Financial Regulation: Your Complete Cheat Sheet

Like the health care law, financial regulation is a big fat sausage factory. If you are simply looking for the key takeaways of the moment, we’ve compiled a cheat sheet for you:

  1. The next step is to reconcile yesterday’s Senate bill with the House bill from December.
  2. The bill creates a process for liquidating financial institutions which become too big to fail.
  3. The bill creates a council to monitor threats to the economy (a job currently delegated to the Federal Reserve but clearly not done properly).
  4. The bill adds restrictions to derivative and prop trading inside US banks.
  5. The bill creates a Consumer Financial Protection Agency which has the power to ban lending which the Federal Reserve considers abusive.
  6. The bill requires borrowers to show proof they can pay mortgage loans.

The bill does not address key issues such as:

  1. Setting risk limits on financial institutions that have become too big to fail.
  2. Addressing key problems with GSEs Freddie Mac (NYSE: FRE) and Fannie Mae (FNM).
  3. Better separating Main Street banks from Wall Street banks.

The bill is expected to reconcile and become law around the 4th of July.

If you are interested in reading the entire bill, click here to visit Open Congress.