WASHINGTON — While acknowledging differences in their approach to regulatory reform, House Financial Services Committee Chairman Barney Frank and Senate Banking Committee Chairman Chris Dodd said Tuesday that they are making significant progress on the legislation.
After a meeting with Treasury Secretary Tim Geithner, both lawmakers spoke optimistically about the chances for reform, with Frank insisting that reports the effort has stalled are dead wrong.
"Contrary to some of what I have read, this was not a wake," the Massachusetts Democrat said.
Frank said that there is general agreement on the basic tenets of reform: creating a separate consumer financial protection agency, increasing capital standards, regulating derivatives, enhancing resolution authority and consolidating some banking supervision.
He said it is "simply a fiction" that policymakers were losing momentum on reform.
"There is no substance to this argument," he said. "It is a high priority for us to pass this … There are fewer and fewer issues about which there is significant difference and we are working."
Despite Frank's assurances that there is progress on the principles, the administration's basic reform package has enjoyed general support from Dodd and Frank for months and it is hard to gauge how much consensus is developing on the details. House and Senate leaders are also taking different approaches to reform. Dodd told reporters that he stands by a provision that would consolidate all regulators into one. "I still believe in a strong single regulator," he said. "I still think that makes the most for transparency for accountability and for stopping the charter shopping that has caused so much of the problems we have encountered during this economic crisis."
Frank acknowledged that he was not on board with that idea.
"I disagree with him," Frank said, but said the difference was not critical. "If you have one regulator or two — empires do not fall on whether you have one regulator or two."
He went on to say that community bank opposition to a single regulator could make such a plan hard to enact. "My own view is that the concerns about some of the smaller banks and the state banks make it difficult to get to one regulator," he said. "But the question of whether there is one single regulator or the existing three is not a fundamentally important issue I believe — it's not going to break this thing up."
Dodd and Frank also disagree with the administration's approach to managing systemic risk. While the Obama plan would give systemic risk oversight to the Federal Reserve Board, both lawmakers said Tuesday that remains a tough sell on Capitol Hill. "There are a lot of us who have reservations about the Fed as being the sole systemic risk regulator," Dodd said. "They clearly have to be a part of it,"
Frank indicated that he too is leaning to a kind of hybrid approach. "Yeah, it's an issue that it's not going to be the Fed alone," he said. "I'm trying to get the appropriate mix of a kind of council with some executive authority — we are still working on it. We will have some specifics on that fairly soon."
Frank said he plans to release a new draft of his bill to create a consumer financial protection agency "within a few days."