Republicans could shut off Wall St reform-Rep Frank

* Cuts would “shut off reform,” Frank tells Boston group

* Plans debate on federal insurance charters

BOSTON, Oct 12 (BestGrowthStock) – Republican gains in Congress
could endanger funding for agencies charged with overseeing the
sweeping financial overhaul enacted earlier this year,
Representative Barney Frank, one of the act’s authors, said on
Tuesday.

“What I’m afraid will happen is they could, if they came to
power, shut off this reform, and I think that would be a
mistake,” said Frank, chairman of the House Financial Services
Committee, while speaking to reporters at a gathering of local
financial-services executives held at the Federal Reserve Bank
of Boston.

“They can’t repeal it, but they could underfund it,” said
Frank.

He cited two agencies that could lose funding: the
Securities and Exchange Commission and the Commodity Futures
Trading Commission. Both will have increased roles under the
new rules, such as overseeing the $615 trillion
over-the-counter derivatives market, which will require
hundreds of new staff members.

Those agencies are particularly vulnerable because their
budgets are largely controlled by Congress while other agencies
have independent revenue sources. They have already seen
threats to their funding.

Requested budget increases for financial regulators were
not included in a stopgap spending bill to fund government
operations through early December that passed Congress in late
September. The delay could stretch into 2011 and could
complicate efforts to put the sweeping law in place.

ROLLING BACK REFORMS

Frank was the author of key reforms meant to stabilize the
financial system after the worst economic crisis in decades.

But Frank faces a tough election season, including an
unusually strong challenge from a Republican in his own
district west and south of Boston. Nationally, meanwhile,
Republicans hope to regain control of at least one chamber of
Congress in November.

If that happens, Republicans have already made it clear
they plan to roll back parts of the reform law, known as
Dodd-Frank and one of the Obama administration’s legislative
victories.

Speaking at a Reuters Washington Summit on Sept. 20,
Richard Shelby, the Senate Banking Committee’s top Republican,
said Republicans are particularly interested in revisiting the
newly created Consumer Financial Protection Bureau. Under
Dodd-Frank the agency has the power to write and enforce rules
for mortgages, credit cards and other financial products.

“They have said they think we have overregulated
derivatives; they don’t like the consumer financial protection
agency,” Frank said about Republicans.

Frank also raised the question of how much Washington
should oversee the insurance industry, which now is mostly
governed by the states. Frank said he made a decision not to
include it in the Dodd-Frank reform package.

But now, he plans to “put out there for debate” questions
of whether to allow insurance companies to operate under a
federal charter, which would allow them to do business in any
state.

Some consumer advocates say such a system could let
companies sidestep tough state regulators. Not all insurance
companies favor changes either.

Frank said he has not yet taken a position on the matter,
and said the discussion also would include whether to allow a
national charter only for life insurers or for those in the
property and casualty sectors as well.

“It’s a very nonpartisan issue,” he said. “It’s an
interesting one that cuts across both partisan and ideological
lines.”
(Reporting by Ross Kerber; Editing by Steve Orlofsky)

Republicans could shut off Wall St reform-Rep Frank