June 25, 2008 / 7:02 PM / in 9 years

UPDATE 1-US SEC, Fed to discuss investment bank agreement

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WASHINGTON, June 25 (Reuters) - The chairmen of the U.S. Securities and Exchange Commission and the Federal Reserve will meet later on Wednesday to discuss an agreement for the two agencies to oversee the country's largest investment banks, SEC chairman Christopher Cox said on Wednesday.

"We are making good progress," Cox told reporters after an open meeting.

Cox could not give an exact date for when the memo of understanding would be completed, but said that he and Federal Reserve Chairman Ben Bernanke had already accomplished a great deal in previous discussions.

"I don't think we'd be discussing it publicly at all if we didn't think that we were close to doing it. It's just a question of whether it's before or after the Fourth of July at this point," Cox said.

The regulators' agreement will outline the scope and mechanism for sharing information related to the Fed's discount window and other areas.

It would also provide a mechanism for regulators to gain a broader and continuous perspective on financial institutions and markets that could affect the stability of the financial system.

The Federal Reserve started closely looking at the investment banks after opening its discount window to the firms out of concern that the Bear Stearns crisis could lead to a systemic financial failure.

Now the Fed is working with the SEC to ensure that investment banks remain safe and sound.

Previously, the investment banks never had access to the window and the access is a temporary measure that is expected to end in September.

The Fed also helped broker a takeover of Bear by JPMorgan Chase (JPM.N).

The SEC supervises the four largest investment banks, Goldman Sachs (GS.N), Lehman Brothers LEH.N, Merrill Lynch MER.N and Morgan Stanley (MS.N) for liquidity and capital levels. (Reporting by Rachelle Younglai; Editing by Brian Moss)

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