Wall Street Split on Conference Report
June 29, 2010 - The Senate and House conference committee on HR 4173 has produced their conference report, and the final steps to passing the legislation are near. Financial reform groups, such as Americans for Financial Reform, and consumer protection groups, such as Consumer's Union and Public Citizen, have applauded Congress for agreeing to a bill that produced some very strong provisions and thwarted the big bank lobby’s most egregious efforts to weaken the bill." Indeed, the provisions most supported by reform and consumer groups are most heavily opposed by Wall Street. Here's a look at the positions of some major interest groups.
Big Banks: Oppose
The banking industry's leading trade association, the American Bankers Association, is one of the only associations to oppose the bill outright, arguing that "the concerns of the traditional banking industry were largely ignored."
Big Business: Oppose
The US Chamber of Commerce also opposes the bill. "Rather than addressing the core causes of the financial crisis, this bill adds new regulatory agencies to an already antiquated system and grows a bloated, ineffective bureaucracy."
Community Banks: Split
The Independent Community Bankers of America (ICBA) is pleased to see that a version of the Volcker Rule remains in the final legislation. “While the bill could go further to restructure megafirms and hold nonbanks that were the root cause of this crisis accountable, it does include powerful language that will help rein in these culprits from their excessive size and risks they pose to our financial system. They also support changes to the FDIC deposit assessment base that will ensure that "megabanks pay their fair share for the risk they pose."
However, the ICBA joins the rest of the banking industry in its opposition to the creation of the Consumer Financial Protection Agency, as well as new restrictions on debit swipe fees.
Financial Services: Split
The Financial Services Forum, representing the interests of 19 CEO's of major financial services firms, state support for resolution authority to wind down banks, systemic risk supervision by the Fed, and "enhanced prudential supervision."
However, they remain opposed to the Volcker rule, and provisions requiring that their firms spin out derivatives.
The Insurance industry supports most of the toughest reforms as long as they are exempt from them. In particular, the American Council of Life Insurers support provisions in the bill that currently exempt their industry from being subject to rules stipulated by the Collins amendment, the Volcker rule, the establishment of the CFPA and resolution authority. On derivatives rules, whether or not the insurance industry will be subjected to the new rules depends on how a "major swap participant" is defined. Not surprisingly, their support for the reform hinges on this definition. "With those caveats, our initial review suggests that the final legislation likely will not unduly harm life insurers or our customers."
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