By Sarah N. Lynch
WASHINGTON, Nov 29 (Reuters) - U.S. House Democrat Barney
Frank is making one final push to revamp the financial
regulatory structure with his retirement just weeks away,
revisiting an idea to merge two agencies that has had little
traction with fellow lawmakers in the past.
On Thursday, Frank and fellow Massachusetts Democrat Michael
Capuano introduced a bill that would combine the Securities and
Exchange Commission and Commodity Futures Trading Commission,
which already overlap in overseeing derivatives and some other
kinds of exchange-traded products.
Republican House members earlier this month also suggested
such a merger could help to avoid regulatory lapses that
contributed to the failure of commodities brokerage MF Global,
but congressional turf battles have kept such a measure from
"The existence of a separate SEC and CFTC is the single
largest structural defect in our regulatory system," Frank, the
ranking Democrat on the House Financial Services Committee, said
in a statement.
"Unfortunately, this is deeply rooted in major cultural,
economic and political factors in America."
Frank and former Senator Christopher Dodd, a Democrat from
Connecticut, were the chief architects of the 2010 Wall Street
reform law, which was enacted as a response to the 2007-2009
The Dodd-Frank law made sweeping changes, such as empowering
the SEC and CFTC for the first time to regulate over-the-counter
derivatives, created a Consumer Financial Protection Bureau, and
gave the U.S. government authority to wind down large financial
firms that may pose risks to the broader marketplace.
The bill succeeded in doing away with one financial
regulator, the Office of Thrift Supervision, which was heavily
criticized for its lax oversight of taxpayer-rescued insurer
American International Group and failed lender Washington
But one thing lawmakers could not agree on was a proposed
merger of the CFTC and SEC, in large part because of
jurisdictional disagreements between committees overseeing
financial services and those responsible for agriculture, the
latter having a long history of overseeing the CFTC.
Frank said on Thursday the merger was not part of the
Dodd-Frank law because it would have "almost certainly caused
the defeat" of the legislation.
But now, he said, the time is right for Congress to tackle
The idea of merging the two financial regulators was
broached in a report released this month by the House Financial
Services oversight panel, which scrutinized the collapse of
futures brokerage MF Global.
The report heaped criticism on the SEC, CFTC and New York
Federal Reserve Bank for failing to recognize the growing threat
that the firm had become.
The report also scolded the SEC and CFTC for poorly
communicating with each other during MF Global's death spiral.
It also called for exploring a merger of the two agencies.
Capuano, who is the ranking member of the oversight panel,
said a merger represents a "common sense step."
Whether such a move could ever gain traction in Congress,
however, remains to be seen.
Shortly after the oversight panel released its report,
Republican Senator Pat Roberts, from Kansas, who is the ranking
member of the Senate's Agriculture Committee, blasted the idea
and said he failed to see how merging the two would have made
"any difference" in preventing MF Global's collapse.
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