Senate proposes alternate financial regulatory reform legislation

Senator Christopher Dodd, D-Conn., unveiled new legislation that proposes sweeping reform the nation’s financial regulatory system, providing an alternative to the version that made its way through the House Financial Services Committee recently.

Key elements in Dodd’s legislation would:

• Remove supervision from the Federal Reserve and Federal Deposit Insurance Corp.
• Eliminate the Office of the Comptroller of the Currency and the Office of Thrift Supervision
• Fold the Treasury Department units into the Financial Institutions Regulatory Administration
• Creates an Agency for Financial Stability to monitor and alleviate systemic risks posed by large, complex firms

Similar to the legislation in the House, Dodd’s bill also creates a Consumer Financial Protection Agency in an attempt to maintain market stability and manage systemic risk.

Dodd has been highly negative of the U.S. bank regulation system and is pushing for legislation that goes even further in reform measures.

A provision in Dodd’s bill would allow the SEC to fund itself based on the fees collected. Currently the SEC relies on Congressional appropriations for funding. Many times, however, the SEC has taken in twice as much in fees as they were appropriated by Congress. SEC Chairman Mary Schapiro has also asked Congress to allow the SEC to retain its regulatory fees.

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