Tags: gregg | finance | reform | obama | gop

Gregg: GOP Frozen Out by Obama on Finance Reform

Thursday, 27 May 2010 08:32 PM

WASHINGTON – Republican lawmakers may not have much sway over a final financial regulation bill that could cut into banks' profitability and give shareholders more say on how their companies are run, Republican Senator Judd Gregg said on Thursday.

As lawmakers get set to merge Senate and House bills, Gregg said he was not confident Democrats would allow Republicans to change rules for banks and the $615 trillion over-the-counter (OTC) derivatives market.

"I don't know if we will be invited into the room or not," Gregg told Reuters in an interview. "We will certainly be constructive if we are asked."

The final bill, expected to be negotiated before early July, will have deep implications for every player in the financial system.

Republicans are looking to strike some of the bills' most controversial measures such as so-called "proxy access" or giving shareholders an easier way to nominate corporate board directors and creating a bureau to write and enforce rules for financial products.

Gregg is one of the Republican senators on a conference committee of senators and representatives that must merge the two versions of the financial regulation bill.

Gregg said the chairman of the conference committee, Democratic representative Barney Frank, and other Democrats on the committee will decide the process of merging the bills.

Gregg and other Republican senators on the committee urged Frank and Democratic Senator Christopher Dodd to be transparent with the upcoming meetings. In a letter, dated May 27, the Republican senators called for a fair and open process and said a public vote was needed on all major issues not just the final bill.

Dodd is the chairman of the Senate Banking Committee and was in charge of shepherding his chamber's version of the bill through the Senate.


Among other issues, Republicans abhor a provision in the Senate bill that could require banks to spin off their OTC derivatives-trading desks.

That measure may be killed given that conference committee chairman Frank has said it goes too far. The Federal Reserve and the Federal Deposit Insurance Corp have also voiced concerns and say that it could force some of the riskiest parts of banks' business out of the purview of federal oversight.

"The FDIC says it is unworkable, the Fed says it is unworkable... It seems that someone should listen. At some point if it is unworkable, it is unworkable," Gregg said.

"It should be abandoned because it is a bad idea."

Gregg and Democratic Senator Jack Reed unsuccessfully tried to negotiate rules for the OTC derivatives market. They agreed that regulators ought to be able to have a window into the opaque market and that there should be a system to limit the risk the derivatives have on the wider financial market.

However Gregg and Reed disagreed on who should be exempt from complying with the new rules. Gregg said lawmakers should revisit the work that he had accomplished with Reed and said it would help solve the derivatives rules in a constructive way.

Reed is also on the conference committee.

© 2015 Thomson/Reuters. All rights reserved.

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