In a special report AM Best outlines the proposed financial regulatory changes in the US

Lawmakers stepped up efforts to revamp U.S. financial regulation in November.

Senator Christopher Dodd, D-Connecticut, proposed consolidating federal bank oversight from four regulators into one agency. The plan also would limit the Federal Reserve’s emergency lending powers and create agencies to monitor systemic risk and consolidate consumer protection.

Aspects of the Senate plan differ from recent progress on systemic risk legislation in the House Financial Services Committee.

The Senate plan’s single federal bank regulator differs from the Obama administration and House plans, which would merge the Office of Thrift Supervision into the Office of the Comptroller of the Currency.

The proposals would strip the Fed and the Federal Deposit Insurance Corporation (FDIC) of their state-bank supervisory functions and the Fed’s authority over bank holding companies. House efforts would preserve the respective regulatory roles of the Fed and the FDIC.

The Fed’s emergency lending powers for individual institutions would be limited under the plan, while the FDIC would no longer be able to use its open bank assistance authority.

To address systemic risks, the Senate package proposes a financial stability agency empowered to strengthen capital, leverage and liquidity requirements. An amendment to the House measure would authorize an oversight council to even dismantle large financial firms.

Under the House measure, financial firms exceeding $50bn in assets would prepay into a systemic resolution fund for winding down failed, systemically risky institutions. The Senate plan would tap firms whose assets exceed $10bn after an orderly shutdown of a large, complex institution.

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