The Irish Independent reports that beleaguered telecoms firm Eircom is set to change hands for the fifth time since its flotation to Singapore Technologies Telemedia (STT) in a deal that will value the firm at just over €132.5m.
Eircom Holdings (ERC), the company's Australian parent, has recommended the offer from STT to its shareholders whereby the entire share issue of ERC will be transferred to the new entity called Emerald Communications (Cayman) SPC (ECC).
It is understood it will be early next year before the deal is finalised. It involves a scheme of arrangements that will involve two trips to the Australian High Court as well as shareholder approval.
STT will hold a 49.9pc stake in the firm when the deal is concluded in a bid to avoid the triggering of debt consolidation that would be passed onto the books of the Singaporean firm if it took more than a 50pc share in the new firm.
The deal also includes a clause that could involve the Eircom Share Ownership Trust (ESOT), made up of thousands of current and former shareholders in the firm, increasing its stake in ECC to 50pc.
The relatively low price of the equivalent of €130m reflects the level of debt at Eircom of over €3bn.
Eircom was acquired in 2006 for €2.4bn by failed Australian investment group Babcock Brown, which spun it off into a separate, listed satellite fund Babcock & Brown Capital, now ERC.
The offer is the equivalent of A$1.335 per ERC share, which includes the proposed capital return of A$0.80 per share previously announced by ERC.
This values the firm at A$224.1m (€132.57m) and is a 20.2pc premium on the closing price of A$1.11 per ERC share on June 24, the last close before STT's proposal was announced.
It is understood that ERC shareholders are keen to get cash back, having waited for a long time for an opportunity as well as being stung by their original investment in the firm.
The sale will also mark the first time the company has moved into the hands of a telecoms operator since 1999, having been controlled by private equity players for a decade.
Paul Donovan, who took up the role of chief executive at Eircom in July, said: "It is my hope that the transaction will be concluded swiftly and we in Eircom will continue in parallel to drive operational programmes that will transform the company at a time when the challenges in Ireland's communications sector have never been greater, and the imperative in overcoming them more acute."
The Irish Independent first reported that negotiations had opened up between STT, a unit of Singapore state investor Temasek Holdings and ERC,earlier this year.
The Irish Independent also reports that from being one of the best banks for consumers, Halifax/Bank of Scotland is rapidly becoming less and less competitive.
This is particularly the case when it comes to credit cards.
Halifax had one of the best credit cards, with its Visa an attractive proposition with interest of just 11.7pc on purchases.
This card also offered a deal that allowed those who transferred a balance to Halifax to benefit from a 0pc interest rate for six months. It also offered 0pc on new purchases for six months for those who transferred to its card. But as from the start of this month, the 0pc on balances transferred and the 0pc on new purchases for six months are no longer on offer.
Bank of Ireland is now the only card issuer offering 0pc on balance transfers and 0pc for new purchases. Its two in one card offers the introductory rate on balance transfers and new purchases for six months. However, it is worth pointing out that this card has a rate of 13.9pc for purchases.
Halifax has also upped the interest rate it charges on its card. Purchases on the Halifax Visa card were 11.7pc, but that has now risen to 13.4pc.
When it comes to cash advances on the card, the rate has risen from 19.9pc to 21.6pc. The bank argues that cash advances are highly risky, so its pricing on this needs to reflect this fact.
In a further sign that Halifax has made a U-turn from being one of most competitive banking players to one of the more expensive ones, it has also increased its loan rates.
Its loan rate for €10,000 over five years has gone from 8.9pc to 12.5pc.
However, it is important to point out that Halifax is still highly competitive when it comes to its current account and flexi-saver deposit account.
The flexi-saver is jointly the best demand deposit account in the market with a rate of 3.75pc on balances of up to €10,000. Irish Nationwide recently introduced the same rate for balances of up to €20,000. Anglo pays 3.1pc on balances up to €100,000.
Halifax's current account pays interest of 7.23pc on balances up to €1,500, as long as the account is credited with €1,500 each month.
It is just a pity that when it comes to credit card and loans Halifax has retreated from its former role as a competitive mould breaker to being just as expensive as every other bank.
The Irish Times reports that Minister for Finance Brian Lenihan said the Nama (National Asset Management Agency) Bill which would be introduced in the Dáil tomorrow had been agreed by the Green Party Ministers as well as the Fianna Fáil members of the Government.
Speaking after the first day of the Fianna Fáil parliamentary party meeting at the Hodson Bay Hotel near Athlone, Mr Lenihan expressed confidence that the Green Party TDs will vote for the legislation setting up Nama in the Dáil, despite reservations by some Green party members .
“Minister Gormley has discussed the matter with me and at this stage there is the possibility of looking at what social return will result from Nama. That is something that can be examined in the context of the committee stage of the Bill,” he said.
Mr Lenihan added that he was confident the Nama Bill would be passed by the Dáil because Green Ministers and Fianna Fáil Ministers had worked together on the project. “What the Green Ministers are concerned about and what I am concerned about is to sustain public confidence in this operation. Anything done by responsible politicians to achieve that is welcome.”
He added that the public should be given the maximum amount of information possible about the Bill and there was an onus on all of the political parties to listen to the views being expressed by people.
In the Dáil tomorrow, Mr Lenihan will make the crucial announcement about the overall amount Nama will pay to take over about €90 billion in impaired loans from the banks.
Mr Lenihan’s arrival at the hotel yesterday morning triggered a scuffle between protesting farmers and gardaí. The farmers burst through a security barrier and made it to the door of the hotel as they attempted to tell the Minister of the anger about recent cuts in farm spending. Later in the day students from the Athlone Institute of Technology protested against the possible reintroduction of university fees.
In Dublin, Green Party leader John Gormley insisted that 80 per cent of his party members favoured the establishment of Nama, in spite of the fact that only 13 per cent of them expressed support for the Nama Bill in its current form.
Speaking outside an international heritage conference in Dublin yesterday, Mr Gormley said a “lot of satisfaction” had been expressed at the Green Party conference last weekend with the changes made to the forthcoming Nama legislation.
“It is very clear that what the party wants is a version of Nama, but they want a new improved Nama and I think we’re getting there . . . What 80 per cent of the party wants is a version of Nama where we can have a social dividend.” The party members had made it clear that they wanted to see Nama work for the benefit of communities and schools, rather than wealthy individuals and big business.
“There was a lot of satisfaction expressed with the amendments that we have achieved thus far . . . the windfall tax was something that we’ve looked for, for may many years, and now I think what the party is saying very clearly is that we want a social dividend.”
Taoiseach Brian Cowen told his TDs and Senators at their meeting in Athlone that people needed “to get real” if they thought we could recover as a country without a good and viable banking system.
“People are free to oppose me, this party or this Government. They can support or reject our policies. But our whole motivation is securing the common good in difficult circumstances. I’ve heard all the catch cries about bailing out the banks etc. About bailing out whatever you are having yourself. That is cheap politics. It is politics without substance, without analysis and it doesn’t address the issues at stake. But it won’t distract me and it won’t deter this party from doing what is right by the people,” said Mr Cowen.
The Irish Times also reports that today marks the first anniversary of the earthquake in the global economy that brought the Irish banks to the brink of collapse – the failure of US bank Lehman Brothers.
No one expected the US government and central bank, the Federal Reserve, to allow the fourth-largest bank on Wall Street, a 158-year-old institution, to go under. When it did, the impact was devastating, including for the Irish banks. Fear gripped the financial markets as depositors and investors, who provided the Irish banks with € 400 billion in funding that kept them in business, fled to safer havens.
Anglo Irish Bank, which had a heavy exposure to the faltering property market, was the most exposed. It later emerged that in the 12 days following the bankruptcy of Lehman, Anglo lost more than € 5 billion, a massive haemorrhaging of cash that no bank could withstand.
Banks worldwide could not take the pressure and governments stepped in to save them with multibillion euro bailouts. By September 29th, the future of Anglo Irish was on a knife-edge as its share price nose-dived. Forced to act, the Government decided against nationalising the bank fearing that a wider solution was required lest other Irish banks be targeted.
The Government agreed to guarantee € 440 billion of deposits and bonds to stem the loss of funding. The move restarted the flow of oxygen into a system gasping for funding.
One year on, what has changed? The benefit of the September 30th State bank guarantee has diminished dramatically over the last 12 months as the banks suffer under the drag of € 90 billion in bad and suspect loans, including the most toxic loans (to the property development sector), and concerns about whether the banks have enough capital to absorb spiralling losses on loans.
The Irish banking system’s reliance on the European Central Bank for the life support of discounted funding has surged over the past 12 months.
The Government has so far invested € 10.8 billion into Bank of Ireland (BoI), Allied Irish Bank (AIB) and Anglo, which was ultimately taken into State ownership after a spate of controversies brought it to its knees last January.
The heavy investment has proven to be insufficient and the purchase of € 90 billion in bad loans by the State’s “bad bank”, the National Asset Management Agency (Nama), will lead to further capital injections and to the State taking large shareholdings, possible majority stakes, in the two biggest banks, BoI and AIB.
Shareholders in the Irish banks have seen € 11 billion wiped off the value of their investments over the past year – in addition to just over € 40 billion already lost since bank shares peak in the first half of 2008 – though stocks recently recovered from last February’s unprecedented lows.
Top management at the banks has mostly changed, though many of the faces at the boardroom tables remain the same. At the six guaranteed institutions, five chief executives have gone or are going, and five chairmen have stepped down.
Under changes to Nama legislation, the Green Party is seeking a boardroom clearout of any directors appointed before 2008, which will lead to the departures of the up to 25 directors.
Bankers’ pay has been slashed as bonuses have been cancelled and salaries frozen. Performance-related pay fell 65 per cent in the year to the end of March. The country’s most senior bankers have seen their annual salaries halve to about € 500,000.
Almost 12 months after the guarantee, the Government has yet to remove the bad loans clogging up the banks and to address the shortage of capital that is forcing the banks to hoard cash and curb their lending at normal levels into a credit-starved economy.
One senior banker who has departed the scene criticised the pace of the Government rescue since the recapitalisation of the two main banks last February and for the failure to increase the supply of credit into the economy. “From February to now, there has been a vacuum,” he said. “This has caused huge uncertainty surrounding the banks and it has stigmatised the sector.”
More than 40,000 people work within the Irish banking sector and, despite the dramatic falls in activity across the banks, the reduction in staff numbers have been limited to recruitment freezes where departing staff are not replaced. The shrinking effect of Nama, which will cut the size of the lenders dramatically, will lead to mergers that will change the face of Irish banking and will lead to an estimated 5,000 job losses.
The sector has effectively become State-controlled. Economic nationalism across the banking world, sparked by the Irish Government guarantee, has forced foreign banks to retreat to their home markets and focus their lending on the very taxpayers who are bailing them out.
This poses a long-term problem for Ireland as competition wanes, leaving the domestic banks to carve up the Irish banking market for themselves, widening their profit margins and exposing customers to higher charges and fees on their loans and mortgages.
Larry Broderick, secretary general of the Irish Bank Officials Association, says there needs to be a radical restructuring of bank boards and financial regulation. “I believe the banks have not got the message. It has not yet sunk in that they have been bailed out – they are continuing as if it was business as usual.”
The Irish Examiner reports that the 10 highest earning bosses at Ireland’s state and semi-state companies each earn more than US president, Barack Obama.
Irish president Mary McAleese whose salary is now €298,000 also earns more than the US president despite taking a €32,000 cut last year.
President Obama’s salary of €274,420 is half that of the chief executive of the Dublin Airport Authority Declan Collier who earns €575,000. Before his salary was cut by 10% he used to earn €638,000.
A survey conducted by Newstalk on Irish chief executive pay also found that three quarters of chief executives of state and semi-state bodies have not taken a pay cut.
According to Newstalk 13 of the 48 chief executives it contacted said they have taken a voluntary pay cut, beyond pay and pension levies over the last year.
That compares to six who have not, five who said it was a confidential matter and 24 who either failed or have yet to respond.
The highest earning chief executive who has not taken a voluntary pay cut is Professor Brendan Drumm of the Health Service Executive (HSE).
The other five who have not taken a cut are Barry O’Leary of the IDA, Mary Cloake of the Arts Council, Jason Whooley of An Bord Iscaigh Mhara, John Henry of the Dublin Transportation Office and Paul O’Toole of Fás.
The survey also found that chief executives continue to earn sizeable bonuses and performance related perks. Gabriel D’Arcy of Bord na Mona got a performance fee of €76,000 on top of his basic pay of €247,000.
Meanwhile, a separate report found basic salaries for executives at top British companies jumped 10% last year despite the worst financial crisis in decades.
Although bonuses were lower, the wages of executives rose at more than double the rate of inflation in 2008, an analysis of boardroom pay by the Guardian newspaper said.
The highest paid boss was Bart Becht, the chief executive of household goods group Reckitt Benckiser, who earned £36.8 million (€41.8m) in pay, bonuses, perks and share incentive schemes.
The second highest was Irishman Aidan Heavey, head of Tullow Oil, who took £28.8m.
The Financial Times reports that Barack Obama’s decision last week to impose emergency tariffs on Chinese tyres has fuelled an increasingly familiar Sino-US war of words over trade.
Beijing launched an investigation on Monday into whether US poultry and car parts were being unfairly dumped in the Chinese market. It also requested formal consultations at the World Trade Organisation into the US tariffs – the first step in trying to have them declared illegal.
Whether it will succeed is unclear. The particular “safeguard” measure that the US president invoked was, after all, written specifically to allow the US to block Chinese imports as part of the price for China joining the WTO in 2001.
However, trade experts and lawyers say the episode does show the increasingly sophisticated legal strategies used by Beijing in its many disputes with trading partners, and the way it maximises political effect while trying to limit the actual economic damage.
Opinion is divided as to whether this dispute – while breaking ground by using a particular trade law for the first time – is likely by itself to set off a protectionist spiral.
Gao Yongfu, an expert in trade law at Shanghai Institute of Foreign Trade, said: “I think it unlikely that this dispute will be limited to just one industry – it’s likely to spread to others.”
Prof Gao said other trading partners, including the European Union, were likely to follow suit, broadening if not deepening the restrictions on trade.
Yet other trade lawyers and economists noted that China had threatened to retaliate in a way that had high political salience but modest economic impact.
Beijing has built a reputation for rapid but controlled retaliation during trade disputes. One Washington trade lawyer said: “China always responds, so I don’t think this escalates. It just repeats each time the US does something.”
Arthur Kroeber of Dragonomics, a Beijing-based economic consultancy, said: “Chinese tit-for-tat measures are unlikely to wreak significant economic damage . . . We don’t believe that the case marks the start of Depression-type trade wars.”
The products that Beijing is threatening to target – while denying that it is retaliating for the tyre tariffs – are politically important in the US.
Poultry farmers are a vocal part of America’s influential farm lobby, and are particularly aggressive in seeking out export opportunities, because the US market is largely saturated. The manufacture of cars and car parts is often heavily unionised and located in important Midwest states.
China’s choice of instrument is also telling. Besides proposing “anti-dumping” measures on imports deemed to be priced unfairly low, Beijing is looking at “countervailing duties”, used against goods that receive government subsidies.
Since the US frequently accuses China of illegal state aid to its exporters, Beijing would score valuable propaganda points by making a counter-accusation stick, particularly in light of the vast US motor industry bail-out.
The Washington trade lawyer said: “The interesting part is adding a countervailing duty case. China is [already] running one on US steel, but auto parts from the bail-out money and a US agricultural product are more politically sensitive.”
The economic impact could be small, however. Both sectors are already the subject of separate disputes and involve limited trade volumes. In response to a two-year-old US ban on processed chicken imports from China, Beijing has banned imports of US chicken from several states and, in recent weeks, reports have emerged of an unofficial block on new shipments of US poultry.
Meanwhile, US exports of auto parts to China have been relatively limited, in part because of high tariffs that Beijing is only now beginning to dismantle after losing a ruling at the WTO.
From a distance, China’s reaction may look like it is lashing out in anger. But in the eyes of some trade experts, it is preparing a surgical counter-strike.
The FT also reports that happiness, long holidays and a sense of well-being may not be everyone’s yardstick for economic performance, but Nicolas Sarkozy believes they should be embraced by the world in a national accounting overhaul.
France’s president on Monday urged other countries to adopt proposed new measures of economic output unveiled by a panel of international economists led by Joseph Stiglitz, the US Nobel Prize winner.
Mr Sarkozy, who set up the Stiglitz-led commission last year, said the world had become trapped in a “cult of figures”.
Insee, the French statistics agency, would set about incorporating the new indicators in its accounting, Mr Sarkozy said.
One consequence of the commission’s proposed enhancements to gross domestic product data would be to improve instantly France’s economic performance by taking into account its high-quality health service, expensive welfare system and long holidays. At the same time, the commission’s changes would downgrade US economic output.
The commission suggested a series of improvements to the way GDP was measured. It proposed accounting for people’s well-being and the sustainability of a country’s economy and natural resources. “The world over, citizens think we are lying to them, that the figures are wrong, that they are manipulated,” said the president. “And they have reasons to think like that.
“Behind the cult of figures, behind all these statistical and accounting structures, there is also the cult of the market that is always right,” he said.
Mr Sarkozy’s overriding objective, at least before the crisis, was to raise France’s trend rate of growth by a percentage point. Henri Guaino, Mr Sarkozy’s speechwriter and inspiration for the commission, quipped: “We just found half of that.”
Mr Stiglitz and Jean-Paul Fitoussi, co-author, said a more comprehensive method for measuring performance would cut the per capita GDP gap between the US and France by at least half. US per capita GDP is 14 per cent higher than France’s. Although the commission did not work out the effects of its proposals on different countries, Mr Stiglitz said the changes would bring “a number of major adjustments”.
The US spends 15 per cent of its GDP on health and France 11 per cent. But if GDP accounted for outcomes and not just financial inputs, that alone would cut the per capita GDP by a third.
The New York Times reports that as President Obama traveled to Wall Street on Monday and chided bankers for their recklessness, across town a federal judge issued a far sharper rebuke, not just for some of the financiers but for their regulators in Washington as well.
Giving voice to the anger and frustration of many ordinary Americans, Judge Jed S. Rakoff issued a scathing ruling on one of the watershed moments of the financial crisis: the star-crossed takeover of Merrill Lynch by the now-struggling Bank of America.
Judge Rakoff refused to approve a $33 million deal that would have settled a lawsuit filed by the Securities and Exchange Commission against the Bank of America. The lawsuit alleged that the bank failed to adequately disclose the bonuses that were paid by Merrill before the merger, which was completed in January at regulators’ behest as Merrill foundered.
He accused the S.E.C. of failing in its role as Wall Street’s top cop by going too easy on one of the biggest banks it regulates. And he accused executives of the Bank of America of failing to take responsibility for actions that blindsided its shareholders and the taxpayers who bailed out the bank at the height of the crisis.
The sharply worded ruling, which invoked justice and morality, seemed to speak not only to the controversial deal, but also to the anger across the nation over the excesses that led to the financial crisis, and the lax regulation in Washington that permitted those excesses to flourish.
Implicit in the judge’s remarks were broader questions on the anniversary of one of the most tumultuous weeks in Wall Street’s history: What do the giants of finance owe their shareholders and the investing public? And who will adequately oversee these behemoths?
Congress is pondering these issues as it prepares to reshape the power structure of financial regulators in Washington, including the S.E.C. President Obama is pushing lawmakers to pass tougher regulations this year that would touch everything from bonuses to the structural soundness of Wall Street’s most powerful banks, even as some Democrats fret that the health care debate makes it unlikely that financial reform can be achieved.
“We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis,” Mr. Obama said in his speech before several hundred banking executives, lawmakers and Mayor Michael R. Bloomberg of New York.
Such consequences were at the heart of the dispute that came before Judge Rakoff, who had demanded that the S.E.C. and the bank explain which executives were responsible for failing to tell the bank’s shareholders about the payout of Merrill’s bonuses. That information, together with evidence of large undisclosed losses at Merrill, may have led shareholders to reject the merger at a time when the government wanted to forestall a worse meltdown of the financial system.
The judge accused Bank of America and the S.E.C. of concocting the settlement to effectively absolve themselves of further responsibility.
“The S.E.C. gets to claim that it is exposing wrongdoing on the part of the Bank of America in a high-profile merger,” he wrote, and “the Bank’s management gets to claim that they have been coerced into an onerous settlement by overzealous regulators.”
The ruling echoes a long-standing criticism that the S.E.C. has largely failed to prosecute cases against corporate executives, opting for quick settlements in which companies themselves are penalized instead of their leaders.
It comes as the agency, under its new leader, Mary L. Schapiro, is struggling to revive its reputation as an effective watchdog of Wall Street after presiding over a near-collapse of the financial markets and failing to catch the $65 billion Ponzi scheme run by Bernard L. Madoff.
Judge Rakoff called the $33 million settlement unfair and inadequate, and ordered Bank of America and the S.E.C. to prepare for a possible trial that would begin by Feb. 1.
Both the bank and the S.E.C. said they disagreed with the judge’s decision and were evaluating their legal options. Experts said the S.E.C. could decide to appeal the case to a higher court or drop the charges altogether instead of going to trial, but they said the agency was unlikely to exercise those options. Some analysts argued the case itself was irrelevant given that Bank of America’s takeover of Merrill had increased the bank’s profits, resulting in a surge in its stock price.
The deal also saved Merrill from impending collapse and arguably prevented a greater financial calamity from unfolding in the immediate aftermath of the Lehman Brothers bankruptcy.
“I’m having a difficult time understanding who was harmed here,” said Richard X. Bove, a banking analyst with Rochdale Securities. “Why is this company being put into court over a series of events that benefited the nation, its economy, its financial system, the shareholders of Bank of America and the bank itself.”
In forcing the two sides to argue their case in court, Judge Rakoff hopes to expose the truth about whether Bank of America lied to shareholders.
“It’s a strong, blistering decision,” said John C. Coffee, a Columbia Law School professor who has taught a course along with Judge Rakoff for 21 years. “It is really a critique, not just of this case, but of a long-standing practice at the S.E.C., which effectively allowed corporate managers to buy immunity with their shareholders’ money.”
Judge Rakoff focused much of his criticism on the fact that the fine in the case would be paid by the bank’s shareholders.
“It is quite something else for the very management that is accused of having lied to its shareholders to determine how much of those victims’ money should be used to make the case against the management go away,” Judge Rakoff wrote.
The case is one of several investigations into the bank’s $50 billion deal with Merrill. Andrew M. Cuomo, the attorney general of New York, is also investigating the disclosures of bonuses and Merrill’s losses last year.
Mr. Cuomo plans to file a complaint charging individuals at Bank of America in the next two weeks, according to a person briefed on the investigation.
The House Committee on Government Oversight and Reform is also looking into the merger.
The NYT also reports that President Obama on Monday sternly admonished the financial industry and lawmakers to accept his proposals to reshape financial regulation to protect the nation from a repeat of the excesses that drove Lehman Brothers into bankruptcy and wreaked havoc on the global economy last year.
But with the markets slowly healing, Mr. Obama’s plan to revamp financial rules faces a diminishing political imperative. Disenchantment by many Americans with big government, along with growing obstacles from financial industry lobbyists pressing Congress not to do anything drastic, have also helped to stall his proposals.
Mr. Obama chastised Wall Street denizens in the audience at Federal Hall, at the foot of Wall Street. “Instead of learning the lessons of Lehman and the crisis from which we are still recovering, they are choosing to ignore them,” Mr. Obama said. “They do so not just at their own peril, but at our nation’s.”
The speech came on the first anniversary of the collapse of Lehman Brothers and implicitly recognized that time was an enemy of reform. Throughout history, most major laws to change the financial system arose from the cauldron of a crisis. Senior officials have acknowledged that as the financial system begins to mend, a kind of political inertia sets in as lawmakers have less of an incentive to act boldly.
Hoping to kick-start the legislation, Mr. Obama said: “I want them to hear my words. We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses.”
He also warned that “those on Wall Street cannot resume taking risks without regard for consequences, and expect that next time, American taxpayers will be there to break their fall.”
Mr. Obama’s speech in New York, like his address to Congress last week on health care, is part of an attempt to put the plan back on political track. But with the Senate preoccupied with the president’s health care plan and strong opposition to central provisions of the financial overhaul, the president faces major hurdles on both the substance and the timetable.
Senior Congressional Democrats had originally planned to have the House complete its work on the financial overhaul before turning to the more recalcitrant Senate. But the tighter time schedule has forced lawmakers to rethink that approach.
Later this week, Barney Frank, Democrat of Massachusetts and the chairman of the House Financial Services Committee, is expected to announce a series of hearings for the coming days before his committee marks up legislation in October. Aides say he is hoping to get legislation to the floor by the end of next month or beginning of November.
There is less certainty in the Senate, where Christopher J. Dodd, Democrat of Connecticut and the chairman of the Senate Banking Committee, has been working to put together a package that could withstand the threat of a filibuster.
“Failure to act leaves our economy at risk,” Mr. Dodd said in a statement after the president’s speech. “We will not allow our efforts to be stalled by well financed special interests intent on keeping the status quo.”
But Republican opponents of the administration’s legislation said that it suffered from the same problems as the White House’s health care plan.
“The president has offered a reform proposal that would grant broad new authorities to government bureaucrats while intruding in private markets and restricting personal choice,” said Spencer Bachus of Alabama, the senior Republican on the House Financial Services Committee. “The obvious lesson of the events of September 2008 is that we need smarter regulation, not more regulation, not more government bureaucracy, and not more incentives to engage in harmful business practices.”
One major difficulty is that many of the issues do not break along party lines — they tend instead to force disagreements between industries and their various supporters in Congress. So the fight is as much among Democrats as it is between parties.
Big institutions and community banks have unified against a central provision of the plan to create a new consumer finance protection agency. The new agency would regulate mortgages, credit cards and other forms of consumer debt. The companies, and their Republican and Democratic allies in Congress, fear that the new agency would lead to unnecessarily burdensome oversight.
Some top regulators, including Sheila C. Bair, the head of the Federal Deposit Insurance Corporation, support the creation of the new agency but have said they would give it less authority than what the president is seeking.
Lawmakers, particularly in the Senate but also in the House, have been skeptical of a second major plank that would give the Federal Reserve more explicit authority to monitor the markets for systemwide problems.
Opponents prefer an enlarged role for a council of regulators. The Obama plan creates such a council, but makes the Fed the first among equals and acknowledges, as the Treasury secretary, Timothy F. Geithner, has said, that you cannot put out a fire by committee. Mr. Geithner, who before joining the administration was head of the Federal Reserve Bank of New York, has said the administration’s plan for the Fed is both incremental and essential.
He and Ben S. Bernanke, chairman of the Fed, have also said that no other agency is better positioned to play the lead role in monitoring markets for potential problems that could cascade through the financial system.
But there are lingering questions about the Fed’s failure to adopt consumer protection measures to curb abusive mortgages and other regulations that could have reduced the risk-taking at large banks under its supervision. And top Fed officials were slow to grasp the depths of the problems once the crisis began.
In recent weeks, Mr. Frank has been saying that the Fed might have to share the role of systemic risk regulator, indicating that there was not enough support in Congress to give the Fed alone the wider authority that the president had been seeking. Other central elements of the plan have come under assault.
Major Wall Street companies, for example, have also worked to water down the president’s proposal on tightening the rules for derivatives like credit default swaps. They have also lobbied heavily to make sure that any attempts to impose tough new restrictions on executive pay do not come to pass.