While Wall Street and the banking sector obsesses over the government’s controversial stress tests, Congress is moving on to the next hot-bottom issue—granting the government authority to take over and, if necessary, close big financial firms as part of a sweeping regulatory reform package.
Capital Money
CNBC.com
Capital Money
The Senate Banking Committee Monday said it will hold a public hearing Wednesday on the issue of so-called too-big-to-fail institutions, the first of what promises to be several hearings in Congress in the weeks to come. The House Financial Services Committee is expected to do the same as early as next week.
“It’s going to be the next big thing,” said one senior Congressional staffer.
In March, President Obama asked House Financial Services Chairman Barney Frank to fast-track legislation on the new regulatory power—similar to that which the FDIC now has over banks and thrifts with government-insured deposits—amid the latest public flap over executive pay at AIG [AIG 1.46 0.08 (+5.8%) ], which has received tens of billions of dollars in government aid.
At the time, the plan was for the resolution authority measure to be drawn up as stand-alone legislation, and essentially rushed into law, but it will now be wrapped into a broader overhaul effort, including the creation a super or systemic regulator.
“We thought we could break that out and pass it sooner,” said one Congressional source, Congress is thought to be waiting for the White House to take the lead on the legislation and forward its recommendations to legislators. more...
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