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Bill sets supervision of financial giants
The government would gain far-reaching new powers to regulate, and even shut down, large financial firms that threaten economic stability under a draft bill released Tuesday in Congress.
Congressional Democrats and the Obama administration agreed on the legislation, which seeks to protect taxpayers from having to pay for more bailouts, while holding financial firms to much higher capital standards.
Under the bill, the Federal Reserve could limit credit exposures, block acquisitions and, in extreme cases, order bankruptcy at financial holding companies it finds severely undercapitalized.
The bill states that the Federal Deposit Insurance Corp. could extend Treasury Department credit to solvent banks and nonbank financial firms alike to prevent instability. Any losses from FDIC actions would have to be repaid by assessments on large financial companies.
-- Reuters
House panel votes to regulate funds
The House Financial Services Committee voted to regulate for the first time hedge funds and other large pools of privately managed capital. The bill, which received broad bipartisan support in a 67-1 vote, was aimed at shedding light on an elite group of investors that so far has escaped government oversight.
"In the last five years, there's been a significant change and a greater sophistication in the financial service industry than has ever happened in the history of mankind," said Rep. Paul E. Kanjorski (D-Pa.), who sponsored the bill. "So we're going to have to change fast."
