A much-anticipated package of financial regulations from the Obama administration will call for a financial products safety commission and new rules on executive pay, hedge funds and derivatives, the chairman of the U.S. House of Representatives Financial Services Committee told Reuters on Wednesday.
The package will also propose giving the federal government the power to seize and unwind troubled non-banks, Democratic Representative Barney Frank said in an interview.
Sources told Reuters on Wednesday the administration will release its proposal on June 17, which is in line with earlier comments from Treasury Secretary Timothy Geithner.
Frank -- a key architect in Congress of Washington's policy response to the global financial crisis -- could not confirm that release date. But he said Geithner has asked to testify before the financial services committee on June 18.
Frank is targeting House passage of the reforms package before Congress recesses in early August. The Senate's handling of the package is likely to be much more time consuming. The White House wants to enact reforms into law by year's end.
Frank said a merger of the Securities and Exchange Commission and the Commodity Futures Trading Commission was off the table as far as he is concerned. Such a move has been debated for months in Congress and the administration.
But Frank said combining two bank regulators, the Office of Thrift Supervision and the Office of the Comptroller of the Currency, is a possibility.
He also said: There's a real consensus on what ought to be done in terms of a systemic risk regulator, that it does not displace the existing regulators, etc. ...
But how you structure it is going to be a collective decision here in the Congress.
The idea of creating a systemic risk regulator to monitor and head off financial risk in the economy was questioned by former Federal Reserve Chairman Alan Greenspan on Wednesday.
He said in a speech that a systemic regulator should not be given the job of determining when the next financial crisis will hit because regulators are not generally capable of accurately forecasting such things.
On another front, Frank said in the interview he and House Agriculture Committee Chairman Collin Peterson, also a Democrat, have been having good conversations on how to regulate the over-the-counter derivatives markets.
There may still be some differences. But we agree that all derivatives have to be regulated and there's going to be some split between SEC and CFTC and we're working our way through that, he said.
The Obama administration's reforms package will also contain a risk retention requirement, Frank said.
The House on May 7 approved a bill, originated in Frank's committee, that would require mortgage lenders to keep 5 percent of loans they securitize, forcing them to retain more of the mortgage risks they originate. That bill, containing other mortgage reforms as well, is languishing in the Senate.
Frank added the package would also contain a recently developed provision empowering the systemic risk regulator to assign oversight responsibility for new financial products to an existing regulator.
Because you know once we've done this there will be new entities with new products, he added.
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