The U.S. House and Senate will begin to reconcile their separate versions of financial services reform legislation starting Monday, June 7, with the conference committee process. The goal is to have a final bill for President Obama’s signature by July 4. While reform has focused on regulation of derivatives, consumer protection, systemic risk, credit ratings agencies, and regulation of private fund managers, critical issues still remain unresolved that will ultimately affect advisors and their practices.
On June 4, Investment Advisor’s Washington bureau chief, Melanie Waddell, hosted “Financial Services Reform: The Next Steps,” a Webinar featuring panelists David Tittsworth, executive director of the Investment Adviser Association (IAA), and Dan Barry, director of government relations for the Financial Planning Association (FPA). They discussed harmonization of investment advisor and broker/dealer regulation–including fiduciary obligations–SEC resources, and the Financial Industry Regulatory Authority (FINRA) as a potential self-regulatory organization.
The hour-long Webinar began with an overview of the House’s passage of the Wall Street Reform and Consumer Protection Act of 2009 (H.R. 4173) on Dec. 3, 2009, and the Senate’s passage of the Restoring American Financial Stability Act (S. 3217) on May 20, 2010. The questions and answers below are taken from a portion of the Webinar. To hear the full Webinar, click on the link at the bottom of this article.
Melanie: David, I’ll start with you. Talk us through the House bill that passed last December and the Senate’s passage of its legislation in May. Give us some background on how we got here.
David: Last year, I had the new experience of testifying before both the Senate Banking Committee in March and the House Financial Services Committee in October. Last summer, the Obama administration and Treasury Department released a white paper on regulatory reform and started draft pieces of legislation to Capitol Hill.
When the House actually passed this 1,700-page bill called the Wall Street Reform and Consumer Protection Act of 2009, there were no Republicans who supported it. It was a fairly close vote, when you consider there was a 50-vote margin in favor on the House Democrats’ side. The Senate then started taking up its version with a party-line vote in the Banking Committee in March. And very recently, the full Senate voted to approve its counterpart to the House bill, another massive 1,500- or 1,600-page bill, and only four Republicans voted for that final bill and a couple Democrats who didn’t think it went far enough voted against it.
Now where we’re at is Legislation 101: a House bill and a Senate bill, and both houses of Congress have to pass exactly the same bill before it can go to the President and be either signed or vetoed. The process that is going to begin very soon–in fact, next week–is that there will be a conference committee where both the House and the Senate will appoint a subgroup of members from the committees of jurisdiction, and those two groups have promised to have some public meetings, and Barney Frank will be the chairman of the committee on the House side. That process will start next week, and according to Chairman Frank, they think that they will have the final legislation passed through the House and the Senate and ready for the President’s signature by the Fourth of July.