LIVE BLOG of the U.S. House hearing on UIGEA regulations

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The House Finance Committee's hearing on the UIGEA regulations is about to begin. We'll be blogging this event LIVE, so if you can't watch it yourself, don't worry about it. Anything of import will be reported in this thread. Hope you enjoy the play by play.

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Chairman Guittierrez is speaking right now. He believes it's wrong to have banks to be the final arbiter of what's illegal and legal, and will put an undue burden on money transmitters like Western Union, which will disproportionately affect immigrants.

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Rep. Bachus is speaking in support of the UIGEA right now. Says Internet gambling is a "scourge on our society" that leads to divorce, addiction and other ills. Gambling addicts turn to crime (he's referring to research, but not specific studies).

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Bachus just threw in an anecdote about a college student who is in jail now after turning to a life of crime to escape gambling debt.

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Says Internet gambling facilitates money laundering of drug money, tax evasion and could be used to help fund terrorism.

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Says the proposed the regulations are an essential first step, and says built in UIGEA exemptions make sure there are no burdens on financial institutions.

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Chairman of the Full Committee, Barney Frank is speaking. Says there are two issues -- one that the UIGEA is an intrusion on liberty. Secondly, the principals of regulations, and the possibility of intruding on the rules of the Internet. Frank wants states to collect taxes on the Internet, doesn't want to set rules on Internet behavior based on the morals of Congress. And he says the regulations are too burdensome. Every sector of the economy has complained about them.

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Says the Fed isn't sure they can handle the problem. The objectives of the UIGEA and the regulations are separate issues. We've enlisted financial institutions to be the the anti-gambling cops. "I think that is an error." "Need to find a way to police the leisure activities of adults without drafting the financial sector." "There could be an adverse effect on the payment systems according to the Fed." Even those that support the UIGEA have to admit that regulations might not be the right way.

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Maxine Water from California is up now. Says she voted for the UIGEA. Today, she's not sure if she would vote for it again. Doesn't like legislating morals without infringing on rights. Really reconsidering vote "because some of those organizations that are such strong supporters of the bill I have review carefully and am wondering about their morality and the way they treat people in their own organizations."

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Rep. King doesn't like banks deciding what's lawful and unlawful. Says even Grover Norvquist is concerned. Would like to confine it to sports betting. Says the regulations could have serious unintended consequences.

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Rep. Geoff Davis from Kentucky up now and entered a letter from the horse racing industry.

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Ms. Louise L. Roseman, Director, Division of Reserve Bank Operations and Payment Systems, Board of Governors of the Federal Reserve System is up now.

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Says determining what is legal and illegal is at the heart of the problem. Says offshore nature of online gambling adds significant complications. And the comments provided says it will be virtually impossible to block cross-border transactions. "The extent the rule can further affect current restrictions (undertaken by credit card companies on their own) is uncertain."

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Ms. Valerie Abend, Deputy Assistant Secretary for Critical Infrastructure Protection and Compliance Policy, U.S. Department of the Treasury is testifying now.

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Shes says the Treasury Dept. is currently reviewing more than 200 comments provided. Other than that she's said nothing new to this point.

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A bunch of letters are being entered into the record now.

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Sorry, server hiccup. We're back.

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Guittierez is asking how many transactions it will take to close an account? How will it be resolved if there is a question to the legality of the action?

Abend says they haven't come to any determination whether it is a volume of transactions (the becomes aware standard) or a request from law enforcement that would lead to the closing of an account.

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baccus asking questions now.

asking about nfl questions now.

Roseman: says the payment system isn't well defined to identify this type of activity and what types of internet gambling

Baccus says the fed isn't sure of the efficacy of a bad actors list, baccus is wondering what the problem is.

Roseman says the fed is looking at he list, but the problem is that this deals with restricted activities, not restricted entities and companies have other commercial activities that might be legal. We are looking at alist as we develop the final rule.

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Frank is wondering why in all the moral biblical teachings about gambling, i can't find the horse racing exception. wonders if betting on a horse is animal husbandry.