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NU Online News Service, Nov. 3, 3:52 p.m. EST
WASHINGTON—The full House is unlikely to debate financial services reform legislation until the first week of December, Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, said today.
He also said that the committee will finish work tomorrow on the Investor Protection Act, and start work on legislation establishing a mechanism for dealing with systemically risky financial services companies the same day.
Rep. Frank said he will revise the draft legislation he developed with the aid of the Treasury Department. The revision will take place because of objections by fellow Democrats on the committee so that large financial institutions will be levied in advance to fund a pool of cash that can be used to help liquidate troubled large financial institutions.
He also said that under the bill the Federal Reserve Board would lose its authority to provide funds to troubled non-banks under Section 13 (3) of the Federal Reserve Act. That is the provision the Fed used to provide American International Group insurance conglomerate with up to $182 billion at one point last year.
He said the fund is needed to ensure there is no collateral damage to the markets from the failure of a very large financial institution.
In the original draft, Rep. Frank and the Treasury Department proposed that taxpayers pay to cover costs of unwinding a large financial institution, with those funds later to be recouped from large financial institutions, including insurers with assets of more than $10 billion.
Under the revised plan, he said, if funds run out, taxpayer dollars will be used, subject to expedited Congressional disapproval. He said the exact size of this fund is unknown, but "we’re not talking in the hundreds of billions of dollars."
He said general debate on the legislation will begin tomorrow, and that work on amendments will start Thursday.
But, he said, if the House is in session next Monday or Tuesday the committee will continue the markup drafting. Otherwise, he predicted that the Committee will finish work on the bill the week after next.
As for legislation creating a Federal Insurance Office, Rep. Frank did not mention during his press conference any timetable for his committee to consider such legislation.
But his chief spokesman said later that Rep. Frank was meeting soon with officials of the House Ways and Means Committee to discuss jurisdictional issues holding up debate on the legislation by the House Financial Services Committee.
“But, we don’t think these issues will prevent marking up the legislation very soon by our committee,” the spokesman said.
And insurance industry sources said today that the Treasury Department and representatives of the U.S. Trade Representatives Office were meeting to discuss the jurisdictional issues raised by provisions in the legislation that would give the Treasury Department the authority to negotiate insurance trade pacts with foreign countries.