Washington faces tough reform test

That could be the case again next year on a proposed merger of the Securities and Exchange Commission and the Commodity Futures Trading Commission, which have similar missions, said Columbia University Law School Professor John Coffee.

Although merging the agencies would give them more clout and close cracks between their markets, Coffee said, “I’m not optimistic there can be merger of the CFTC and the SEC.”

The reason? Separate committees of Congress oversee each agency. “A merger of the SEC and the CFTC ... would imply that (members) one of those committees would be cut off from the continued supply of Wall Street funding,” Coffee said.

To get around this problem, Frank and others have talked about possibly appointing a select committee to handle financial regulation restructuring.

Whether Washington summons the will next year to take such novel approaches to overcome old obstacles will depend greatly on Obama. He has spoken forcefully of fixing the financial system and breaking the grip of lobbyists.

On the campaign trail, he often cited as an accomplishment his role in passage of congressional ethics legislation. Last week, Obama prohibited federal lobbyists from doing any lobbying while they are working for his transition team.

He said in a speech earlier this year: “The future cannot be shaped by the best-connected lobbyists with the best record of raising money for campaigns. This thinking is wrong for the financial sector and it’s wrong for our country.”

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