After an All-Nighter, Compromise Is Reached on Landmark Financial Reform Bill
After an all-night session, House and Senate conferees have agreed on a bill to reform financial regulations.
The negotiating session began Thursday morning and lasted more than 20 hours, according to stories in the New York Times, the Washington Post and the Wall Street Journal (sub. req.). Congress will likely vote on the compromise bill next week.
The Wall Street Journal says the “common thread” of the new rules is that large financial companies will now be on a shorter leash.
Under the agreement:
• A new Consumer Financial Protection Bureau in the Federal Reserve will have “near-total autonomy to write and enforce rules,” the Washington Post says. Auto dealers will not be subject to the bureau’s authority.
• Banks with federally insured deposits will be restricted in trading for their own benefit. Banks would be able to invest no more than 3 percent of their total equity in hedge funds or private equity funds, and the amount may total no more than 3 percent of the funds’ capital, according to the Times. They would have up to two years to scale back such trading, the Post says.
• Banks and their parent companies will be required to conduct much of their riskier derivatives activities through separate subsidiaries.
• The Securities and Exchange Commission will have new powers to regulate Wall Street and monitor hedge funds, the Wall Street Journal says.
