Washington (CNNMoney.com) – The Senate's final version of Wall Street reform runs close to 1,600 pages.
It takes a broad swipe at the rules that govern the financial sector. It aims to prevent future financial crises. It establishes a new consumer regulatory agency. It throws down new rules on complex financial products and creates a new way for the government to take over failing financial firms.
The bill, which the Senate passed Thursday night, must now be reconciled with a similar measure the House approved last December.
Here's a breakdown of key measures in the Senate legislation.
Dealing with 'too big to fail' firms: Creates a new process for unwinding big financial firms that resembles the powers that the Federal Deposit Insurance Corp. has to shut failing banks. Banks would be taxed to pay for unwinding banks after a collapse. Also, the Federal Reserve would be able to make emergency loans only to banks that are otherwise healthy and just need credit to get by.
Breaking up banks: Gives regulators strengthened powers to break up financial companies that have grown too big and threaten to destabilize the financial system.
Creating a consumer agency: Establishes an independent Consumer Financial Protection Bureau housed inside the Federal Reserve. Bank fees fund the agency, which would set rules to curb unfair practices in consumer loans and credit cards.
New oversight power: Creates a new oversight council that would look out for major problems at large financial firms. The Treasury Department gains a key role in enforcing tougher regulations on larger firms and watching for systemic risk. The council also has veto power over new rules proposed by new consumer regulator.
Regulating derivatives: Attempts to shine a light on complex financial products called derivatives that many blame for bringing down American International Group and Lehman Brothers. Would force most derivatives to be bought and sold on clearinghouses and exchanges. Some derivatives, including those traded by agriculture companies and airlines to mitigate risk, would still be unregulated.
Reining in risky bets: Limits the size and scope of banks' investment activities. Bars banks from trading on their own accounts, though it gives regulators the power to modify the ban. Also prevents banks from trading derivatives, even for their clients' accounts. Banks would be forced to spin off their swaps desks that make these trades.
Checking on the Fed: Allows Congress to order a one-time Government Accountability Office review of Fed activities, including loans made during the financial crisis. President gets new powers to appoint the head of the New York Fed. Currently, banking sector leaders play a big role in choosing who runs the New York Fed.
Curbing executive pay: Gives shareholders the right to a nonbinding proxy vote on corporate pay packages.
Giving shareholders voice: Makes it easier for investors to have a say in choosing who is on the ballot to run for the board of a publicly-traded company.
Improving credit ratings: Agencies that rate securities must disclose their methodologies. Agencies would be more at risk for lawsuits if they're reckless and ignore outside, independent analyses in their ratings. Agencies would lose their official designation in government regulation. The Securities and Exchange Commission would appoint a panel to figure out how to independently match ratings agencies with firms that need securities rated.
Banning 'liar loans': Lenders would have to document a borrower's income before originating a mortgage and verify a borrower's ability to repay the loan.
Forcing 'skin in the game': Firms that sell mortgage-backed securities must keep at least 5% of the credit risk, unless the underlying loans meet new standards that reduce risk.
We need this regulation to create stable markets.
Although I am not in favor of regulation, when a system
cannot police itself, and the American people suffer greatly,
regulation is necessary.
I support the White House and the Congress on this.
Paul deMontesquiou, Esq/Broker/Builder/Energy
Charlotte, North Carolina
The proof of whether it helps or not, will be in the details, as it was in the ObamaCare bill.
Hopefully it won't be as worthless as the ObamaCare bill, but I am not counting on that.
One wonders if the Dems have any idea how to solve any problem, whatsoever.
What the bill does is shield the big Wall Street banks by guaranteeing taxpayer funding if they need it, and puts the whole burden on the smaller banks.
Another reason to vote democraps out of office asap.
Don’t ask the people that voted for it what’s in it….they don’t know. Seems to be a common theme with all the bills that have been passed in the past year and a half.
My only question is why this has taken so long. This should have happened years ago.
From what Fox News says Fannie May and Freddie Mac are not in the wall street bill .
Why has Freddie and Frannie kept out of financial reform bill? They should have been encluded. More bailout money is going to them, a government run programs. Enough is a enough!
where is the tea party now.also repub party.which 40 voteded against wallstreet reform.we will and can call these repubs out even if media dont.
"It aims to prevent future financial crises", yet nothing said about Fannie Mae or Freddie Mac? If you say so!
This bill isn't financial reform, it's crony capitalism and it's just another way for Washington to seize control of our economy. Obama is turning our nation into a socialist nightmare.
Wake up people! In 2010, vote American, vote Republican! So we can get our country back on the "right" track.
Finally, I am so proud now that these changes are actually geting through. For the first time since the usury laws went out the window way back when, I actually feel that we're no longer just pawns in the game of putting money into big business's pocket.
For far too long we have been subject to interest rates that would of been illegal only a few decades ago.
Hurray for the people and thank you to the lawmakers.
the fed is willing to make loans to big banks that just need credit to get buy. Why not do that for small businesses, they after all employ way more people.
Does it include jail time for defrauding the public?
over 1,000 pages? were the gop able to read that much material?
What a crock...
First of all, put Glass Steagle back in place. The truth is, I'll believe it when I see it. The repugnicans will do anything to protect the people they work for, namely the rich and powerful and when they do, the Dems collapse like a wet paper bag. Financial reform. Right! Hey gang I've got a bridge for sale.
Then why did most Republicans Senators end up voting against the bill?
You can bet Wall Street has already figured out a way to go around these laws.
All you people cheering for "Wall Street Reform" will be singing a different tune when they permanently lose their jobs, when their pension benefits plummet, and when their IRA isn't worth squat because of the American Business Destruction Act that the Dumocrats passed.
Wall Street IS Main Street for American business – don't let the Socialist class warriers convince you otherwise.
This just seems like common sense measures to me. Honestly, I'm surprised these rules weren't already in place.
here we go again now the repubs are crying the blues along with
wall street that it is socialism the only problem is that I tried my
hardest to to cry but I only could laugh isn't it funny that every
time the working stiffs in this country get a level playing field
the country is going down the tubes it just goes to show how
much we are prayed on by so many companies
"Curbing executive pay: Gives shareholders the right to a nonbinding proxy vote on corporate pay packages."
It ought to be binding.
"Banning 'liar loans': Lenders would have to document a borrower's income before originating a mortgage and verify a borrower's ability to repay the loan."
I'm assuming this includes Fannie Mae and Freddie Mac, the government-sponsored- and protected corporations that triggered the whole mess by ignoring, at the insistence of Congress, the ability of borrowers to repay loans?
Repugs (Boehner for one) like to say that we should trust them, they are not like the Repugs of the Bush era. This bill is a good chance to show their desire to fix a problem affecting our country, and the party line is, no thanks.