Senate Passes Finance Bill
Biggest Regulatory Overhaul of Wall Street Since Depression Moves Closer to Law
"Simply, the American people are saying, 'you've got to protect us,' and we didn't back down from that," said Senate Majority Leader Harry Reid (D., Nev.). "When this bill becomes law, the joyride on Wall Street will come to a screeching halt."
But this screaming right wing radical disagrees with Harry Hasbeen:
"It will inevitably contract credit," said Sen. Judd Gregg (R., N.H.), who says the Senate bill "is probably undermining the system…probably making for a weaker system."
Yep, that's right, the government that needs a 26 page recipe to make brownies is going to regulate spending. You read that right. Congress, which couldn't balance a checkbook if their pointy little heads depended on it, are going to tell private enterprise how they must balance their checkbooks.
This is scary:
What's in the Fine Print
Key parts of the Senate bill and where it differs from the House version
Consumers
Senate version
- Consolidates responsibilities from seven agencies into a Bureau of Consumer Financial Protection within the Federal Reserve system to oversee products made available to consumers
- Limits ability of mortgage lenders to assess penalities on borrowers who pay off the loan early
- Prohibits paying brokers and loan officers more to steer borrowers to higher interest rates or certain risky features; commissions would be based on the size or number of loans originated
How House bill differs
- Oversight would be independent of the Fed and exclude insurance companies, auto dealers and accountants, among others
Investors
Senate version
- Creates Investment Advisory Committee within Securities and Exchange Commission
- Creates Office of Investor Advocate within SEC to identify problems in dealing with SEC and provide assistance
- Gives SEC the authority to grant shareholders proxy access to nominate directors
- Requires directors to win by majority vote in uncontested elections
- Gives shareholders the right to nonbinding vote on executive pay, excluding golden parachutes
How the house bill differs
- Would require institutions with assets of at least $1 billion to disclose to regulators the structures of all incentive-based compensation
Banks
Senate version
- Eliminates Office of Thrift Supervision
- Federal Reserve Board would keep oversight of largest bank holding companies
- State banks and holding companies would either be regulated by the Fed or FDIC
- National banks with less than $50 billion in assets would be under Office of the Comptroller of the Currency
- Banks would be generally barred from using their own capital to engage in speculative trades
How the house bill differs
- Preserves the Fed's and FDIC's bank-supervision roles; calls for OTS to be absorbed by the OCC
Markets
Senate version
- Hedge Funds: Requires investment advisers of hedge funds with $100 million or more in assets to register with the SEC
- Derivatives: Requires that many derivatives and overthe- counter financial products be traded on regulated platforms
- Securitizations : Requires companies that package loans into marketable securities to hold at least 5% of the credit risk
- Requires issuers to disclose more information about and analyze the quality of underlying assets
How the house bill differs
- Applies to funds with assets of $150 million or more; exempts venture-capital funds
- Exempts many end users from mandatory central clearing
- Exempts education, agriculture, veterans and small-business loans
Insurers
Senate version
- Creates Office of National Insurance within Treasury to monitor industry, recommending to the systemic-risk council insurers that should be treated as systemically important
- Office would recommend ways to modernize insurance regulation, but it is explicitly not a new regulator
How the house bill differs
- Proposes creation of a Federal Insurance Office with similar characteristics
Other Elements
Senate version
- Creates office at SEC to administer credit rating agencies' rules and practices
- Creates Financial Stability Oversight Council, led by Treasury secretary, with nine voting members. Agency would identify systemic risks to the economy, promote market discipline and respond to emerging risks. It would also write regulations for risk-based capital, leverage and liquidity requirements
How the house bill differs
- Also creates seven-member advisory board for credit raters
- Large firms would pay into a $150 billion fund to manage the dissolution of failing firms considered systemically significant
Scott Brown, Susan Collins, Chuck Grassley, Olympia Snowe.
