Committee Republicans To Frank: Arbitrary Deadline On Financial Regulatory Reform Will Result In Bad Bill
October 29, 2009 -
- Financial Services Committee Republicans, led by Ranking Member Spencer Bachus, urged Chairman Barney Frank to allow more time to study and understand the 253-page draft legislation released on October 27 before the Committee considers the legislation. Frank announced that the Committee will mark up the legislation as early as Tuesday, November 3, only a week after the draft legislation was released.
"This one bill would enact major changes in at least nine major areas of financial services regulation. It : (1) creates an oversight council to monitor systemic risks; (2) empowers regulators to keep a secret list of large, interconnected financial institutions and subject them to extra oversight; (3) massively expands the Federal Reserve's regulatory purview; (4) abolishes the Office of Thrift Supervision and merges its functions into the Office of the Comptroller of the Currency; (5) overhauls the regulatory treatment of credit card banks, industrial loan companies and others to create a new classification of "special purpose holding companies"; (6) establishes a new regulatory framework for payment, clearing and settlement systems; (7) mandates credit risk retention in the asset-backed securitization market; (8) devises a complex resolution regime that makes bailouts a permanent part of the regulatory landscape and puts taxpayers first in line to suffer losses for bailing out too-big-to-fail firms; and (9) rewrites Section 13(3) of the Federal Reserve Act, transforming the way that the Federal Reserve responds to unusual and exigent circumstances in the market," the letter states.
"Several of these proposals - including those relating to ‘special purpose holding companies' and payment, clearing and settlement systems - have been the subject of virtually no discussion in our Committee in this Congress. Any one of them would merit a series of hearings and extensive debate if our Committee were proceeding under anything approximating regular order."
"We understand that you are in a hurry to comply with the Obama Administration's arbitrary deadline to create the appearance of accomplishment. We are concerned, however, that the desire to get something - anything - done to satisfy this arbitrary deadline will result in a bad bill."
The comments echo similar remarks made by Federal Reserve Vice Chairman Donald Kohn, who told the Washington Post on Saturday: "I hope we build a regulatory structure that's good for a couple of decades, and it's worth taking our time to get it right."
Federal Deposit Insurance Corp. Chairman Sheila Bair also called for a go slow approach when she told a group of bankers on October 5 that, when it comes to reform of the financial services system, Congress needs "to take a deep breath and think about it a little more."
Click here to view a copy of the letter.