Friday: Financial Reform Deal Reached; BP’s Costs Hit $2.35 Billion
Conference committee chairman Rep. Barney Frank (D-Mass.) at Senate-House meetings. Photo by Mark Wilson/Getty Images.
A sweeping overhaul of Wall Street rules cleared congressional negotiations early Friday after last-minute deals and compromises. Final votes in the House and Senate could come as early as next week, in time to have a bill on President Barack Obama’s desk by July 4.
The legislation, which would be the biggest overhaul of U.S. financial regulations since the 1930s, would establish new oversight of the financial system.
The bill would affect everything from buying groceries with a debit card to negotiating a first mortgage to making securities deals.
A new Consumer Protection Bureau housed in the Federal Reserve would have independent funding and the authority to set and enforce rules to curb unfair practices in consumer loans and credit cards. (It would not have power over auto dealers, a component that the Obama administration had wanted.)
The FDIC would have new powers to seize and take down large, failing financial firms and, for the first time, to oversee the $600-trillion derivatives market, requiring most deals to be insured by a third-party clearinghouse and traded on public exchanges.
A new 10-member oversight council, headed by the Treasury secretary, would look out for potential systemic risks in the financial landscape and in financial firms.
The Volcker Rule would newly restrict the ability of banks whose deposits are federally insured from trading for their own benefit.
House negotiators voted a party line 20-11 in favor of the final agreement, while senators also voted along party lines, 7-5.
The Congressional Budget Office has estimated that the financial regulatory bill would cost roughly $20 billion over 10 years. To pay for it, negotiators agreed to assess a fee on banks with assets of more than $50 billion and hedge funds of more than $10 billion in assets to raise $19 billion over 10 years.
We’ll have more on the bill here later and on Friday’s program.
BP’s Oil Spill Costs Reach $2.35 billion
BP has spent about $2.35 billion to date on its oil spill response, the company said in a press release Friday. About $126 million of that was spent paying damage claims; the rest was spent on containment and cleanup efforts.
That amount is only a fraction of what BP is likely to spend in the end. Last week, at a White House meeting, the oil company agreed to set aside a $20 billion escrow account to pay oil-related damage claims. But wrangling has already begun over whether the other companies that worked with BP on the Deepwater Horizon rig — including Halliburton and Transocean — will share in the liability.
“Everybody’s going to be pointing fingers at each other,” energy investor Dan Pickering told the New York Times.
Meanwhile, BP’s stock on Thursday hit a new low, closing at $28.74 per share — down 52 percent since the spill began on April 20.
In the Gulf, the oil continued to spread. A quarter-mile of beach was closed to visitors in Pensacola, Florida, after oil washed ashore — the first time a beach in the state has been entirely closed. Health advisories warning against swimming and fishing are posted along at least 33 more miles of beach in the area, according to the Associated Press.
Jobs and Economic Relief Bill Fails
A Democratic-backed jobs and economic relief bill collapsed in the Senate on Thursday, failing for the third time to break through GOP opposition. The package would have provided aid to cash-strapped state governments and extend emergency unemployment benefits for millions of unemployed.
Emergency jobless benefits, which provide up to 99 weeks of income support, expired June 2. Since then, more than 1.2 million people have had their checks cut off, according to estimates by the Labor Department.
G-20 Meeting Set to Start
Members of the Group of 20 representing the world’s major economies began gathering in Toronto for three days of talks on economic issues.
The Group of Eight countries — the United States, Japan, Germany, France, Britain, Italy, Canada and Russia — will also meet to discuss Iran’s nuclear program and possible sanctions on North Korea following the sinking of a South Korean warship.
NPR reports on how some of the countries might be a bit jealous of their Canadian hosts.
The New York Times reports on China strengthening its currency ahead of the meetings.
The Wall Street Journal reports on why President Obama might have hard time convincing other countries of his ideas.
Lea Winerman contributed to this report.