The U.S. Chamber of Commerce said Tuesday it is disappointed by Senate Banking Committee Chairman Christopher J. Dodd’s (D-CT) proposal for a sweeping overhaul of the financial regulatory system, citing the measure’s failure to attract bipartisan support in the Senate.

“This bill takes three steps backwards with the hope of making future progress,” said David Hirschmann, president of the U.S. Chamber’s Center for Capital Markets Competitiveness. “It’s time for Congress to put politics aside and come together on a bipartisan basis to restore confidence and certainty to the markets, reform our broken regulatory structure, and help us get back on track toward a strong economy.”

Among its major concerns, the chamber will continue to oppose a new independent consumer financial regulator that will reduce access to credit for businesses and consumers, the federalization of corporate governance, and a permanent bailout fund, according to Hirschmann. It also will work to support greater transparency for over-the-counter (OTC) derivatives without jeopardizing the ability of business end-users to effectively manage their risks, he said.

The portion of the bill addressing regulation of OTC derivatives is still being hammered out. Sens. Jack Reed (R-RI) and Judd Gregg (R-NH), who have headed up a working group on OTC derivatives at Dodd’s direction, are expected to offer a substitute amendment on derivatives regulation to the full committee next week, when mark-up of the bill is slated to begin (see Daily GPI, March 16).

A key issue that remains to be resolved is how to craft an exemption for end-users, such as large consumers and producers, from mandatory clearing if they use OTC derivative products to hedge commercial risk, said Susan Ginsberg, vice president of crude oil and natural gas regulatory affairs for the Independent Petroleum Association of America.

“It’s important to get this done, but it’s even more important to get it right. It’s been 75 years since the last major overhaul of our financial regulatory structure,” said Hirschmann.

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