A probe of one of Wall Street’s biggest failures has become a proxy battle in the congressional fight that could decide the fate of President Obama’s push to overhaul the nation’s financial regulatory system.
As talks continued on a bid to reach a compromise deal, lawmakers on Tuesday used the investigation into the historic September 2008 bankruptcy of Lehman Brothers to spar over key provisions of the bill, which is shaping up as the biggest partisan clash on Capitol Hill since the passage of Mr. Obama’s health care law.
Separately, Securities and Exchange Commission (SEC) Chairman Mary Schapiro told a House panel that her agency has begun investigating whether any of the country’s 19 largest banks are using the same questionable accounting practices that were uncovered after Lehman’s collapse.
Sweeping legislation pushed by Mr. Obama and Democratic leaders to reform Wall Street regulation relies heavily on the judgment of many regulators [JUMP]who missed abuses in the past to try to prevent crises in the future, as well as to close large institutions when they fail. A House-passed bill would enable regulators to break up large companies that pose a danger to the financial system, but it does not target specific firms.