Make us your home page
Instagram

Provisions of the financial regulation bill

Here are some highlights of the compromise legislation to overhaul financial rules:

OVERSIGHT: A 10-member council of regulators led by the Treasury secretary would monitor threats to the financial system and decide which companies were so big or interconnected that their failures could upend the financial system. Those companies would be subject to tougher regulation. If such a company teetered, the government could liquidate it. The costs of taking such a company down would be borne by its industry peers.

CONSUMER PROTECTION: A new independent office would oversee financial products and services such as mortgages, credit cards and short-term loans. The office would be housed in the Fed. Auto dealers, pawn brokers and others would be exempt from the bureau's enforcement. For community banks, the new rules would be enforced by existing regulators.

FEDERAL RESERVE: The Federal Reserve would lead the oversight of big, interconnected companies whose failures could threaten the system. The Fed's relationships with banks would face more scrutiny from the Government Accountability Office, Congress' investigative arm. The GAO could audit emergency lending the Fed made after the 2008 financial crisis emerged. The Fed also would have to set lower limits on the fees that banks charge merchants that accept debit cards.

CAPITAL CUSHIONS: Big banks would have to reserve as much money as small banks do to protect against future losses. But big banks would have to replace hybrid forms of capital called trust preferred securities with common stock or other securities.

DERIVATIVES: The trading of derivatives, financial instruments whose values change based on the price of some underlying investment and fueled the financial crisis, would be forced onto more transparent exchanges.

Banks will continue trading derivatives related to interest rates, foreign exchanges, gold and silver, but riskier derivatives could not be traded by banks. Those deals would run through affiliated companies with segregated finances.

BANK RESTRICTIONS: Companies that own commercial banks could no longer make speculative bets for their own profits. Also, banks will be allowed to invest up to 3 percent of their capital in private equity and hedge funds.

EXECUTIVE PAY: The Fed would oversee executive compensation to make sure it does not encourage excessive risk-taking. The Fed would issue broad guidelines but no specific rules. If a payout appeared to promote risky business practices, the Fed could intervene to block it.

CREDIT RATING AGENCIES: Credit rating agencies that give recklessly bad advice could be legally liable for investor losses. Regulators would study the conflict of interest at the heart of the rating system: Credit raters are paid by the banks that issue the securities they rate. Before the crisis, they bowed to pressure from the banks, lawmakers say.

MORTGAGE LOANS: Lenders would have to make sure mortgage borrowers could afford to repay and would have to disclose the highest payment borrowers could face on their adjustable-rate mortgages. Mortgage brokers could no longer receive bonuses for pushing people into high-cost loans.

Provisions of the financial regulation bill 07/13/10 [Last modified: Tuesday, July 13, 2010 9:55pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, Associated Press.
    

Join the discussion: Click to view comments, add yours

Loading...
  1. PunditFact: George Will's comparison of tax preparers, firefighters based on outdated data

    Business

    The statement

    "America has more people employed as tax preparers (1.2 million) than as police and firefighters."

    George Will, July 12 in a column

    The ruling

    WASHINGTON - JANUARY 08: Conservative newspaper columnist George Will poses on the red carpet upon arrival at a salute to FOX News Channel's Brit Hume on January 8, 2009 in Washington, DC. Hume was honored for his 35 years in journalism. (Photo by Brendan Hoffman/Getty Images)
  2. Appointments at Shutts & Bowen and Tech Data highlight this week's Tampa Bay business Movers & Shakers

    Business

    Legal

    Retired U.S. Navy Commander Scott G. Johnson has joined Shutts & Bowen LLP in its Tampa office as a senior attorney in the firm's Government Contracts and Corporate Law Practice Groups. Johnson brings 15 years of legal experience and 24 years of naval service to his position. At Shutts, Scott will …

    United States Navy Commander (Retired) Scott G. Johnson joins Shutts & Bowen LLP in its Tampa office. [Company handout]
  3. Macy's chairman replaces ex-HSN head Grossman on National Retail Federation board

    Retail

    Terry Lundgren, chairman of Macy's Inc., will replace Weight Watchers CEO Mindy Grossman as chair of the National Retail Federation, the organization announced Wednesday. Grossman stepped down from her position following her move from leading St. Petersburg-based HSN to Weight Watchers.

    Weight Watchers CEO and former HSN chief Mindy Grossman is being replaced as chair of the National Retail Federation. [HSN Inc.]
  4. Unexpected weak quarter at MarineMax slashes boating retailer shares nearly 25 percent

    Business

    CLEARWATER — Just when you thought it was safe to go back into the water, a boating business leader issued a small craft warning.

    Bill McGill Jr., CEO of Clearwater's MarineMax, the country's biggest recreational boat retailer. [Courtesy of MarineMax]
  5. CapTrust moving headquarters to downtown Park Tower

    Corporate

    TAMPA — CAPTRUST Advisors, a Raleigh, N.C.-based investment consulting firm, is moving its Tampa offices into Park Tower. CapTrust's new space will be 10,500 square feet — the entirety of the 18th floor of the downtown building, which is scheduled to undergo a multi-million-dollar renovation by 2018.

    CAPTRUST Advisors' Tampa location is moving into Park Tower. Pictured is the current CapTrust location at 102 W. Whiting St. | [Times file photo]