WASHINGTON (Reuters) - The top Republican on the U.S. Senate Banking Committee wants bipartisan financial reform, but sees key issues as unsettled and opposes a new consumer protection watchdog, an aide told Reuters on Monday.
Senator Richard Shelby opposes the Obama administration’s proposed Consumer Financial Protection Agency, which would strip existing regulators, such as the Federal Reserve, of consumer protection duties and centralize them.
Shelby backs stronger consumer protections “where appropriate, but believes the creation of a stand-alone agency is neither necessary nor wise,” said Jonathan Graffeo, spokesman for the Republican lawmaker.
As drafted, the proposed consumer agency in Shelby’s judgment “would make the system less safe,” Graffeo said.
Shelby also wants more debate in the Senate on derivatives regulation, systemic risk, and bank supervision, Graffeo said.
More than a dozen proposals on these and other issues have been sent to Congress by the administration in recent months, with most meeting stiff resistance from lobbyists for banks and financial services firms, as well as Republicans.
The latest assessment of Shelby’s views shows that he and Senate Banking Committee Chairman Christopher Dodd, a Democrat, have a long way to go to find consensus on reforming bank and capital market oversight, a key administration goal.
The Democrats’ firm command of the House of Representatives will help them push reforms through the lower chamber of Congress, but Dodd lacks that advantage in the closely divided Senate, making Shelby’s positions crucial on every issue.
A spokeswoman for Dodd said he is committed to getting a reform bill done. “There is a real sense of urgency,” the spokeswoman, Kirstin Brost, said.
A bill to create a single bank supervisor, possibly with proposals on handling systemic risk and firms seen as “too big to fail,” may come soon from Dodd, analysts said.
“Comprehensive bank regulatory restructuring legislation is likely to be introduced in the next few days, but we continue to believe that completion of the issue will likely be in 2010,” said Brian Gardner, financial services policy analyst at investment firm Keefe Bruyette & Woods.
The House of Representatives Financial Services Committee, chaired by Democratic Representative Barney Frank, has already approved reform bills on a consumer finance agency and derivatives oversight.
On the consumer agency, Brost said, “We’re probably 80 percent in agreement with Frank and the White House, but we’re still trying to find ways to strengthen the agency.”
On derivatives, she said, Dodd is looking at the administration’s proposal and a bill filed by Democratic Senator Jack Reed “and trying to pull the best from both.”
Frank’s committee is expected to approve a bill on Wednesday to beef up the U.S. Securities and Exchange Commission, as well as strengthen certain standards for investor protection.
Investor advocates and financial planners’ groups on Monday expressed concern about amendments to the House bill that they said could weaken its attempt to raise the duty of care that brokers and planners alike must follow when advising clients.
Editing by Leslie Adler