Changes in financial regulation

The new financial overhaul law triggers hundreds of new rules that regulators must draft and enact in the next two years. Here is a timetable of major actions.

Effective immediately:

•Key appointments — Directors of the Consumer Financial Protection Bureau and the Office of Financial Research, which will collect and monitor financial information.

•Resolution authority — Power to seize and dismantle large financial institutions should their imminent failure pose a danger to the economy.

•Shareholder access — The Securities and Exchange Commission to issue rules granting shareholders proxy access to nominate corporate directors.

Within three months:

•Financial Stability Oversight Council — A council of regulators to monitor the financial system for signs of emerging risks.

•Breakup power — The council and the Federal Reserve to require any severely troubled financial firm to sell some holdings should its failure pose a “grave threat” to the country’s financial stability.

Within six months:

•Executive compensation — Shareholders granted nonbinding vote on executive pay and retirement packages.

Within nine months:

•Mortgage risk — Sellers of mortgage-backed securities to keep at least 5% of the credit risk.

•Debit card fees — Fed rules to limit fees banks can charge businesses for debit card transactions.

Within one year:

•Consumer Financial Protection Bureau — Independent agency to issue and enforce rules regarding mortgages, credit cards and other consumer products.

•Office of Thrift Supervision — Agency regulating savings and loans to merge into the Office of the Comptroller of the Currency, which oversees national banks.

•Derivatives regulations — Previously unregulated complex securities to be traded on centralized exchanges.

•Office of Financial Research — New office to start analyzing data for signs of risk to the financial system.

Within 18 months:

•Proprietary trading ban — Rules to prohibit banks from using more than 3% of capital to trade for the firm’s benefit.

•Capital standards — Fed to issue stricter rules for required amounts of capital, liquidity and leverage by large, interconnected financial firms.

•Shutdown plans — Rules to require large financial institutions to file periodic plans to dissolve their operations should they go bankrupt or be seized.

Within two years:

•Mortgage disclosures — Simplified rules to combine overlapping disclosure forms for mortgages.

Source: The White House