WASHINGTON — Obama administration officials outlined their priorities Wednesday for regulatory reform as the bill is negotiated between the House and Senate, but the briefing was notable as much for what issues they ignored as those they tackled.

Michael Barr, Treasury assistant secretary of financial institutions, said the administration did not care whether a proposed consumer financial protection division was a separate agency or a bureau inside the Fed. While the battle over where the consumer regulator is housed is expected to be a key issue during the conference committee, Barr said the administration was fine with either approach.

"One sort of rents space from the Fed and the other doesn't, but they are both paths to real meaningful independence … so those paths are two different ways of achieving the president's objective," Barr said.

He also repeatedly dodged taking a position on a provision that would force banks to spin off their derivatives operations. Banks have complained that the measure by Senate Agriculture Committee Chairman Blanche Lincoln goes too far and are hoping to have it removed during conference.

They have received help from several regulators, including Fed Chairman Ben Bernanke, Federal Deposit Insurance Corp. Chairman Sheila Bair and former Fed Chairman Paul Volcker, who warned the bank would actually increase risks to the system.

While Treasury Secretary Tim Geithner has hinted he, too, opposes the amendment, the administration has refused to clearly state a position. During the briefing, Barr acknowledged that some of the language in the amendment was vague.

"There are different ways of interpreting the language of the provision and exactly how it would work and the regulations that would come out of it, so it's hard to tell today on how the provision would operate," he said. "If it would result in banking organizations not being able to engage in swap transactions, the provision could have very significant consequences. If it has a narrower set of interpretations, those consequences would be smaller, and the language of the provision is somewhat unclear on that point."

He also said that the goal of the Lincoln provision — to protect banks from risky practices — may be better dealt with through the Volcker Rule, which would ban proprietary trading and limit investments in hedge funds and private-equity firms.

"We do think the Volcker Rule addresses a core concern we had with proprietary trading by banking entities, and that provision is in the Senate bill," Barr said. "We obviously want to see it in the final product, and it addresses proprietary trading of all kinds of financial instruments, including derivatives instruments."

Barr also declined to take a position on a provision by Sen. Richard Durbin, D-Ill., that would require the Fed to ensure interchange fees on debit cards were reasonable and allow merchants to offer discounts for particular forms of payment. Such a measure is not part of the House bill.

Administration officials did say they preferred the Senate version of an amendment to audit the activities of the Fed. Under the House bill, the Government Accountability Office would conduct an audit on all of the Fed's activities, including monetary policy.

But the Senate adopted a measure by Sen. Bernard Sanders, I-Vt., that would require the central bank to disclose names of institutions it lent money to during the financial crisis. "We think the current Sanders amendment which is actually in the [Senate] bill is a good way of balancing the demands of transparency and openness with the need for monetary independence," said Diana Farrell, deputy director of the National Economic Council, the economic arm of the White House.

She also called for ensuring that the FDIC has the flexibility in a resolution process to provide guarantees to solvent firms to minimize the damage of a failure.

Overall, they said the two bills are strong measures encompassing their core objectives and downplayed the differences. But they acknowledged the lobbying fight is not over.

"We expect a lot more of the same [industry lobbying] but now very targeted," Farrell said. "I think it will be hard to imagine that can wage an even stronger lobbying battle, but they probably will."

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