Q&A: Obama’s Financial Reform & Regulation Plan

June 17, 2009 by · Leave a Comment
Filed under: Policy News 

WHAT ARE THE MAIN CHANGES PROPOSED?

The Federal Reserve would monitor “systemic risk” in the economy, together with a council led by Treasury.

The Federal Deposit Insurance Corp would get power to seize and resolve the problems of troubled non-bank companies that pose risks to the economy. The U.S. Securities and Exchange Commission would get additional limited “resolution authority.”

A National Bank Supervisor would be created, taking in the supervision duties of the Office of Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS), both Treasury units. The thrift charter that is the legal basis of the savings and loan business would be eliminated and the OTS would be closed.

Financial companies would have to hold more capital to absorb losses when times get tough, and boost their liquidity, or their ability to move quickly in and out of various holdings.

Asset-backed securities issuers would face new regulation, as would hedge funds and credit rating agencies. An independent Consumer Financial Protection Agency would be formed.

Oversight of over-the-counter derivatives would be imposed, as well as “harmonizing” futures and securities regulation, and new payment and settlement system safeguards would be created.

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