MacGray Matters – Financial News Update – July 19, 2010
MacGray Matter July 19, 2010
FINANCIAL REFORM: Early this week, President Obama will sign the Financial Reform Act passed by the Senate this past week. What does the bill say? Once again, it is very, very long and rather confusing. One of the main reasons I can’t tell you what it all means is that much of the Act simply directs the Executive Branch to do things, like make regulations. The bill will immediately create a 10-member Financial Stability Oversight Council, a powerful assembly of regulators chaired by the Treasury Secretary to keep watch over the entire financial system. The Obama administration has one year to create a new Bureau of Consumer Financial Protection. The Fed has until April to derive standards to measure the fairness of fees charged by banks to merchants for customers who use debit cards. Regulators also will have to figure out how to implement new standards for how much capital banks should hold in reserve to protect against losses. The legislation requires rules in 18 months, but the U.S. is also part of international negotiations on what global capital standards should be, and those could move more slowly and affect how quickly the regulations are enacted. As we learn more about this legislation and its implications, we will provide additional information.