Wall Street Reform Express

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The Senate is attempting to quickly move forward with financial regulatory overhaul. Naturally, though in this election year politics is too often trumping policy. As this issue cuts deeply across both party’s bases, the bill will ultimately be enacted though as no one wants to go to the polls in November with Wall Street reform still not done.

Senate leaders are hopeful now that an agreement has been reached between the leaders of the Banking Committee, Chairman Christopher Dodd and ranking member Richard Shelby, establishing a resolution process to liquidate large financial firms the collapse of which would threaten markets thereby ending taxpayer-funded bailouts.

In addition, the Dodd-Shelby agreement would require congressional approval for FDIC to use any debt guarantee program; permit the Federal Reserve to use its emergency lending authority only to aid solvent firms; and give regulators the power to ban management and directors from failed firms from working again in the sector if they were responsible for sending a firm into a resolution process.

There are still controversial amendments for the Senate to handle though, including a handful of populist amendments on so-called “too big to fail” financial institutions, a stronger version of the “Volcker rule” that would ban big banks from proprietary trading for their benefit rather than their clients, and a Republican measure on derivatives regulation.