AUGUSTA — The Senate and House have passed different versions of financial reform and now a 40-member conference committee is working out a compromise measure. No one from Maine’s congressional delegation serves on the conference, but they are closely watching the negotiations.
“You never know what will come out of a conference committee,” U.S. Sen. Olympia Snowe, R-Maine, said. “I voted for the Senate measure but I have to see what is in the final bill before I decide how I will vote.”
Just before the conference began its work, Democrats released a 1,974-page base text that will be the basis for the negotiations. While it is mostly modeled on the Senate version of the bill, it includes several provisions from the House bill.
Snowe said the final measure needs to both protect consumers from poor bank management and keep some businesses from overly stringent regulations.
“We have to make sure that the (Consumer Protection) Bureau is not so broad, and so far-reaching on it regulatory authority that it could overwhelm small businesses,” she said.
Snowe said the target has to be those that are in the business of lending, not those who are in business but may be involved indirectly with lending.
U.S. Rep. Mike Michaud, D-Maine, said that while he voted for the House bill, he shares the concern that the conference committee may make significant changes that he could not support. He said consumer protection and increased transparency of complex financial instruments that are packaged and sold by banks and other financial institutions are important to gaining his vote.
“We have to bring and end to the too big to fail institutions that have to be bailed out by the taxpayers,” he said. “People are very concerned they will end up again paying for reckless financial practices by Wall Street.”
Michaud said he is worried the lobbyists for financial institutions will influence the conference process and the needed reforms will get watered down. He said if the legislation is too weak, he will not support it.
U.S. Sen. Susan Collins, R-Maine, once served as Maine commissioner of Business and Professional Regulation and introduced her own package of reforms last year. She said the measure needs to meet three benchmarks, a council on regulators that will look at the cumulative impact of bank and other financial institutions policies, improved transparency of various financial instruments and greater reserves by lenders.
“But I am not going to judge the bill until I see it, because there are so many moving parts,” she said. “For example there are some provisions in the House bill that have been interpreted as covering small businesses, a furniture store that provides credit or a dentist that allows patients to pay over time.”
Collins said an amendment she added to the Senate bill is controversial and expects there will be a battle in the conference committee over the requirement that all lending institutions meet the same minimum reserve standard.
“These large financial institutions are taking aim at that and trying to knock it out in conference,” she said.
U.S. Rep. Chellie Pingree, D-Maine, voted for the House bill and said the final measure has to contain provisions to make sure taxpayers do not have to bail out large financial institutions again. She said there are several different sections in the two bills aimed at accomplishing that goal.
“I am very supportive of this consumer protection agency,” she said. “I think the people need to know there is someone looking out for consumers in this country, not just Wall Street and big banks.”
Pingree said she has learned never to say never about a piece of legislation because changes are made in the process that may improve the bill and make a bill supportable, when at first it did not appear to be adequate legislation.
“I hope we get a stronger bill out of conference because this is already a compromise bill,” she said.
In fact the negotiators are already introducing possible changes. Some are calling for reviving a new version of the Glass-Steagall Act. That was the 1933 law that separated commercial banking from investment banking and was watered down before being fully repealed in 1999.
The conference committee wants to complete work on the measure before Congress breaks for the Fourth of July recess.