The regulatory reform legislation approved on Thursday by the U.S. Senate hands hundreds of new duties to every national regulator and financial player, including banks, credit rating agencies and hedge funds.
Below is a list of some of the key actions that need to be taken and a timeline for some of the key regulations.
* Office of Thrift Supervision is shut down immediately and its authorities transferred to the Comptroller of the Currency.
* The heads of all the major financial regulators and the Treasury secretary will form the Financial Stability Oversight Council to monitor risk in the financial system. Effective immediately.
* Federal Deposit Insurance Corp has authority to liquidate or unwind all large troubled financial firms. Effective immediately.
TROUBLED ASSET RELIEF PROGRAM (TARP)
* The $700 billion bailout fund is shut down before it is due to expire October 3.
* Within a year, establish minimum capital and margin requirements for swap dealers and major swap participants -- and deem who will be subject to the new requirements.
* Rule on what types, groups, categories of swaps are required to be cleared.
* Determine whether to exempt small banks, savings associations, farm credit institutions, and credit unions.
* Set rules and standards for clearinghouses, including financial resources required.
* Within 90 days, publish an "interim final rule" for how to report data for swaps that predate the Act. Also establish timelines for how new swap trades will be reported.
* Establish limits on trades for physical commodities.
* Establish protection for whistle-blowers within 270 days.
For a more-detailed list of steps the Commodity Futures Trading Commission needs to take on swaps see [ID:nN14250671]
* Banks with more than $15 billion in assets will have to strip trust preferred securities from their Tier 1 capital. Deadline: Five years after enactment.
* Fed must adopt rules that limit debt to equity ratios to no more than 15:1 for large financial services firm (with more than $50 billion in assets). Deadline: 1.5 years after enactment or January 2012.
* Every financial institution with more than $10 billion in assets must perform annual stress tests. Deadline: 1.5 years after enactment or January 2012.
* Banks will be restricted from "proprietary trading activities" and only allowed to invest up to 3 percent of their Tier 1 capital in hedge and private equity funds. Deadline: Two years after enactment or July 2012.
CREDIT RATING AGENCIES
* Investors will be allowed to sue credit rating agencies such as Moody's Corp ,Standard & Poor's and Fitch Ratings if they "recklessly" failed to review information in developing a rating. Effective immediately.
* The SEC has until mid-2012 or two years to produce study to mitigate conflicts of interests at the biggest rating agencies. If the SEC does not find a solution, the regulator is required to implement a proposal by Senator Al Franken and create a board to match rating agencies with debt issuers.
HEDGE FUNDS, PRIVATE EQUITY FUNDS
* The SEC has up to one year to adopt rules requiring registration for advisers to hedge funds and private equity funds with more than $150 million in assets.
* The new consumer regulator will be established with the Treasury secretary as the temporary head of the bureau. All consumer protection functions at the Fed, FDIC and Federal Trade Commission are transferred to the consumer watchdog. Effective immediately.
* The government has until the end of 2011 to pick a director and get the bureau operating.
* SEC will have to adopt rules requiring all publicly traded companies to have an independent compensation committee: July 2011.
* SEC will have to adopt rules requiring companies to give shareholders a nonbinding vote on executive pay at least once every three years. Deadline: In time for 2011 proxy season.
* SEC will have to adopt rules requiring companies to give shareholders a nonbinding vote on executives' golden parachutes. Deadline: end of 2011 or six months after bill is enacted.
* SEC must adopt rules prohibiting underwriters from engaging in a transaction that would involve or result in a material conflict of interest with another investor.
* National regulators must adopt rules requiring securitizes to retain at least 5 percent of the credit risk in any asset that they securitizes. Exceptions for certain residential mortgages. Deadline: Nine months after the bill is enacted.
FINANCIAL STABILITY OVERSIGHT COUNCIL
* Is established immediately; president must appoint an independent member.
* Federal Reserve will supervise systemically important nonbank financial companies.
* Provides annual congressional testimony, report.
* Through Fed, will set higher regulatory standards for firms designated as systemically important.
* Establishes Office of Financial Research within Treasury Department to keep tabs on emerging threats to financial stability.
* Allows Fed to write rules requiring systemically important firms to issue a minimum of contingent capital that is convertible to equity in times of stress.
* Requires Fed to conduct annual stress tests for systemically important firms.
* The congressional watchdog agency will audit Fed emergency lending facilities and the regional Federal Reserve Bank system
(Reporting by Rachelle Younglai, Roberta Rampton, Kim Dixon and Mark Felsenthal; Editing by Leslie Adler)