S&C’s Cohen Says Financial Bill Passed by Congress Has ‘Substantial Teeth’
A financial reform bill passed by Congress on Thursday has “substantial teeth,” according to a lawyer who represented seven financial firms in financial bailout negotiations as the economy neared a meltdown.
In an interview with Bloomberg Television, Sullivan & Cromwell senior chairman H. Rodgin Cohen countered critics who said the bill won’t do enough to reform the way Wall Street does business, the Am Law Daily reports.
“This is a bill with substantial teeth,” Cohen told Bloomberg. “Regulatory requirements are clearly appreciating greatly, and there is a new resolution regime. I think the administration’s basic objective has been accomplished.”
The Wall Street Journal (sub. req.) says the legislation is “a rewrite of rules touching every corner of finance, from ATM cards to Wall Street traders, in the biggest expansion of government power over banking and markets since the Depression.”
The New York Times emphasized change in its story on the legislation. “Congress approved a sweeping expansion of federal financial regulation on Thursday, reflecting a renewed mistrust of financial markets after decades in which Washington stood back from Wall Street with wide-eyed admiration,” the newspaper said.
Banking partner Mark Nuccio of Ropes & Gray has analyzed the bill. A press release with highlights of his review says the legislation:
• Imposes significant restrictions on the Fed’s ability to bail out individual failing institutions, no matter how big. Now there will be roles for the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp.
• Creates several new bureaucracies, including the Financial Stability Oversight Council, charged with preventing another meltdown, and the Consumer Financial Protection Bureau, which will write and enforce regulations for consumer financial products.
• Will require hedge fund managers to register with the Securities and Exchange Commission, setting the stage for future attempts to establish more substantive regulation in these areas.
• Requires many types of derivatives to be exchange traded and centrally cleared, making them subject to regulation by either the SEC or the Commodity Futures Trading Commission.
• Restricts bank investments in derivatives.
• Increases deposit insurance from $100,000 to $250,000.
