Banks view regulation plans as just proposals

By Elinor Comlay - Analysis

NEW YORK (Reuters) - The U.S. banking industry played down the Obama administration's proposals on Monday for the most wrenching regulatory changes since the Great Depression as just that -- proposals.

Bankers, and their lobbyists, were careful not to attack the plan, which was broadly outlined in a Washington Post op-ed piece by Treasury Secretary Timothy Geithner and White House National Economic Council Director Lawrence Summers, head on. Instead they talked about waiting to see the details due on Wednesday.

"Have we had enough say yet? No, but the process has really just gotten started," said Wayne Abernathy, executive director for financial institutions policy at the American Bankers Association.

The plan includes raising capital and liquidity requirements for all banks, controls on asset-backed securities including a requirement that their creators retain some risk, and the regulation of derivatives contracts and dealers.

The proposals will have to travel through congressional committees in a process that will likely extend through fall.

One financial industry lobbyist, who did not want to be identified because he is not authorized to speak publicly on the matter, estimated that even after amendments, the bill would have less than a 60 percent chance of passing.

Some parts, such as consumer protection and rules requiring banks securitizing assets to retain some of the risk, might be stripped out, he predicted.

But what he perceived to be the administration's two highest priorities -- forming a systemic risk regulator and granting resolution authority for the U.S. Treasury -- would likely remain.