Brown calls financial reform negotiations 'a work in progress'

By Matt Viser, Globe Staff

WASHINGTON – Senator Scott Brown, a pivotal vote on a dramatic overhaul to financial regulatory laws, said he is closely following the debate in a committee of House and Senate lawmakers but has yet to make any firm commitments.

The Massachusetts Republican said his support is contingent upon several changes that would benefit Massachusetts-based financial companies, including State Street Corp. and MassMutual. There has been a flurry of discussions throughout the day between Brown and Senator Christopher J. Dodd, the chief negotiator for the senate, and Treasury Secretary Timothy Geithner.

“I've spoken with Dodd and Geithner and Dodd and Geithner and Dodd and Dodd and Geithner,” Brown told reporters this evening. “I've obviously been working on it and it's a work in progress. They're getting close. And I appreciate those efforts.”

When asked if those conversations happened recently, he looked at his watch and said, “Within the last 30 seconds.”

Still, Brown was noncommittal about whether he would support the final package.

“We're working through everything,” he said. “I want to see everything before I decide whether or not I'm voting for this.”

A 43-member committee of House and Senate lawmakers, lead by Representative Barney Frank of Newton, has been meeting for several weeks to resolve differences on the biggest overhaul to financial regulations since the Great Depression.

The new changes, strongly supported by the Obama administration, are meant to crack down on some of the risky practices that contributed to the economic meltdown of 2008.

The committee is aiming to wrap up its work by the end of the week, but several issues -- including those Brown is raising -- have stymied top negotiators.

Brown supported the Senate bill last month, but said there were a series of conditions that would have to be met for him to support the final package.

He has been focused on a series of exemptions from the so-called Volcker Rule, named after former Federal Reserve chairman Paul Volcker, who is now an economic adviser to President Obama and proposed the plan. The rule would limit the investment options of large institutions, trying to crack down on the speculative activity that played a major role in the 2008 economic collapse.

But Brown has wanted two different changes to be made on how the Volcker Rule would be applied. First, he wants to exempt altogether financial institutions that use banks for limited purposes, such as MassMutual and its insurance business or Fidelity and its investment funds.

Second, he wants to let firms invest a limited amount of their top capital in hedge funds and private equity funds. Brown has called for a 5 percent cap, but negotiators appear to be settling on 3 percent. Those changes are wanted by Boston-based State Street Corp., and Bank of New York Mellon Corp., which has several thousand Massachusetts employees.

“We're trying to address everybody’s concerns,” Brown said this evening. “Obviously it's important…for Massachusetts businesses and businesses throughout the country to continue to operate as they've done for many years.”

Matt Viser can be reached at maviser@globe.com.