June 25 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
* 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agencies that would have been superseded by it, including the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