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Financial industry reform bill to be rolled out this afternoon -- what's in it

I was away for a few days last week watching my beloved West Virginia Mountaineers win the Big East tournament, but now I'm back on the economic beat.

Today's a big day for financial regulation reform. This afternoon, Sen. Chris Dodd (D-Conn.), having worked closely with Sen. Bob Corker (R-Tenn.), is expected to roll out their version of financial reform legislation.

You can read a detailed overview of what's expected by clicking here, but here are the bullet points:

  • Shareholders of a company would get more a "say on pay" for top executives.

  • A new consumer financial products regulator would be housed in the Fed Reserve, a compromise to get Republicans onboard. President Obama and liberal Democrats wanted a brand-new, stand-alone consumer financial protection agency, but Republicans opposed this idea as unnecessary bureaucracy.

  • A "systemic risk council" would look to identify bubbles and other potential problems before they occur. Click here to read Dodd speaking about his plan in the Wall Street Journal.

  • Legal authority would allow the government to takeover and wind-down troubled non-bank financial institutions.

    To my way of thinking, the final provision is the most important, even though the consumer protection provision looks sexier because it's aimed at ordinary folks. Fed Chairman Ben Bernanke and former Treasury secretary Hank Paulson have repeatedly testified under oath that they were not able to save Lehman Brothers because they did not have the legal resolution, or wind-down, authority to do so. Lehman's failure, as you recall, really pushed the country to the edge of the precipice in fall of 2008. The government was able to negotiate a sale of Bear Stearns to sort of save that failing firm earlier in the year, but could not work a sale of Lehman. Absent that, the Fed and Treasury could not take over Lehman and wind it down -- as the FDIC does with failing banks -- so Lehman failed. (To be fair, members of Congress said after the fact that they would have given Bernanke emergency power to do the Lehman wind-down if he would have asked.)

    Bernanke has repeatedly asked for his Fed to receive wind-down authority, and this bill looks to give it to him.

    Follow me on Twitter at @theticker

  • By Frank Ahrens  |  March 15, 2010; 12:21 PM ET
    Categories:  Congress , Corporations , Fed Reserve , Regulation , The Ticker  | Tags: Ben Bernanke, Bob Corker, Hank Paulson, chris dodd, financial regulations  
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    I'm speculative. It's going up until it's going down. In any case it's hard. There's no easy street and she wants a rock and I have five set in gold. The book keeps are busy as bees.

    Posted by: tossnokia | March 15, 2010 1:21 PM | Report abuse

    Thank god he is not proposing the banks not be able to continue to play roulette with the insured deposits by buying and trading Wall Street paper.

    Posted by: bsallamack | March 15, 2010 1:29 PM | Report abuse

    I'm going to look at a new Lotus a cross the river. We'll see what and who rolls where.

    Posted by: tossnokia | March 15, 2010 1:41 PM | Report abuse

    re: reg reform. It's not "their" bill (i.e. Dodd and Corker). Dodd walked away from the negotiations last week. It's his (Dodd's) bill.

    Posted by: thechief16 | March 15, 2010 1:56 PM | Report abuse

    The bill appears to be essentially useless, designed to let Obama and Congress say they passed "financial reform" without actually ending the practices that got us in this mess. Because THAT would require offending the rich and well-connected.

    Posted by: qaz1231 | March 15, 2010 2:15 PM | Report abuse

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