Senator Chris Dodd will introduce a new financial regulation reform bill on Monday aimed at strengthening the power of the Fed and weakening Wall Street’s ability to influence regulatory policy.
Following the recommendations of Treasury Secretary Timothy Geithner and Fed Chairman Ben Bernanke, Dodd’s bill will expand and strengthen the Fed’s oversight. Under the new bill, the Fed would continue to oversee those institutions with assets of more than $50 billion — around 40 banks in total — a departure from earlier proposals to limit the Fed’s oversight to any institution with over $100 billion in assets. The Fed will also play host to a new consumer-protection authority led by a presidential appointee, and bank officers, such as Jamie Dimon, will be forbidden from sitting on the board.
The bill would also create a systemic risk council, with an independent chairman and several other federal regulators who would be charged with monitoring emerging risks to the economy. This council would have two significant powers. First, it would be able to force a financial company that isn’t a bank, such as an insurance firm or a giant hedge fund, to be overseen by the Fed. It could also vote to strongly pressure another federal regulator to adopt certain regulatory practices, such as tougher regulations against exotic financial products.
Although Dodd has an aggressive schedule in mind for the bill, the same cripplingly slow legislative process that has plagued health-care reform seems imminent.
Senator Bob Corker of Tennessee, who had spearheaded Republican talks on the bill, said last week: “If the senators can pass a bill of this substance out of committee in a week — a 1,200-page bill full of substance, that has a real effect on the financial industry — then the states who elect them might as well send robots to the Senate.”
Dodd hopes to use this week for amendments and vote the bill out of his Senate Banking Committee and onto the Senate floor before Easter recess on March 26.