Regulators: Much to do on Wall Street reform

"The Dodd-Frank Act is an important step forward for financial regulation in the United States, and it is essential that the act be carried out expeditiously and effectively," said Federal Reserve Chair Ben Bernanke at the hearing.

Lawmakers focused on several questions about the new Financial Stability Oversight Council, which is scheduled to convene for the first time at the Treasury Department on Friday.

That panel is tasked with setting up some key pieces of financial reform, like identifying financial firms that could threaten the financial system as well as setting up new curbs for banks' trading on their own accounts.

Deputy Treasury Secretary Neil Wolin suggested that the new council will start looking at ways to monitor risk in the financial system, but didn't give much in the way of details.

Playing nice

Several lawmakers grilled regulators on their coordination and how well they're working together. While the various old and new regulatory agencies are independent and have their own sets of powers, they must work together to implement many of the new reforms.

All the regulators assured that relations were smooth, while acknowledging they expect healthy debates will ensue.

"I expect there will be plenty of good debates, as there should be," Wolin said.

Bernanke agreed that "inevitably there will be some disagreements at some point."

"Honestly, in terms of the substance of rule-writing, I don't see any deep or principled controversies at this point," he said. "Just an issue here or there, on the margins."

But it was clear that tensions exist as regulators answered some other questions during the hearing.

For example, Sen. Bob Corker, R-Tenn., asked about a tussle between the Federal Deposit of Insurance Corp. and the Office of Comptroller of the Currency over a new FDIC rule on risk retention that the OCC doesn't like.

On Monday, the FDIC approved a rule that would force lenders to do something they don't want to do: Hold on to a set amount -- 5 % -- of risky debt that's been securitized, if the banks want to escape tougher new accounting rules in place for assets at banks that go belly-up.

FDIC Chair Sheila Bair said the rule was in line with the new Wall Street reform laws, and that the FDIC needed to act quickly, because the existing protections from tougher accounting rules were set to expire next month.

0:00/4:03Risks of financial reform

But OCC acting chair John Walsh said he didn't understand why the FDIC couldn't just put another stop-gap in place until all the financial regulators could get together and agree on exact details.

Later, Commodities and Future Trading Commission Chair Gary Gensler said there had been a bit of an "arms race" on transparency, as all the agencies tried to outdo each other in figuring out the best way to let the public know when they're gathering comment on possible rules and holding meetings with financial firms and other stakeholders.

Gensler also said that he expects some healthy debate with the Securities and Exchange Commission on some of the tougher new rules on futures and securities regulation. 

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