Obama Unveils Rules For Systemic Risk Regulation

Obama Unveils Rules For Systemic Risk Regulation - 7/23/2009

Home

Index of Filings

News and Press Releases

Filings

Decisions

Settlements

Litigation Activity Indices

Top Ten List

Annual/Quarterly Updates

Clearinghouse Research

Articles & Papers

Search

Related Sites

About Us

Local Rules

Sponsors

Register

_______________
Copyright © 2001
Stanford Law School

2009 News and Press Releases

SEARCH

News	News 2009
HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

HEADLINE NEWS:

Obama Unveils Rules For Systemic Risk Regulation
Evan Weinberger

Securities Law 360. July 23, 2009
_________________________________________________________________________

EXCERPT: Putting more meat onto its proposal for regulating systemic risk throughout the financial system, the Obama administration submitted to Congress legislation that would establish the Federal Reserve as the prime systemic regulatory institution, create a Financial Services Oversight Council, create an Office of National Insurance and require all systemically important financial firms to have a resolution plan should they run into trouble. The legislative package submitted by the Treasury Department Wednesday night grows out of the Obama administration's broader financial regulatory overhaul, but in many ways is the centerpiece because of the powers being redistributed. The legislation hands over broad authority to the Board of Governors of the Federal Reserve to determine which financial firms are systemically significant, including the establishment of some broad guidelines. Any U.S. bank or other financial company with $10 billion or more in assets, $100 billion or more in assets under management, or $2 billion or more in annual revenue could potentially be deemed a Tier 1 Financial Holding Company by the Fed and come under strict capital, leverage and liquidity requirements. Any foreign financial institutions with similar asset levels as their U.S. counterparts and $2 billion or more in annual revenues inside the U.S. could also face determination as a Tier 1 FHC, according to the legislation. An eight-member Financial Services Oversight Council chaired by the Treasury secretary and including a permanent staff inside the Treasury Department is also a part of the package. The rest of the board would be made up of the Fed chairman, the chairs of the U.S. Securities and Exchange Commission and Commodity Futures Trading Commission, the director of the proposed Consumer Financial Protection Agency, the Federal Deposit Insurance Corp. chair, the director of the Federal Housing Finance Agency and the director of the proposed National Bank Supervisor. One other aspect of the legislation that could potentially mark a significant shift is a requirement that systemically important financial institutions provide to the Fed a plan for a “rapid and orderly” resolution in case it runs into severe trouble. In a nod to the collapse of American International Group Inc. and Lehman Brothers Holdings Inc., Tier 1 FHCs will also have to provide lists of their credit exposure to other similar organizations to the Fed along with the resolution plans. The Fed also has the right to examine compensation practices at Tier 1 FHCs under the proposed legislation.

Back to News page | Back to Archived News 2009 page | Back to Top

�