Maine news, sports, weather from Portland Press Herald / Maine Sunday Telegram, Portland, Maine

Dodd seeks middle ground on new financial rules

Sen. Christopher Dodd's regulatory scheme backs away from the plan he offered four months ago.

The Associated Press

WASHINGTON — The senator trying to rewrite the nation's financial industry rules is dropping plans to create a stand-alone consumer financial protection agency and give a single regulator the power to oversee all banks, according to people familiar with the evolving proposal.

click image to enlarge

Senate Banking Committee Chairman Sen. Christopher Dodd, D-Conn., holds a news conference Thursday. Dodd says he will offer his own version of a sweeping overhaul of financial regulations without Republican support.

The Associated Press

Select images available for purchase in the
Maine Today Photo Store

Backing away from the proposal he offered four months ago, the chairman of the Senate Banking, Housing and Urban Affairs Committee is now incorporating GOP ideas, and yet not one Republican senator is coming along so far.

Sen. Christopher Dodd's new regulatory scheme, expected to be released today, follows months of bipartisan negotiations that abruptly ended last week when he said it was time for his committee to consider a bill.

The legislation, a priority for President Obama, aims to avoid a repeat of the financial crisis that caused the Wall Street meltdown 18 months ago.

Those familiar with the plan described it on condition of anonymity because they were not authorized to speak publicly. The details, they said, remained in flux.

Dodd, who's not running for re-election this fall, is planting himself squarely between a united bloc of Republicans on his committee and Democrats who have insisted on a strong, autonomous consumer agency. He's also facing Democratic pressure from outside his committee to take stronger measures to cut down the size of banks and to limit their activities.

In a signal that Republicans were not yet prepared to support Dodd's efforts, the committee's 10 Republicans urged Dodd in a letter Friday not to push the bill through before the Easter recess, which begins March 27.

Dodd wants to create a special council that would watch over the financial markets, looking for trouble spots that could threaten the economy. The council would have an independent chairman appointed by the president. Members would include the treasury secretary, the chairman of the Federal Reserve, and the heads of several regulatory agencies.

The Fed, which would have lost all its regulatory powers under Dodd's initial plan, would emerge with fewer banks to supervise, but retain the power to oversee some of the largest nonbank financial institutions.

The central bank, faulted for not seeing the recent crisis, would oversee all bank holding companies with assets of more than $50 billion – about 50 institutions in all. That's more than Dodd had considered as early as last week. Currently, the Fed supervises all bank holding companies.

The Fed would still supervise state-charted banks and the U.S. branches of foreign banks.