Congress Turns To Overhauling Financial Regulations

President Obama's next domestic priority is overhauling financial regulations. Congress begins debate on Senate Banking Committee Chairman Christopher Dodd's bill next week. The measure, which runs more than 1,000 pages, almost makes overhauling health care look simple.

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STEVE INSKEEP, host:

It's MORNING EDITION from NPR News. I'm Steve Inskeep.

RENEE MONTAGNE, host:

And I'm Renee Montagne. President Obama said this week that with health care reform passed, he has a new top domestic priority: regulating the financial industry. Next Monday, Congress will begin debating Senator Christopher Dodd's regulatory reform bill. We asked the Planet Money team to explain what's in it. Here now, NPR's Adam Davidson�and�Chana Joffe-Walt.

ADAM DAVIDSON: This assignment is actually impossible. Nobody can make sense of regulatory reform in a four-minute radio story. You can't even read the table of contents of this huge bill in four minutes.

CHANA JOFFE-WALT: Yeah, the bill is big. It is more than 1,300 pages long and it covers every aspect of our financial system. And it's dense. Here's just the title: A bill to promote the financial stability of the United States...

DAVIDSON: Wait, wait, Chana, Chana.

JOFFE-WALT: Yes?

DAVIDSON: No offense. I hope you don't take this the wrong way, but I think when we read the bill we need more drama, some energy. We need like a professional Shakespearean actor.

JOFFE-WALT: Yeah?

DAVIDSON: I actually happen to have one on hand. It's my father, Jack Davidson.

Dad, take it away.

Mr. JACK DAVIDSON (Actor): A bill to promote the financial stability of the United States by improving accountability and transparency in the financial system, to end to big too fail, to protect the American tax payer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.

JOFFE-WALT: Very nice, much better than me.

DAVIDSON: So here's how we're going to do this. My dad will read excerpts from three parts of the bill. Three acts, if you will, Dad. And we'll try to take them on. So, Dad, go ahead, give us the first on.

Mr. DAVIDSON: Section 314. The secretary of the Treasury is authorized to negotiate and enter into international insurance agreements on prudential measures on behalf of the United States.

DAVIDSON: Sounds really boring and technical. There's actual a lot of drama here. It solves the AIG problem. Remember that big international insurance company, AIG, that nearly brought down the global economy?

JOFFE-WALT: I do remember that. I reported on how AIG had around 400 regulators all over the world, all covering tiny pieces of the company, but nobody actually looking over the whole thing.

DAVIDSON: And even if the Treasury secretary or the president or the head of the Federal Reserve did see the big picture, there wasn't much they could do about it, because the U.S. federal government does not regulate insurance companies.

JOFFE-WALT: Right. States do. And states can't do international negotiation.

DAVIDSON: So to solve the AIG problem, they have to create - actually, Dad, can you read here Section 313, Paragraph A?

Mr. DAVIDSON: There is established within the Department of the Treasury the Office of National Insurance.

DAVIDSON: Problem solved.

Dad, can you read the one that's trying to end too big to fail?

Mr. DAVIDSON: There is established in the United States bankruptcy court for the District of Delaware an orderly Liquidation Authority Panel. The chief judge of the United States Bankruptcy Court...

DAVIDSON: All right, Dad, Dad. Great. Great job. I think we get the picture.

(Soundbite of laughter)

JOFFE-WALT: Okay. So remember when all those big banks were collapsing over the course of a few hours and the government said if we let them go through the normal bankruptcy it would take years, maybe decades to wind them down, and at the time we only had a couple hours, so the government had to bail out all those bank companies?

DAVIDSON: So if this bill passes there will now be a crack team of special op financial judges who can swoop in and handle these big monster bankruptcies really quickly.

All right, Chana, we're running out of time on our story. Let's try one more. Dad?

Mr. DAVIDSON: There is established in the Federal Reserve System the Bureau of Consumer Financial Protection, which shall regulate the offering and provision of consumer financial products or services under the federal consumer financial laws.

JOFFE-WALT: Translation: a new team at the Federal Reserve focused on one thing - making sure that we, the consumer, don't get suckered into lousy financial products.

DAVIDSON: And that one sentence has a huge tortured history. There have been massive political battles over just how much power that sentence should give. Should this new team be a bureau? Should it be an agency?

JOFFE-WALT: And time. Adam, there is more than 1,200 other pages we will still have to deal with. We're going to take them piece by piece over the coming months.

I'm Chana Joffe-Walt.

DAVIDSON: I'm Adam Davidson.

Mr. DAVIDSON: And I'm Jack Davidson, NPR News.

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