Tim Fernholz on why the final step in the banking overhaul — debating the bill in conference — could be bad news for progressives:
Keep in mind that this was supposed to be the easy first day: Most of the policies discussed were comparatively minor, and the major point of contention was ratings agency reform. The House objected to a provision authored by Sen. Al Franken in the Senate legislation, which would create a panel of industry representatives, supervised by the SEC, charged with preventing conflicts of interest between ratings agencies and their clients. Those conflicts played in part in so many toxic financial products being considered safe before the crisis.
An all-day fight ensued behind the scenes among Democratic members of the Senate delegation over whether to protect Franken’s idea or accept the House’s language. Franken’s proposal, despite a strong vote in the Senate, is still viewed skeptically by some Democrats because it preserves the existing ratings agencies and by others because agencies have lobbied hard against it. Eventually, a compromise was brokered, directing the SEC to implement Franken’s plan — after a year-long study.