Financial Reform Signed into Law

President Barack Obama signed into law today the most far reaching set of reforms to the nation’s financial infrastructure since the Great Depression. The new law, the formally titled the Dodd-Frank Wall Street Reform and Consumer Protection Act, is the culmination of more than a year’s worth of intense political maneuvering concerning a number of issues, including whether the Federal Reserve should be audited or the extent to which banks should be kept from engaging in proprietary trading.

The new law, weighing in at more than 2,300 pages, contains a panoply of new rules and regulations on everything from over-the-counter derivatives to hedge funds, but some of its more well known provisions include the creation of a Consumer Financial Protection Bureau (CFPB), which will oversee things like credit cards, payday loans and home mortgages, and the organization of the heads of the various regulatory agencies into a 10-member Financial Stability Oversight Council. This council will have the power to place companies thought to be a threat to financial stability under the supervision of the Federal Reserve, as well as the ability to approve recommendations brought by the central bank that these same companies be broken up (an action that requires a 2/3’s vote).

Now that the financial reform bill has been signed into law, regulators will now need to set about implementing its various provisions, a process that will require the production of 67 studies, 22 reports and 243 rulemaking procedures (and this is a conservative estimate – some sources have this figure even higher). Key positions will also need to be filled, including the head of the newly formed CFPB. Elizabeth Warren, who currently head the Congressional Oversight Panel that supervises the spending of stimulus funds, has been mentioned several times in different places, though other names being floated include Assistant Treasury Secretary Michael S. Barr, who helped guide the legislation as it went through Congress, and Deputy Assistant Attorney General Eugene I. Kimmelman, who works in the Justice Department’s antitrust division.