By John Shaw

WASHINGTON (MNI) - Treasury Secretary Tim Geithner returns to Capitol Hill this week to testify on the status of financial regulatory reform and the emerging role of the Group of 20 in the international economic system.

Geithner will testify before the Senate Foreign Relations Committee Tuesday at 2:30 p.m. on the G-20 and before the Joint Economic Committee Thursday at 10:00 a.m. on regulatory reform.

Geithner's comments on regulatory reform will occur during a busy and complicated week on Capitol Hill regarding that issue.

House Financial Services Committee Chairman Barney Frank is hoping to complete work this week on the final main element of his regulatory reform plan: giving the federal government the tools and power to take over large at-risk financial firms and place them in receivership.

Frank is expected to offer language that would establish a pre-paid fund, with fees assessed on firms with assets of more than $10 billion to cover costs of a takeover.

Another key Democrat, Rep. Paul Kanjorski, is set to offer an amendment that would give regulators preemptive authority to break up large banks and other large firms that they fear could implode because of risky investments.

The House Financial Services panel is also expected to approve legislation this week that would create a Federal Office of Insurance.

Frank's committee has been working for more than a month on passing individual regulatory reform bills, with the expectation that these various bills will be placed before the House in early December as a comprehensive package.

Frank's committee is expected to fine-tune other parts of the package that were developed earlier, including regulation of over-the-counter-derivatives.

The House Agriculture Committee, which has jurisdiction over over-the-counter-derivatives and the Commodity Futures Trading Commission, is holding a hearing Tuesday at 11:00 a.m. to review regulatory reform legislation.

In the Senate, Banking Committee Chairman Chris Dodd will formally begin the consideration of his regulatory reform discussion draft Thursday, and members of the panel will be allowed to give opening statements. The time for the meeting has not yet been set.

The most interesting feature of this hearing is likely to be the degree of opposition to Dodd's package expressed by Sen. Richard Shelby, the ranking Republican on the panel.

The Senate Banking Committee will begin considering amendments to Dodd's draft during a session on Dec. 2.

The full Senate is not expected to take up financial regulatory reform until next year, assuming Dodd can win approval of his bill by the Banking Committee in December.

Last week, Dodd proposed "sweeping and long overdue comprehensive financial reform legislation" which would, among other things, return the Federal Reserve Board to the traditional role of a central bank.

Dodd said one of his central goals in the bill is to get the Fed to return to its traditional focus on monetary policy and assessing financial stability in the overall system. The Fed should "get back to its core enterprises" and leave areas such as consumer protection to others.

Dodd's bill would create a new consumer financial protection agency, establish a disciplined process to unwind financial firms, and create an independent agency with a board of regulators to monitor systemic risk challenges. This agency could require companies that threaten the economy to divest of some of their holdings.

Dodd's bill also creates a single bank regulator, consolidating the regulatory power of the Federal Reserve, FDIC, Office of Thrift Supervision and Comptroller of the Currency into a single entity.

Dodd said his plan is a "discussion draft" that will be modified as it is reviewed and reworked by his panel.

The Senate Agriculture Committee is holding a hearing Wednesday at 9:30 a.m. on financial market regulation. CFTC chairman Gary Gensler will be among those who will testify.

Senate Majority Leader Harry Reid continues to work to merge health care reform bills passed by the Senate Health, Education and Labor Committee and the Senate Finance Committee into one package.

Reid sent several policy options to the Congressional Budget Office in late October for cost estimates. If those estimates come back this week, the Senate health care could begin as early as late this week.

The only detail that Reid has disclosed about his plan is that it will include a public insurance option.

The Senate will try to complete work this week on the $134 billion Military Construction-VA spending bill.

So far, the House has passed all 12 of its FY10 spending bills while the Senate has passed eight of 12. Once each chamber passes its version of a spending bill, a House-Senate conference panel must reconcile the bills and draft a compromise which must be approved by both chambers.

A second stop-gap spending bill was recently approved to keep the federal government fully funded until December 18 while work continues on the remaining spending bills.

The House Oversight Committee will hold a hearing Tuesday at 10:00 a.m. on the role of the federal government in the Bank of America-Merrill Lynch merger.

Finally, the House is expected to consider a bill this week to increase oversight of TARP.

** Market News International Washington Bureau: (202) 371-2121 **