Key part of finance reform law could be at risk

Reporting from Washington —  Top government regulators sought to assure U.S. senators Thursday that they were moving quickly to implement the sweeping financial reform law and pledged to work cooperatively to meet deadlines to write hundreds of rules required by the bill.

But lawmakers were worried about the huge amount of work required by the law, which was enacted in July. They also questioned the ability of the newly created Consumer Financial Protection Bureau to draft rules before it has a director confirmed by the Senate.

“As you will notice, there is no ‘mission accomplished’ banner hanging behind me,” Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.) told top officials from six regulatory agencies. “The work is not done at all.”

Congressional oversight is key to the success of the most far-reaching overhaul of financial rules since the Great Depression, Dodd said. But the committee’s top Republican, Richard C. Shelby of Alabama, who voted against the financial reform bill, complained that too much authority has been “outsourced” to unelected regulators.

Shelby, who probably would chair the committee if Republicans take control of the Senate in the mid-term elections, predicted Congress would need to “revisit the law and make changes consistent with our findings and the demands of the electorate.”

“In this particular instance, change is not only a good thing, I believe that it is inevitable,” Shelby said.

Dodd, who is retiring at year’s end, will not be around to protect the financial reform law from changes. House Minority Leader John A. Boehner (R-Ohio) has said he wants to repeal it.

Dodd warned that one of the centerpieces of the legislation — the new agency to protect consumers in the financial marketplace — could be in jeopardy if it does not have a full-time director in place showing how it can help prevent abusive and misleading practices by lenders.

President Obama recently appointed Elizabeth Warren, who originally proposed the idea of such an agency, to special positions at the White House and Treasury Department to help launch the agency.

But Obama did not nominate Warren to be the agency’s director, a powerful, five-year position that requires Senate confirmation. Consumer advocates and liberal groups had pushed for Warren to be nominated, but the White House feared a lengthy confirmation battle because of Republican opposition.

“Regardless of the outcome of the election in November … people are going to be trying to get rid of this bureau,” Dodd said. “So it’s at risk, in my view, until we get someone in running the place and demonstrating what it can do and the kind of rules it’s going to develop.”

Deputy Treasury Secretary Neal Wolin said he expected Obama to make a nomination soon.

Treasury Secretary Timothy F. Geithner has authority to set up the new agency and run it until a director is appointed, a job he is delegating to Warren. But Republicans pressed Wolin about whether the Treasury Department has the ability to issue consumer protection rules in the absence of a director.

Wolin said the agency could do research and prepare to issue rules, but probably could not issue them without a director.

Regulators said their agencies already were drafting rules based on mandates from the law, such as tougher regulation of complex financial derivatives. John Walsh, acting Comptroller of the Currency, which regulates national banks, called it a “mammoth effort.”

The law also requires regulatory agencies to work jointly on many rules and studies. Federal Reserve Chairman Ben S. Bernanke said regulators were working well together on the law’s implementation.

“I’m not just trying to put a happy face here,” Bernanke said. “At this point I don’t see any deep conflicts or differences in point of view that are going to threaten implementation of this act.”

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