US Senate panel seen approving financial reform

RELATED NEWS Obama admin puts 2-year phase-in on 'Volcker rule' Volcker sees no threat to dollar as reserve currency White House says committed to 'Volcker Rule' on trading White House: Not watering down 'Volcker rule' White House recommits to 'Volcker rule' trade ban

The new financial reform bill introduced in the US Senate will likely be approved at the committee level next week, but its shape could change substantially once it comes before the full Senate and winning Republican support comes into play, analysts said on Tuesday.

The 1,336-page measure leaves major issues still to be worked out, likely on the Senate floor and beyond, including regulating over-the-counter derivatives, applying the "Volcker rule" on curbing risky trading by banks, and imposing stricter bank capital and liquidity standards.

The bill introduced by Senate Banking Committee Chairman Christopher Dodd, a Democrat, on Monday faces a reasonably smooth road at the committee level, where Democrats hold enough votes to pass the measure without any Republican support.

But once it advances to the full Senate, the arithmetic changes, with Democrats only controlling 59 of the 60 votes that will be needed to overcome procedural roadblocks that sure to be thrown up by Republicans.

"We caution the bill is currently without Republican support ... so we expect the bill to undergo significant changes over the next month," said Brian Gardner, an analyst at investment firm Keefe Bruyette & Woods. He expects the bill to be passed by the banking committee next week.

Dodd told MSNBC that Congress needs to fast-track reform, despite Republican pleas to slow down. He said Congress should not adjourn for a two-week recess on March 26 without acting.

"We really can't allow this Congress to adjourn without addressing these basic issues," said Dodd, among those concerned that lawmakers will soon become too distracted by the coming November elections to act on major legislation.

Dodd, who is not seeking reelection in November, released his bill on Monday after marathon talks with Republicans failed to produce a bipartisan deal on proposals for the most sweeping overhaul of bank and capital market oversight since the 1930s.

The committee will convene on March 22 to debate and amend the bill in a working session known as a mark-up. Dodd hopes the process can be completed within a week.

Democrats hold 13 committee seats, the Republicans have 10. The bill can win passage in committee with 12 votes.

DODD: 'YOU NEVER KNOW'

Dodd on Tuesday indicated optimism on the bill, but acknowledged that there is work yet to be done.

"We've made a lot of progress, the bill reflects that," he told reporters in the Capitol. "Some Republicans have indicated we're 80 or 90% agreed. I think it's a little more optimistic than I would place it.

"We think we have consensus on the committee. You never really know that until you get into the markup," he added.

Working closely with bank lobbyists, Republicans have fought for months to weaken or block regulatory reforms since President Barack Obama's original mid-2009 proposals.

The U.S. House of Representatives in December approved most of Obama's package, but without a single Republican vote.

On Tuesday, almost two years since the near-collapse of former Wall Street giant Bear Stearns ushered in the worst financial crisis in generations, Republicans were pushing Dodd to put the brakes on the banking committee's timetable.

A one-week deadline for committee passage is "way too quick," said Republican Senator Bob Corker, who had tried but failed for weeks to reach a bipartisan deal with Dodd.

Corker was optimistic, however, about chances of Congress approving a reform bill this year. "The odds are very high, and I think there are people on both sides of the aisle that actually want to see a bipartisan bill," he said on CNBC.

The bill unveiled on Monday serves as a placeholder, Dodd told CNBC, noting that a proposed government watchdog for financial consumer products and increased shareholder rights are two issues "still in controversy." _