Events at 10 AM tomorrow morning should shed new light on how Congress plans to regulate mutual funds down the road. That is when Rep. Richard H. Baker (R, Louisiana) will bang his gavel to open hearings on the bill he unveiled last week to the surprise of just about everyone inside the industry.

The bill has made waves in the industry by calling for new disclosure from fund companies and their advisors about revenue sharing. It also creates new mandates for fund boards and attempts to limit the use of soft dollars.

What no one yet knows, though, is just how serious Baker is about pushing the bill through Congress. Typically, legislation only moves as far as the bill's sponsor pushes it. Sometimes, even, the purpose of a bill is not to gain passage but to win headlines for the author. Baker has certainly accomplished the latter with The Mutual Funds Integrity and Fee Transparency Act of 2003 (H.R. 2420).

While hearings are often as unscripted as kabuki performance in Japan, the do sometimes reveal the agenda of those present. In that light, it may be of some use to look at the list of those set to testify.

The opening panel -- call it the regulators' panel -- consists of the SEC's Paul F. Roye and the GAO's Richard J. Hillman. Yesterday, in fact, the GAO released a report that recommended that funds be required to make more disclosures about fund costs, soft dollar arrangements and revenue sharing. Last week, the SEC released a similar report to the Baker subcommittee. Look for this panel to be grilled on the content of their reports.

The afternoon panel does not bode well for the industry. Three of the four set to testify are likely to side with Baker. Those three are Vanguard founder Jack Bogle, Fund Democracy founder Mercer Bullard and Mellody Hobson, president of Chicago-based Ariel Mutual Funds. The fourth panelist is Paul Haaga Jr., chairman of the Investment Company Institute.  

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