Senators wary of curbs on Wall St

By Jesse Westbrook  |   2008-6-29  |     NEWSPAPER EDITION

THE United States Senate's top banking legislators have told the Federal Reserve and Securities and Exchange Commission to hold off on enacting a deal to oversee Wall Street.

The senators are concerned that regulators are proceeding without consulting Congress, Bloomberg News reported.

Democrat Christopher Dodd and Republican Richard Shelby, the Senate Banking Committee's top law makers, delivered their warning in a letter on Friday as the heads of the two agencies, Ben Bernanke and Christopher Cox met to wrap up a memorandum of understanding.

The SEC plans to provide information on securities firms' trading positions, capital and leverage, according to two government officials.

"Congress wants to have its say," said David Becker, a former SEC general counsel now in private practice in Washington.

"Reshuffling who has information could have a significant impact on the distribution of regulatory influence."

Congress is asserting its primacy over how financial markets should be regulated as federal supervisors wrestle with the yearlong credit rout.

Regulators are debating how to strengthen oversight of investment banks after the Fed started emergency lending to securities firms in March.

"We ask that no action be taken before legislators can decide it's in the economy's best interests," Dodd, the Connecticut senator who chairs the banking panel, and Shelby of Alabama said in the letter addressed to Bernanke, Cox and Treasury Secretary Henry Paulson.

In response, Cox offered to brief the senators on the talks.