WASHINGTON -- Derivatives are likely to continue to be a hot topic in the new Congress, but Republican role probably won't result in the enactment of derivatives legislation next year, according to several congressional aides.
However, legislation giving added securities powers to banks could be approved next year, the aides predicted last week at a Washington conference sponsored by the American Bar Association.
Mitchell Feuer, counsel for the Senate Banking Committee, said he doesn't think the new Congress will pass legislation to reform derivatives, but that derivatives and securities litigation reform will be major issues.
"I think though there's attention that has been focused on the area of derivatives and enough high-profile corporations, institutions, and municipalities around the country that have suffered losses associated with derivatives, that if there is another major event in the market asssociated with derivatives it will remain on the congressional agenda," Feuer said.
"Congress very much reacts to things that take place in the market, and I suspect that that will remain the same," he said.
Laura Unger, an-aide to the Senate Banking Committee who worked for Sen. Alfonse-D'Amato, R-N.Y., who is elected to be the new chairman of the Senate Banking Committee, agrees that the derivatives issue isn't going to go away in the next Congress.
"I don't know if it will be a high, priority as far as legislation, but I know it will be on the radar screen," Unger said.
Meanwhile, much of the legislation in the next Congress will probably center around a push toward scaled-back government regulation, several congressional aides said All the regulatory action that occurred during the past two years was prompted by congressional oversight and interest, said Martha Cochran, formerly a Senate Banking Committee aide who now works for the law firm of Arnold & Porter.
"We may see the flip side of that in the coming year," she said.
Cochran said reform in the next Congress will involve efforts to help the business community rid itself of burdensome regulations.
"There may be some good opportunities here," Cochran said. "The business community should not be too greedy; it should work closely with Republicans and Democrats. It' s not a filibuster-free Senate and it's not a veto-free Senate."
Peter Kinzler, an-aide to the House Banking Committee's subcommittee on financial insiitutions, said banking reform could possibly move through Congress more easily because rumored committee changes in the House would mirror the committee structure in the Senate.
"If that happens, and you're got the jurisdiction in the House that mirrors jurisdiction in the Senate, you take away major obstacles to modernization legislation," Kinzler said.
Securities issues may be taken away entirely from the House Energly and Commerce Committee, which has been under the control of John Dingell, D-Mich., Kinzler said. Dingell has fought hard to keep banks out of the securities business by fighting to retain the Glass-Steagall Act, which curbed banks' securities powers, he said.
In the last Congress, interstate banking legislation was passed because it was, a stripped-down version of bank modernization. "We were able to avoid getting a deferral to Mr. Dingell's committee," Kinzler said.
But now, Kinzler said, the Republicans have a more difficult task: getting legislation through, not blocked.
"The Republicans will have to get over a minority attitude," Kinzler said. "a minority attitude is you sit back and you lob bombs. To actually move Something forward is much more difficult than it is in getting something blocked."
Meanwhile, Unger also predicted that Republicans will probably move forward with efforts to scale down government regulation. "It's probably true that Republicans will proceed with a less government approach," Unger said.
Unger said bank modernization is most likely going to be on D'Amato's agenda. In addition, she said, funding for the Securities and Exchange Commission will probably be considered.
"We need to find a more permanent way to fund the SEC, whether that be self-funding or something else," she said.
Before adjournment, Congress approved an SEC funding measure before adjournment last month that authorizes the SEC to collect and use $192 million in fees to fund its operations in the new fiscal year that began Oct. 1.