Sens. Chuck Hagel, R-Neb., and Charles E. Schumer, D- N.Y., on Wednesday said the Securities and Exchange Commission should be required to consult with banking regulators before challenging an institution's loan-loss reserves.
The two lawmakers urged Senate Banking Committee Chairman Phil Gramm to accept an amendment to the House financial reform bill by Rep. Marge Roukema, R-N.J., that would require the SEC to "consult and coordinate comments with the appropriate federal banking agency before taking any action or rendering any opinion" on a bank's loan-loss reserves.
The Senate bill has no similar provision. But banking and securities regulators have hammered out three agreements on handling loan-loss reserves since last fall. The most recent, dated July 12, was reached after a House hearing on the issue.
"Rep. Roukema's amendment would make the SEC's voluntary consultation with bank regulators mandatory," Sens. Hagel and Schumer wrote. "We hope that you will support its inclusion in the financial services modernization conference report."
Congressional leaders will soon name the lawmakers responsible for reconciling differences between the House and Senate versions of financial reform.