[StBernard] House Approves Historic New Rules to Govern America's Financial System

[Westley Annis]

House Approves Historic New Rules to Govern America's Financial System

 

Washington, DC - Today, the House of Representatives approved sweeping new
legislation to modernize America's financial rules in response to the worst
economic crisis since the Great Depression. The Wall Street Reform and
Consumer Protection Act
<http://financialservices.house.gov/Key_Issues/Financial_Regulatory_Reform/F
inancialRegulatoryReform/Bills_as_reported/hr4173.pdf>  (H.R. 4173), which
passed by a vote of 223-202, includes a comprehensive set of reforms that
will address the myriad causes - from predatory lending to unregulated
derivatives - that led to last year's meltdown. Once signed into law, these
tough new regulations will hold Wall Street accountable, end taxpayer-funded
bailouts, and protect Americans from unscrupulous big banks and credit card
companies.

 

The Wall Street Reform and Consumer Protection Act
<http://financialservices.house.gov/Key_Issues/Financial_Regulatory_Reform/F
inancialRegulatoryReform/Bills_as_reported/hr4173.pdf>  will:

 

*      Increase Consumer Protections: Creates the Consumer Financial
Protection Agency (CFPA), a new, independent federal agency solely devoted
to protecting Americans from unfair and abusive financial products and
services. 

 

*      Create a Financial Stability Council: Creates a council of regulators
that will identify financial firms that are so large, interconnected, or
risky that their collapse would put the entire financial system at risk.
These systemically risky firms will be subject to increased oversight,
standards, and regulation. 

 

*      End Taxpayer Bailouts and "Too Big to Fail": Establishes an orderly
process for shutting down large, failing financial institutions like AIG or
Lehman Brothers in a way that ends bailouts, protects taxpayers, and
prevents contagion to the rest of the financial system. 

*      Rein in Executive Compensation: Gives shareholders a "say on pay" -
an advisory vote on pay practices including executive compensation and
golden parachutes. It also enables regulators to ban inappropriate or
imprudently risky compensation practices, and it requires financial firms to
disclose incentive-based compensation structures.

 

*      Safeguard Investors: Strengthens the SEC's powers so that it can
better protect investors and regulate the nation's securities markets.  It
responds to the failures to detect the Madoff and Stanford Financial frauds
by ordering a study of the entire securities industry that will identify
needed reforms and force the SEC and other entities to further improve
investor protection. 

 

*      Regulate Derivatives:  Regulates, for the first time ever, the opaque
$600 billion over-the-counter (OTC) derivatives marketplace. Under the bill,
all standardized swap transactions between dealers and "major swap
participants" would have to be cleared and traded on an exchange or
electronic platform. The bill defines a major swap participant as anyone
that maintains a substantial net position in swaps, exclusive of hedging for
commercial risk, or whose positions create such significant exposure to
others that it requires monitoring. 

 

*      Outlaw Predatory Mortgage Lending Practices: Would incorporate the
tough mortgage reform and anti-predatory lending bill the House passed
earlier this year. The legislation outlaws many of the egregious industry
practices that marked the subprime lending boom, and it would ensure that
mortgage lenders make loans that benefit the consumer.  It would establish a
simple standard for all home loans: institutions must ensure that borrowers
can repay the loans they are sold. 

 

*      Require the Registration of Hedge Funds: Closes a regulatory hole
that allows hedge funds and their advisors to escape any and all regulation.
This bill requires almost all advisers to private pools of capital to
register with the SEC, and they will be subject to systemic risk regulation
by the Financial Stability regulator.

 

For more information about H.R. 4173, click here
<http://financialservices.house.gov/Key_Issues/Financial_Regulatory_Reform/F
inancial_Regulatory_Reform.html> . 

 

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