House Panel Clears Bill Creating Board To Police Government Securities Dealers
WASHINGTON -- A House subcommittee approved a bill setting up a board to regulate all government securities dealers.</br></br>The bill, passed by voice vote by the Energy and Commerce Committee's Telecommunications, Consumer Protection and Finance panel, would establish the "Government Securities Rulemaking Board," which would set requirements and standards for government securities trading.</br></br>The measure also would require the estimated 100 to 200 unregistered dealers to register with the Securities and Exchange Commission. The Federal Reserve Board would enforce regulations established by the new board. Lawmakers took the action in response to the failures of E.S.M. Government Securities Inc., which touched off the Ohio thrift crisis last spring, and the later collapse of Bevill, Bresler & Schulman Asset Management Corp.</br></br>The measure strongly reflects the Federal Reserve Board's view that a new regulatory body is needed to protect participants in the nearly $2 trillion-a-year government securities market. But officials at the Treasury Department, which issues the bulk of the securities, and the SEC have said they would prefer that the Treasury expand its rules to improve record keeping and set standards for dealers.</br></br>John J. Niehenke, acting assistant Treasury secretary, had argued that a new body would duplicate efforts the Treasury already plans to make. "This duplication of functions would confuse the market and add to the cost of Treasury financing," Mr. Niehenke said in a hearing held earlier this month.