Two of the Obama Administration’s top priorities to accomplish by year-end–healthcare and financial services reform–are well on their way to fruition.
The Senate Finance Committee passed October 13 its version of healthcare reform, and at press time White House and Congressional leaders were busy trying to meld provisions of five House and Senate healthcare bills. The major tussle now in the healthcare debate will be whether to include a public option in the final piece of legislation. The Senate Health, Education, and Labor Committee’s (HELP) Affordable Health Choices Act, which was passed in July, as well as the three House healthcare bills, include the public option that the Administration has been championing. But the bill passed by the Senate Finance Committee does not include a public option. The Senate Finance bill–which the Congressional Budget Office (CBO) estimates would cost $829 billion over 10 years–was backed by one Republican Senator, Olympia Snowe of Maine.
Meanwhile, Rep. Barney Frank (D-Massachusetts), chairman of the House Financial Services Committee, launched full force into financial services reform measures in October, passing on October 14 legislation to strengthen over-the-counter derivatives. The legislation would, for the first time, impose new capital, margin, transparency, record-keeping, and reporting regulations on derivatives. At press time on October 15, Frank and his committee were marking up legislation that would create the Consumer Financial Protection Agency (CFPA). Frank said during the CFPA mark up session that his committee would begin marking up the week of October 18, the Investor Protection Act, “dealing with restrictions on investment advisors.”
The Investor Protection Act was discussed by the Committee during a hearing on October 6 to discuss three legislative discussion drafts put forth by Rep. Paul Kanjorski (D-Pennsylvania) on investor protection, registration of advisors to private funds, and creating a national office of insurance.
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Kanjorski, ranking member on the Committee and chairman of the committee’s subcommittee on capital markets, said during his opening statement that his three bills “work to reverse” the trend of excessive deregulation that has existed and caused the financial crisis “by closing loopholes and fixing problems in our broken regulatory structure, especially in our securities and insurance markets.” As Congress works through these drafts and other pieces of financial services reform, Kanjorski said, “We should listen to common-sense ideas and seek out consensus where it exists. I am therefore open to making changes to these draft bills.” However, he said, “We must ensure that special interests do not weaken particular solutions to the point of becoming toothless.”
The first draft bill, the Investor Protection Act, expands the SEC’s powers and requires broker/dealers to adhere to the same fiduciary standard of care as advisors; expands the SEC’s ability to reward whistleblowers whose tips lead to successful enforcement actions; allows the Commission to adopt rules to bar the inclusion of mandatory arbitration clauses in securities contracts; expands upon the proposals put forth by the Administration by closing loopholes identified by the Madoff and Stanford Financial frauds; and doubles the Commission’s funding over the next five years.