So What’s in the Financial Regulation Bill?

Last night the Senate approved the big financial regulation bill by a 59–39 vote, and the bill will move to a conference committee where it will be reconciled with the already-passed House bill, which differs only slightly, but in some major ways. So what does the bill actually accomplish, and what could be changed before final passage?

Simply put, there’s a lot of stuff going on in this bill. It’s 1,500 pages long, which, granted, isn’t as long as the health-care reform bill, but still no easy reading. Here’s how the Washington Post summarizes its major points in pseudo-layman’s terms today:

[T]he legislation would create a new consumer-protection watchdog housed at the Federal Reserve to prevent abuse in mortgage, auto and credit card lending. It also would give the government power to wind down large failing financial firms and set up a council of federal overseers to police the financial landscape for risks to the global economy. Moreover, the legislation would establish oversight of the vast market in financial instruments known as derivatives, impose new restrictions on credit rating agencies and give shareholders a say in corporate affairs.

If this is still confusing to you, the paper also provides explanations with basic illustrations (oversight is depicted as little men looking at a building with binoculars. That’s not what will actually happen, though!).

There are about a dozen differences between the Senate and House bills that need to be smoothed out over the next few weeks, although nobody doubts that they will be. One of the major ones has to do with those derivatives you also hear about. Senator Blanche Lincoln, embroiled in a dead-heat primary battle with a more liberal Democratic opponent, proposed that banks “spin off” their trading of derivatives into a separate subsidiary. This gained enough support to make it into the bill but may be a terrible idea, and the White House wants it stripped in conference committee. Another big discrepancy is the House’s provision for a $150 billion fund, paid for by financial institutions, to help liquidate failed banks. A similar idea was stricken from the Senate bill after the Republicans claimed it would encourage more bailouts. Instead, the Senate bill would collect this money after the fact.

Senate Passes Broader Rules for Overseeing Wall Street [NYT]
Senate passes financial regulation bill [WP]
Regulatory Reform Passes the Senate, Now What? [Swampland/Time]

So What’s in the Financial Regulation Bill?