WASHINGTON (Dow Jones)- The dust is still settling around the massive rewrite of U.S. financial regulations, but it's clear the bill will have a significant impact on every federal financial regulator. Here's a quick glance at some of the major consequences for some key regulators:
-Office of Thrift Supervision. The regulator will cease to exist in the financial bill. One reason: It failed to catch the problems at American International Group (AIG). The OTS was the federal regulator of AIG, which had a thrift subsidiary.
-Consumer Financial Protection Bureau. This new regulator, housed in the Federal Reserve, will be created by the bill and have the power to write rules governing an array of financial products, from mortgages to pay day loans.
-The Securities and Exchange Commission. Tarnished by its failure to catch various Ponzi-scheme artists, the regulator will get several new enforcement tools to protect investors such as enhanced whistle-blower options. The agency will gain several significant new powers, including authority--after some study--to set a higher ethical standard for brokers who give investment advice. The agency will be empowered to write rules for securities-based derivatives and to give shareholders of public companies easier access to corporate voting. The SEC will also gain oversight of hedge-fund advisers. Finally, the agency will hold the power to determine a new credit-rating regime.
-The Commodity Futures Trading Commission. This small, often unnoticed agency stands to gain sweeping new powers to police the over-the-counter derivatives market. Along with the SEC and banking regulators, the CFTC will have a seat on the newly created Financial Stability Council to monitor systemic risk.
-The Federal Deposit Insurance Corp. Long a favorite of congressional Democrats writing the bill, the FDIC will take a leading role in the new regulatory regime created by the bill. Most significantly, the FDIC will be responsible for carrying out the new process established in the bill to wind down systemically significant financial firms on the brink of failure. The agency will also be in charge of collecting up to $19 billion in new assessments on the nation's largest financial firms.
-The Federal Reserve. Despite more than a year of heavy Fed-bashing on Capitol Hill, the central bank not only preserved much of its existing power it also gained new supervisory responsibilities. The Fed chairman will have a seat on the new Financial Stability Oversight Council. But the central bank would also be forced to a new level of transparency, with the bill mandating a one-time government audit of its crisis-related emergency lending and future details of loans made to banks after a two-year lag. The bill will curb the Fed's future emergency lending powers as well.
Copyright 2009 Dow Jones Newswires
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