WASHINGTON Feb 11 A key Senate banking committee member said on Thursday that there may be better ways to restrict banks' speculative activities than imposing an outright ban on proprietary trading and hedge fund ownership.
"There are real challenges to an outright ban," said Senator Mark Warner, a Democrat who is helping craft financial reform legislation. "If you don't have international agreements, there may be other ways other than an outright ban," he said in an interview.
For weeks, the banking committee has been working on legislation to overhaul U.S. financial regulation. But it was caught off guard when the White House in late January proposed a curb on banks' proprietary trading and ties to hedge funds and private equity funds.
Warner said it might be better to enhance prudential regulation and have a federal banking regulator pay attention to large financial firms that have deposits, proprietary trading, hedge fund and private equity components.
Senate Banking Chairman Christopher Dodd on Thursday said he was optimistic he could hash out a bipartisan financial reform bill with Republican Senator Bob Corker, just days after he said he had reached an impasse with the top Republican on his committee, Richard Shelby.
Warner has been working with Corker on new banking rules and said the two agreed 98 percent on how to oversee risk in the financial system. Warner said overall the committee had pieces to resolve such as how to protect consumers from risky financial products.
The White House has pushed to establish a separate Consumer Financial Products Agency oversee products such as mortgages. Republicans detest the idea of creating a new bureaucracy.
"There are lots of discussions on how to enhance consumer protections," Warner said. (Editing by Leslie Adler; Editing by Leslie Adler)