Biz Brief: Congress Is Set to Reconcile the Two Financial Overhaul Bills

This week, Congress gets down the final phase of reconciling the two versions of the financial regulatory overhauls each chamber has produced. The reforms are sure to be the most comprehensive changes to banking regulation in decades, but that's not really as historic as it might sound, considering how relatively little has changed on a fundamental basis for financial regs since Congress made its really sweeping changes in the wake of the Great Depression.

This time around, one key feature to keep an eye on to see how far Congress is willing to go is the push among some members to seriously crimp big banks' ability to engage in risky derivatives trading. Among other provisions that would limit risk-taking among banks is the so-called Volcker Rule, most famously proposed by the former Federal Reserve chairman. It would require banks to split off their proprietary trading operations from their deposit-taking functions.

Another closely watched proposal calls for a consumer financial protection agency. Both Houses included this new watchdog in their respective versions, but the House envisions an independent body while the Senate would house the new group inside the Federal Reserve.

Financial institutions, of course, are just as busy as the lawmakers (perhaps more so) as they gear up for the final lobbying blitz to limit the scope of the changes being hammered out. The time for trying to stop the process is now long since past, but with so many details yet to be agreed on, the lobbyists are working furiously to mold the overhaul in such a way that it would let banks keep as much lucrative business as possible.

President Obama is pushing Congress to get the bill worked out by the time of the G20 summit in Toronto June 26-27, so that he can rally support for more global coordination of financial regulations.
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