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.