President Obama’s New Financial Reform Law

President Obama’s New Financial Reform Law

  • Submitted By: spadez106
  • Date Submitted: 05/16/2011 7:24 AM
  • Category: Business
  • Words: 545
  • Page: 3
  • Views: 457

Re: President Obama’s New Financial Reform Law


The purpose of this brief memorandum is to discuss “The New Financial Reform Law that was signed into Law by President Obama on July 21, 2010”. While also discussing the reasons the law was proposed and passed; the major provisions of the law including the changes the law makes with respect to federal banking regulation and to federal securities regulation. The Council of Federal Regulators which was created as the new regulator by the law to protect consumers of financial products.

The financial reform bill that President Obama signed into law on July 21, 2010 is an attempt to transfer power from Wall Street to Washington and prevent any future financial disasters to protect consumers of financial products. The bill establishes a Consumer Financial Protection Bureau inside the Federal Reserve. This organization will put into effect existing consumer-oriented set of laws that apply to big monetary firms, mortgage-related businesses, and payday and student lenders. It will also ensure that the fine print on financial services is clear and accurate, and will uphold a single toll-free hotline for clients to account possibly misleading practices.

The bill establishes tight limitations on the capability of banks to do business in financial markets with their own money. For example, when banks that practices proprietary trading; which means when banks rest market bets for their own profits, instead of their customers that bank will be banned. Banks will be capable of investing sums equivalent to only 3 percent of their assets in hedge and private equity venture instruments. In addition, the complex financial risk swaps known as derivatives will encounter comprehensive rule for the first time. Most will have to be traded through unrestricted clearinghouses or exchanges.

In relations to the changes the law makes with respect to federal securities regulation, including regulations the law imposes on...

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