Democrats Fight States Curb in Securities Bill

[Nambe]

WASHINGTON (Reuters)

Democratic lawmakers on Wednesday said they plan to oppose a Republican- sponsored bill that would curb the powers of state securities regulators, such as New York State Attorney General Eliot Spitzer.

The bill is part of a broader package focused on strengthening the U.S. Securities and Exchange Commission. The package is set for a vote either today or Thursday before the House of Representatives Financial Services Committee.

"There will be a Democratic amendment to strike that section entirely," Massachusetts Rep. Barney Frank, ranking committee Democrat, told Reuters of the state powers proposal. ---

The United States regulates its stock, bond and other securities markets at both national and state levels, with far greater power held by the SEC in Washington. But Spitzer put the states at the forefront of probing Wall Street research analyst misconduct with his investigation of Merrill, embarrassing the SEC and infuriating the brokerages.

As originally written, the Baker bill would bar state regulators from imposing legal requirements in certain areas on financial firms that "differ from, or are in addition to, the requirements in those areas established by" the SEC.

State officials have said the bill would hobble their ability to respond to new forms of financial fraud against which the federal government has not yet acted. ---