Topics for Discussion on GOVERNMENT RELATIONS

Financial Regulatory Reform, suggestions, questions, and critiques are coming from all corners. Here is a sampling of the top issues under discussion.

Systemic Risk Regulator –

Sen. Mark Warner (D-VA), who sits on the Banking Committee, objects to the plan’s expansion of the Federal Reserve’s role in managing systemic risk, believing it would concentrate too much power in one entity. Warner instead proposes the establishment of a Systemic Risk Council comprised of the Treasury, the Fed, and the other financial regulators that would, together with a permanent council staff, be able to assess and minimize risks comprehensively across the financial landscape. The House Republicans also prefer the council approach, proposing their own version – the “Market Stability and Capital Adequacy Board”– last week.

Tier I Financial Holding Companies —

What companies will be considered Tier I Financial Holding Companies and subject to new regulation by the Fed? The Fed and Treasury are to establish the criteria, but some companies that are not currently subject to federal regulation might include General Electric, Berkshire Hathaway, State Farm Insurance, or even WalMart. Those not used to federal regulation will be given five years to ease into the new regime – the non-financial activity restrictions in the Bank Holding Company Act.

Registering Private Funds —

What will be the “modest” threshold at which advisers to hedge funds, private equity funds, and venture capital funds must register with the SEC? Congress will likely define the threshold.

Government Sponsored Enterprises (GSEs) —

Why is the administration waiting until the president’s Fiscal Year Budget, which comes out in February , to make recommendations for the GSEs Fannie and Freddie? In testimony yesterday, Secretary Geithner said the administration decided other issues needed resolution first, but with GSEs at the heart of the crisis, many are criticizing this as a punt.

Consumer Financial Protection Agency —

The proposed Consumer Financial Protection Agency appears to have extensive authority – charged with regulating anything related to consumer credit, savings, collection, or payments. It even has authority to regulate communications with consumers and to ensure that consumer products are “plain vanilla” and straightforward. The American Bankers Association and Hill Republicans oppose the creation of this new agency, and even some Democrats may want to limit the proposed parameters.

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