Taking Apart The Financial Overhaul Bill Piece by Piece, Part 6

The links to the other articles in this series are the bottom of this article.

Section 162 is “Enforcement” and requires a written explanation for why a company should be supervised. At least they are agreeing to explain why they are taking too much power certain companies. I was worried that they wouldn’t take any steps to make sure we understood that.

Section 165 a) 2) says “Tailored Applications- A) In General-In prescribing more stringent prudential standards under this section, the Board of Governors may, on its own or pursuant to a recommendation by the Council in accordance with Section 115, differentiate among companies on an individual basis or by category, taking into consideration their capital structure, riskiness, complexity, financial activities (including the financial activities of their subsidiaries), size, and any other risk-related factors that the Board of Governors deems appropriate”. In other words, they can make rules that only apply to certain companies and don’t apply to others.

Section 165 d) requires nonbank financial companies that are supervised by the Board of Governors to submit reports including “information regarding the manner and extent to which any insured depository institution affiliated with the company is adequately protected from risks arising from the activities of any nonbank  subsidiaries of the company” and “full descriptions of the ownership structure, assets, liabilities, and contractual obligations of the company”. The Board of Governors can prevent a company from “growth, activities or operations” if they do not provide those reports.

Section 165 h) requires nonbank financial companies that are supervised by the Board of Governors to create a risk committee. The purpose of this is to “promote sound risk management practices”. Yes, these words were written by a member of Congress. This legislation is about as ironic as it gets.

Section 166 a) again clarifies that there will be no more bailouts and no more financial assistance to failing companies from the Federal government.  Section 168, “Regulations”, reiterates the authority of the Board of Governors to regulate the companies they supervise. And Section 169 states that the Board of Governors will avoid duplicative requirements.

The next article will pick up after section 169. Here are links to other articles in the series.






About Author

Leave A Reply