The Senate passed its version of the financial regulatory reform bill on May 20. Since then, analysts and investors have been trying to gauge the eventual impact on the sector and its exchange traded funds (ETFs).
The Senate’s version of the legislation creates a process for liquidating financial institutions that become too big to fail, adds restrictions to derivative and proprietary trading desks in U.S. banks, creates an agency that has the power to ban lending that the Fed considers abusive, and requires borrowers to show proof that they can pay mortgage loans, Gary Smith for iStock Analyst reports. The bill passed by the Senate will require rating agencies to register with the Securities and Exchange Commission (SEC). [Why Market Liquidity Is So Important.]
The United States isn’t the only country trying to push through reforms of its financial system.
Britain will make major changes to a financial regulation system that “failed spectacularly” to halt the financial crisis. David Stringer for USA Today reports that Britain’s central bank will add oversight of individual institutions to its current task in guarding against systemic risks to the financial sector. [Europe’s ETFs in the Bargain Basement.]
Many have long complained that the complexity of Britain’s three-point banking system has made decision-making a nearly impossible process. It needs to be clear-cut about who is making the decisions and the guidelines that everyone is following. [Bond Bubble Concerns: Are They Valid?]