Factbox: Key elements of Dodd's financial reform bill

WASHINGTON (Reuters) - A revised U.S. financial regulation reform bill was unveiled on Monday by Senate Banking Committee Chairman Christopher Dodd, a Democrat.

The bill will be the next step in a long push by the Obama administration and congressional Democrats to tighten bank and capital market oversight after the financial crisis.

Below is a look at some key provisions of the legislation and its prospects:

* RESOLUTION FUND

To put an end to the assumption that some financial firms are "too big to fail," Dodd proposed a new government process for "orderly liquidation" of large, troubled firms.

With the aim of avoiding debacles like the 2008 collapse of former Wall Street titan Lehman Brothers and the bailout of former insurance giant AIG, Dodd proposed empowering regulators to seize distressed firms and unwind them in a bankruptcy-like process.

He called for creating a $50 billion fund to help pay for such wind-downs, with large firms paying into the fund.

Invoking the liquidation process would require approval of the Treasury, the Federal Reserve and the Federal Deposit Insurance Corp, under Dodd's bill, as well as approval within 24 hours of a panel of three bankruptcy judges.

* CONSUMER PROTECTION

Dodd called for creating a financial consumer protection watchdog as a unit of the Federal Reserve, rather than as an independent agency.

Obama last year proposed an independent Consumer Financial Protection Agency to regulate credit cards and mortgages.

The independent agency approach was endorsed by the House in its bill in December. Dodd backed it as well, in November when he unveiled a draft package of financial reforms, but Republicans have refused to consider the idea.

While it would be inside the Fed, the watchdog would have an independent chief appointed by the president and confirmed by the Senate. It could examine and enforce consumer rules for banks and credit unions with assets above $10 billion and have authority over mortgage-related businesses and large non-bank financial firms such as insurance companies.

* BANK SUPERVISION

Dodd called for a modest revamp of the patchwork U.S. bank supervision system that gives the Fed a major role in a change from earlier proposals.

His latest approach would let the Fed keep oversight of large bank holding companies with assets exceeding $50 billion. That would cover about 44 major firms, including giants already under Fed supervision, such as Citigroup and Bank of America.

The Fed would lose its authority over state-chartered banks in the Fed system with less than $50 billion in assets. The FDIC would take over regulation of state banks, thrifts of all sizes, and bank holding companies of state banks with assets below $50 billion.

Dodd's bill also stipulates that a financial firm that got government bailout funds may not evade Fed oversight by dropping its banking charters.

Nationally chartered banks with assets below $50 billion would be under the supervision of the Office of the Comptroller of the Currency (OCC). It would also absorb the Office of Thrift Supervision (OTS), which would close, under Dodd's bill.

The House bill approved in December called for closing OTS and merging it into OCC, but it preserved the Fed's and the FDIC's traditional bank supervision roles.

* VOLCKER RULE

Obama's January proposal to ban proprietary trading at banks looks set to get into legislation only in reduced form.

Legislation to enact Obama's idea, dubbed the Volcker rule after its chief sponsor, White House economic adviser Paul Volcker, has been introduced in the Senate to apply the rule to banks and large nonbank financial institutions.

Dodd proposed requiring regulators to prohibit banks' proprietary trading, hedge fund and private equity sponsorship, but said rules regarding the Volcker rule would wait until after a study by the systemic risk council.

Dodd also proposed restricting nonbank financial institutions' proprietary trading and hedge funds and private equity fund involvement.

* OVER-THE-COUNTER DERIVATIVES

Dodd called for imposing a new set of rules on the un-policed $450 trillion OTC derivatives market.

Obama has called for forcing as much traffic as possible in the market through exchanges, equivalent electronic trading platforms or, at least, central clearinghouses.

The handful of Wall Street firms -- Goldman Sachs, JPMorgan Chase, Citigroup, Bank of America and Morgan Stanley -- that dominate the market have fought increased oversight.

The House bill included new regulations for OTC derivatives, but exempted a wide range of end-users of the financial contracts from mandatory central clearing. The draft unveiled by Dodd in November had a narrow scope for exemptions.

* EXECUTIVE PAY AND SHAREHOLDER RIGHTS

Dodd proposed giving shareholders more say on executive pay and more clout in electing corporate directors, echoing similar measures in the House bill.

* SYSTEMIC RISK REGULATION

The Dodd bill would set up a 9-member council of regulators, chaired by the Treasury Secretary, to oversee systemic risk in the financial system.

This council would be able, with a 2/3 vote, to assign high-risk non-bank financial firms to Fed oversight. The council, also by a 2/3 vote, could approve a Fed decision to break up a firm so large it threatens stability.

The House bill proposed an inter-agency council chaired by the Treasury, with the Fed as its chief policy agent, as well.

* HEDGE FUNDS

The Dodd bill would require hedge funds managing more than $100 million to register with the government.

The House bill called for registration of hedge funds worth $150 million or more.