June 3, 2010 / 8:42 PM / in 8 years

Financial reg debate to be public: Frank

WASHINGTON (Reuters) - The lawmaker heading the push for a final version of a U.S. financial overhaul countered concerns that negotiations would take place behind closed doors and said proposals would be presented and debated publicly.

U.S. Representative Barney Frank, the chair of the joint House-Senate committee in charge of hammering out the final bill, told Reuters on Thursday he hopes to have it ready by June 24.

The committee must iron out major differences between the House and Senate bills, including a controversial provision forcing banks to spin off lucrative swaps desks, limiting their role in the $615 trillion over-the-counter derivatives market.

Another Senate provision could ban banks from proprietary trading.

Republicans named to the committee are calling for a “fair and open” process, with one senator saying he has no idea whether they will be part of backroom discussions on the most sensitive issues.

Frank said in an interview that “any conversation about what the bill should look like will be presented publicly in conference, debated and voted on” by House and Senate lawmakers in the committee.

Frank, a Massachusetts Democrat, shepherded a broad financial regulation bill through the House in December.

The quick-tempered Frank has been a fierce critic of Wall Street lately. But he surprised everyone when he took a politically unpopular position last week and said the Senate’s derivatives provision went too far.

That measure is opposed by Wall Street, Federal Reserve Chairman Ben Bernanke and the chairman of the Federal Deposit Insurance Corp, Sheila Bair.

Frank’s comments have given industry and regulators hope that the measure will not be included in the final bill.

“The product of any negotiation will be presented and debated. ... Some negotiations will take place more publicly than others,” Frank told Reuters in an interview.

Some Republicans are pushing for television coverage of the meetings. Frank said the committee meetings will be open to the public and if cameras want to roll they can.

Frank’s Senate counterpart, Christopher Dodd, pushed a similar bill through the Senate in May.

Both bills aim to ensure that large troubled financial firms will be allowed to fail rather than receive billions of dollars in taxpayer funds as happened when the U.S. government propped up some of the biggest firms like insurer AIG at the height of the financial crisis.

The bills also create a new government watchdog for consumer products like mortgages and give regulators authority to supervise the opaque over-the-counter derivatives market.

The bills do not propose reforms for mortgage finance companies Fannie Mae and Freddie Mac, which were taken over by the government in 2008 when they were hit hard by steep home value declines.

Republicans say that by not addressing Fannie and Freddie, the legislation fails to tackle one of the root causes of the crisis. Government officials say a reform of the housing agencies must wait for the U.S. housing market to recover from its worst crash since the Great Depression.

Frank said lawmakers would begin drafting legislation to replace the “current helter-skelter scheme of housing finance” after the financial regulation bill passes.

Frank said he hoped to have legislation by the end of the year but did not expect it to be enacted before next year.

Editing by Leslie Adler

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