Overhaul spells trouble for US

Regulation overhaul

The word "overhaul" is one currently plaguing industries. And while a final vote on a healthcare reform bill may now have been passed, for the financial services industry, the concept of an regulatory overhaul is on a totally different track.

Now, reports suggest that an overhaul of the financial regulatory system is nothing more than a study of contrasts between Senator Christopher J. Dodd and his counterpart in the House, Representative Barney Frank. The New York Times, for instance, reports that on a recent Saturday evening, moments after the Senate cast its final vote on a healthcare bill, Mr. Todd convened an unpublicized meeting of the members of the Senate banking committee.

According to the New York paper, the reason for the meeting was to try and establish a further legislative overhaul of the financial services sector, a move that had hit something of a wall recently after a handful of Democrats took the Republican lead in raising sharp questions about the proposals.

In response to this, say reports, at the Saturday evening meeting last month, Mr. Todd revealed a new plan that assigned one Democrat and one Republican to each of the main chapters of the legislation. According to the New York Times, the outcome Mr. Todd had hoped for was to forge compromises between the Democrats and Republicans and revive the much-needed measure.

Contrast

However, little action seems to have happened since. In an interview last week, Mr. Todd warned, "I wish I can tell you with some certainty it will work, [but the truth is] I’m not sure it will." In an effort to appease his critics, he did add, however, that he could express the "sincerity" with which the Senate were reaching out to colleagues to try to make the plan work.

Cynics, meanwhile, have pointed to the massive difference between Mr. Todd's proposals and those of House Representative Barney Frank, who heads the House Financial Services Committee. That's because, while both lawmakers are liberal Democrats from New England, both institutional and other reasons have forced each to embark on a significantly different course.

While Mr. Frank believes that, "On the whole, we have put in place a plan that would make the last set of problems very unlikely to happen again"; Mr. Todd has proposed legislation that is reportedly so ambitious that many of his allies, including some within the administration, believe it stands virtually no chance of adoption.

Overall it is institutionally more difficult for a Senator to exert control than a Representative, largely because the rules and culture of the Senate make it much easier for just one member to derail or delay legislation - so how will the overhaul of the financial regulatory system pan out? That's for both the Senate and the House to decide, but with the issue still clearly at the forefront of the industry's mind, both Mr. Todd and Mr. Frank seem to have an interesting ride ahead of them.

Related Articles:

Whistle blowing | Too big to fail | Goldman Sachs says sorry

Like this article? Get the RSS feed: