Dodd Says Panel Has ‘No Agreement’ on Financial Rules
Dodd Says Panel Has ‘No Agreement’ on Financial Rules Overhaul
by Alison Vekshin
March 5 (Bloomberg) — Senate Banking Committee Chairman Christopher Dodd said lawmakers have been unable to agree on legislation to overhaul U.S. financial regulations, including a proposal for a consumer unit at the Federal Reserve.
Dodd met committee Democrats yesterday to discuss the progress of this week’s negotiations aimed at resolving differences over a consumer-protection authority. Lawmakers also reviewed derivatives regulation and creating a mechanism for unwinding failing systemically important firms, he said.
“I’ve asked people to think about this, to mull it over, have staffs get back, give us their reaction to these things,” Dodd told reporters after the Washington meeting. “There is no agreement.”
Negotiators are seeking to break a deadlock over the consumer authority, which Dodd has said must be independent and able to enforce its rules while Republicans want the agency reporting to a regulator such as the Fed. The financial services-industry and companies such as JPMorgan Chase & Co. oppose a stand-alone consumer authority.
Talks advanced last weekend after Dodd dropped support for a Consumer Financial Protection Agency, proposed by President Barack Obama, and began considering a proposal for a unit within the Fed offered by Senator Bob Corker, a Tennessee Republican working with Dodd to craft a bipartisan bill.
“While I haven’t settled on the Fed as a place for this to be, there’s a vast difference between what’s being suggested today and what existed for so many years and where there was so much disappointment in how that operation was run,” Dodd said yesterday in an interview with Bloomberg Television.
Democratic Senators Jeff Merkley of Oregon and Charles Schumer of New York this week expressed skepticism about putting the consumer agency at the Fed, saying the central bank has failed to protect consumers.
“I think we got over those concerns,” Dodd said.
Committee Democrats and Republicans are split over autonomy granted to the division, which would police banks for lending abuses. Dodd has said the unit must have power to write and enforce its own rules, an independent budget, and be led by a director appointed by the president and confirmed by the Senate.
Corker told reporters negotiators are “very close to a point where we can meet the objectives of the Republicans and meet the objectives of Democrats.”
Dodd said any agency that houses the division wouldn’t have veto power over rules, a demand of Senator Richard Shelby, the committee’s top Republican whose support is needed to persuade other Republicans to back the legislation.
“That will not be a part of this,” Dodd said, declining to offer details on the consumer-unit negotiations.
Senators also are crafting language to let the government take apart large failing firms whose collapse would threaten the economy. The resolution mechanism is aimed at preventing future taxpayer bailouts, after the U.S. rescued Citigroup Inc. and American International Group Inc. in 2008.
“It’s bankruptcy, it’s receivership and it is painful,” Dodd said. “There is a resolution vehicle, but let me tell you the last thing you’d want to do — you’d rather go to hell and live there for a lifetime than go through resolution.”
Last Updated: March 5, 2010 00:01 EST