FACTBOX-Keys to US House financial regulation reform bill

Dec 11 (Reuters) - The U.S. House of Representatives approved legislation to overhaul financial regulation on Friday, shifting the push for reform to the Senate, which has just recently begun to debate its own legislation.

For a story on the House vote, please double-click on [ID:nN11265663].

Below is a summary of the provisions of the 1,279-page House bill, intended to prevent a repeat of last year's financial crisis, and some notes on prospects in the Senate.

MANAGING SYSTEMIC RISK

* Establishes inter-agency Financial Services Oversight Council, with staff and funding, chaired by Treasury secretary

* Council can tighten regulatory screws on firms that are in distress or judged to pose a threat to financial stability

* Council members include Federal Reserve, Securities and Exchange Commission, Commodity Futures Trading Commission, Federal Deposit Insurance Corp, other bank supervisors

* Firms' debt-to-equity ratio can be capped at 15-to-1, credit exposure to unaffiliated companies limited to 25 percent of capital stock, among balance-sheet strengthening steps

* Firms can be ordered to hold contingent capital, or long-term hybrid debt convertible to equity in emergencies

* In extreme cases, firms can be ordered to restructure, restrict executive pay, sell businesses, or otherwise break up

* Treasury secretary must approve order to divest more than $10 billion in assets; president, more than $100 billion

* Risky firms must undergo annual "stress tests" and submit "living wills" on how firms could be unwound quickly

* For first time, Federal Reserve monetary policy subjected to audits by congressional watchdog

SENATE OUTLOOK: Senate bill proposes stronger inter-agency council, smaller role for Federal Reserve in managing risks

DEALING WITH TROUBLED FIRMS

* In emergencies, FDIC can back debts of solvent firms, up to $500 billion, drawing on Treasury borrowings, fees to firms

* FDIC can liquidate insolvent firms through bankruptcy or orderly receivership, like FDIC now dismantles failing banks

* Fully secured creditors in FDIC dissolutions can have up to 10 percent of their claims treated as unsecured claims

* "Systemic dissolution fund" of $200 billion helps pay for FDIC actions, drawn from fees charged to firms with more than $50 billion in assets, and Treasury borrowings

* Fees paid by banks into FDIC's existing Deposit Insurance Fund become risk-based, cutting small banks' fee burden

* In financial emergencies, Fed can extend loans to a wide variety of businesses up to a total of $4 trillion

SENATE OUTLOOK: Senate bill proposes paying for dissolutions of troubled firms after the fact

SUPERVISING BANKS, SECURITIZERS

* Office of Thrift Supervision abolished and its operations merged into Office of Comptroller of the Currency

* Lenders must retain 5 percent of credit risk of loans securitized for sale onto secondary debt market

SENATE OUTLOOK: Senate bill proposes more radical bank supervisor centralization, similar securitization reform

REGULATING OTC DERIVATIVES

* Over-the-counter derivatives go through clearing and exchanges or equivalent facilities where possible

* Swaps not cleared centrally must be reported to swap repository or to regulators

* "End users" of swaps, such as airlines and agribusinesses, can be exempted from central clearing

* Regulators can set position limits on swap trading and on security-based and commodity-based derivatives

* Financial firm clearinghouse stakes capped at 20 percent

SENATE OUTLOOK: Senate has competing bills, main bill has narrower end user exemptions than House

CREATING CONSUMER WATCHDOG

* Consumer Financial Protection Agency (CFPA) created to regulate mortgages, credit cards, other financial products

* Fed, other existing agencies stripped of consumer protection duties, which would go to CFPA

* Exempted from CFPA oversight are auto dealers, retailers, accountants, tax preparers, real estate agents

* States can have tougher rules than CFPA, but federal regulators can block state laws in some circumstances

* Banks with less than $10 billion in assets need not have full-scale CFPA exams, but must follow agency's rules

PROTECTING INVESTORS, CURBING PAY

* SEC standards for brokers and investment advisers harmonized, mandatory investor-broker arbitration curbed

* SEC's budget doubles, enforcement powers strengthen

* Investors get annual, nonbinding votes on executive pay, while pay plans encouraging excessive risk can be prohibited

REGULATING HEDGE FUNDS, CREDIT RATERS

* Hedge funds, private equity firms, offshore funds must register with SEC, while venture capital firms and funds with less than $150 million in assets exempted

* SEC gets new oversight over credit rating agencies, which exposed to more investor lawsuits

MONITORING INSURERS

* Federal Insurance Office (FIO) set up to monitor insurance industry for first time, but not regulate it

* FIO cannot preempt state insurance laws except in limited circumstances, preserving state-level regulation

For a text of the House bill, please double-click here (Reporting by Kevin Drawbaugh; Editing by Leslie Adler)