Several House committee leaders are resuscitating a proposal to make it easier to search regulatory agency and corporate records for signs of market trouble, which senators oddly removed from the financial reform law before it was passed.
The lawmakers are backing a bill Rep. Darrell Issa, R-Calif., introduced that is nearly identical to a financial regulatory overhaul provision he sponsored during House-Senate negotiations on the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. Senate dealmakers puzzlingly scrapped the provision at the last minute.
The bill would amend the reform law to require that federal regulators use a standard electronic format such as Extensible Business Reporting Language when collecting and disclosing business information from the financial sector.
The amendment is aimed at helping agencies and average citizens sift through business reports from banks, hedge funds, credit rating agencies and other financial firms for indications of possible wrongdoing or a looming market crash. Standard formatting makes it easier to compare figures and to verify proper accounting because the data fields are organized in the same way for every report, supporters said. The Securities and Exchange Commission and many public companies already use XBRL for sharing financial statements.
Aides for Issa expect the House Financial Services Committee to take up his bill (H.R. 6038) at a hearing in September.
Harry Gural, a spokesman for committee Chairman Barney Frank, D-Mass., said on Tuesday, "The amendment didn't disappear mysteriously. The Senate defeated it. We would obviously need Senate support to pass it. Congressman Frank says that the committee is studying the issue to see if it's likely that we can come to an agreement in order to get such legislation adopted."
Reps. Edolphus Towns, D-N.Y., chairman of the Oversight and Government Reform Committee, and Spencer Bachus, R-Ala., ranking member of the Financial Services Committee, are co-sponsoring the measure, which Issa introduced on July 30.
Issa staffers said on Monday they have not received a clear explanation from lead Senate negotiator Christopher Dodd, D-Conn., chairman of the Senate Banking Committee, as to why senators rejected the original transparency provision. The aides added they have not found senators who will say they will not support the proposal.
Frank, the head negotiator in the House, advocated for the measure and has expressed equal bewilderment about why the Senate opposed the proposal.
But Dodd spokesman Sean Oblack said in a statement on Monday, "Chairmen Dodd and Frank held an open conference where the House and Senate conferees publicly agreed to every aspect of the bill. The bill includes strong transparency requirements that must be easily accessible to the public. These transparency requirements will allow detailed monitoring of financial markets and financial transactions."
In late July, Frank pledged to attempt passage again by rushing Issa's conference proposal as a stand-alone bill to the House floor for a vote under expedited procedures.
The bill's data formatting requirement would apply to nearly every exchange of information covered under the law, including the online posting of previously secret Federal Reserve activities. For instance, regulators now tasked with monitoring privately exchanged derivatives would have to make trade data publicly available in the searchable formats.
Some senators and Obama administration officials have raised concerns about a similar bill the House passed in 2009 that calls for agencies to use uniform formats for sharing federal spending data. They argued changing business processes to comply with one standard could be complicated and costly for some agencies.
Issa's first proposal would have granted regulators the authority to exempt specific firms or information from the transparency rules if regulators believed the requirements would inflict undue hardship on certain agencies or companies. Agency officials signed off on the conference proposal, Issa said in July.
This time, Issa let the Federal Reserve, SEC, Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation request changes before he reintroduced the measure, staffers said on Monday. "Other than a few technical changes from the SEC -- which were accepted -- none of these agencies requested changes," Issa spokesman Frederick Hill said.