End game for financial reform --- follow along

[Cate Long]

Greetings to all finance hackers.

The US Senate has brought the Dodd bill (S. 3271) to the floor of the
Senate and the Republicans have acceded to debate.

The legislation is relatively weak and reflects the influence of bank
lobbyists and a fear that making substantial changes to the structure
of our financial markets could cause declines in asset values.

The heart of the legislation gives vast new authorities to the Federal
Reserve, creates a "council of regulators" (comprised of agency
heads), structures an ad hoc bankruptcy process for large financial
firms (resolution authority) and establishes a consumer protection
agency.

Amendments to strengthen the legislation and to create carve-outs for
special interests are now being filed. Debate on various amendments
will begin on Tuesday.

The important amendments so far are the following (from the Wall
Street Journal):

> > Obama administration officials have declined to weigh in on any specific amendments, with one exception: a move by Sen. Bernie Sanders (I., Vt.) to give the government more power to audit certain operations at the Federal Reserve. Fed and administration officials have signaled they would fight to stop it at all costs. Mr. Sanders has more than a dozen co-sponsors.

"I can't predict, but I think we've got a good chance to pass it," Mr.
Sanders said.

> > Sens. Ted Kaufman (D., Del.) and Sherrod Brown (D., Ohio) plan an amendment that would prohibit any bank from ever holding more than 10% of the country's deposits and put strict caps on the debt banks issue.

> > Sens. Maria Cantwell (D., Wash.) and John McCain (R., Ariz.) have worked on an amendment that would force commercial banks to separate from investment banks—revisiting the Glass-Steagall Act of the 1930s.

> > Sens. Jeff Merkley (D., Ore.) and Carl Levin (D., Mich.) plan a provision to forbid banks with federally insured deposits from certain trading activities.

Also of enormous significance is the Lincoln amendment on derivatives
which would impose excellent new oversight and structure on the $600
trillion derivatives markets.

To follow the debate Riski is compiling the most useful blogger, law
firm and media articles at:

http://freerisk.org/wiki/index.php/Senate_draft_commentary

Also the following twitter hashtags are being used for this debate:

#FinancialReform
#finreg
#Senate
#regreform
#derivatives
#megabanks

Please advise if you have any suggestions or comments about Riski's
coverage of the debate.

Thanks for your attention. Cate Long

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