The financial reform bill, unlike the healthcare bill has support from both parties. But to no ones surprise, there is quite a bit of disagreement on sections of the bill. The bill is not as large as the healthcare bill but is every bit as complex. Here are the major parts of the bill:
· A derivative is a financial contract whose value is derived from some other factor. Simple examples of derivatives are stock options and future contracts. Other derivatives are far more complex. A key part of the legislation would force the trading of derivatives on public exchanges where regulators could see which banks have a hand in which deals. This trading was a 450 trillion dollar market! By comparison, this is about 30 times the GNP of the United States and over a hundred times the national debt. Most of this activity was done in private deals so when markets crashed in 08, no one knew who owed what to whom. The new regulations would give regulators the same oversight they have in other publicly traded markets. Most of the debate is not whether this oversight is needed but rather how it should be accomplished.
· Another provision in the bill would allow the government to breakup failing banks gradually before they actually fail to avoid the Lehman and IAG debacles. The bill contains a 50 billion dollar fund for this purpose, but this may be dropped from the bill.
· The bill also establishes a System Risk Council where regulators would look at the total risk to the system as opposed to only looking at their specific corner of the industry. It is still being debated as to how much power this council should have.
· The bill also addresses the too big too fail issue by giving some banks an implicit taxpayer guarantee. This is another item that is hotly debated.
· The bill would create a Consumer Financial Projection Agency, which would monitor how banks treat their customers. This has been hotly debated also.
There may be more but this was all I could find.
Is this bill needed? If so, what should be in the bill?
http://www.twincities.com/politics/ci_14921067
Financial reform fails to tackle real issues :: CHICAGO SUN-TIMES :: Steve Huntley
· A derivative is a financial contract whose value is derived from some other factor. Simple examples of derivatives are stock options and future contracts. Other derivatives are far more complex. A key part of the legislation would force the trading of derivatives on public exchanges where regulators could see which banks have a hand in which deals. This trading was a 450 trillion dollar market! By comparison, this is about 30 times the GNP of the United States and over a hundred times the national debt. Most of this activity was done in private deals so when markets crashed in 08, no one knew who owed what to whom. The new regulations would give regulators the same oversight they have in other publicly traded markets. Most of the debate is not whether this oversight is needed but rather how it should be accomplished.
· Another provision in the bill would allow the government to breakup failing banks gradually before they actually fail to avoid the Lehman and IAG debacles. The bill contains a 50 billion dollar fund for this purpose, but this may be dropped from the bill.
· The bill also establishes a System Risk Council where regulators would look at the total risk to the system as opposed to only looking at their specific corner of the industry. It is still being debated as to how much power this council should have.
· The bill also addresses the too big too fail issue by giving some banks an implicit taxpayer guarantee. This is another item that is hotly debated.
· The bill would create a Consumer Financial Projection Agency, which would monitor how banks treat their customers. This has been hotly debated also.
There may be more but this was all I could find.
Is this bill needed? If so, what should be in the bill?
http://www.twincities.com/politics/ci_14921067
Financial reform fails to tackle real issues :: CHICAGO SUN-TIMES :: Steve Huntley