While the posturing continues as regulators and investigators tell the more permanent residents of Capital Hill of their doings, some outlines of coming changes to the regulatory landscape are starting to take form. The most likely would be a creation of a new agency at the SEC charged with ferreting out the type of wrongdoing recently uncovered by state officials. Less definite are potential changes from Congress itself.

Though both the Senate and the House have held high profile hearings, it is likely that neither body will be able to act legislation before the Congress recesses for the holidays. By the time they return in late January the scandals, and the potential fixes, will most likely have significantly altered.

That tight schedule is not stopping both chambers from taking action. Representative Michael Oxley (R., Ohio), plans to hold a vote on the Baker fund reform bill in the House Financial Services Committee as soon as today.

On the other side of Capital Hill the Senate Banking Committee chaired by Richard C. Shelby (R-Alabama) is believed to be readying a bill that would include criminal sanctions for fund executives violating the rules. The committee also held hearings on Tuesday as part of its preparation of the bill.

Speaking before the committee, SEC Chairman William Donaldson outlined his plans to create a new division whose task it will be to anticipate areas of potential trouble in the financial services industry. Presumably, the new division will take some away some of the oversight duties now held by the division of investment management.

Donaldson explained to the Senators that "for too long, the commission has found itself in a position of reacting to market problems, rather than anticipating them." He added that "There are countless reasons for this - not the least of which include historically lagging resources and structural and organizational roadblocks. The time for excuses has long passed."

The SEC head also told the Senators that he plans to offer final regs governing fee disclosure in January. The SEC first proposed the regs at the start of this year. Those rules would require fees to be expressed as a dollar amount per $10,000 invested in a fund.

In another potential change, Donaldson said the SEC is looking at requiring brokers to disclose the commissions paid on fund purchases as well as the disclosure of any incentives the broker received for selling the fund. The SEC has provided an exemption for the disclosure of commissions on fund sales for more than two decades.  

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