Legislative Updates: June 2010
It is noteworthy that the House and Senate agreed in May to hold a formal Conference Committee to reconcile the two versions of financial regulatory reform passed by their legislative bodies. The last time there was a Conference Committee on financial-related legislation was in 2003 when Congress passed the FACT Act that addressed credit reporting and identity theft.
Getting to this bargaining table was no small undertaking. The House passed its version of regulatory reform in December while the Senate began debate on its own version in late April. More than 400 amendments were introduced and debate on the bill continued for over four weeks—an extraordinarily long time to debate one bill-before it was passed on May 20 by a largely party-line vote of 59-39.
Senators were trying to get a vote on their amendments but Majority Leader Harry Reid (D-Nevada) and Senate Banking Committee Chairman Chris Dodd (D-Connecticut) held firm and kept a tight grip on which amendment would be considered when. This displeased some Senators, one of whom, Maria Cantwell (D-Washington), even voted against cloture and prevented her party from wrapping up debate on the bill because she was frustrated that her amendment did not receive a vote.
All in all, however, it was a robust and vibrant debate and, to the surprise of many in the private sector, the bill was not "weakened" by amendments that would have substantively changed the underlying bill. After all the action that took place in the Senate, the Conference Committee finally got underway, chaired by House Financial Services Committee Chairman Barney Frank (D-Massachusetts). Twelve Senators participated alongside 31 of their House counterparts. It was televised live on C-SPAN and took six days, with the final Conference Report being agreed to just before sunrise on Friday, June 25 after an unprecedented 20-hour marathon negotiating session.
The measure includes several provisions of importance to OCC, including language on portfolio margining and a mechanism to develop a system for the SEC and CFTC to follow when determining which agency has jurisdiction over a proposed derivative product. Hopefully this will eliminate the many jurisdictional battles between the CFTC and SEC over new product approval that has created lengthy delays in the process. Title VIII of the Conference Report would also give the Federal Reserve the authority to grant clearinghouses access to the Discount Window during an "emergency."
The House is on track to pass the Conference Report, which is not subject to amendment, sometime before the July 4 recess, with the Senate scheduled to debate and pass it sometime in July. President Obama fully supports the legislation and is expected to sign it into law soon after it is approved by both legislative bodies.
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