Due Diligence

Final Stretch In Financial Reform Wrangling Goes Public

The process of reconciling House and Senate bills is usually confined to Washington's proverbial smoke-filled back rooms, but for financial reform it's gone public. That's after Conference Chairman Barney Frank, (D, Mass.) wrote a letter to C-Span Wednesday asking that the deliberations be aired live. The process kicked off Thursday afternoon at 2:15pm with lengthy opening remarks and plenty of angry rhetoric from Committee members on both sides of the political divide. They were still going at it as of 5:30 pm. The public nature of the proceedings could yield a final bill that is tougher on Wall Street and banks, kinder to consumers. But it could also make it harder for legislators to finish the process by June 24, when President Barack Obama leaves for the G-20 summit in Toronto, as some have proposed they should. With television cameras in the room, everyone will have a lot more to prove, and to say.

Debate and voting on individual sections of the bills will resume on Tuesday, and which sections will be addressed in a particular session will be made public at noon the previous day.

The Senate version of the bill is the starting point for discussions. Some say that dampens chances for a more widely applied fiduciary standard to make its way into a final bill. But David Tittsworth, executive director of the Investment Advisor Association, says which version of the bill is the starting point is not terribly important. "The bottom line is what the conferees agree to on each individual issue," said Tittsworth. "They could pick parts of both--a study plus rulemaking."

The Senate version of the legislation requires only a study of the fiduciary issue, and no SEC rulemaking. The House would require the SEC to draw up rules that extend fiduciary duty to stocksbrokers when they are providing retail financial advice.

In the Senate, all conferees chosen to be part of the reconciliation process will participate in debate and voting on the various parts of the bill. In the House, different conferees will address different sections of the legislation. "We’re trying to contact all the conferees," says Tittsworth. "These issues are not the highest tier issues…so it’s possible that not all the conferees have a position [on the fiduciary standard] yet."

The House conferees who will address the subject of the fiduciary standard are those who are also members of the Financial Services Committee: Barney Frank (D, Mass.), Paul Kanjorski (D, Pa.), Maxine Waters (D, Tenn.), Carolyn Maloney (D, NY), Mel Watt (D, NC), Luis Gutierrez (D, Ill.), Gregory Meeks (D, Fla.), Dennis Moore (D, Kan), Bary Peters (D, Mich.), Mary Jo Kilroy (D, Oh), Spencer Bachus (R, Ala.), Edward Royce (R, Calif.), Shelley Moore Capito (R, WV), Scott Garrett (R, NJ), Judy Biggert (R, Ill.), Jeb Hensarling (R, Tex.).

Separately, the Consumer Federation of America sent a letter to Congress Tuesday that urges legislators to include adoption of the fiduciary standard in the bill, among other issues.

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