As the Federal Open Market Committee (FOMC) meets today to wrap up a session largely expected to result in no change to the low federal funds rate -- the overnight rate at which banks lend to each other -- the House Financial Services Committee heard testimony on the Administration's plans for sweeping financial regulatory reform. Committee chairman Barney Frank (D-Mass.) said in opening statements there should be a mechanism for putting non-bank financial institutions "out of everyone's misery," adding "there will be a death panel" enforced by the legislation eventually adopted. Rep. Spencer Bachus (R-Ala.) took a less aggressive tone, stressing the need for smarter -- not more -- regulation. He said reform legislation should seek greater enforcement of existing regulations, rather than a new layer of regulation. Bachus cited his "deep-seated" reservations on the Administration's proposal, pointing toward "misguided" government intervention in bailing out large financial institutions. He said failed non-banks should be moved through bankruptcy proceedings, in which shareholders and investors would absorb losses, rather than government regulators and -- ultimately -- taxpayers. Bachus also indicated his reservations over the proposed Consumer Financial Protection Agency (CFPA), saying consumers will ultimately pay for it at a time when other regulatory entities fail to enforce their share of consumer protection. The CFPA would not solve the key issues at hand, he said, calling instead for an effort to streamline existing bank regulators into a unified entity. Rep. Scott Garrett (R-N.J.) seemed to oppose such a mega-regulator, citing Sen. Christopher Dodd's (D-Conn.) recent proposal to combine the Office of the Comptroller of the Currency (OCC), Office of Thrift Supervision (OTS), the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) into a single financial regulator. Dodd's intentions to create a single large regulator threw a "wrench into the works" at a time when congressional attempts to create financial regulatory reform legislation have already delayed, Garrett said. He suggested pushing the timeline for completed legislation into 2010, to allow both the Senate and House of Representatives to arrive at mutual agreements. In the mean time, two key challenges remain: finding balance between consumer protection and competition among financial firms, and dealing with firms considered too big to fail, according to Treasury Department secretary Tim Geithner. Geithner, the Committee's sole witness in the morning's hearing and the first in an "ambitious" series of hearings scheduled in weeks to come, said addressing these challenges requires regulatory overhaul without limiting consumer choice of financial products or stifling competition. The Administration's proposals focus on achieving three goals, including provide new protection for consumers and investors, creating a more stable, safer financial system that is less prone to crisis and safeguarding taxpayers from bearing costs of battling future crises, Geithner said in prepared remarks. The proposed legislation seeks to merge the OCC and OTS into a new National Bank Supervisor. It also would require hedge funds to register, set rules for derivatives markets, constrain leverage and require financial firms to hold higher capital and liquidity buffers. Following Geithner's opening remarks, Bachus drew his attention to suggested changes by Frank to the proposed CFPA. Frank called specifically to drop the requirement that CFPA enforces the marketing and sale of "plain vanilla" financial products, according to Bachus. The provision aims to prevent complex debt products and confusing mortgage terms but faces criticism for government regulation of financial products. Geithner seemed to indicate the Administration is generally supportive of the changes proposed by Frank. He seemed to push greater disclosure of product terms over regulated products, emphasizing "smarter regulation" of disclosures currently in place. Consumers ought to have the right to choose a more simple, understandable product and the way to do that is to "get disclosure right," Geithner said. Write to Diana Golobay.