Highlights from the legislation
• OVERSIGHT: A 10-member council of regulators led by the Treasury secretary would monitor threats to the financial system. It would decide which companies were so big or interconnected that their failures could upend the financial system. Those companies would be subject to tougher regulation.
If such a company teetered, the government could liquidate it. The costs of taking such a company down would be borne by its industry peers.
• CONSUMER PROTECTION: A new independent office would oversee financial products and services such as mortgages, credit cards and short-term loans. The office would be housed in the Fed.
Auto dealers, pawn brokers and others would be exempt from the bureau’s enforcement. For community banks, the new rules would be enforced by existing regulators.
• FEDERAL RESERVE: The Federal Reserve would lead the oversight of big, interconnected companies whose failures could threaten the system. Those companies would be identified by the council of regulators.
The Fed’s relationships with banks would face more scrutiny from the Government Accountability Office, Congress’ investigative arm.
The Fed also would have to set lower limits on the fees that banks charge merchants who accept debit cards.
• CAPITAL CUSHIONS: Big banks would have to reserve as much money as small banks do to protect against future losses.
• EXECUTIVE PAY: Shareholders would vote on executive pay packages. But the votes wouldn’t be binding. Companies could ignore them.
The Fed would issue broad guidelines but no specific rules. If a payout appeared to promote risky business practices, the Fed could intervene to block it.
• MORTGAGE LOANS: Lenders would have to make sure borrowers could afford to repay.
Lenders would have to disclose the highest payment borrowers could face on their adjustable- rate mortgages. Mortgage brokers could no longer receive bonuses for pushing people into high-cost loans.
• GOVERNMENT COSTS: The bill would be paid in part with $11 billion generated by ending the Troubled Asset Relief Program. It would cover additional costs by increasing premium rates paid by commercial banks to the Federal Deposit Insurance Corp. The increase would not affect banks with assets less than $10 billion.