(CN) – President Obama’s plan to overhaul financial regulations, to prevent a repeat of the country’s credit and banking catastrophe, is laid out in a “nearly final” 85-page document the president is expected to reveal today.
Among other things, the president proposes creating a National Bank Supervisor to oversee all federally chartered banks; strengthening capital requirements for banks; requiring hedge funds and other private pools of capital to register with the SEC; and regulating derivatives, including credit default swaps.
The plan would give the Federal Reserve more authority over large financial institutions that could threaten the financial system, and give the Federal Deposit Insurance Corp. greater power to seize and break up such institutions.
The document proposes five “key objectives;”
1. Promote robust supervision and regulation of financial firms;
2. Establish comprehensive supervision and regulation of financial markets
3. Protect consumers and investors from financial abuse;
4. Improve tools for managing financial crises; and
5. Raise international regulatory standards and improve international cooperation.
The first objective of the plan calls for “new authority for the Federal Reserve to supervise all firms that could pose a threat to financial stability, even those that do not own banks.”
It would create a Financial Services Oversight Council to advise the Federal Reserve.
It calls for “elimination of the federal thrift charter and other loopholes that allowed some depository institutions to avoid bank holding company regulation by the Federal Reserve.”
And it would require all hedge funds and other “private pools of capital” to register with the SEC.
The third objective calls for creation of a Consumer Financial Protection Agency “to protect consumers across the financial sector from unfair, deceptive, and abusive practices.”
The fourth objective – in an obvious glance at the meltdown of American International Group – calls for a “new regime to resolve nonbank financial institutions whose failure could have serious systemic effects.”
It also would revise the Federal Reserve’s emergency lending powers “to improve accountability.”
The plan was worked out over weeks of meetings with financial institutions, but is believe to be mainly the brainchild of Congressman Barney Frank and Senator Christopher Dodd.