Late this week or early next week, a Financial Reform Bill summary is due to be debated in the Senate. For a clearer view of the Financial Reform Bill summary that will control everything from a payday lender to the largest banks, a financial reform bill summary of both HR 4173, which are the House bill that was passed last December and S 3271, will be debated this week. Bear in mind that this Financial Reform Bull summary could change during the dialogue, though the main areas will likely remain the same. This article covers HR 4173, the House Bill.
For the complete Financial Reform summary of the Senate bill, see Part Two.
The Financial Reform Bill Summary on HR 4173
HR 4173 is the House of Representatives Financial Reform Bill. This financial reform bill was first initiated by the House Financial Services Committee and is known widely as the Wall Street Reform and Consumer Protection Act. A full text of HR 4173 is available in PDF form on the U.S. House of Representatives website.
Financial Reform Bill HR 4173 summary | Consumer Protections
First, a Consumer Financial Protection Agency is set to be a separate Federal agency focused solely on decoding, regulating, and ensuring the safety of U.S. financial product consumers. The day-to-day functionality of the Consumer Financial Protection Agency might include creating disclosure standards, working for consumer education about personal loan companies, and examining the details of new financial products.
Mortgage reform and anti-predatory lending laws would also be included. A standard that borrowers must be able to repay the loans they are sold would be instituted. How credit rating agencies conduct business would also be addressed and be given some liability for their ratings.
Stability and Investing covered in HR 4173 Financial Reform Bill summary
The Financial Stability Council, as an "inter agency council," would be responsible for identifying what financial firms are especially risky. Given stronger investor-protection powers are the Securities and Exchange Commission.
Financial Reform Bill HR 4173 Summary | Too Big To Fail
Taxpayer money will no longer be given to firms that are considered "Too Big To Fail" to keep afloat. Rather, a system for dismantling financial businesses would be put into motion through the Financial Reform Bill when they start to fail. In short – no more bailouts for big companies.
Summary of HR 4173 | Investors Say on Pay
A "say on pay" of the executives of a company would be given to shareholders of a company through HR 4173. Even though the vote would only be advisory, regulators also have the capability of banning "inappropriate or imprudently risky" pay packages. All in all, there will be no more executives getting paid millions for running their companies into deep waters.
Derivatives covered in HR 4173 Summary
For the very first time, the "derivatives" market would be regulated. When a product is developed from another product, it's considered a financial derivative. The "mortgage-backed securities," for example, were a financial product derived from residential mortgages. "Derivative" products considered to have "substantial risks" would be regulated.
Financial reform bill summary | Private Pools Investing Money
Businesses, like Hedge funds and private equity firms, who are in the business of investing with private money are not currently regulated. A "private pool of capital," a group of people that pool their money to invest it, would be examined for risk by the Financial Stability Council under HR 4173.
Financial reform bill HR 4173 covering Office of Insurance
At last, the Financial Reform Bill HR 4173 would form a fused insurance regulatory agency. Instead of having to deal with multiple stings of rules and regulations, insurance companies would be regulated, monitored and reported by only one Office of Insurance.
This is a summary of HR 4173, the Financial Reform Bill that passed the House of Representative.
Wall St Journal