‘Anti-Spitzer Clause’ to Be Removed From Bill

A proposal in Congress that would have curtailed the powers of state securities regulators is being dropped, a congressional aide said Tuesday.

The measure, known as the “anti-Spitzer” clause, will be removed from a wider bill to beef up Securities and Exchange Commission powers at a meeting today of the House Financial Services Committee, the aide said.

The original measure offered by Louisiana Republican Rep. Richard H. Baker would have barred state-level securities regulators from writing rules that differ from or add to existing federal law.

It became known as the anti-Spitzer clause after New York Atty. Gen. Eliot Spitzer, who caught federal regulators flat-footed and embarrassed big Wall Street firms by exposing wrongdoing over the last two years.

Baker said he wanted to ensure that securities law was written by the federal government to prevent a “Balkanization” of rules and regulations.

But in September, the wider bill to give the SEC more power to fight financial crime stalled due to an impasse over the restriction on state securities regulators.

State regulators criticized the Baker amendment as a Wall Street-backed attempt to marginalize state law enforcement authorities and, in the process, defang Spitzer.

Spitzer on Tuesday called the changes in the bill encouraging and a good forward step.

There was “no track record that we have violated the jurisdictional boundaries that should be respected,” Spitzer, in Washington to give a speech on banking regulation, told reporters.