US’s stance on its too-big-to-fail firms just got tougher. New measures, cutting heavily on the big banks’ portfolios and profits, have been proposed.
Barack Obama, moving a step closer to his previously manifested policy (of circumscribing the BIG BANKS), reined in Chris Dodd, chairman of the United States Senate’s Banking Committee, to propose a bill that could contain the hefty firms.
The proposed bill comprises two main aspects:
1.) Creation of the Financial Stability Oversight Council.
Such a council provides for authorities to the FED to take control of any firms it deems as a threat to financial stability. Although such mechanisms did exist for banks but they did not for bank-holding companies.
2.) Creation of Consumer Financial Protection Bureau.
This one will lay-out rules and regulations for a vast range of financial products, viz. Car loans, ATM fees, etc.
These come, obviously in addition to the Federal Deposit Insurance Corporation, which have been doing hopefully well (save for the pre-recession period though).
Though the aspects of the proposal look good, Obama will need to muster a filibuster proof 60 votes, that ain’t no easy. Obama is already facing stale-mate on numerous policies like health care reforms and carbon-emission-capture-plants.
He’ll have to keep his fingers crossed to ensure that this one works out.