A year and a half since the reckless behavior of the Big Banks took our economy to the edge of the abyss and cost 8 million Americans their jobs, the Senate is moving towards passage of meaningful reform that will rein in the Big Banks and protect consumers.

Read the most current posts about the Senate’s bill here.

The following reforms will hold Wall Street accountable and prevent another financial crisis:

Enactment of the Consumer Financial Protection Agency; key provisions include:

• CFPA as an independent agency.
• Cover all financial products.
• Examination, enforcement and rulemaking authority.
• Federal floor of protection, not ceiling.
• Include the Community Reinvestment Act under its purview.

Derivatives reform, key provisions include:

• Standardized derivatives must be cleared and traded on open exchanges.
• Any exemptions from exchange trading or clearing should be restricted to bona fide commercial hedging of physical commodities by end-users, and truly customized contacts that cannot be traded or cleared.
• Higher capital and margin requirements on derivatives that are not cleared, providing strong economic incentive to deal in derivatives that are cleared and exchange-traded.
• Authority for Federal regulators (not clearinghouses) to define which swaps must be cleared.
• Full authority for Federal regulators to set and enforce position limits including aggregate position limits, and limits on activity on foreign boards of trade that allow U.S. access.     
• Full public reporting of aggregate swap trading data.

Systemic Risk prevention, key provisions include:

• One central systemic risks regulator that is more democratic and transparent than the Federal Reserve Board as currently governed.
• A Presidentially-appointed director with sufficient staff, resources, and jurisdiction over activities throughout the financial markets.
• Mandates Regulator to take mitigatory actions including orders to divest – regarding institutions that create systemic risk because of their size, complexity, interconnectedness, or speculative activities.
• Insulation of commercial banking from capital/shadow market risk through a robust “Volcker Rule” banning proprietary trading and bank ownership of private investment funds, or a reinstatement of pre-1999 Glass-Steagall Act separations between commercial and investment banking and insurance.
• Limits on speculative activities and market concentration, such as a cap on bank liabilities as a share of GDP, restrictions on off-balance sheet activities, lower leverage limits, safeguards against excessive counterparty exposures, progressive capital and liquidity requirements and enforcement of deposit concentration rules.

Resolution authority, key provisions include:

• Swift resolution authority for financial firms that prevents bailouts.
• No protection for management, board, shareholders and unsecured creditors other than insured depositors and employees.
• No bankruptcy presumption that allows for costly delays.
• Resolution costs financed by financial companies and not by taxpayers, paid in advance of resolution
• Resolution authority reform must be in addition to — not a substitute for — active, strong prudential regulation.

Investor Protections; key provisions include:

• Removal of the broker-dealer exclusion from the Investment Advisers Act.
• Greater resources and authority for the SEC.
• Timely and better tested disclosures.
• Improved remedies to redress wrongdoing.

Hedge Funds and Private Equity; key provisions include:

• Comprehensive SEC regulation of advisers to hedge funds, private equity and venture capital and the investment funds.
• No exemptions from registration requirements.
• SEC access to information about private investment funds and SEC authority to require disclosures to investors, prospective investors, trading partners and creditors.

Credit Rating Agencies reform, key provisions include:

• Reduction of reliance on ratings on a case-by-case basis.
• Independent ratings clearinghouse to make rating assignments.
• Increased SEC authority over credit rating agencies, including anti-fraud authority and post-rating surveillance.
• Majority, independent representation for credit ratings users on rating agencies’ boards of directors to improve governance practices.
• Enhanced ratings transparency.
• Expanded legal liability to ensure accountability.
• Establishment of a universal rating scale for municipal and corporate bonds.

Corporate governance reforms, key provisions include:

• Reaffirm the authority of the SEC to give shareowners access to the proxy.
• Majority voting for directors.
• Shareowner “say on pay” and other executive compensation issues.