Wall Street critic to head reform bill panel

WASHINGTON Mon May 24, 2010 8:01pm BST

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WASHINGTON (Reuters) - Representative Barney Frank, a fierce critic of Wall Street and close ally of the Obama administration, will head a House-Senate committee to hammer out a final bill on financial regulation reform.

As chief author of the U.S. House of Representatives' legislation, Frank can be expected to press for a tough crackdown on bank oversight, although the House bill is in some ways less hard-hitting than one approved by the Senate.

Under the Senate bill approved just last week, for instance, banks would have to spin off their swap-trading desks into affiliates, which is not in the House bill.

Banking interests are digging in for a last attempt to water down reforms and carve out loopholes for themselves. The end-product promises to be the biggest overhaul of financial regulation since the 1930s.

Joining Frank on the panel will be Senator Christopher Dodd, author of the Senate bill. Riding a wave of voter antipathy towards Wall Street bailouts and big bonuses for bankers, Dodd pushed his version of reform through the fractious Senate by a 59-39 vote.

Both Frank and Dodd are Democrats committed to reform following the 2007-2009 financial crisis that slammed economies worldwide, unleashing a powerful political backlash against Wall Street and a global wave of reform initiatives.

Their conference committee must merge the House and Senate measures into a single bill, pass it through both chambers and send it to President Barack Obama, who is expected to sign it promptly into law. That could happen by July 4, analysts said.

The final shape of the legislation will also depend on the other members of the panel.

Congressional aides said Democratic Senator Blanche Lincoln will be on the committee. She authored the provision, opposed by big banks, on spinning off swap-trading desks.

LINCOLN PROVISION NOT IN HOUSE BILL

The Lincoln provision is not in the House bill. Nor is a plan for setting up a new government panel to choose credit rating agencies to assess certain new debt instruments. Nor does the House bill contain the 'Volcker rule' curbing risky bank trading, although it does have a related provision.

Lincoln, chairman of the Senate Agriculture Committee, faces a difficult primary election run-off on June 8 in Arkansas, her home state. The conference committee probably will not get down to work until after that date.

House Speaker Nancy Pelosi has the responsibility for naming the members of the panel from the House. She may wait until the second week in June to do that, aides said.

Frank, a Democrat like Dodd, has said the conference may take about a month. Frank chairs the House Financial Services Committee; Dodd, the Senate Banking Committee.

Senators Richard Shelby and Saxby Chambliss will be on the panel, Senate aides said. Both voted against the Senate bill. They are the senior Republicans on the banking and agriculture committees, respectively.

(Additional reporting by Andy Sullivan, Kevin Drawbaugh, Roberta Rampton, Charles Abbott. Writing by Kevin Drawbaugh; Editing by Kenneth Barry)

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