Factbox: Highlights of U.S. Dodd-Frank Wall St reform bill

(BestGrowthStock) – The biggest overhaul of U.S. financial regulation since the 1930s is being implemented by regulators with hundreds of rules to write and studies to complete.

Almost two years after a severe credit crisis slammed the world financial system, the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law in July by President Barack Obama following months of debate.

Some Republicans have vowed to roll back parts of the bill, but they face an uphill climb against continued Democratic dominance in the Senate and the likelihood that Obama would veto any major attempt to gut the bill.

Banking and Wall Street lobbyists are trying to influence the implementation process at the regulatory level. Republicans who won control of the U.S. House of Representatives last week were expected to apply additional pressure in months ahead by calling in regulators to testify at Capitol Hill hearings.

Here is a brief look at the bill’s main provisions:

THE BIG PICTURE: A new council of federal regulators — known as the Financial Stability Oversight Council — has been created to monitor the financial landscape. High-risk firms will be tagged as “systemically significant” and placed under stricter Federal Reserve oversight.

VOLCKER RULE: Banks’ “proprietary trading” for their own accounts unrelated to customers is being curbed; the growth of the biggest banks is capped; bank involvement in private equity and hedge funds, except for small investments, is barred.

OTC DERIVATIVES: The first-ever U.S. regulation is imposed on the $615-trillion over-the-counter (OTC) derivatives market, including credit default swaps, which were implicated in the downfall during the crisis of firms such as AIG.

Much OTC derivatives trading will be redirected through more accountable channels such as exchanges and clearinghouses, but many OTC contract end-users may carry on as before.

SWAPS PUSH-OUT: Firms that dominate OTC derivatives must spin off dealing operations in some swaps, but can keep many swaps in-house, including derivatives to hedge their own risk.

WALL ST ‘DEATH PANEL’: Aiming to prevent massive bailouts like AIG’s and disastrous bankruptcies like Lehman Brothers’, the bill creates a new government “orderly liquidation” process for non-bank firms on the edge of collapse. Authorities will be able to seize and liquidate these firms, with costs covered by sales of assets and fees on other firms if needed.

CONSUMER WATCHDOG: Protection of financial consumers is being enhanced by increased government regulation. The bill sets up a bureau in the Federal Reserve to regulate mortgages and credit cards. The watchdog has sharp teeth, but won’t be able to bite car dealers, who won an exemption.

BEHIND THE HEDGE: Private equity and hedge funds will have to register with regulators and open their books to scrutiny. Not so for venture capital funds, which are exempt.

INSURANCE COPS: The first federal monitor for state-policed insurers will be formed. It’s not federal regulation — yet.

BANK CUSHIONS: Banks will have to set aside more capital to ride out tough times, but will get several years to comply as international regulators work to harmonize standards globally.

FED SCRUTINY: The Fed’s emergency lending during the crisis will be reviewed, but not its decisions on interest rates.

DEBIT CARDS: Fees charged on debit card transactions will be reduced — a victory for retailers over the banks.

(Reporting by Kevin Drawbaugh; Editing by Tim Dobbyn)

Factbox: Highlights of U.S. Dodd-Frank Wall St reform bill