FACTBOX-Some financial reforms missing from U.S. legislation

June 25 Fri Jun 25, 2010 5:52am EDT

June 25 (Reuters) - A U.S. Senate-House of Representatives conference committee on Friday concluded work on a sweeping Wall Street reform bill, which had slowly narrowed over more than a year of debate, with some proposals slipping from view.

Some changes that looked achievable at the height of the 2007-2009 financial crisis that unleashed the drive for tighter financial oversight never made it into the bill.

Here is a look at some proposals that were left behind:

* FIXING FANNIE AND FREDDIE: The two giants of U.S. mortgage finance -- Fannie Mae FNM.N and Freddie Mac FRE.N -- need a major overhaul. That much both political parties in Congress can agree on. But the consensus ends there.

Fixing Fannie and Freddie, which together own or guarantee half of all U.S. mortgages, is such a contentious problem that Democrats set it aside for the time being.

The Obama administration has asked for public input on what to do about the housing finance system, a classic Washington tactic to buy more time.

A more detailed proposal on housing finance is not expected until 2011, and it could take years before lawmakers agree on a new framework.

* CONSOLIDATING BANK SUPERVISION: A bold idea offered last year by Senate Banking Committee Chairman Christopher Dodd was to consolidate into one super-agency the bank regulation duties now dispersed across several federal bureaucracies.

That idea died after months of lobbying by banks and the agencies that would have been superseded by it, including the Federal Reserve, the Comptroller of the Currency, and the Federal Deposit Insurance Corp.

Dodd wanted to create a new agency, the Financial Institutions Regulatory Administration, to supervise all banks and put an end to today's patchwork system that has been stitched together over decades. The House never contemplated such a plan.

The bill finalized by the conference committee changes little, other than closing the Office of Thrift Supervision -- a step toward streamlining, but far short of Dodd's plan.

* MERGING SEC AND CFTC: The Securities and Exchange Commission and the Commodity Futures Trading Commission regulate such closely linked markets that critics have long argued the two agencies should be one.

When the Obama administration took over in 2009 and the financial crisis was at its peak, a CFTC-SEC merger looked possible. But as Congress began hammering out a politically realistic set of reforms, the merger slipped from view.

Neither agency wanted it since it would threaten jobs and turf. Financial services industry lobbyists were divided.

In the end, legislators said, in a perfect world the two agencies would be combined, but that just isn't Washington.

* MORTGAGE 'CRAMDOWN': Under present law, bankruptcy courts may reduce many forms of debt for struggling borrowers -- including loans for a boat, car, vacation home or family farm -- but not for a primary residence.

In a proposal backed by homeowner activists and many Democrats, bankruptcy law would have been rewritten to allow judges to change the terms of mortgages for distressed borrowers in bankruptcy court. Known as mortgage "cramdown," the idea is opposed by the banking industry and Republicans.

The House approved a "cramdown" measure in March 2009 over the objections of Republicans, but it died in the Senate.

Cramdown could help stem U.S. home foreclosures, its advocates say. Opponents say it would raise costs for everyone and divert capital from the mortgage debt market.

* USURY CAPS: Some congressional Democrats want to cap credit card interest rates, but the idea is not included in the conference committee bill.

A bill offered in the Senate last year would have capped rates at 36 percent for all consumer credit -- mortgages, payday loans, car title loans -- not just credit cards, but it gained little traction in the face of bank opposition. (Reporting by Kevin Drawbaugh and Corbett Daly; Editing by Andrea Ricci)