congress

The Obama administration’s ambitious plan to overhaul U.S. financial regulation was bogged down in Congress as it returned from a long recess on Tuesday.

With no clear path forward in the Senate, analysts and lobbyists said Democrats would be hard-pressed to enact tighter bank and capital market rules by year-end, a deadline self-imposed months ago by the White House.

Some reform bills may squeeze through the House of Representatives in weeks ahead. But the Senate is a quagmire, with the leadership of a key committee in doubt since the death of Senator Edward Kennedy, and leading lawmakers still far apart on issues such as consumer protection and systemic risk.

Moreover, the sheer logistics on Capitol Hill are daunting, with healthcare, climate change and federal spending bills bearing down on both chambers in the final months of 2009.

A senior White House aide told Reuters last week that President Barack Obama still hopes for results by year-end, while Senator Charles Schumer said he thinks it can be done.

But Democratic Representative Brad Miller, a senior member of the House Financial Services Committee, last week said: “I haven’t thought about financial services issues for a month.

“It’s been all health care, all the time … We have to focus attention back on this issue.”

Treasury Secretary Timothy Geithner over the weekend called for “greater urgency” on regulatory reform. At a meeting of finance ministers from the Group of 20 leading nations, Geithner cautioned that as the financial crisis recedes and the economy improves, momentum for reform may wane.

Lobbyists and analysts said at least three possible outcomes present themselves. One is a new burst of momentum, perhaps triggered by fresh financial scandals, like the ones in 2002 that revived the fading post-Enron Sarbanes-Oxley laws.

Another, more likely scenario would be that the debate simply drags into 2010. That would let Congress follow its usual practice of delaying tough decisions. But it would also mean the administration would fail to meet its own deadline, and it would give opponents more time to dig in. more…

here: www.reuters.com