"Congress should seriously consider establishing (or empowering the Federal Reserve to act as) a financial services risk regulator that has the capacity and power to assess risk across financial markets regardless of corporate form and to intervene when appropriate," Frank told the meeting.

"In exchange for potential access to the discount window for nondepository institutions, this regulator could have enhanced tools to receive timely market information from market players, inspect institutions, report to Congress on the health of the entire financial sector and act when necessary to limit risky practices or protect the integrity of the financial system," he added.

Frank's approach is to draft legislation that would regulate financial institutions less by the forms they take or their charters and more by what they do. In other words, regulators would look at lending in one way, no matter what organizations are involved and investments in another way, again regardless of the organizations.

Credit union industry lobbyists have generally refrained from commenting too deeply on the topic since, so far, neither lawmakers nor the Bush administration have put forward any formal proposals, but both CUNA and NAFCU lobbyists have said they are prepared to press credit union industry legislative goals into whatever packages that are eventually put forward.

Lobbyists from the organizations noted, for example, that reform of capital standards for different institutions has been mentioned as one of the necessary reforms by many legislators, and that resonates well with a long-term goal of helping credit unions have additional sources of capital and giving NCUA more flexibility when assessing risk.

"Capital reform has been a significant credit union goals for years now," remarked Brad Thaler, Director of Legislative Affairs for NAFCU. "So we are ready to make clear how capital reform will help credit unions better serve their members."

Lobbyists were of two minds about whether there was room on the shortened legislative calendar due to the elections to get any significant financial reform accomplished this year. Normally, they said, it would be impossible to get a sweeping regulatory package through in a shorter legislative year. But the significant steps by the Federal Reserve to use public funds to facilitate the take over of Bear Stearns by J.P. Morgan Chase and to allow other investment banks to get loans from public funds have given regulation minded legislators more leverage than they have had in many years and that might move the legislation more quickly.

Several analysts have pointed out that the prospect of federally guaranteed depository insurance, first for banks and later for credit unions, was the platform used for applying regulations to depository institutions in the wake of the Great Depression. The thinking then was if the public treasury is going to play a role in guaranteeing deposits, the public will want to have some guarantee that the institutions are conducting their business in a safe and sound manner, and assuring that is the role of the regulator. Now, analysts said, the use of public money by previously unregulated or lightly regulated institutions is giving lawmakers interested in issuing more regulations an additional tool to bolster their case.

But theirs will not be only voice. The Bush administration has admitted to working on its own regulatory package in an attempt to provide an alternative program to whatever legislation congressional Democrats propose. For his part, Rep. Frank has suggested that the Democratic approach will strive to be market oriented.

"You need regulation that is adequate to scope of innovation and the to the scope of the activity," Frank said in an interview with The New York Times. "You do it right, and its pro-market."

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