WASHINGTON (CN) – A bicameral group of lawmakers met for the first time Thursday to reconcile House and Senate versions of the financial reform bill. They promised to craft legislation to overhaul the nation’s financial system, end taxpayer bailouts of Wall Street and add consumer protections to the financial industry.
“This is going to be a very open process,” said House Financial Services Committee Chairman Rep. Barney Frank, D-Mass., who chaired Thursday’s conference committee. “Nothing will be put into this final bill that is not advanced, openly debated, subject to amendment by the conference process and then voted on.”
Frank and Senate Banking Committee Chairman Sen. Christopher Dodd, D-Conn., who pushed the bill through the Senate, are heading up negotiations with the White House.
The committee plans to meet over the next few weeks, aiming to get a final version of the bill to President Obama by June 24, before he leaves for the G20 summit in Toronto.
Thursday’s conference was heavily split down party lines, with Democrats touting the bill’s new consumer protections and its regulations of risky trading practices, and Republicans saying the bill institutionalizes taxpayer bailouts and treats small community banks no different than large Wall Street firms.
Sen. Blanche Lincoln, D-Ark., said the current bill contains “well over 99 percent of what we had in our Senate bill.” She added, “We are excited to begin with that product.”
She highlighted the bill’s regulation of the derivatives market, the section of the financial industry dealing with instruments whose value comes from underlying investments that was faulted for much of the financial collapse. The derivatives market ballooned by “$600 trillion dollars in notional value” over a decade, Lincoln said.
The new bill brings derivatives trading through clearing houses, increasing transparency for regulators and the public, Lincoln said. By regulating the derivatives market, Lincoln said, banks could again focus on their initial pillars of business, “taking deposits and making loans.”
“There is so much common ground here,” she said, adding that lawmakers were “weeks away from making history” with the final bill.
Sen. Richard Shelby, R-Ala., called the reform bill “incomplete and unnecessarily overreaching,” lamenting the creation of the new consumer protection bureau that he said was “more intrusive than protective” and was “a liberal activist’s dream come true.”
He also voiced objection to regulating the derivatives market, saying it would only push derivatives trading overseas, thereby “magnifying, not reducing, systemic risk.”
The House approved its version of the bill with a 223-202 vote last December, and the Senate approved its version in May by a vote of 59-39.