Details of the Wall Street Reform Bill

Consumer protection

A new Consumer Financial Protection Bureau would be set up inside the Federal Reserve, but with complete independence from the central bank; it would tackle “abusive” mis-selling of mortgages, credit cards and other loan products. Banks and other finance providers worry about onerous reporting standards, the possibility of credit products being banned and the dearth of checks on the power of the CFPB chairman.

Derivatives

Derivatives that trade in “over-the-counter” bilateral deals would be forced through central clearing houses to curb the risk from one counterparty going bankrupt and on to electronic exchanges to increase transparency. There would be exemptions for non-financial companies using the contracts to hedge risk. Banks would be forced to spin off their derivatives dealing operations.

Resolution authority

Government can seize and wind up a large institution if it faces impending failure and poses a risk to the broader financial system. It would have powers to wipe out shareholders and fire executives. Payments to creditors would be paid by the government but recouped later from levies on the industry. It is designed to stop a repetition of the market shock from Lehman Brothers’ bankruptcy and end implicit government guarantees that reduce funding costs for banks deemed “too big to fail”.

Systemic risk regulation

Financial Stability Oversight Council of regulators chaired by the Treasury secretary would identify systemically significant companies and monitor markets for bubbles. Companies branded as systemically significant would face stricter capital, leverage and liquidity standards and be obliged to draw up a “living will” to describe how they would be broken up in the event of failure.

Volcker rule

Deposit-taking banks would be forced to spin off proprietary trading arms and sell ownership interests in hedge funds and private equity firms. Named after Paul Volcker, former Federal Reserve chairman, who said banks should not be allowed to engage in “casino” activities while benefiting from government insurance over their deposits.

www.ft.com...

You will have to sign up for this news site, it's free, but this is where talking head like Glen Beck and Thom Hartmann get there information on the economy and what is coming.



[edit on 20-5-2010 by David9176]

After reading this, it is stronger than I expected it to be.

However, I don't like the fact that the Federal Reserve and Treasury will be looking over this. It does say that the Consumer Protection Agency will be independent from the central bank...but what does that mean for transparency?

Bernanke and Geithner both should have damn well knew what was happening with the banks before the bailout happened....which seems crazy to give them control over these new agencies....especially when the Federal Reserve itself is independent and, for the most part, not transparent.

[edit on 20-5-2010 by David9176]

No matter how they write the law, the devil is in the transformation of the law into Federal guidelines within the various agencies involved in interpreting the elements of the law.

reply to post by David9176


You want to know what's sad? Ethiopia has the same bill waiting to be signed right now and it is stronger than the one in the USA.

The bill, which deals with mergers, prohibits agreements or practices by business persons that prevent, restrict or distort competition. The only exception is if the gains from such agreements or practices outweigh the harms.

The new bill proclaims the right of the consumer to get satisfaction and accurate information or explanation on the quality and type of goods and services offered for sale and to be compensated for damages suffered because of such transactions.

Acts of the abuse of market dominance like limiting production, hoarding, concealing, or withholding or diverting goods from being sold in regular channels of trade is punishable with fine of 15pc of one's annual income and where it is impossible to determine annual income with fine of 500,000 to one million Br and rigorous imprisonment for five to 15 years.

Preparing or selling goods or services that are poisoned, expired or been adulterated is punishable with fine from 100,000 to 300,000 Br and with rigorous imprisonment of 10 to 20 years. Where the criminal act results in death or physiological disability, a regular court shall conduct the adjudication.

The ministry wants the agency to have the power to adjudicate cases involving criminal matters, according to Nuredin Mohammed, director of the Trade Registration and Licensing Directorate at the MoTI. The regular courts are not only overloaded with other cases but also lack depth of knowledge to handle trade and consumer related issues, he said.

The bill overdoes the punishment of those who are allegedly in violation of the law, according to Yayehyirad Abate, deputy secretary general and Advocacy Department manager at the Ethiopian Chamber of Commerce and Sectoral Association.

The very purpose of punishment should be teaching a lesson not to do it again, he said. However, the bill prescribes severe penalties on those who did not even violate the law deliberately, forcing them out of the business track.

"The bill is biased in favour of consumers," according to him, because the drafters of the bill are themselves civil servant buyers.

allafrica.com...

I was just listening to Alex Jones' show from yesterday and he said that the bill

1. Gives unlimited power to the Fed
   
2. $600,000,000,000,000 in derivatives (did I type "trillions" correctly?)
   
3. They can take over any financial institution or anything that affects the financial system
   

Alex just said the figure about the derivatives without elaborating. I guess he meant that's the amount of derivatives that are left standing and not reckoned with by the bill?