This post was also written by Michael Bleier, Peter Blasier, and Perry Napolitano.
The next few weeks are make-or-break for the Obama administration and Congressional Democrats as they consider separate and often competing proposals on the regulation of financial institutions. The House of Representatives last year passed its own version of legislation, H.R. 4173, the “Wall Street Reform and Consumer Protection Act of 2009,” sponsored by the Chairman of the House Financial Services Committee, Rep. Barney Frank (D-Mass.-4) (“H.R. 4173”). This legislation would create a “Financial Stability Council” to identify those at-risk financial institutions whose failure would most likely hurt the nation’s financial system; and it also establishes a process for dismantling those institutions without the need for taxpayer funds. In addition, it would create a Consumer Financial Protection Agency to protect consumers against unfair financial practices.
Over in the Senate, Sen. Christopher Dodd (D-Conn.), the Chairman of the Banking, Housing and Urban Affairs Committee, is working on his second proposal (the first effort last year having been withdrawn) and has held talks on this with both the Ranking Member of the Committee, Sen. Richard Shelby (R-Ala.), and another member of the committee, Sen. Bob Corker (R-Tenn.). While a full draft of Sen. Dodd’s bill has not yet been made public, elements are being released for Senate comment, as Sen. Dodd attempts to produce a bipartisan bill. Finally, the Obama administration has upped the ante by recently proposing restrictions on (1) bank size and (2) the ability of banks to buy and sell financial instruments with their own funds, not their customers’, customarily referred to as “proprietary trading.”
The window for getting a bill passed by both Houses of Congress and to the president’s desk is quickly closing. Congress has only a few months to consider the huge issues pending before it on health care, the economy, and financial regulation before it adjourns for the summer. We do not see any significant legislative activity occurring in the fall as members head home to campaign in the midterm congressional elections. So what happens next is pivotal to the success of the proposed reforms. This Client Alert provides (1) a discussion of some of the key issues in the regulatory reform proposals being debated between Congress and the Executive Branch and within Congress itself, and (2) suggested possible affirmative steps that might be taken to influence that process.
To view the entire alert, please click here.