Panel Approves Bond Reforms

A House committee passed legislation Thursday giving bank regulators greater power to regulate the $2.3-trillion Treasury bond market after last year’s Salomon Bros. scandal.

But the measure could actually slow market reform efforts.

The Banking Committee measure--which was attached to a bill passed in June by the Energy and Commerce Committee--represents a swipe at the Securities and Exchange Commission.

It would let bank regulators, not the SEC, require bond dealers operated by banks to keep better records. Regulators also would get the power to write rules to combat fraud.

The measure also would require the Treasury to automate the bond auctions it uses to raise about $1.5 trillion a year.

Salomon agreed in May to pay $290 million to settle civil charges that it broke rules at nine auctions. The scandal brought the ouster of the firm’s top management and a complete review of how the government bond market operates.

The amendment is sure to hamper efforts by Congress to beef up regulation of the loosely regulated market, the world’s biggest.

It also opens a turf battle against those lawmakers who want the Securities and Exchange Commission in charge of policing the market and writing new rules governing trade reporting.

In June, the House Energy and Commerce Committee voted to give the SEC powers to force government bond dealers to set up internal checks against fraud and to keep better records. The committee oversees the SEC.