House-Passed Financial Regulatory Bill Includes Subpoena Power for Financial Records

By Matt Cover | July 6, 2010 | 7:38 PM EDT

House Financial Services Committee Chairman Rep. Barney Frank, D-Mass., center, flanked by Rep. Maxine Waters, D-Calif., left, and Rep. Mary Jo Kilroy, D-Ohio, speaks on Capitol Hill after The House passed a massive overhaul of financial regulations on Wednesday, June 30, 2010. (AP Photo/Lauren Victoria Burke)

( – A House-Senate compromise on President Barack Obama’s financial regulatory overhaul contains a provision that grants the government subpoena power to collect any financial information it wants from any financial institution.
The compromise in the legislation, passed by the House (237-192) on June 30, is a combination of proposals from the individual House and Senate versions of the bill – the Dodd-Frank Wall Street Reform and Consumer Protection Act -- the goal of which is to further regulate the financial services and banking industries.

The subpoena provision, in both the House and Senate versions of the bill, creates the Office of Financial Research and empowers it to collect “any data or information” from “any non-bank financial company or bank holding company” it deems necessary to monitor the nation’s financial system.
“The Council may receive, and may request the submission of, any data or information from the Office of Financial Research, member agencies, and the Federal Insurance Office, as necessary -- (A) to monitor the financial services marketplace to identify potential risks to the financial stability of the United States,” the bill reads.
It further states: “The Council, acting through the Office of Financial Research, may require the submission of periodic and other reports from any non-bank financial company or bank holding company.”
The “Council” referred to is the Financial Stability Oversight Council, which is tasked with monitoring the financial industry: attempting to make sure that financial firms are not engaging in what the government considers too risky behavior.
The Office of Financial Research is designed to be the brains of the Council, collecting the information necessary for the Council to carry out its mission. To do this, the Office is empowered to collect information from “any financial company.”
“The Office may, as determined by the Council or by the Director in consultation with the Council, require the submission of periodic and other reports from any financial company,” the proposed law states.

Sen. Chris Dodd (D-Conn.) on Capitol Hill. (AP Photo)

If any financial firm does not agree that the government needs to check into every detail of its business, and does not comply with an order from the Office of Financial Research, the Office is empowered to serve the company with a subpoena forcing it to divulge its information.
“GENERAL.-The Director may require from a financial company, by subpoena, the production of the data requested,” by the Office.
A Senate vote on the Dodd-Frank legislation could occur as early as next week.