A Wall Street Cheat Sheet

With health-care reform passed, the next big piece of the president's agenda is financial regulatory reform, an effort by policy-makers to address the problems of the financial crisis and create a better financial marketplace for the American economy. To help give you an idea of where this debate is, here is some of the best recent material the Prospect has put together on this topic.

Getting a Good Bill Through Congress.
The Easter recess has given financial reform a brief respite. The House passed a bill under the leadership of House Financial Services Committee Chair Barney Frank last year that adopted many of the Obama administration's proposals, so the action is now in the Senate. Chair Chris Dodd recently obtained the Senate Banking Committee's stamp of approval with a partisan vote, setting the stage for a floor fight over the bill in mid-May. Reformers will encourage senators to offer amendments to strengthen the bill while financial-sector lobbyists will do the exact opposite with their own allies. When that bill passes, expect contentious conference negotiations between the two chambers followed by equally tense final votes.

The Legislative Process Versus Regulatory Reform: The challenges of getting a complex bill through Congress.

The Fine Print on Financial Reform: If Dems want to campaign on regulatory overhaul for the banking sector, they need to make sure reforms are more than in name only.

Who Regulates the Regulators? Obama's far-reaching proposal for financial regulations is a mixed bag -- Congress must now try to improve the project.

Dodd Goes Big on Reg Reform: The senator's first plan resembles the House bill, in a good way.

Why Dodd Should Stop Negotiating with Republicans: If you want financial reform, you want a partisan bill.

Solving the Problem of Too Big to Fail.
Perhaps the trickiest challenge of the whole project is stopping the implicit government guarantee of large financial companies so taxpayers never again bail out major financial institutions. This is mainly because the financial sector wants to preserve the size of its institutions while keeping them risky -- and therefore profitable. Policy-makers who want to maintain a vibrant financial sector are debating how to mix three possible solutions: raising standards to keep banks from taking excessive risk, restricting how large and interconnected banks can get -- with some advocating that large banks be forcibly broken up by the government -- and creating a system that allows failing banks to be liquidated instead of rescued by taxpayers.

The Myth of Too Big to Fail: Breaking up sprawling institutions won't be enough to clean up our financial mess.

What is Dodd's Too Big to Fail Solution? Restricting the ability of regulators to bail out insolvent banks.

The Battle Over Bailout: Rep. Barney Frank's bill deals with the problem of Too Big to Fail with increased oversight and a plan to liquidate failing banks.

The Difficulties of Breaking Up the Banks By Statute: The top three banks in the United States -- J.P. Morgan, Bank of America, and Citibank -- each have about $1.5 trillion in assets. But if you wanted to make them smaller, how would you?

The Banks Are Big Because the Financial Crisis Isn't Over: If financial reform works, regulatory agencies will take action to limit pernicious practices that keep banks bloated.

Protecting Consumers -- Like You!
With the crisis driven by the huge growth of sub-prime mortgage lending, reformers quickly realized that we need to attack the problem of bad loans from the bottom up. Led by Elizabeth Warren, a consensus emerged that an independent agency that consolidates consumer regulation authority would bring accountability, transparency, and strong rules back to the consumer-credit market. Of course, the banks that made huge profits off risky loans have fought this idea tooth and nail.

When Creditors are Predators: We need to regulate to assure that loans work -- and stop the loans that work people over.

Who's Leading the Fight Against Consumer Financial Regulation? The U.S. Chamber of Commerce doesn't think consumers need real protection after the financial crisis.

Making the Consumer Financial Protection Agency Better: How to improve the House's version of the CFPA.

Cramdown's Downfall: Bankers are making it hard for Obama to limit foreclosures -- but he's not doing much in the way of fighting back.

New Credit-Card Rules Show We Still Need the CFPA: We need a more flexible way to deal with pernicious lending practices.

Why Jack Reed Wants to Take the CFPA to the Floor: Most Banking Committee members don't support real reform -- but the larger Democratic caucus does.

The Regulatory Structure
The regulatory landscape in the aftermath of the crisis shows that the U.S. financial regulatory system is incredibly byzantine, with regulators competing against each other in a race to the bottom. Reformers quickly galvanized around the ideas of limiting regulatory arbitrage, supervising previously ignored financial firms and returning more power to state officials. While the actual legislation to do this has become tangled, here are the arguments for a more straightforward regulatory regime.

How Financial Reform Goes After Regulatory Abritrage: Obama's ideas for consolidating supervision.

Who Will Be King Regulator? While there are a few different agencies that could take the lead in coordinating financial regulation, Treasury -- with its many conflicts of interest -- is not one of them.

Never Fear, The Super-Regulator is Here! Dodd's plan puts forth the idea of a single consolidated regulator, which would prevent banks from picking and choosing which regulators oversee them.

Republic of the Central Banker: How the Federal Reserve bestrides our financial system like a colossus.

Who Will Fix This Mess?
With most of the financial and intellectual firepower in the debate over financial reform found on the side of the banks -- it's pretty hard to find an expert in, say, derivatives who hasn't taken the time to profit handsomely from that knowledge -- reformers have been hard-pressed to find champions for their cause. Here are some of the people, inside and outside government, who are trying to change that dynamic.

Present at the Re-Creation: Elizabeth Warren and Phil Angelides -- along with five other liberal financial experts -- are our best hope for truly fixing the economy.

Sheila Bair for Treasury Secretary: Outspoken FDIC Chair Sheila Bair has proved one of the most tenacious opponents of bad practices in the banking sector and a key advocate for her constituency of state-chartered banks.

Wall Street Meets Its Match: If Congress ends up with effective regulation of potentially toxic securities like credit-default swaps, Sen. Maria Cantwell will deserve a lot of the credit.

Meet the Next Treasury Secretary: Tim Geithner was charged with overhauling America's collapsing financial system. Though he has often been criticized since his appointment, there was a reason he was tapped for the job.

Meet the Financial Crisis Inquiry Commission
When President Franklin Roosevelt overhauled the financial sector in the 1930s, he wasn't just working off a wing and a prayer, even though it sometimes seemed that way. To ground his reforms, he had help from a commission led by Ferdinand Pecora, who grilled bank CEOs to get to the bottom of the Great Crash. Today, Congress has established a new commission of investigators with a similar mandate: finding the cause of the crisis. Whether they will be able to overcome ideological differences to agree on an explanation, however, remains an open question.

An Accounting of the Crisis: The FCIC should help provide a complete map of the relationships between the New York Federal Reserve, the banks, and American International Group, which enabled the massive bubble of sub-prime lending fueled by fraud and incomprehensible securities.

The New Pecora Commission's Only Partisan: Is conservative economist Douglas Holtz-Eakin too partisan for the FCIC?

Is The FCIC Going After the Community Reinvestment Act? It probably won't, but some of its commissioners will.

An Exclusive Interview with Phil Angelides, chair of the FCIC.

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