WASHINGTON, Nov 29 (Reuters) - U.S. House Democrat Barney Frank is making one final push to revamp the financial regulatory structure with his retirement just weeks away, revisiting an idea to merge two agencies that has had little traction with fellow lawmakers in the past.
On Thursday, Frank and fellow Massachusetts Democrat Michael Capuano introduced a bill that would combine the Securities and Exchange Commission and Commodity Futures Trading Commission, which already overlap in overseeing derivatives and some other kinds of exchange-traded products.
Republican House members earlier this month also suggested such a merger could help to avoid regulatory lapses that contributed to the failure of commodities brokerage MF Global, but congressional turf battles have kept such a measure from advancing.
"The existence of a separate SEC and CFTC is the single largest structural defect in our regulatory system," Frank, the ranking Democrat on the House Financial Services Committee, said in a statement.
"Unfortunately, this is deeply rooted in major cultural, economic and political factors in America."
Frank and former Senator Christopher Dodd, a Democrat from Connecticut, were the chief architects of the 2010 Wall Street reform law, which was enacted as a response to the 2007-2009 financial crisis.
The Dodd-Frank law made sweeping changes, such as empowering the SEC and CFTC for the first time to regulate over-the-counter derivatives, created a Consumer Financial Protection Bureau, and gave the U.S. government authority to wind down large financial firms that may pose risks to the broader marketplace.
The bill succeeded in doing away with one financial regulator, the Office of Thrift Supervision, which was heavily criticized for its lax oversight of taxpayer-rescued insurer American International Group and failed lender Washington Mutual.
But one thing lawmakers could not agree on was a proposed merger of the CFTC and SEC, in large part because of jurisdictional disagreements between co mmittees overseeing fi nancial services and tho se responsible for agri culture, t he latter having a long history of overseeing the CFTC.
Frank said on Thursday the merger was not part of the Dodd-Frank law because it would have "almost certainly caused the defeat" of the legislation.
But now, he said, the time is right for Congress to tackle the issue.
The idea of merging the two financial regulators was broached in a report released this month by the House Financial Services oversight panel, which scrutinized the collapse of futures brokerage MF Global.
The report heaped criticism on the SEC, CFTC and New York Federal Reserve Bank for failing to recognize the growing threat that the firm had become.
The report also scolded the SEC and CFTC for poorly communicating with each other during MF Global's death spiral.
It also called for exploring a merger of the two agencies.
Capuano, who is the ranking member of the oversight panel, said a merger represents a "common sense step."
Whether such a move could ever gain traction in Congress, however, remains to be seen.
Shortly after the oversight panel released its report, Republican Senator Pat Roberts, from Kansas, who is the ranking member of the Senate's Agriculture Committee, blasted the idea and said he failed to see how merging the two would have made "any difference" in preventing MF Global's collapse.