FACTBOX: Major U.S. financial regulation reform initiatives

(Reuters) - The Obama administration and congressional Democrats are moving to tighten U.S. financial regulations to prevent another banking crisis.

Changes will affect banks, insurers, credit rating agencies, hedge funds, private equity firms, brokerages and exchanges, while extending the government's reach into the financial sector.

The following are the major issues involved:

OTC DERIVATIVES:

The administration on Wednesday proposed cracking down on over-the-counter derivatives with a plan to move more trading onto exchanges, require central clearing, supervise dealers more closely and bring more transparency to an opaque market.

Political risk exposure: JPMorgan Chase (JPM.N), Bank of America, Citigroup (C.N), Goldman Sachs (GS.N), CME Group Inc (CME.O), Intercontinental Exchange (ICE.N).

CREDIT CARDS:

The U.S. House of Representatives and a Senate committee have approved bills to crack down on credit card companies by, for example, limiting fees and barring sudden rate increases.

The House approved its bill by a vote of 357-70 on April 30. Debate on a Senate bill was under way on Thursday.

Political risk exposure: American Express (AXP.N), Bank of America (BAC.N), JPMorgan Chase (JPM.N), Capital One (COF.N), Citigroup (C.N), Discover Financial (DFS.N).

HOUSING, MORTGAGES AND SECURITIZATION:

The Senate and the House are moving toward agreement on legislation to tighten rules on mortgage financing, curb predatory lending and assist troubled homeowners.

The House approved a bill on May 7 to force mortgage lenders to keep 5 percent of loans they securitize, tighten mortgage broker oversight and protect borrowers.

The Senate approved a bill on May 6 to retool a $300 billion housing rescue fund to help homeowners and encourage mortgage servicers to ease the terms of distressed loans. The House has passed a similar bill. An agreement could come soon.

Political risk exposure: Citigroup, Wells Fargo (WFC.N), Bank of America, JPMorgan.

UNWINDING FAILING FIRMS:

The administration has sent Congress a draft "resolution authority" bill to empower the government to seize and unwind large, failing financial firms that are not banks.

No clear procedure for this exists. A seizure would require approval of the Treasury Department, the Federal Reserve and Federal Deposit Insurance Corp, with White House consultation.

The Treasury and the FDIC would decide whether to offer financial aid to the seized firm or put it in conservatorship.

The U.S. House Financial Services Committee plans to hold more hearings on the legislation.

SYSTEMIC RISK REGULATOR:

The Obama administration is expected to propose legislation by June calling for the Fed to play a central role in regulating systemic risk in the economy. No single agency is now formally designated to monitor systemic risk.

Alternative legislation has been introduced in Congress to establish an inter-agency council on financial stability.

Consideration of this issue is expected to occur together with the resolution authority and OTC derivatives proposals.

EXECUTIVE PAY:

U.S. officials are looking at ways to force reforms in financial industry pay practices to discourage excessive risk-taking. The Fed said on Wednesday it was looking at what regulatory steps could be taken. Treasury has said the administration is working with the Securities and Exchange Commission (SEC) on industry-wide compensation reform.

A pay provision is expected to be included in a sweeping Obama administration financial regulation reform proposal that may be unveiled before the end of May.

HEDGE FUNDS, PRIVATE EQUITY:

A major U.S. hedge fund industry group told lawmakers on May 7 it supports requiring all hedge fund investment advisers to register with the SEC. The Managed Funds Association joined other policy-makers and regulators in supporting registration.

Lawmakers have recently introduced several bills in Congress to give the SEC registration authority.

The Treasury wants advisers to hedge funds, private equity funds and venture capital funds, whose assets under management exceed a not-yet-determined level, to register with the SEC.

House Financial Services Committee Chairman Barney Frank told Reuters last month there will be a registration component in a broad reforms package planned for later this year, taking in resolution authority, systemic risk and OTC derivatives.

Political risk exposure: Bridgewater Associates, D.E. Shaw Group, Farallon Capital Management, Citadel Investment Group, Fortress Investment Group (FIG.N), many others.

SHORT-SELLING:

The SEC will meet soon to finalize an interim rule that requires large short sellers to disclose their positions to the agency. It is not clear whether the agency will require the positions to be disclosed publicly.

The agency is also considering five proposals that would restrict short-selling, including the restoration of an updated uptick rule, which allows shorting only when a stock's last sale price was higher than the previous price.

STUDENT LOANS:

President Barack Obama's 2010 federal budget proposed ending the giant federally-guaranteed student loan program and moving most of the country's $90 billion in student lending into the direct-loan program run by the Education Department.

The proposal is subject to review by Congress and possible changes. The student loan industry is resisting the proposal and has put forth alternative strategies.

Political risk exposure: Sallie Mae (SLM Corp) (SLM.N), Student Loan Corp (STU.N), JPMorgan, Bank of America, ITT Educational Services (ESI.N), Corinthian Colleges (COCO.O).

BANK CAPITAL STANDARDS:

U.S. regulators are expected to craft stricter capital standards for banks. Financial institutions will also face new liquidity requirements, about which bank regulators are expected to issue guidance during the first half of this year.

CREDIT RATING AGENCIES:

The SEC is considering reforms to crack down on potential conflicts of interest at credit rating agencies. Final action is likely months away.

Political risk exposure: Moody's Corp (MCO.N), Standard & Poor's (MHP.N), Fitch Ratings (LBCP.PA).

INSURERS:

The House insurance subcommittee held a hearing on Thursday on insurance industry regulation, with the industry still largely divided over whether to establish a national regulator to supplement the present state-based oversight system.

Political risk exposure: Allstate Corp (ALL.N), Travelers Cos Inc (TRV.N), Hartford Financial (HIG.N), MetLife Inc (MET.N), Prudential Financial Inc (PRU.N).