On May 20, 2010, after much debate, the Senate passed the most sweeping financial regulatory legislation since the Great Depression. The Senate’s 59-39 vote was the last major stepping stone in making the Obama administration’s proposed financial regulatory overhaul a reality. In December 2009, the House of Representatives passed its own version of the legislation by a 223-202 vote. Now, the Senate and the House have the ever important task of reconciling their two versions of the bill, which are largely the same but have important distinctions.
The financial regulatory legislation aims to curtail a repeat of the 2008 economic crisis that nearly crippled the U.S. economy. The Senate’s version of the legislation encompasses over 1,500 pages and includes major overhauls to the current laws and regulations governing the financial industry. Some of the key measures include, but are not limited to:
• A major overhaul in the regulation of banks and financial firms which were previously deemed “too big to fail,” including creating more powers for regulators to break up financial firms that are so large that they pose a threat to the stability of the entire financial system;
• Limiting the scope of banks’ investment activities by in part banning banks from trading on their own accounts and from trading derivatives;
• Empowering the Federal Reserve to supervise large financial companies to help ensure that the government understands the risks these companies pose to the economy;
• Creating a new and independent Consumer Financial Protection Bureau within the Federal Reserve charged with adopting and enforcing new regulations targeting abusive practices in consumer loans and credit cards; and
• Giving regulators the power to oversee and regulate the derivatives market that many experts believe crippled AIG and Lehman Brothers.
Both the Senate and the House have expressed a desire to come to a final resolution of the financial regulatory overhaul legislation by the Fourth of July. The bill will then be sent to President Obama for a final review before he signs it into law.
The financial industry overhaul will have large implications for financial firms throughout the country. The attorneys of Cosgrove Law, LLC have years of experience in the financial industry and will be available to assist you or your firm in maintaining proper compliance with the new financial regulatory legislation.