The Latest Loopholes in Financial Regulatory Reform

“„

USAA, one of the country’s 50 largest federally insured financial companies, has one of Washington’s more aggressive lobbying operations. It spent $5 million on lobbying in the first nine months of 2009, according to government filings, more than larger rivals such as Bank of AmericaCorp. and Wells Fargo& Co. Its political-action committee also gives generously to lawmakers.

“„

Adam J. Levitin, an associate professor at Georgetown Law Center, said by exempting some companies, others will demand similar treatment. “There’s a slippery slope,” he said. “Just because a party is a good party today, that doesn’t mean its going to be a good party in the future.”

“„

One key change approved Thursday night was the addition of language that would permit federal laws governing consumer protection to continue to preempt those set by individual states. The bill that arrived on the House floor would have allowed states in most cases to impose tougher restrictions, using federal standards merely as a floor rather than a ceiling. The financial industry has lobbied relentlessly against that structure, saying it would saddle national banks with layers of burdensome bureaucracy and cause confusion among consumers. Rep. Melissa Bean (D-Ill.) and other moderate and business-friendly Democrats threatened earlier this week to stall the bill if Bean’s preemption amendment did not get a hearing on the House floor. After a flurry of meetings between top House Democrats and Treasury Department officials, the groups reached a deal: A modified form of Bean’s amendment could proceed. In addition, it would be folded into a broader amendment put forward by Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee. “It’s clearly a victory for the banks,” said Ed Mierzwinski, consumer program director for the U.S. Public Interest Research Group.