Senate Dems gut Fed's powers

Jan 2008
32,903
9,709
Vertiform City
Ha - a new Senate bill that finally does a TINY part of what's needed!



. Consolidate federal supervision of banks under a "Financial Institutions Regulatory Administration."



• Abolish the Office of the Comptroller of the Currency and the Office of Thrift Supervision, and strip the Federal Deposit Insurance Corporation and the Fed of their bank supervision duties.



• Create an "Agency for Financial Stability" that would enforce new rules and dismantle complex financial firms if they threaten the broader economy.



• Regulate privately traded derivatives, hedge funds and other private pools of capital so that regulators have a sense of how much risk is being assumed by financial firms.



• Impose new rules on investment rating agencies.



• Limit the Fed's ability to provide emergency loans to mostly healthy institutions, instead of failing firms.





http://news.yahoo.com/s/ap/20091110/ap_on_bi_ge/us_financial_overhaul
 

Bluegrass

Former Staff
Apr 2007
4,992
1,672
[quote name='nonsqtr' date='10 November 2009 - 04:48 PM' timestamp='1257889725' post='56683']

Ha - a new Senate bill that finally does a TINY part of what's needed!



. Consolidate federal supervision of banks under a "Financial Institutions Regulatory Administration."



• Abolish the Office of the Comptroller of the Currency and the Office of Thrift Supervision, and strip the Federal Deposit Insurance Corporation and the Fed of their bank supervision duties.



• Create an "Agency for Financial Stability" that would enforce new rules and dismantle complex financial firms if they threaten the broader economy.



• Regulate privately traded derivatives, hedge funds and other private pools of capital so that regulators have a sense of how much risk is being assumed by financial firms.



• Impose new rules on investment rating agencies.



• Limit the Fed's ability to provide emergency loans to mostly healthy institutions, instead of failing firms.





http://news.yahoo.com/s/ap/20091110/ap_on_bi_ge/us_financial_overhaul

[/quote]



If this is going to happen, it is great news.
 
Oct 2009
1,353
0
[quote name='Bluegrass' date='10 November 2009 - 10:55 PM' timestamp='1257911710' post='56931']

If this is going to happen, it is great news.

[/quote]



I'm very skeptical about the Democrats doing anything that they claim is in the interests of the people. Although I wouldn't mind seeing the Fed out of business.
 

Bluegrass

Former Staff
Apr 2007
4,992
1,672
[quote name='SideTraKd' date='10 November 2009 - 11:05 PM' timestamp='1257912305' post='56936']

I'm very skeptical about the Democrats doing anything that they claim is in the interests of the people. Although I wouldn't mind seeing the Fed out of business.

[/quote]



It appears this is a go.
 

anonymous

Former Staff
Jun 2008
10,578
2,873
Passing Through
The FRB will not be out of business and with regulation of derivatives they set the stage for the continued bailout of institutions that trade in derivatives. It creates 3 more government departments, meaning more bureaucracy and more spending.



This is nothing more than more smoke and mirrors and does nothing to alleviate the still outstanding obligations of banks and investment firms. It does nothing to separate depository institutions from investment firms.



Senator Dodd's Bill - Copy



Here is the claimed "discussion points" that are allegedly addressed:



1

[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Senate Committee on Banking, Housing, and Urban Affairs, Chairman Chris Dodd (D-CT) [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Contact: Kirstin Brost/Justine Sessions, 202-224-7391 [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Summary: Restoring American Financial Stability – Discussion Draft [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Create a Sound Economic Foundation to Grow Jobs, Protect Consumers, [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Rein in Wall Street, End Too Big to Fail, Prevent Another Financial Crisis [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Over the past year, Americans have faced the worst financial crisissince the Great Depression. Millions have lost their jobs, businesseshave failed, housing prices have dropped, and savings were wiped out.



The failures that led to this crisis require bold action. We mustrestore responsibility and accountability in our financial system togive Americans confidence that there is a system in place that worksfor and protects them. We must create a sound foundation to grow theeconomy and create jobs.



[/font]
[/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]HIGHLIGHTS OF THE DISCUSSION DRAFT [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Consumer Financial Protection Agency: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Createsan independent watchdog to ensure American consumers get the clear,accurate information they need to shop for mortgages, credit cards, andother financial products, while prohibiting hidden fees, abusive terms,and deceptive practices. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Ends Too Big to Fail: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Preventsexcessively large or complex financial companies from bringing down theeconomy by: creating a safe way to shut them down if they fail;imposing tough new capital and leverage requirements and requiring theywrite their own "funeral plans"; requiring industry to provide theirown capital injections; updating the Fed’s lender of last resortauthority to allow system-wide support but not prop up individualinstitutions; and establishing rigorous standards and supervision toprotect the economy and American consumers, investors and businesses. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Protects Against Systemic Risks: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Createsan independent agency with a board of regulators to identify andaddress systemic risks posed by large, complex companies, products, andactivities before they threaten the stability of the financial system.The agency could require companies that threaten the economy to divestsome of their holdings. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Single Federal Bank Regulator: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Eliminatesthe convoluted system of multiple federal bank regulators to increaseaccountability and end unnecessary overlap, conflicting regulation, and"charter shopping;" keeps in place the healthy dual banking system thatgoverns community banks. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Executive Compensation and Corporate Governance: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Providesshareholders with a say on pay and corporate affairs with a non-bindingvote on executive compensation and director nominations. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Closes Loopholes in Regulation: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Eliminatesloopholes that allow risky and abusive practices to go on unnoticed andunregulated - including loopholes for over-the-counter derivatives,asset-backed securities, hedge funds, mortgage brokers and paydaylenders. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Protects Investors: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Providestough new rules for transparency and accountability from investmentadvisors, financial brokers and credit rating agencies to protectinvestors and businesses. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Enforces Regulations on the Books: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Strengthensoversight and empowers regulators to aggressively pursue financialfraud, conflicts of interest and manipulation of the system thatbenefit special interests at the expense of American families andbusinesses. [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]2 [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]INDEPENDENT CONSUMER FINANCIAL PROTECTION AGENCY [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]The Consumer Financial Protection Agency will have the sole job ofprotecting American consumers from fraud and abuse and will ensurepeople get the clear information they need on loans and other financialproducts from credit card companies, mortgage brokers, banks andothers.



American consumers already have protections against faultyappliances, contaminated food, and dangerous toys. With the creation ofthe Consumer Financial Protection Agency, they’ll finally have awatchdog to oversee financial products, giving Americans confidencethat there is a system in place that works for them – not just bigbanks on Wall Street.



[/font]
[/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Why Change Is Needed: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Theeconomic crisis was driven by an across-the-board failure to protectconsumers. When consumer protections are handled by regulators whoseprimary responsibility is to safeguard the profitability of thecompanies they regulate, consumer protections don’t get the attentionthey need. The result has been unfair, deceptive, and abusive practicesbeing allowed to spread unchallenged, nearly bringing down the entirefinancial system. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]TheFederal Reserve is the primary consumer protection rule-writer, but ithas repeatedly failed to act despite repeated demands from Congress.The Federal Trade Commission is responsible for consumer protectionsfor non-bank finance companies, but lacks the authority and capacity toexamine them. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]The Consumer Financial Protection Agency [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· Consumer Protections in One Place: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Consolidatesconsumer protection responsibilities currently handled by the Office ofthe Comptroller of the Currency, Office of Thrift Supervision, FederalDeposit Insurance Corporation, the Federal Reserve, the National CreditUnion Administration, and the Federal Trade Commission. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Independent: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Ledby a 5 member board with an independent director. The Chairman of theFinancial Institutions Regulatory Administration will have a seat onthe board. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]A Watchdog with Real Teeth: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Unitesrule-writing, supervision, and enforcement for consumer protection in asingle, stand-alone agency with broad authority to investigate andreact to abuses as they develop. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Able to Act Fast: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Withthis agency on the lookout for bad deals and schemes, consumers won’thave to wait for Congress to pass a law to be protected from badbusiness practices. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Educates: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Creates a new Office of Financial Literacy. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Regulates Shadow Banking Industry: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Levelsthe playing field for insured banks by regulating the shadow bankingindustry, such as mortgage brokers and payday lenders, for the 1[/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]st [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]time and ensures that companies offering customers the same products receive the same regulatory treatment. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Accountability: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Makesone agency accountable for consumer protections. With many agenciessharing responsibility, it’s hard to know who is responsible for what,and easy for emerging problems that haven’t historically fallen underanyone’s purview, to fall through the cracks. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Tougher State Laws: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Allowsstates to pass tougher consumer protections that apply to all lenders,preventing federal regulations from preempting stronger state laws. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Works with Bank Regulators: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Coordinates with other regulators when examining banks to prevent undue regulatory burden. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Bases Supervision on Risk: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Focusesresources on companies that pose the biggest risk to consumers -mortgage bankers, brokers, finance companies and the largestinstitutions. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]3



[/font]
[/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ADDRESSING SYSTEMIC RISKS: THE AGENCY FOR FINANCIAL STABILITY [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]One financial institution should never be capable of bringing down the entire American economy.



The newly created Agency for Financial Stability is an independentagency responsible for identifying, monitoring and addressing systemicrisks posed by large, complex companies as well as products andactivities that can spread risk across firms. It will discouragecompanies from getting too large by imposing burdens on them as theygrow and give regulators the authority to break up large, complexcompanies if they pose a threat to the financial stability of theUnited States.



[/font]
[/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Why Change is Needed: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]The economic crisis introduced a new term to our national vocabulary – systemic risk. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]InJuly, Federal Reserve Governor Daniel Tarullo, testified that"Financial institutions are systemically important if the failure ofthe firm to meet its obligations to creditors and customers would havesignificant adverse consequences for the financial system and thebroader economy." [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Inshort, in an interconnected global economy, it’s easy for some people’sproblems to become everybody’s problems. The failures that brought downgiant financial institutions last year also devastated the economicsecurity of millions of Americans who did nothing wrong – their jobs,homes, retirement security, gone overnight because of Wall Street greedand regulatory failures. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]The Agency for Financial Stability [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] Strong and Independent: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Governedby an independent chairman, appointed by the President and confirmed bythe Senate, to provide insulation from political manipulation. Theboard will have 9 members including the federal financial regulatorsand two independent members. The board members' diverse areas ofexpertise will strengthen the board’s ability to identify and respondto emerging risks throughout the financial system. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Tough to Get Too Big: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Writesincreasingly strict rules for capital, leverage, liquidity, riskmanagement and other requirements as companies grow in size andcomplexity, imposing significant costs on companies that pose risks tothe financial system. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Break Up Large, Complex Companies: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Givesthe regulators the authority to break up large, complex companies ifthey pose a threat to the financial stability of the United States[/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· Close Gaps in Regulation: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Identifies unregulated financial companies that pose systemic risk and assigns them to a federal regulator for supervision. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Lean and Mean: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Expectedto be staffed with a highly sophisticated staff of economists,accountants, lawyers, former supervisors, and other specialists. Withjust rule writing authority and no direct supervision, the agency canremain small but effective. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Make Risks Transparent: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Collectsand analyzes data to identify and monitor emerging risks to the economyand make this information public in periodic reports and testimony toCongress twice a year. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Oversight of Important Market Utilities: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]TheAgency for Financial Stability will identify systemically importantclearing, payments, and settlements systems to be regulated by theFederal Reserve. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]4



[/font]
[/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ENDING TOO BIG TO FAIL [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Preventing another crisis where American taxpayers are forced tobail out financial firms requires strengthening big companies to betterwithstand stress, putting a price on excessive growth that matches therisks they pose to the financial system, and creating a way to shutdownbig companies that fail without threatening the economy.



[/font]
[/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Why Change is Needed: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Aslong as giant firms (and their creditors) believe the government willprop them up if they get into trouble, they only have incentive to getlarger and take bigger risks, believing they will reap any rewards andleave taxpayers to foot the bill if things go wrong. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Sincethe crisis began, a number of institutions previously considered "toobig to fail" have only grown bigger by acquiring failing companies,leaving our country with the same vulnerabilities that led to lastyear’s bailouts. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Limiting Large, Complex Companies and Preventing Future Bailouts [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· Discourage Excessive Growth: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Imposesincreasingly strict standards for companies as they grow larger, morecomplex, or more interconnected, including heightened capital,leverage, and liquidity requirements, that ensure these companies havegreater resources to deal with financial shocks. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Require Companies Provide Their Own Capital Injections: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Requiresinstitutions to issue long-term hybrid debt securities that willprovide them with capital during a systemic crisis so failinginstitutions can provide their own life support. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Funeral Plans[/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]:Requires large, complex companies to periodically submit plans fortheir rapid and orderly shutdown should the company go under. Companieswill be hit with higher capital requirements and subject torestrictions on growth and activity as well as required divestment ifthey fail to submit acceptable plans. Plans will help regulatorsunderstand the structure of the companies they oversee and serve as aroadmap for shutting them down if the company fails. Significant costsfor failing to produce a credible plan create incentives for firms torationalize structures or operations that cannot be unwound easily. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Orderly Shutdown: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Createsa mechanism for the FDIC to unwind failing systemically significantfinancial companies through receivership, but not open assistance.Costs of unwinding these companies will ultimately be charged tofinancial firms with assets of over $10 billion, not to the taxpayers. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Limit Federal Reserve Lending: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Updatesthe Federal Reserve’s 13(3) lender of last resort authority to allowsystem-wide support for healthy institutions or systemically importantmarket utilities during a major destabilizing event, but not to prop upindividual institutions. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]5



[/font]
[/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]CREATING A SINGLE FEDERAL BANK REGULATOR: [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]THE FINANCIAL INSTITUTIONS REGULATORY ADMINISTRATION [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]The Financial Institutions Regulatory Administration will eliminatethe alphabet soup of multiple bank regulators that has led to weak,confusing regulation where it’s easy for problems to fall through thecracks and difficult to know who is responsible.



[/font]
[/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Why Change is Needed: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Today,we have a convoluted system of bank regulators created by historicalaccident. There are 4 federal banking agencies that oversee nationaland state banks and federal and state thrifts. The result has beencharter shopping, where firms look around for the regulator that willgo easiest on them and fee-funded regulators go easy on those theyregulate in order to keep their business, as well as a mess ofoverlaps, redundancies, and blurred lines of responsibility. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Expertsagree that no one would have designed a system that looked like this.For over 60 years, administrations of both parties, members of Congressacross the political spectrum, commissions and scholars have proposedstreamlining this irrational system. The Financial InstitutionsRegulatory Administration will finally achieve that goal. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]The Financial Institutions Regulatory Administration [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· Independent: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Headedby an independent chairman appointed by the President and confirmed bythe Senate, a Vice Chairman experienced in state banking regulation,and a board including the chairmen of the FDIC and the Federal Reserveand two other independent members. It will be funded primarily byassessments on the industry. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Single Focused Agency: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Combinesthe functions of the Office of the Comptroller of the Currency and theOffice of Thrift Savings, the state bank supervisory functions of theFederal Deposit Insurance Corporation and the Federal Reserve, and thebank holding company supervision authority from the Federal Reserve. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Dual Banking System: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Preserves the dual banking system, leaving in place the state banking system that governs most of our nation’s community banks. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Separate Community Bank Division: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Establishesa separate division within the new regulator to regulate communitybanks given the different supervisory issues they pose. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Eliminates Charter Shopping: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Stopsfinancial institutions from choosing the easiest regulator, and stopsfee-funded regulators from going easy on those they regulate to keeptheir business. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Increases Accountability: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Having a single regulator will mean an identifiable agency is held responsible for shortcomings in the banking system. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Speeds Action, Increases Efficiency: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Endsslow, cumbersome, coordinated rulemaking that creates extra red tapeand inconsistent enforcement of the same rules by agencies. Overlapsimpose unnecessary costs on regulated institutions and their customers.[/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Focuses the FDIC and the Federal Reserve: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]TheFDIC will focus on its jobs as deposit insurer and resolver of failedinstitutions, retaining backup examination authority over troubledbanks and gaining additional authority to accompany the new agency onexaminations of healthy banks and holding companies to ensure it hassufficient information to perform its insurance functions. The FederalReserve will focus on monetary policy without being distracted byresponsibilities for bank oversight and consumer protections. TheFederal Reserve will continue to play a key role in assessing financialstability and have guaranteed access to financial institutions and anyneeded information. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]6



[/font]
[/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ADDRESSING SYSTEMIC RISKS POSED BY DERIVATIVES [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Common sense safeguards will protect taxpayers against the need forfuture bailouts and buffer the financial system from excessiverisk-taking. Over-the-counter derivatives will be regulated by the SECand the CFTC, more will be cleared through centralized clearing housesand traded on exchanges, un-cleared swaps will be subject to margin andcapital requirements, and all trades will be reported so thatregulators can monitor risks in this large, complex market.



[/font]
[/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Why Change is Needed: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Theover-the-counter derivatives market has exploded in the last decade –from $91 trillion in 1998 to $592 trillion in 2008. During last year’sfinancial crisis, concerns about the ability of companies to make goodon these contracts and the lack of transparency about what risksexisted caused credit markets to freeze. Investors were afraid to tradeas Bear Stearns, AIG, and Lehman Brothers failed because any newtransaction could expose them to more risk. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Over-the-counterderivatives are supposed to be contracts that protect businesses fromrisks, but they became a way for companies to make enormous bets withno regulatory oversight or rules and therefore exacerbated risks.Because the derivatives market was considered too big and toointerconnected to fail, taxpayers had to foot the bill for WallStreet’s bad bets. Those bad bets linked thousands of traders, creatinga web in which one default threatened to produce a chain of corporateand economic failures worldwide. These interconnected trades, coupledwith the lack of transparency about who held what, made unwinding the"too big to fail" institutions more costly to taxpayers. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Bringing Transparency and Accountability to the Derivatives Market [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] Closes Regulatory Gaps: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Providesthe SEC and CFTC with authority to regulate over-the-counterderivatives so that irresponsible practices and excessive risk-takingcan no longer escape regulatory oversight. Uses the Administration’soutline for a joint rulemaking process with the Agency for FinancialStability stepping in if the two agencies can’t agree. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Central Clearing and Exchange Trading: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Requirescentral clearing and exchange trading for derivatives that can becleared and provides a role for both regulators and clearing houses todetermine which contracts should be cleared. Requires the SEC and theCFTC to pre-approve contracts before clearing houses can clear them. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Safeguards for Un-Cleared Trades: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Requirestraders post margin and capital on un-cleared trades in order to offsetthe greater risk they pose to the financial system and encourage moretrading to take place in transparent, regulated markets. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Market Transparency: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Requiresdata collection and publication through clearing houses or swaprepositories to improve market transparency and provide regulatorsimportant tools for monitoring and responding to risks. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]7 [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]HEDGE FUNDS [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Hedgefunds worth over $100 million will be required to register with the SECas investment advisers and to disclose financial data needed to monitorsystemic risk and protect investors. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Why Change is Needed: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Hedgefunds are responsible for huge transfers of capital and risk, butgenerally operate outside the framework of the financial regulatorysystem, even as they have become increasingly interwoven with the restof the country’s financial markets. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Asa result, no regulator is currently able to collect information on thesize and nature of these firms or calculate the risks they pose to thebroader economy. The SEC is currently unable to examine private funds’books and records or take sufficient action when it suspects fraud. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Raising Standards and Regulating Hedge Funds [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· Fills Regulatory Gaps: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Endsthe "shadow" financial system in which hedge funds and other privatepools of capital operate by requiring that they provide regulators withcritical information. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Register with the SEC: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Requireshedge funds to register with the SEC as investment advisers and provideinformation about their trades and portfolios necessary to assesssystemic risk. This data will be shared with the systemic riskregulator and the SEC will report to Congress annually on how it usesthis data to protect investors and market integrity. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Independent Custody of Client Assets: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Requires investment advisers to use independent custodians for client assets to prevent Madoff-type frauds. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Greater State Supervision: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Raisesthe assets threshold for federal regulation of investment advisers from$25 million to $100 million, a move expected to increase the number ofadvisors under state supervision by 28%. States have proven to bestrong regulators in this area and subjecting more entities to statesupervision will allow the SEC to focus its resources on newlyregistered hedge funds. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]INSURANCE [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Office of National Insurance: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Createsa new office within the Treasury Department to monitor the insuranceindustry, coordinate international insurance issues, and requires astudy on ways to modernize insurance regulation and provide Congresswith recommendations. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Streamlines [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]the regulation of surplus lines insurance and reinsurance through state-based reforms. [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]8 [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]CREDIT RATING AGENCIES [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Establishesa new Office of Credit Rating Agencies at the Securities and ExchangeCommission to strengthen regulation of credit rating agencies. Newrules for internal controls, independence, transparency and penaltiesfor poor performance will address shortcomings and restore investorconfidence in these ratings. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Why Change is Needed: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Ratingagencies market themselves as providers of independent research andin-depth credit analysis. But in this crisis, instead of helping peoplebetter understand risk, they failed to warn people about risks hiddenthroughout layers of complex structures. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Flawedmethodology, weak oversight by regulators, conflicts of interest, and atotal lack of transparency contributed to a system in which AAA ratingswere awarded to complex, unsafe asset-backed securities - adding to thehousing bubble and magnifying the financial shock caused when thebubble burst. When investors no longer trusted these ratings during thecredit crunch, they pulled back from lending money to municipalitiesand other borrowers. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]New Requirements and Oversight of Credit Rating Agencies [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· New Office, New Focus at SEC: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Createsan Office of Credit Ratings at the SEC with its own compliance staffand the authority to fine agencies. The SEC is required to examineNationally Recognized Statistical Ratings Organizations at least once ayear and make key findings public. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Disclosure: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]RequiresNationally Recognized Statistical Ratings Organizations to disclosetheir methodologies, their use of third parties for due diligenceefforts, and their ratings track record. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Independent Information: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Requiresagencies to consider information in their ratings that comes to theirattention from a source other than the organizations being rated ifthey find it credible. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Conflicts of Interest: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Prohibits compliance officers from working on ratings, methodologies, or sales. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Liability: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Investorscould bring private rights of action against ratings agencies for aknowing or reckless failure to investigate or to obtain analysis froman independent source. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Right to Deregister: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Gives the SEC the authority to deregister an agency for providing bad ratings over time. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Education: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Requires ratings analysts to pass qualifying exams and have continuing education. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]9 [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]EXECUTIVE COMPENSATION AND CORPORATE GOVERNANCE [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Strengthening Shareholder Rights [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Givingshareholders a say on pay and proxy access, ensuring the independenceof compensation committees, and requiring public companies to setclawback policies to take back executive compensation based oninaccurate financial statements are important steps in reining inexcessive executive pay and can help shift management’s focus fromshort-term profits to long-term growth and stability. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Why Change Is Needed: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]In this country, you are supposed to be rewarded for hard work. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ButWall Street has developed an out of control system of out of this worldbonuses that rewards short term profits over the long term health andsecurity of their firms. Incentives for short-term gains likewisecreated incentives for executives to take big risks with excessleverage, threatening the stability of their companies and the economyas a whole. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Giving Shareholders a Say on Pay and Creating Greater Accountability [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· Vote on Executive Pay and Golden Parachutes: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Givesshareholders a say on pay with the right to a non-binding vote onexecutive pay and golden parachutes linked to corporate takeovers. Thisgives shareholders a powerful opportunity to hold accountableexecutives of the companies they own, and a chance to disapprove wherethey see the kind of misguided incentive schemes that threatenedindividual companies and in turn the broader economy. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Nominating Directors: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Givesshareholders proxy access to nominate directors. Providing shareholdersa greater role in choosing directors can help shift management’s focusfrom short-term profits to long-term growth and stability. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Independent Compensation Committees: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Standardsfor listing on an exchange will require that compensation committeesinclude only independent directors and have authority to hirecompensation consultants in order to strengthen their independence fromthe executives they are rewarding or punishing. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Clawbacks for Executives at Public Companies: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Requiresthat public companies set policies to take back executive compensationif it was based on inaccurate financial statements that don’t complywith accounting standards. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]SEC Review: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Directsthe SEC to clarify disclosures relating to compensation, includingrequiring companies to provide charts that compare their executivecompensation with stock performance over a five-year period. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]10 [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]SEC AND IMPROVING INVESTOR PROTECTIONS [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Everyinvestor – from a hardworking American contributing to a union pensionto a day trader to a retiree living off of their 401(k) – deservesbetter protections for their investments. Investors in securities willbe better protected by improving the competence of the SEC, creatinguniform standards for those providing customers investment advice, andgiving investors the right to sue those who commit securities fraud. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Why Change Is Needed: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]TheMadoff scandal demonstrated just how desperately the SEC is in need ofreform. The SEC has failed to perform aggressive oversight and isunable to understand the very companies it is supposed to regulate. Andinvestors have been used and abused by the very people who are supposedto be providing them with financial advice. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]SEC and Beefed Up Investor Protections [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] SEC Reforms: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Mandates an annual assessment of the SEC’s internal supervisory controls and a biannual GAO study of SEC management. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Uniform Standards for Advisors: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Mandates uniform standards for anyone providing customers investment advice, eliminating different standards for broker[/font][/font][font="Cambria Math,Cambria Math"][font="Cambria Math,Cambria Math"]â€[/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]dealersand investment advisers. Small investors should have uniformprotections regardless of the title of the financial professionaladvising them has. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Best Interest of the Client: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Brokerswho give investment advice will be held to the same fiduciary standardas investment advisers – they will be required to act in their clients’best interest. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Aiding and Abetting: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Investors will be able to sue persons who help commit securities fraud. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]New Advocates for Investors: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Createsthe Investment Advisory Committee, a committee of investors to advisethe SEC on its regulatory priorities and practices as well as theOffice of Investor Advocate in the SEC, to identify areas whereinvestors have significant problems dealing with the SEC and FINRA andprovide them assistance. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Funding: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]The self-funded SEC will no longer be subject to the annual appropriations process. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]SECURITIZATION [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Companiesthat sell products like mortgage-backed securities are required toretain a portion of the risk to ensure they won’t sell garbage toinvestors, because they have to keep some of it for themselves. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Why Change Is Needed: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Companiesmade risky investments, such as selling mortgages to people they knewcould not afford to pay them, and then packaged those investmentstogether, called asset-backed securities, and sold them to investorswho didn’t understand the risk they were taking. For the company thatmade, packaged and sold the loan, it wasn’t important if the loans werenever repaid as long as they were able to sell the loan at a profitbefore problems started. This led to the subprime mortgage mess thathelped to bring down the economy. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Reducing Risks Posed by Securities [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] Skin in the Game: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Requirescompanies that sell products like mortgage-backed securities to retainat least 10% of the credit risk. That way if the investment doesn’t panout, the company that made, packaged and sold the investment would loseout right along with the people they sold it to. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Better Disclosure: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Requires issuers disclose more information about the underlying assets and to analyze the quality of the underlying assets. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]11



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[/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]MUNICIPAL SECURITIES [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Municipal securities will have better oversight through theregistration of municipal advisers and increased investorrepresentation on the Municipal Securities Rulemaking Board.



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[/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Why Change is Needed: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Financialadvisers to municipal securities issuers have been involved in"pay-to-play" scandals and have recommended unsuitable derivatives forsmall municipalities, among other inappropriate actions, and are notcurrently regulated. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Better Oversight of Municipal Securities [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] Registers Advisors and Brokers: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]RequiresSEC registration for financial advisers, swap advisers, and investmentbrokers – unregulated intermediaries who play key roles in themunicipal bond market. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Regulates Advisors and Brokers: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Subjectsfinancial advisers, swap advisers, and investment brokers to rulesissued by the Municipal Securities Rulemaking Board and enforced by theSEC or a designee. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]ï‚· [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Puts Investors First on the MSRB Board: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Givesinvestor and public representatives a majority on the MSRB to betterprotect investors in the municipal securities market where there hasbeen less transparency than in corporate debt markets. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]CREATING A 21[/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]st [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]CENTURY WORKFORCE FOR 21[/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]st [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]CENTURY REGULATORS [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]This bill will take a look at a key hurdle for creating competent regulatory agencies: competent staff.



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[/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Why Change is Needed: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Thenew proposals will create three new agencies – the FinancialInstitutions Regulatory Administration, the Agency for FinancialStability and the Consumer Financial Protection Agency – each posingstaffing challenges that will determine the regulators’ success orfailure. [/font][/font]



[font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"] [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]A Better Work Environment to Attract Better Staff: [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]Thebill will set up a panel to look at the staffing needs of the three newagencies based on the successful panel that helped the IRS to improvetheir hiring practices. The advisory panel will last only three yearsto see that these agencies are able to attract, cultivate, and retaincompetent staff qualified to regulate complex, 21[/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]st [/font][/font][font="Times New Roman,Times New Roman"][font="Times New Roman,Times New Roman"]century financial institutions. [/font][/font]