US Senate committee proposes financial regulator

11 November 2009 8:38 am | By Lee Jones

Senate Banking Committee Chairman Chris Dodd, the Democratic Senator from Connecticut, along with other democratic senators from the committee unveiled a “tough, bold” bill to reform the way the US financial system is regulated by creating a single federal regulator, the Financial Institutions Regulatory Administration.

The committee’s bill also proposes the creation of an independent consumer protection unit, the Consumer Financial Protection Agency. This move echoes the proposals of the Conservative party, which says it will create a UK consumer financial regulator if it gets into Government.

The sweeping changes would also create a body to oversee executive remuneration, as well as forcing banks to create “funeral plans” akin to the proposals of FSA chairman Lord Turner, who wants to force UK banks to create their own “living wills”.

The senators behind the bill also want the US government to create an Agency for Financial Stability, which would “break up large, complex companies” as well as enforcing stricter leverage and capital demands on financial institutions.

Senator Dodd told reporters: “This is not a time for timidity. The financial crisis exposed a financial regulatory structure that was the product of historic accident, created piece by piece over decades with little thought given to how it would function as a whole, and unable to prevent threats to our economic security.

“This is a thorough and carefully constructed plan.  It will promote innovation and job creation while protecting consumers and our economy as a whole from another crisis like the one we are now in.”

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