The Obama administration and senior congressional Democrats are moving to tighten US financial regulation to prevent another banking crisis.
Changes will affect banks, insurers, credit rating agencies, hedge funds, private equity firms, brokerages, and exchanges while greatly extending the government's reach into the financial sector.
Here are the major issues:
CREDIT CARDS
A US Senate committee and a House subcommittee have approved bills to crack down on the credit card industry by limiting fees and barring retroactive interest rate increases on existing balances, among other steps.
Political risk exposure: American Express Co, Bank of America, Capital One Financial Corp, Citigroup, Discover Financial Services.
UNWINDING FAILING FIRMS
The administration has sent Congress draft legislation to empower the government to seize and unwind large, failing financial firms that are not banks.
The administration has sent Congress draft legislation to empower the government to seize and unwind large, failing financial firms that are not banks.
SYSTEMIC RISK REGULATOR
Treasury wants a single, independent regulator to oversee systemically important firms and critical payment and settlement systems, but has not said which agency should get this job. No agency formally does it now.
EXECUTIVE PAY
The House has approved a bill to curb "excessive" employee pay at firms getting government bailout funds.
It would let the Treasury block compensation and bonuses not based on performance standards. It would apply to all employees, not just executives, at bailed-out firms.
HEDGE FUNDS, PRIVATE EQUITY
Treasury has recommended that all advisers to hedge funds, private equity funds and venture capital funds, whose assets under management top a not-yet-determined level, must register with the US Securities and Exchange Commission.
SHORT SELLING
The SEC has floated five proposals to curb short selling, drawing fire from short sellers who feel they are being made scapegoats for the financial crisis.
MORTGAGES AND SECURITIZATION
A House bill would clean up mortgage lending by holding lenders more accountable, barring "steering" of borrowers into higher-cost loans and exposing lenders to more legal risk.
Two new standards would be set. One would force lenders, assignees and securitizers to consider a borrower's "reasonable ability to repay." Another would require that borrowers in a refinancing get a "net tangible benefit," under the bill.
MORTGAGE BANKRUPTCY
Legislation meant to help distressed homeowners by allowing US bankruptcy court judges to adjust the terms of mortgages on primary residences has stalled in the Senate.
STUDENT LOANS
President Barack Obama's 2010 federal budget proposed ending the giant federally guaranteed student loan program and moving most of the nation's $90 billion in student lending into the direct-loan program run by the Education Department.
BANK CAPITAL STANDARDS
US regulators are expected to craft stricter capital standards that improve upon Basel II standards, which give financial firms flexibility to judge their own risk profiles.
DERIVATIVES CLEARING AND SETTLEMENT
Exchange operators have scrambled to build credit default swap clearinghouses under recent regulatory decisions.
IntercontinentalExchange has begun clearing US index-based CDS, while rival CME Group has all regulatory approvals.
CREDIT RATING AGENCIES
The SEC has a proposal to wean the financial system off its heavy reliance on credit ratings, but it is opposed by the mutual fund and brokerage industries.
Democratic Senator Jack Reed has drafted legislation to allow investors to sue credit rating agencies if they failed to "conduct a reasonable investigation" of a rated security.
Changes will affect banks, insurers, credit rating agencies, hedge funds, private equity firms, brokerages, and exchanges while greatly extending the government's reach into the financial sector.
Here are the major issues:
CREDIT CARDS
A US Senate committee and a House subcommittee have approved bills to crack down on the credit card industry by limiting fees and barring retroactive interest rate increases on existing balances, among other steps.
Political risk exposure: American Express Co, Bank of America, Capital One Financial Corp, Citigroup, Discover Financial Services.
UNWINDING FAILING FIRMS
The administration has sent Congress draft legislation to empower the government to seize and unwind large, failing financial firms that are not banks.
The administration has sent Congress draft legislation to empower the government to seize and unwind large, failing financial firms that are not banks.
SYSTEMIC RISK REGULATOR
Treasury wants a single, independent regulator to oversee systemically important firms and critical payment and settlement systems, but has not said which agency should get this job. No agency formally does it now.
EXECUTIVE PAY
The House has approved a bill to curb "excessive" employee pay at firms getting government bailout funds.
It would let the Treasury block compensation and bonuses not based on performance standards. It would apply to all employees, not just executives, at bailed-out firms.
HEDGE FUNDS, PRIVATE EQUITY
Treasury has recommended that all advisers to hedge funds, private equity funds and venture capital funds, whose assets under management top a not-yet-determined level, must register with the US Securities and Exchange Commission.
SHORT SELLING
The SEC has floated five proposals to curb short selling, drawing fire from short sellers who feel they are being made scapegoats for the financial crisis.
MORTGAGES AND SECURITIZATION
A House bill would clean up mortgage lending by holding lenders more accountable, barring "steering" of borrowers into higher-cost loans and exposing lenders to more legal risk.
Two new standards would be set. One would force lenders, assignees and securitizers to consider a borrower's "reasonable ability to repay." Another would require that borrowers in a refinancing get a "net tangible benefit," under the bill.
MORTGAGE BANKRUPTCY
Legislation meant to help distressed homeowners by allowing US bankruptcy court judges to adjust the terms of mortgages on primary residences has stalled in the Senate.
STUDENT LOANS
President Barack Obama's 2010 federal budget proposed ending the giant federally guaranteed student loan program and moving most of the nation's $90 billion in student lending into the direct-loan program run by the Education Department.
BANK CAPITAL STANDARDS
US regulators are expected to craft stricter capital standards that improve upon Basel II standards, which give financial firms flexibility to judge their own risk profiles.
DERIVATIVES CLEARING AND SETTLEMENT
Exchange operators have scrambled to build credit default swap clearinghouses under recent regulatory decisions.
IntercontinentalExchange has begun clearing US index-based CDS, while rival CME Group has all regulatory approvals.
CREDIT RATING AGENCIES
The SEC has a proposal to wean the financial system off its heavy reliance on credit ratings, but it is opposed by the mutual fund and brokerage industries.
Democratic Senator Jack Reed has drafted legislation to allow investors to sue credit rating agencies if they failed to "conduct a reasonable investigation" of a rated security.
