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Obama administration sends financial system overhaul legislation to Congress

By Bernard Hibbitts (editor) and University of Pittsburgh School of Law students.

[JURIST] The Obama administration sent Congress draft legislation Wednesday that would put the Federal Reserve in charge of regulating the largest financial firms. The proposed legislation would create an eight-member Financial Services Oversight Council to pinpoint risks in financial markets and would establish a National Bank Supervisor and Resolution Authority. It would also create within the Department of the Treasury an Office of National Insurance, the director of which would be charged with identifying gaps in industry regulation that could lead to crises in the insurance or financial systems. The draft legislation would also amend the Bank Holding Company Act of 1956 to give the Federal Reserve more power to regulate investment companies or advisors registered with the Securities and Exchange Commission under the Investment Company Act of 1940. The purpose of the legislation is to prevent the recurrence of a crisis such as the one currently plaguing the financial system. US President Barack Obama proposed similar changes in June. In March, US Treasury Secretary Timothy Geithner indicated that the Department of the Treasury would propose stronger rules in response to the current economic crisis. Geithner suggested that the Reserve and Treasury be given broader powers. In February, Geithner emphasized increasing restrictions on financial institutions receiving government assistance.

Full post as published by JURIST - The Paper Chase on July 24, 2009 (boomark / email).