By Daniel Costello

The chairman of the Senate Banking committee unveiled a bold proposal this afternoon to overhaul the nation's financial system that would consolidate current regulatory agencies, impose new restraints on exotic financial instruments and establish a new consumer protection agency to rewrite federal rules on credit cards, mortgages and other types of loans.

Several of the plan's key proposals contradict reforms President Obama and other members of Congress have proposed in recent months, further complicating chances that a financial regulatory overhaul will be passed by the end of the year.

The move, by Sen. Christopher Dodd (D-Conn.), is likely to be stongly opposed by the four main bank regulatory agencies, which would lose power under Dodd's plan. Broad new financial regulations also have been criticized by many Republicans and financial services companies.

The Senate plan could potentially have large ramifications for banks deemed "too big to fail."

It would first require very large institutions to issue long-term debt that would be available during an economic crisis. The capital would serve as insurance should they need the money at a later date.

And in the event of another financial storm similar to last year, the bill would have the government cover the costs of slowly dissolving a large financial institution to blunt the impact on the broader market. The funds would later be paid back from large banks.

categories: News

1:40 - November 10, 2009

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