A Financial Reform Bill summary is due to be debated in the Senate in just a few days. For a clearer view of the Financial Reform Bill summary that will control everything from a payday lender to the largest banks, a financial reform bill summary of both HR 4173, which are the House bill that was passed last December and S 3271, will be debated this week. Keep in mind that this Financial Reform Bill summary could change during reconciliation, though the broad strokes will likely remain the same. This article covers House Bill HR 4173.
For the complete Financial Reform summary of the Senate bill, see Part Two.
The Financial Reform Bill Summary on HR 4173
HR 4173 is the House of Representatives Financial Reform Bill. This financial reform bill was first initiated by the House Financial Services Committee and is known widely as the Wall Street Reform and Consumer Protection Act. A full text of HR 4173 is available in PDF form on the U.S. House of Representatives website.
Financial Reform Bill HR 4173 summary touches on Consumer Protections
On opening, a Consumer Financial Protection Agency is positioned to be a separate Federal agency focused mainly on decoding, ensuring, and regulating the safety of U.S. financial product consumers. The day-to-day functionality of the Consumer Financial Protection Agency might include creating disclosure standards, working for consumer education about personal loan companies, and examining the details of new financial products.
Anti-predatory lending laws and mortgage reform would also be included. The traditional standard for borrowers to repay the loans they are sold would be instituted. The role of credit rating agencies would also be addressed, and credit rating agencies would be given some liability for their ratings.
HR 4173 Financial Reform Bill summary | Stability and Investing
The Financial Stability Council, as an “inter agency council,” would be responsible for identifying what financial firms are especially risky. Given stronger investor-protection powers are the Securities and Exchange Commission.
Financial Reform Bill HR 4173 Summary on ‘Too Big to Fail’ firms
Taxpayer money will no longer be given to firms that are considered “Too Big To Fail” to keep afloat. Instead, a system for dismantling financial businesses would be created by the Financial Reform Bill if or when they start to fail. Basically, there will be no more bailouts for big companies.
Summary of HR 4173 covers Investors Say on Pay
HR 4173 would give shareholders of a company a “say on pay” of the executives of a company. While the vote would only be advisory, regulators are also given the ability to ban “inappropriate or imprudently risky” pay packages. In other words, no more executives getting paid millions for running their companies into the ground.
HR 4173 Summary covering derivatives
The “derivatives” market, for the very first time, would be regulated. A product developed from another product is a financial derivative. For example, the “mortgage-backed securities” were a financial product derived from residential mortgages. Any “derivative” product with “substantial risk” would be monitored.
Financial reform bill summary | Private Pools Investing Money
Currently, businesses – Hedge funds and private equity firms – that are in the business of investing with private money are not being monitored. The Financial Stability Council, under HR 4173, would examine any risk from a “private pool of capital,” a group of people that pool their money to invest it.
Financial reform bill HR 4173 | Office of Insurance
Finally, the Financial Reform Bill HR 4173 would create a unified insurance regulatory agency. Rather than answering to multiple sets of rules and regulations, insurance companies would be monitored, regulated and reported by a single Office of Insurance.
This is a summary of HR 4173, the Financial Reform Bill that passed the House of Representative.
Sources:
Reuters
Daily Finance
OpenCongress.org
Wall St Journal
