Frank and Dingell Seek Oversight of Securities, SEC

[Ron Burgundy]

Bloomberg - (Corrects date of Pelosi's election as leader of House Democrats in second-to-last paragraph.)

Nov. 20 (Bloomberg) -- Two of the most powerful incoming chairmen of the U.S. House of Representatives are vying for the ability to write laws affecting Wall Street and the U.S. Securities and Exchange Commission.

U.S. Representative Barney Frank (news, bio, voting record) of Massachusetts, 66, in line to lead the Financial Services Committee when Democrats take control of the House in January, wants to retain power over the securities and insurance industries, as well as the federal agencies like the SEC that regulate them.

Representative John Dingell (news, bio, voting record), 80, one of Congress's most powerful and domineering chairmen in the 1980s and 1990s, wants his Energy and Commerce Committee to take back jurisdiction over securities and the SEC, which it had until a Republican-inspired committee reshuffling in 2001.

``I have strong views on it, and Barney has strong views on it,'' Dingell, of Michigan, said in a Nov. 17 Bloomberg Television interview. ``We'll try and see if they are worked out. This is one of those issues that will have to be addressed.''

At stake is the power to shape changes to the Sarbanes-Oxley corporate-governance law, decide whether hedge funds need to be reined in and guide the government response to stock-option abuse -- all while scooping up the sizable campaign donations those industries send to committee members.

Incoming House Speaker Nancy Pelosi and her fellow House Democratic leaders will decide who will get the job when they complete committee assignments in December.

``I believe that we're going to leave the jurisdiction as is,'' said Frank, of Massachusetts.

Industry Integration

Some finance industry leaders fear a return to Dingell's Energy and Commerce panel, saying it wouldn't make sense given the types of consolidation among banking, securities and insurance companies that has taken place in recent years. They say Dingell, a longtime opponent of mixing banking and securities, could stand in the way of further integration.

Carving out securities and insurance matters ``would lead to financial silos in regulation and in the marketplace,'' said Steve Bartlett, president of the Financial Services Roundtable, a Washington-based industry group whose members include banks as well as securities and insurance companies. ``The world of the 21st century is that it's one marketplace.''

Not everyone is so apprehensive. Frank Zarb, interim chairman of New York-based American International Group Inc., the world's largest insurer, said Dingell wouldn't pose a threat.

The industry ``is very sensitive to running itself in a way that's in the best interest of the safety of shareholders,'' Zarb said. ``I don't think anybody is going to run for cover if John gets that job.''

Gramm-Leach-Bliley

Under Dingell's leadership, the Energy and Commerce Committee became more influential, with its wide scope stretching to cover securities, transportation, health and telecommunications. Known for his keen political sense and ability to maneuver the rules in Congress, Dingell used the chairmanship to pass major pieces of legislation such as the 1990 update of the Clean Air Act.

The expansion of the House Financial Service Committee's reach in 2001 was aimed at appeasing Representative Michael Oxley (news, bio, voting record), the Ohio Republican who later became known for writing the Sarbanes-Oxley corporate-governance law. Oxley, who is retiring this year, was awarded the chairmanship of the newly expanded panel after losing a fight for the gavel of the commerce committee to former Representative Billy Tauzin, a Louisiana Republican.

Frank cited the Gramm-Leach-Bliley law, enacted in 1999 to remove decades-old restraints separating banks, brokerages and insurance companies, as a reason for leaving oversight of all three industries with his committee.

``The law has been restructured, so financial services and banking and securities used to be more separated than they are,'' Frank said.

Dingell's Reign

During his previous tenure as chairman, Dingell developed a reputation for conducting tough investigations. His committee led probes of junk-bond trader Michael Milken's investment schemes. Dingell investigated so many issues that his staff hung a photo of the earth in the office near the hearing room to illustrate the extent of his committee's jurisdiction.

Dingell said Pelosi, a California Democrat, has not made any commitments one way or the other about which committee will get securities oversight.

Pelosi is seen as having a better relationship with Frank. Dingell backed Representative Steny Hoyer (news, bio, voting record) over Pelosi when House Democrats chose their leader in October 2001. Pelosi backed Representative Lynn Rivers when she challenged Dingell in a bitterly fought Democratic primary election in 2002.

After this year's elections, both Dingell and Frank opposed Pelosi and backed Hoyer over Representative John Murtha (news, bio, voting record) for the No. 2 position in the Democrats' House leadership.

To contact the reporter on this story: Alison Vekshin in Washington at avekshin@bloomberg.net .