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Wall Street Regulation Won’t Be Completed This Year, Bair Says - Bloomberg.com

Wall Street Regulation Won’t Be Completed This Year, Bair Says

By Alison Vekshin

Oct. 7 (Bloomberg) -- The U.S. Congress won’t approve an overhaul of Wall Street regulation this year because lawmakers disagree on the plan and need time to weigh proposals, Federal Deposit Insurance Corp. Chairman Sheila Bair said.

“I really don’t think anything is going to happen this year, certainly not a bill becoming law,” Bair said yesterday in a question-and-answer session at a dinner in New York honoring women in banking. “I think we’ll see a lot of activity hopefully in the first quarter of next year.”

Bair, 55, said Congress should carefully study the options and hold more hearings. There are some areas where lawmakers clearly need to act and other areas “we still may be working through that maybe it would be better to take a deep breath and think about it a little more,” Bair said.

House Financial Services Committee Chairman Barney Frank and Senate Banking Committee Chairman Christopher Dodd, who are leading efforts to advance the legislation, have said they are determined to pass a law by the end of this year. Treasury Secretary Timothy Geithner pressed Congress to act this year, telling Frank’s committee on Sept. 23 that “time is the enemy of reform.”

Bair has urged Congress to form an authority to shut failing firms and avoid bailouts for companies whose collapse would disrupt the economy. Lawmakers were asked to give the FDIC powers to disassemble failing bank-holding companies, the same process the agency uses to shut banks. Bair backs a council of regulators to monitor companies that may pose a systemic risk.

“Resolution authority is clearly at the top of our list,” Bair said. “Too big to fail needs to end. Bankruptcy doesn’t work.”

Bair, whose agency is charged with unwinding failed banks, said lenders will continue to collapse at a “pretty good clip” through 2010. Ninety-eight U.S. banks have failed this year.

“Commercial real estate is starting to eclipse mortgages as the big driver of losses,” Bair said. “And you’re dealing with a weak economy.”

To contact the reporters on this story: Alison Vekshin in New York at avekshin@bloomberg.net.