Lawmakers and Obama Administration officials are moving closer to finalizing proposals to overhaul the financial regulatory system -- a discussion which now includes federal insurance regulation and institutions such as Fannie Mae (FNM) and Freddie Mac (FRE) -- but significant conflicts remain unresolved, according to people familiar with the matter from the financial industry and on Capitol Hill.

House leaders are looking to hold hearings and write and pass a final set of regulatory changes this summer.

Meanwhile, Treasury is working on its final proposal to Congress. 

The following is from a document circulating among congressional offices and industry lobbyists, which builds on a Capitol Hill memo from last week, particularly with the discussion about a federal insurance charter and the government-sponsored entities.

Among the current considerations:

• Systemic risk regulator: Treasury prefers a single regulator. It would have the power to take corrective actions. Institutions subject to systemic risk regulation would be determined based upon criteria such as size, interconnectedness, and leverage. Treasury would propose legislation that would include criteria for determining which institutions would be subject to systemic risk regulation. The regulator would be permitted to adjust the criteria over time. Treasury would not recommend creating a too-big-to-fail list and would prefer to keep the names of the institutions confidential. These institutions would be subject to different capital, liquidity and other standards. However, this option would face significant resistance -- officials from Securities and Exchange Commission Chairman Mary Schapiro to House Financial Services Committee Chairman Barney Frank (D-Mass.) have come out against the idea of a single regulator.
• Prudential regulator: Treasury would like to consolidate prudential regulators, but still has to work out the details. At a minimum, Treasury wants to establish a more coherent set of rules between the SEC and Commodity Futures Trading Commission to eliminate gaps and overlaps.
• Federal insurance charter: Treasury is debating the precise scope of a charter.
• Resolution authority: Treasury submitted language to Congress that would place this authority with the Federal Deposit Insurance Corp., but it is open to prudential regulators acting as resolution authority for the institutions it supervises.
• Consumer Protection Authority: It would have consolidated rule writing and enforcement authority. Officials are still considering whether the authority should include both deposit/credit products and investment products. Treasury is still questioning whether there would be some enforcement by the prudential regulator or whether that power will be given to the states.
• Government-Sponsored Entities: Treasury plans to highlight the issues surrounding GSEs, which include institutions such as Fannie Mae and Freddie Mac, in its White Paper and emphasizes that there is an importance in resolving these issues. However, it does not plan to pursue such changes as part of their regulatory reform package.

Separately, House Republicans are meeting on Wednesday to finalize an alternative proposal to the Democrats’ regulatory overhaul.