Senate Closer to Deal on Wall Street Regs

(AP)  More than a year after Lehman Brothers' collapse set off a financial panic, Senate negotiators appear close to resolving a narrow dispute that was holding up broad legislation to set new rules for Wall Street.

At issue was whether a government consumer watchdog should be free from bank regulators to write rules that govern everything from credit card and overdraft fees to payday loans and mortgages.

After a flurry of offers and counterproposals over the past three days, the Senate Banking Committee was closing in on a deal that would house a government consumer entity inside the Federal Reserve but give it autonomous power to write regulations, three people familiar with the talks told the Associated Press Monday night.

The sources spoke on the condition on anonymity because they were not authorized to discuss the evolving talks publicly.

The idea, proposed by Republican Sen. Bob Corker of Tennessee, could break the logjam that has prevented a bipartisan bill from emerging in the Senate.

While the sources said the Banking Committee's chairman, Democrat Christopher Dodd of Connecticut, was seriously entertaining the plan, it was unclear whether the committee's top Republican, Sen. Richard Shelby of Alabama, was receptive to it. Dodd would also need to persuade fellow Democrats to accept the compromise.

"Senator Dodd is keeping members informed on how things are progressing - as he has throughout this process," Dodd spokeswoman Kirstin Brost said. "We do not have an agreement yet. He hopes to have a consensus bill in the coming days."

While the political world has focused on attempts to revive health care legislation, tougher Wall Street regulations could end up being this year's biggest legislative accomplishment. The House passed its version of the bill in December. And President Barack Obama has made new regulations a priority in his response to the recession.

Still, a Fed-housed consumer entity would fall short of Mr. Obama's initial demand for a stand-alone Consumer Financial Protection Agency that would replace the consumer oversight now assigned to bank regulators. The House-passed version would create a separate agency.

The White House, eager to give Dodd room to negotiate, had backed off its insistence on a stand-alone agency. On Monday, White House spokesman Robert Gibbs said the agency still would have to have "strong independent authority, an independent head, an independent budget, independent authority to do what it needs to do."

The banking industry has opposed an independent agency, arguing that regulators should retain authority over consumer protections.

If the latest Senate plan were to hold, it would represent a remarkable turnaround for the Fed, which has been criticized for failing to adequately protect consumers as part of its regulation of state-chartered banks and bank holding companies.

Consumer advocates prefer the House-passed financial regulation bill. They criticized a plan that Dodd floated Friday to place the agency inside the Treasury Department because it would give bank regulators the right to appeal consumer regulations. Shelby and Corker also opposed it.

The consumer agency has been the final obstacle in Dodd's effort to get bipartisan support for the bill. The legislation also would create a council of regulators that would determine which financial institutions deserve special supervision because their size and breadth could pose a threat to the economy. The legislation also would provide a mechanism to dismantle large failing institutions, with the cost borne by their banking peers.
By Associated Press Writer Jim Kuhnhenn

[rockcutr]

None of this shall matter when the dollar turns into an Amero.

[Gititdun]

I'm sure you know what mortgage backed securities are: http://useconomy.about.com/od/glossary/g/mortgage_securi.htm

" Mortgage-backed securities are a bundle of mortgages that have been sold by banks to Fannie Mae"

"During the real estate boom, many less careful banks and mortgage companies made loans with no money down..."

If and since this is true and what caused the "largest taxpayer bailout in history" 20 years ago, how does one explain how openly, 0 down, sub-prime loans were advertised and allowed to exist and grow at such a rate as to cause the worse "global" banking failure in history?

http://stvglmr.newsvine.com/_news/2008/09/27/1921509-deregulation-and-lack-of-media-attention-cause-bailout

How could a false real estate market in this magnatude be created and bound to burst if Americans income did not keep up with the rate of increase in the real estate market. Since the last taxpayer bailout of the banks, S/L's, insurers and retirement funds the median price of a home tripled from $80K to $230K.

Knowing how people borrow and banks lend the most (and more) than one qualifies for, how does a person earning, basically the same they did 20 years ago qualify for a home three times the cost they once qualified for? What was driving and sustaining this massive rise in real estate, besides fraud and a blind eye by the regulators, allowing for higher unsustained pricing for greed and profit?

If a Congressional Subcommittee declared 20 years ago: "faulty and fraudulent real estate appraisals have become an increasingly serious national problem whose effects are widespread, pervasive and costly." then explain a market growing three times faster than income?

Why would appraisers over value real estate? They are forced to by demand of Realtors and mortgage lenders or else be denied business and black-balled. How can a problem that existed over 20 years ago exist still today causing the worse economic implosion in history. How could over valued mortgages be the major factor in the S/L, bank bailout 20 years and "toxic assets" (over valued mortgages) be the fuel that caused the worse "global" banking failure in history?

Go to http://appraiserspetition.com/
This pressure comes in many forms and includes the following:

the withholding of business if we refuse to inflate values,
the withholding of business if we refuse to guarantee a predetermined value,
the withholding of business if we refuse to ignore deficiencies in the property,
refusing to pay for an appraisal that does not give them what they want,
black listing honest appraisers in order to use "rubber stamp" appraisers, etc.

How can a problem that existed 20 years ago that was "a serious national problem costing taxpayers billions" still be a problem today that has cost the taxpayers TRILLIONS?

Without "toxic assets" NONE of the outrageous fraudulent hanky panky that went on for the past 20 years that led to this economic implosion that has ruined so many families was remotely possible, without the fuel there would of been no fire.

Think of the simplicity of stopping what happen, instead of eliminating and black balling the honest appraisers who refused to over inflate the market, eliminate all the ones that did. Then again Americans wouldn't of been able to re-fi every couple years.

How could NO ONE, NOT know that all the mortgage backed securities that were being traded back and forth and INSURED by all of the well educated economist, bankers were worthless?

[peregrine3]

Doesn't matter, good bill bad bill, Shelby and Bunning the Einsteins of the senate will block it until they either do a mulligan on the Kentucky/South Carolina game with courtside seats, or the European plants in Alybamy get the contracts for the refueling aircraft contracts. No more is bribery a subtlty; both sides have shown oblivousness to any semblence of ethics.

[soap-suds]

The Representatives and Senators just need to answer a single question for me: "Explicitly, how would whatever you end up with have prevented all aspects of the recent financial crisis?"

[stychokiller]

Seems to me that the banks and mortgage lending institutions need legislative protection from Congress and the Govt telling them who to lend money to in the first place. I don't care if you're black, brown or green -- if you can't afford to own a home, you're better off (and so is the country's finances apparently), if lending institutions don't bend the rules (at the suasion of Congress) to qualify you for a loan.