The Central Bank out somewhat scratched by the reform

Only 30 of the 300 amendments tabled in the "Restoring American Financial Stability Act 2010" have been examined so far, but the senators were hopeful that the text, which is more than 1,600 pages, can be voted in the end of the week. In its broadcast allocation Saturday, Barack Obama urged the Senate to adopt this legislation as quickly as possible because it is to implement "the greatest financial consumer protection never established in history". Still, he denounced "the efforts of the special interests and their lobbyists" to weaken it, in particular an amendment which would make escape vehicle manufacturers to the control of the future Office of protection of consumers in the Federal Reserve.

"With this reform, we will make our financial system more transparent, highlighting the complex operations in rear-shops that led to this crisis", assured Barack Obama, who considers that must be implemented so that the next financial crisis causes a recession. Considered hostile by most of the bankers of Wall Street but fairly weighted by the experts, this text, if it is voted in the State, will be a real political victory for President, after the vote on health reform, and should weigh the outcome of the mid-term elections in November.

An audit of the Central Bank

And to persuade voters that it is to their advantage, this reform ensures taxpayers that they will never have to come to the rescue of banks. Indeed, the senators voted a mechanism which allows the orderly dismantling financial institutions posing systemic risk by regulators. It was to be accompanied by the creation of a Fund of 50 billion but the latter was finally abandoned.

One of the measures which aroused more controversy will be discussed in coming days: it concerns the brokerage products, and in particular of the swaps. An amendment by Senator Blanche Lincoln of Arkansas, out this activity of the fold of the commercial banks to place in subsidiaries which have neither access to the emergency funding of the Central Bank or to the guarantees of the Federal Deposit Insurance Corporation (FDIC). The measure is very contested, not only by banks because it would require to much more capital: between 110 and 200 billion according to the Securities Industry and Financial Markets Association. But also by Sheila Bair, the Chairman of the FDIC, and Ben Bernanke, President of the Federal Reserve.

The Central Bank out somewhat scratched by the reform. Although the revision of the supervisory bodies is finally much less ambitious than in the first version of the Act, adjustments have been made here and there to give or remove the power to one or the other. If the Central Bank has managed to retain his authority on the small banks, elle will have to accept an audit of its actions during the crisis.

A vote for the closing of discussions could take place as early as Wednesday, so that the text could be voted at the weekend. It should then be merged with the one voted in the House of representatives in December, so that a single law should be sent to the White House for its enactment. But it could be that the Chamber decides simply to vote on the text of the Senate, thus shortening the negotiations and formalities.