WASHINGTON - The House Financial Services Committee has canceled a municipal securities disclosure hearing that had been set for Tuesday, joining its counterpart committee in the Senate by scheduling hearings on the financial market crisis for that day.
The cancellation of the disclosure hearing appears to be a setback for Securities and Exchange Commission chairman Christopher Cox, who, about 14 months after he proposed a slate of initiatives to boost municipal disclosure and accounting standards, was about to finally have an opportunity to testify on them before the committee. But a source said that market events simply overtook the committee, and they may reschedule the disclosure hearing. An SEC spokesman declined to comment.
Senate Banking Committee chairman Christopher Dodd, D-Conn, yesterday announced that he will hold an oversight hearing on the financial market turmoil with Cox and Federal Reserve Board chairman Ben Bernanke Sept. 23.
It was not clear at press time which regulators, if any, would testify at the Financial Services Committee's hearing on the crisis, which has been scheduled the same day. A committee spokesman could not be reached for comment. The panel is still planning to hold a hearing on auction-rate securities Thursday.
Meanwhile, Dodd said yesterday that he plans to urge Senate Majority Leader Harry Reid, D-Nev., to force the Senate to remain in a "pro forma" session for the rest of the year so that members, who would not be working here, could still be called back for hearings in the event of further financial turmoil or the announcement of a federal bailout of a financial institution.
"I want the ability to reconvene my banking committee as events unfold," Dodd told reporters at an afternoon press conference. "I don't want what could be the largest bailout in U.S. history to occur while the Congress is in recess."
Dodd's remarks came a day after stunned lawmakers were relatively mum about the news of Lehman Brothers' bankruptcy and Merrill Lynch & Co.'s sale to Bank of America Corp. to avoid upsetting the market. But Dodd said yesterday that he believes the economic crisis is deepening and "is going to be with us for some time."
Meanwhile, congressional Democrats, including House Financial Services Committee chairman Barney Frank, D-Mass., said the "next question" for Congress and the administration is to consider a federal entity to manage the assets of insolvent institutions, modeled on the Resolution Trust Corp. that liquidated failed thrifts during the savings-and-loan crisis in the 1980s.
"The question is 'what are the consequences of the federal government taking the risk of holding those assets?' " said Frank, according to Bloomberg News.
But some leading Republicans, including House Minority Leader John Boehner of Ohio, said creating such an agency is "probably not the best answer."
"We don't need more federal involvement in our markets," he said.