The Securities and Exchange Commission, the U.S. Chamber of Commerce, accountants, community banks and credit unions emerged as some of the winners from a lengthy House committee debate on a financial-overhaul bill.
Last-minute lobbying by members of the Financial Accounting Foundation and the chamber caused Rep. Ed Perlmutter (D, Colo.) to tone down an amendment that would have given a new systemic risk council the power to override the SEC on accounting rules.
The council created under the legislation would be headed by the U.S. Treasury secretary. Also having votes would be the federal banking regulators, the SEC, the Commodity Futures Trading Commission, the Federal Housing Finance Agency and the National Credit Union Administration.
The measure to give the government the authority to wind down large institutions that pose a risk to the economy is the largest and perhaps the trickiest of the financial-overhaul measures that Committee Chairman Barney Frank (D, Mass.) will usher through the House. The full House is expected to vote on the systemic risk proposal, a key part of President Barack Obama's regulatory agenda, sometime in December. Similar legislation is pending in the Senate.
The final version of Perlmutter's amendment, which passed the committee unanimously, says the council can submit comments to the SEC on accounting principles. SEC and the Financial Accounting Standards Board would be free to accept or reject those ideas.
Opponents of Perlmutter's original amendment, which had bipartisan support and was backed by the banking industry, said it would have stripped FASB of its independence, wrecking market confidence in accounting rules.
An FAF spokesman said the accounting foundation has removed its opposition to the latest version of the Perlmutter amendment. The FAF is responsible for selecting the members of FASB.
American Bankers Association President Edward Yingling said that Perlmutter's amendment "for the first time" allows banking regulators to monitor accounting policies and comment on them. Bankers had been angling for more teeth to Perlmutter's proposal, however.
The SEC and CFTC scored another win when the committee stripped language from the bill that would have given the Federal Reserve the authority to prescribe uniform risk standards for some clearinghouses that guarantee trades.
CFTC Chairman Gary Gensler and SEC Commissioner Elisse Walter both had expressed concerns about the bill's original language to give the Fed a role in clearinghouse rules.
Also coming out on top after the marathon markup were community banks, which flexed their clout and got House lawmakers to take aim at their larger rivals in a series of amendments adopted by the panel.
The Independent Community Bankers of America, an influential lobbying group, trumpeted its success Thursday in a release saying that "too-big-to-fail firms - the culprits of our economic woes" will be held accountable and "pay their fair share."
The group scored a coup with passage of an amendment that would significantly change the way the Federal Deposit Insurance Corp. collects premiums from banks - assessing fees on a bank's total assets rather than just on its domestic deposits.
The switch would benefit smaller banks over larger Wall Street firms such as State Street Corp. (STT) and Citigroup Inc. (C). Concept Capital analyst Jaret Seiberg said in a note Friday that those banks have the largest percentage difference between their domestic deposits and total assets and may be at risk of paying more to the FDIC if the change is enacted.
It's not the first time this year the group has successfully pushed regulators to focus on banks' total assets. When the FDIC moved to collect a special assessment on banks to refill its deposit insurance fund, it used total assets rather than deposits to calculate how much individual firms would have to pay.
Community banking groups also worked behind the scenes in support of an amendment by Rep. Paul Kanjorski (D, Pa.) that would allow the government to pre-emptively break up some of the largest firms.
Credit unions were able to get lawmakers to carve out an exclusion for their members from the proposed fund to pay for the cost of winding down systemically important financial-services firms. The original version of the legislation would have subjected all firms with more than $10 billion in assets to fees to help make up for any costs incurred by regulators.
Only three credit unions would have been eligible to pay the fees, but two of those are credit unions that cater to the military - Pentagon Federal Credit Union and Navy Federal Credit Union. Military groups, including the National Military Family Association and Military Officers Association of America, lobbied against including credit unions and lawmakers responded.
The financial-services panel approved an amendment offered by Rep. Brad Sherman (D, Calif.) that raised the threshold from $10 billion to $50 billion, a complete carveout for credit unions and most community banks. Groups representing smaller and midsize firms, such as the Property Casualty Insurance Association of America also pushed for the change, according to people familiar with the lobbying effort.
- By Fawn Johnson, Dow Jones Newswires; 202-862-9263; fawn.johnson@dowjones.com
(Michael R. Crittenden contributed to this article.)