Bank Overhaul Bill Has Plenty Of Rules And Critics

BERNARD CONDON

NEW YORK (AP) — To keep taxpayers from having to bail out giant banks again, lawmakers faced two choices: design rules to try to prevent them from failing, or shrink them so that if they do fail, they won't threaten the financial system.

Our political leaders chose the rules.

At more than 2,000 pages, the new financial regulatory bill takes aim at everything from megabanks straddling the globe to street-corner payday lenders. And with a bit of luck, the overhaul — the most sweeping since the Great Depression — will help make big bank failures less likely and less damaging if one does occur.

The House and Senate hope to pass the bill this week in time for President Barack Obama to sign it before July 4. Its backers say it is needed to avoid the kind of cascading fear that brought the financial world to a near standstill after Lehman Brothers collapsed in September 2008.

Whether it succeeds rides on how dozens of regulators, including the Securities and Exchange Commission and the Federal Reserve, fill in the details, because a lot was left up to them. The bill calls for banks to hold more money as a cushion against risks, but it doesn't say how much. It also was mum on the amount of cash that firms dealing in complex derivatives need to set aside in case those bets sour. Lobbying by industry and advocacy groups is expected to be fierce in the months ahead and take place mostly behind closed doors. It will take years for many of the rules to take effect.

But one thing is clear: For the nation's biggest banks, it could have been a lot worse.

In the Senate's version of the bill, banks such as Goldman Sachs Group Inc., Citigroup Inc. and JPMorgan Chase & Co. would have been barred from trading derivatives. In the final one, banks lose only a sliver of that business.