WASHINGTON – More than a year after Lehman Brothers' collapse set off a financial panic, Senate negotiators appear close to resolving a narrow dispute that was holding up broad legislation to set new rules for Wall Street.
At issue was whether a government consumer watchdog should be free from bank regulators to write rules that govern everything from credit card and overdraft fees to payday loans and mortgages.
After a flurry of offers and counterproposals over the past three days, the Senate Banking Committee was closing in on a deal that would house a government consumer entity inside the Federal Reserve but give it autonomous power to write regulations, three people familiar with the talks told the Associated Press Monday night.
The sources spoke on the condition on anonymity because they were not authorized to discuss the evolving talks publicly.
The idea, proposed by Republican Sen. Bob Corker of Tennessee, could break the logjam that has prevented a bipartisan bill from emerging in the Senate. While the sources said the Banking Committee's chairman, Democrat Christopher Dodd of Connecticut, was seriously entertaining the plan, it was unclear whether the committee's top Republican, Sen. Richard Shelby of Alabama, was receptive to it. Dodd would also need to persuade fellow Democrats to accept the compromise.
"Senator Dodd is keeping members informed on how things are progressing — as he has throughout this process," Dodd spokeswoman Kirstin Brost said. "We do not have an agreement yet. He hopes to have a consensus bill in the coming days."
While the political world has focused on attempts to revive health care legislation, tougher Wall Street regulations could end up being this year's biggest legislative accomplishment. The House passed its version of the bill in December. And President Barack Obama has made new regulations a priority in his response to the recession.
Still, a Fed-housed consumer entity would fall short of Obama's initial demand for a stand-alone Consumer Financial Protection Agency that would replace the consumer oversight now assigned to bank regulators. The House-passed version would create a separate agency.
The White House, eager to give Dodd room to negotiate, had backed off its insistence on a stand-alone agency. On Monday, White House spokesman Robert Gibbs said the agency still would have to have "strong independent authority, an independent head, an independent budget, independent authority to do what it needs to do."
The banking industry has opposed an independent agency, arguing that regulators should retain authority over consumer protections.
If the latest Senate plan were to hold, it would represent a remarkable turnaround for the Fed, which has been criticized for failing to adequately protect consumers as part of its regulation of state-chartered banks and bank holding companies.
Consumer advocates prefer the House-passed financial regulation bill. They criticized a plan that Dodd floated Friday to place the agency inside the Treasury Department because it would give bank regulators the right to appeal consumer regulations. Shelby and Corker also opposed it.
The consumer agency has been the final obstacle in Dodd's effort to get bipartisan support for the bill. The legislation also would create a council of regulators that would determine which financial institutions deserve special supervision because their size and breadth could pose a threat to the economy. The legislation also would provide a mechanism to dismantle large failing institutions, with the cost borne by their banking peers.
LOS ANGELES – Mary Feller's family of three spends nearly $25,000 a year on health insurance premiums, which is more than they pay on their home's mortgage in California's Marin County.
"I think for the first time we're really scared that we're going to be without health insurance," she said. Feller's especially worried for her 26-year-old daughter, a cancer survivor whose premium has tripled in four years.
That's why she decided to become a plaintiff in a lawsuit against California's largest for-profit health insurer on behalf of policyholders who were allegedly pushed to take coverage with fewer benefits and higher deductibles.
In a lawsuit filed in Ventura Superior Court on Monday, Anthem Blue Cross is accused of violating a California law requiring health insurers to offer new, comparable coverage or minimize premium increases when they close a policy.
According to the lawsuit, plaintiffs Mary Feller and Randy Freed received similar form letters from the Woodland Hills-based insurer, stating their policies were closed and they could "switch to any Anthem Blue Cross individual health plan with no underwriting required."
The lawsuit alleges that the few plans Anthem would allow Feller and Freed to switch into had higher premiums, higher deductibles, less coverage, or a combination of those undesirable traits.
Anthem Blue Cross spokeswoman Peggy Hinz said the insurer hasn't yet reviewed the lawsuit, declining further comment.
The lawsuit seeks class action status and is being brought by Consumer Watchdog, a Santa Monica-based consumer advocacy group, on behalf of Feller and Freed.
When the practice was outlawed in 1993, legislative analysts called it a "death spiral" because rates inevitably increased until policyholders could no longer afford coverage. As the coverage pool shrank over time, rates went up and up.
"It's a very profitable practice, and what we know is the insurance industry is very focused on short-term returns," said Jerry Flanagan, a health advocate for Consumer Watchdog.
The lawsuit comes on the heels of government scrutiny of a steep Anthem Blue Cross rate hike for roughly 700,000 individual policyholders in California. The hikes average 25 percent — some premiums will rise as much as 39 percent — but implementation of the hike has been delayed until May 1 while a state regulator investigates.
Anthem executives have blamed the current economic climate, flaws in the national health care system, high costs of health care and fewer young, healthy people holding onto insurance policies for the rate hikes.
The Obama administration has called Anthem's hike a harbinger of rising premiums in its arguments for health care reform.
In special hearings last week, California legislators and the U.S. House of Representatives questioned executives from WellPoint, Anthem's parent company, about proposed premium hikes in California, Maine and elsewhere.
SAN FRANCISCO (Reuters) –
The Federal Bureau of Investigation said on Monday it was investigating along with local authorities a possible "hazardous material threat" at an Internal Revenue Service building in Farr West, Utah.
In a statement e-mailed to Reuters, spokeswoman Debbie Dujanovic Bertram said the FBI had evacuated the building, adding she could not release additional details on the incident while it was under investigation.
Staff from the local Weber-Morgan Health Department dispatched to the scene seized an envelope containing something that resembled seeds, department spokeswoman Lori Buttars said.
"There was an envelope that appeared to have seeds inside," Buttars said. "What it was is not known yet."
The incident follows last month's small-plane crash by an apparently disgruntled man into a federal building in Austin, Texas, that housed offices of the IRS, the U.S. tax agency.
(Reporting by Jim Christie)