Democrats: Here's How We Just Made It So There's Never Another Financial Crisis

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The U.S. House passed landmark financial reform today after more than 50 hours of debate — all 1,279 pages of it.While a major victory for the Obama administration, not one Republican said yes in the 223 to 202 vote.

The Senate, of course, will try and shape the legislation its way, and Republicans will continue to object to much of the language, but here’s what the House Democrats say the bill will do:

Today, the House of Representatives approved sweeping new legislation to modernize America’s financial rules in response to the worst economic crisis since the Great Depression. The Wall Street Reform and Consumer Protection Act (H.R. 4173), which passed by a vote of 223-202, includes a comprehensive set of reforms that will address the myriad causes – from predatory lending to unregulated derivatives – that led to last year’s meltdown. Once signed into law, these tough new regulations will hold Wall Street accountable, end taxpayer-funded bailouts, and protect Americans from unscrupulous big banks and credit card companies.

Assuming you don’t want to read the monster bill [pdf], here’s the official Democratic Summary of…

What’s in the financial reform bill >

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[slide
permalink=”consumer-protections-1″
title=”Consumer Protections”
content=”Creates the Consumer Financial Protection Agency (CFPA), a new, independent federal agency solely devoted to protecting Americans from unfair and abusive financial products and services.”
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[slide
permalink=”financial-stability-council-2″
title=”Financial Stability Council”
content=”Creates an inter-agency oversight council that will identify and regulate financial firms that are so large, interconnected, or risky that their collapse would put the entire financial system at risk. These systemically risky firms will be subject to heightened oversight, standards, and regulation.”
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[slide
permalink=”dissolution-authority-and-ending-too-big-to-fail-3″
title=”Dissolution Authority and Ending “Too Big to Fail””
content=”Establishes an orderly process for dismantling large, failing financial institutions like AIG or Lehman Brothers in a way that ends bailouts, protects taxpayers, and prevents contagion to the rest of the financial system.”
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[slide
permalink=”executive-compensation-4″
title=”Executive Compensation”
content=”Gives shareholders a “say on pay” — an advisory vote on pay practices including executive compensation and golden parachutes. It also enables regulators to ban inappropriate or imprudently risky compensation practices, and it requires financial firms to disclose any compensation structures that include incentive-based elements.”
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[slide
permalink=”investor-protections-5″
title=”Investor Protections”
content=”Strengthens the SEC’s powers so that it can better protect the nation’s securities markets. It responds to the failures to detect the Madoff and Stanford Financial frauds by ordering a study of the entire securities industry that will identify needed reforms and force the SEC and other entities to further improve investor protection.”
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[slide
permalink=”regulation-of-derivatives-6″
title=”Regulation of Derivatives”
content=”Regulates, for the first time ever, the over-the-counter (OTC) derivatives marketplace. Under the bill, all standardized swap transactions between dealers and “major swap participants” would have to be cleared and traded on an exchange or electronic platform. The bill defines a major swap participant as anyone that maintains a substantial net position in swaps, exclusive of hedging for commercial risk, or whose positions create such significant exposure to others that it requires monitoring.”
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[slide
permalink=”mortgage-reform-and-anti-predatory-lending-7″
title=”Mortgage Reform and Anti-Predatory Lending”
content=”Would incorporate the tough mortgage reform and anti-predatory lending bill the House passed earlier this year. The legislation outlaws many of the egregious industry practices that marked the subprime lending boom, and it would ensure that mortgage lenders make loans that benefit the consumer. It would establish a simple standard for all home loans: institutions must ensure that borrowers can repay the loans they are sold.”
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[slide
permalink=”reform-of-credit-rating-agencies-8″
title=”Reform of Credit Rating Agencies”
content=”Addresses the role that credit rating agencies played in the economic crisis, and takes strong steps to reduce conflicts of interest, reduce market reliance on credit rating agencies, and impose a liability standard on the agencies.”
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[slide
permalink=”hedge-fund-private-equity-and-private-pools-of-capital-registration-9″
title=”Hedge Fund, Private Equity and Private Pools of Capital Registration”
content=”Fills a regulatory hole that allows hedge funds and their advisors to escape any and all regulation. This bill requires almost all advisers to private pools of capital to register with the SEC, and they will be subject to systemic risk regulation by the Financial Stability regulator.”
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[slide
permalink=”office-of-insurance-10″
title=”Office of Insurance”
content=”Creates a Federal Insurance Office that will monitor all aspects of the insurance industry, including identifying issues or gaps in the regulation of insurers that could contribute to a systemic crisis and undermine the entire financial system.”
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[/slideshow]

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