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The US Treasury has published its final report on the regulatory reform plan of the
To lay a new foundation for regulation and supervision, the administration's plan will strengthen capital and liquidity requirements for all financial firms, establish a tougher supervisory regime for the firms that pose the most serious risks to financial stability, eliminate gaps, increase transparency, and limit the opportunities for regulatory arbitrage.
Treasury will lead a working group, with participation by federal agencies and outside experts, that will conduct a fundamental reassessment of the supervision of banks and BHC. The working group will issue a report with its conclusions by
Firewalls between banks and their affiliates will be strengthened to better protect the federal safety net that supports banks, to better prevent spread of the subsidy from the federal safety net to bank affiliates, and to better address conflicts of interest in banking organizations.
Accounting standards will be reviewed to determine how financial firms should be required to employ more forward‐looking loan loss provisioning practices that incorporate a broader range of available credit
Fair value accounting rules also will be reviewed with the goal of identifying changes that could provide market participants with both fair value
The securitization markets will be strengthened and credit default swaps and other OTC derivatives will be made subject to comprehensive regulation.
Banking regulators will issue regulations that require the originator of a securitized loan, or the sponsor of a securitization to retain 5 percent of the credit risk of securitized exposures.
Regulators will reduce their use of credit ratings in regulations and supervisory practices, wherever possible.
OTC derivatives markets will be subject to comprehensive regulation. New regulation will require transparency for all OTC derivative trades and positions, through recordkeeping and reporting requirements and higher capital charges for customized OTC derivatives
A new Financial Services Oversight Council will be given broad authority to collect
It will have broad authority, through a permanent staff in Treasury, to require reports from any
The Federal Reserve will be given stronger statutory authority to oversee systemically important payment, clearing, and settlement systems.
Further issues of the plan include:
Ø Increase market discipline and transparency to make our markets strong enough to withstand system-wide stress and the potential failure of one or more large financial institutions
Ø Rebuild trust in our markets by creating the Consumer Financial Protection Agency to focus exclusively on protecting consumers in credit, savings, and payment markets.
Ø Provide the government with the tools needed to manage financial crises so it is not forced to choose between bailouts and financial collapse
Ø Raise international regulatory standards and improve international co-ordination
White Paper: Financial Regulatory Reform:
Requiring Strong Supervision And Appropriate Regulation Of All Financial Firms
Strengthening Regulation Of Core Markets And Market Infrastructure
Strengthening Consumer Protection
Providing The Government With Tools To Effectively Manage Failing Institutions
Improving International Regulatory Standards And Cooperation