Dodd Proposes Bold Financial Overhaul

From

The chairman of the U.S. Senate Banking Committee introduced a financial regulation reform bill on Tuesday that leaps beyond earlier proposals, calling for new government agencies on financial stability, bank supervision and financial consumer protection.

Senator Christopher Dodd, a Democrat, released the bill after intense closed-door negotiations, raising the ante in a debate over tighter bank and capital market regulation that has been going on for months since last year’s financial crisis.

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FIRST PLAN FOR INSURANCE OVERSIGHT

The Dodd bill would establish a National Insurance Office, which would be the first attempt by the federal government to monitor the insurance industry. The House and administration proposals have taken similar approaches.

As expected, Dodd’s bill backs the administration’s call for creating a Consumer Financial Protection Agency. The bill proposes that it be funded through fees charged to banks with $10 billion or more in assets and that the Federal Reserve transfer money annually to the agency.

The Federal Deposit Insurance Corp would be the primary agency for unwinding troubled financial firms, with the use of a “systemic resolution fund,” under the bill. The cost of dismantling troubled companies would be recouped afterward through assessments on other financial firms.

The House of Representatives is on track for a final vote on financial regulation reform before the end of the year.

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