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David Weisberger
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Stop the BS & Promote Real Transparency!

In this shared blog, David Weisberger says a recent WSJ article is wrong and that traders do need to purchase faster and more comprehensive market data to avoid being fined for violating "Best Execution" obligations.

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March 1, 2001

New Deal for the Securities Industry?

By William Hoffman

Wall Street Industry Lobbyists Hope a New Committee Will Help Them

Congress is paying more attention to the securities industry with the creation of the new House Financial Services Committee, according to Capitol Hill sources.

"It's one of the more dramatic and noticeable jurisdiction changes in recent history," said Peggy Peterson, communications director for the committee. The committee is chaired by Rep. Michael G. Oxley (R-Ohio). Oxley previously chaired the old House Finance Subcommittee of the Banking Committee.

Peterson noted that GOP leaders had contemplated the change since taking over Congress in 1995. Most Banking Committee functions have been folded into the House Commerce Committee.

House Republicans reorganized now because the six-year term limits cycle on committee chairmanships had run out from the 1994 elections. "If they didn't do it now, and the GOP held onto the House, it could be another six years. You don't take things away from a standing committee chair," said Michael DiResto, a spokesman for Rep. Richard Baker (R-La.), the new chair of the Financial Services subcommittee on Capital Markets, Insurance, and Government-Sponsored Enterprises.

Section 31 Fee

Along with their counterparts in the Senate, the new House Finance committee's members will likely make Section 31 fee reduction a top priority, Peterson said. Bankruptcy reform (passed in the 106th Congress by a wide margin, but subsequently vetoed by President Clinton) will also be an early topic for reconsideration, she said. Oxley will also oversee implementation of the Glass-Steagall reform inspired Financial Services Modernization Act of 1999, especially the privacy amendments he authored. These regulate the disclosure of financial information.

Firms face a July 1 deadline to comply with provisions requiring that customers be informed of in-house privacy policies, and be allowed to stipulate that their information is kept private. Securities industry lobbyists worried that the privacy amendments went too far, while privacy advocates argued they didn't go far enough, sources said.

A bipartisan "privacy caucus" established last session by Sen. Richard Shelby (R-Al.) probably won't try to strengthen the disclosure requirements, but will be alert to attempts to weaken them, these sources said. Shelby had briefly contemplated a filibuster against the unamended reform.

Meanwhile, savings initiatives will be high on the agenda of the Security Traders Association. "There's no question that part of the market's impetus in recent years came not only because we had a good economy, but because we had vehicles in place like IRAs and 401(k) plans that allowed people to put their tax-deferred savings into investments," said STA President Lee Korins.

"The savings rate of Americans is so low relative to that of other industrialized nations," said SIA spokesman Dan Michaelis (In fact, the savings rate has plummeted to zero by some estimates.) The SIA last session supported bills to increase the tax-deferred contribution limits on IRAs and on defined benefit contribution plans. These gathered more than 400 votes in the House late last year, but time ran out before they could be sent to the White House. "I don't see why [they] shouldn't get similar bipartisan support this year," Michaelis said.

The SIA will also be scrutinizing state attempts to enact legislation - concerning privacy or other elements of the Financial Services Modernization Act of 1999 - that could supercede the law. "We really believe we need national laws to govern national markets," Michaelis said. Korins added that the STA hopes to see a reduction in capital gains tax rates included in any overall tax reduction package. "Rates are still high," he said.