Federal Reserve Chairman Ben S. Bernanke and Securities and Exchange Commission Chairman Christopher Cox were warned by two top senators not to proceed with a plan to take on more oversight of Wall Street until they consult with Congress.
"We ask that no action" be taken before legislators can decide whether it's in the economy's "best interests," Christopher J. Dodd (D-Conn.) and Richard C. Shelby (R-Ala.), the Senate Banking Committee's ranking members, said in a letter to Bernanke, Cox and Treasury Secretary Henry M. Paulson Jr.
Congress is asserting its authority over how financial markets should be regulated. Regulators are debating how to strengthen oversight of investment banks after the Fed started emergency lending to securities firms in March. The senators delivered their appeal as Bernanke and Cox met at Fed headquarters Friday to hammer out details of a memorandum of understanding on their new regulatory duties.
The SEC plans to provide information on securities firms' trading positions, capital and leverage, two government officials said on condition of anonymity.
The Fed would share data with the SEC on repurchase agreements, which are short-term loans provided by commercial banks that clear trades and hold collateral for securities firms, said the officials, who declined to be identified because the agreement wasn't final.
Cox offered to brief Dodd and Shelby on the talks. The memorandum doesn't "create new legal authorities or responsibilities," he said in a letter of response. "It is intended to facilitate our agencies' ongoing, day-to-day cooperation. It is the role of Congress to decide whether, and if so how, to alter the existing regulatory structure."