WASHINGTON (Reuters) - Senate Banking Committee Chairman Christopher Dodd will unveil long-awaited draft legislation on financial regulation reform on Tuesday, his office said on Monday.
Marking another step forward in a bid by the Obama administration and congressional Democrats to tighten bank and capital market rules, the Dodd bill has been under development for months behind closed doors.
Analysts said it will garner little immediate support from Republicans, likely forcing significant changes in some of its major provisions before final Senate action is possible.
In a departure from the Obama agenda, Dodd will call for centralizing bank supervision in one agency -- a contentious proposal that would pit him against other lawmakers and the administration, sources said.
Building from a mid-June Obama bill, Dodd is expected to back creating a government watchdog for financial consumers; stripping the Federal Reserve of bank supervision and consumer protection duties and setting up a systemic risk regulatory council with more power than Obama has proposed.
Also, Dodd will propose that the Securities and Exchange Commission be made self-funding, or able to pay for its operations by keeping fees it collects rather than asking Congress each year for money, said a source familiar with the bill.
“We believe Dodd is likely to unveil legislation that will be much tougher than what can pass the Senate,” said policy analyst Jaret Seiberg at investment firm Concept Capital.
“That means he will have to compromise if he wants a bill consolidating regulators, establishing a Consumer Financial Protection Agency, creating systemic risk regulation, reforming credit raters, and revamping derivatives oversight,” he said.
Congressional Democrats and President Barack Obama are trying to overhaul financial regulation to prevent a repeat of last year’s financial crisis, the worst in generations.
Last week, Dodd spokeswoman Kirstin Brost said the bill “will use the administration’s proposal as base text.”
In mid-June, the administration made more than a dozen proposals. All of them have been under debate for months.
Additional reporting by Rachelle Younglai, Karey Wutkowski; Editing by Kenneth Barry