit ratings agencies, investor protections, banking supervision and the insurance industry.

Throughout the day, Democrats dismissed most Republican efforts to shape the legislation.

Republicans, for instance, initially tried to strike Democratic proposals to make permanent guarantees by the Federal Deposit Insurance Corp. put in place during the financial crisis, including a provision to permanently increase the agency's deposit insurance amount to $250,000.

"The rationale for a short-term safety net and a permanent guarantee really are different things," said Rep. Scott Garrett (R-N.J.). "Blanket guarantees undermine depositor discipline."

Democrats accepted a handful of GOP changes but shot down most others, including an amendment that would have eliminated requirements that regulators assess racial and gender policies at banks.

Still, some divisions remained among Democrats themselves, as House and Senate lawmakers traded offers and counteroffers on potential changes. One split centered on the government's stamp of approval for a handful of leading credit rating agencies and efforts to curb the conflicts of interest that exist in the current model.

Even as lawmakers debated the day's topics, House Democrats outlined changes they intend to offer Wednesday, including a proposal to expand the scope of a Senate provision giving the Government Accountability Office power to audit the Federal Reserve. In addition, House Democrats want to eliminate a Senate measure that would require the president to appoint the head of the Federal Reserve Bank of New York.

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