Finally it is done. In the middle of July, in a 60 to 39 vote, the Senate passed the overhaul of the financial system after nearly a year of debate that often descended into politically-charged rhetoric. At more than 2,300 pages the bill is mammoth—and little wonder. It takes apart and then re-makes the nation’s financial infrastructure. Most financial transactions, from a routine charge on a credit card to the most complex risk-hedging techniques multinational companies use, will at some level be impacted by the bill. The same is true for investors in distress debt, who may find more opportunities to invest as regulators clamp down even harder on certain lending and asset-valuation practices.
It is an understatement to say there are multiple moving parts within moving parts to this legislation. Broadly it can be divided into several major areas, none of which are much related to the other: the government oversight to which banks will be subject and the new role of the Federal Reserve Bank, new protections for consumers, rules on how derivatives are to be used, rules impacting how banks are allowed to make money and a general rehash of prudent banking practices.
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