ETF News

WRAPUP 5-Republicans soften opposition to US financial reform

 * Full debate on US Senate reforms expected next week-aide
 * Dodd sees agreement on 80-90 percent of the bill
 * Obama phoned Republican Senator Brown on Tuesday
 * Sen Collins cautions more work needed to gain her vote
 * Senate Agriculture panel to debate swaps on Wednesday
 (Adds Sen Collins comments, paragraph 12)
 By Andy Sullivan and Roberta Rampton
 WASHINGTON, April 20 (Reuters) - Republican lawmakers on
Tuesday took a more conciliatory tone toward Democratic
proposals to crack down on Wall Street as the U.S. Senate
delayed debate on a financial reform package until next week.
 The change in rhetoric could signal the two sides are
moving closer to a deal after months of wrangling over how to
overhaul regulations in the wake of the financial crisis.
 Senate Banking Committee Chairman Chris Dodd said lawmakers
have reached agreement on 80 to 90 percent of the reform bill.
 "We are all optimistic that this can be fixed," said Senate
Republican Leader Mitch McConnell.
 Democrats are seeking at least one Republican vote in the
Senate to overcome procedural hurdles to the financial reform
bill and are trying to build on widespread anti-Wall Street
sentiment ahead of November's mid-term elections.
 President Barack Obama, who will speak in New York City on
Thursday on the need for reform, telephoned recently elected
Republican Senator Scott Brown of Massachusetts on Tuesday to
discuss the issue. Democrats are targeting him and other
moderate Republicans, seeking support for the Senate bill.
 The full Senate had been expected to begin debate on the
bill on Thursday, although a Democratic party aide on Tuesday
said that debate would be delayed until next week.
COLUMN: GOP in dilemma on financial reform     [ID:nLDE63J0XH]
FACTBOX: Major financial reform proposals      [ID:nLDE63D217]
NEWSMAKER-Farmer's daughter takes on Wall St   [ID:nN16132985]
TAKE A LOOK: U.S. Financial Regulation         [ID:nN16148428]
 Democrats are trying to use problems in the banking sector,
including last week's move by the U.S. Securities and Exchange
Commission to charge Goldman Sachs GS.N with fraud, as
leverage for reform. Britain's financial regulator launched its
own probe of Goldman Sachs on Tuesday. For full story, see
 Last week, all 41 Republicans in the 100-seat Senate said
they would oppose the Democratic bill as currently written.
 Several Republicans said on Tuesday they hoped Dodd and
Senator Richard Shelby, the top Republican on the Banking
Committee, could hammer out a compromise before debate begins.
 Shelby told Reuters talks were making progress, but he was
not sure whether they would be finished by Monday, when
Democrats plan to bring the bill to the floor.
 Susan Collins, another moderate being courted by the
administration, told Reuters she would not side with Democrats
unless Dodd and Shelby have come to a deal -- a process she
thinks could take weeks.
 Republican Senator Olympia Snowe, who was wooed on Monday
by Treasury Secretary Timothy Geithner to support the bill,
said she is hopeful compromises could yield bipartisan
 The first test of Republicans' resolve may come on
Wednesday, when the Senate Agriculture Committee considers a
derivatives bill that would force big banks out of the $450
trillion derivatives market. [ID:nN20256991]
 Ethan Siegal, an analyst with The Washington Exchange, a
private firm that tracks Congress and the White House for
institutional investors, said he has increased odds for the
enactment of financial reform to 60-40 from even chances
earlier this year.
 Aside from Snowe, Collins and Brown, Siegal said he sees a
number of Republican senators who may vote for financial
reform, such as George Voinovich and Judd Gregg, who are
retiring this year, as well as Bob Corker, who is not up for
re-election this year.
 Both Democrats and Republicans used a Capitol Hill hearing
on Tuesday on the 2008 collapse of Lehman Brothers to talk
about the bill.
 Democrat Paul Kanjorski said the investment bank's
practices point to the need for reform.
 But Spencer Bachus, the top Republican on the House
Financial Services Committee, warned that regulators should not
be given more powers after they failed to use them wisely ahead
of the financial crisis of 2008.
 Citigroup C.N Chief Executive Vikram Pandit, head of the
third-largest U.S. bank, on Tuesday spoke out in support of a
strong consumer protection authority under the reforms.
 Striking a contrite tone at the firm's annual meeting,
Pandit said the financial industry strayed from its basic
principles, contributing to the financial crisis.
 A key sticking point in the Democrats' plan is a proposed
fund designed to help pay for the dismantling of troubled
financial firms. Republicans have said it amounts to a standing
bailout fund that will be used to prop up insolvent Wall Street
firms deemed "too big to fail," and puts taxpayers at risk.
 But House Democratic Leader Steny Hoyer said on Tuesday the
fund was not central to the bill. [ID:nN20105044]
 The Senate Banking bill has proposed a $50 billion fund,
while the House bill passed in December called for large firms
to pay up to $150 billion into such a fund. The new fund would
be in addition to the Federal Deposit Insurance Corp, which
also restructures and shuts down smaller banks.
 Community bankers, who hold political clout, argue that the
fund is "vitally important," saying that without the fund, big
banks will still be perceived as too big to fail and maintain a
competitive advantage. [ID:nWEN3049]
 Some lawmakers, such as Democrat Charles Schumer, would
also like to include in the bill a tax on banks, as proposed by
Obama to recoup government bailout funds.
 Finance ministers from the Group of 20 nations will meet in
Washington this week to consider global reforms, including a
proposal by the International Monetary Fund for two new taxes
on banks to fund future bailouts. [ID:nLDE63J2J2]