FACTBOX-Highlights of US financial regulation reform bill

July 21 (BestGrowthStock) – President Barack Obama on Wednesday
signed a sweeping overhaul of the financial regulatory system.
Following is a brief look at the bill’s main provisions:

SWAPS PUSH-OUT: Wall Street firms that dominate the $615
trillion over-the-counter derivatives market will have to spin
off dealing operations in some swaps, but can keep many swaps
in-house, including derivatives to hedge their own risk.

Much of OTC derivatives trading will be redirected through
more accountable channels such as exchanges and clearinghouses.
Many OTC contracts end-users will be able to carry on as
before.

VOLCKER RULE: A new rule will bar proprietary trading by
banks for their own accounts unrelated to customers; limit the
growth of the biggest banks; and curb banks’ involvement in
private equity and hedge funds, except for small investments
allowed by a loophole added to the rule late in debate.

Some big banks’ profits will be pinched by both the Volcker
rule and the Lincoln swaps plan, with a few Wall Street giants
potentially facing structural changes.

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 financial firms on the verge of collapse.

Authorities will be able to seize and liquidate them, with
costs covered by sales of assets and fees on other firms if
needed.

CONSUMER WATCHDOG: Protection of financial consumers will be
enhanced by increased government regulation.

The bill will set up a new 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.

THE BIG PICTURE: A new council of federal regulators will
try to monitor the entire financial forest, not just the trees.
High-risk firms can be singled out for stricter policing.

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.

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.

Stock Market Advice
(Reporting by Kevin Drawbaugh, Rachelle Younglai, Kim Dixon,
Andy Sullivan, Roberta Rampton and Charles Abbott, editing by
Anthony Boadle & Theodore d’Afflisio)

FACTBOX-Highlights of US financial regulation reform bill