After big banks and Wall Street CEOs dragged our economy to the brink of complete collapse, hard-working American families were left to pay the price. That is why Senate Democrats are on the side of the taxpayer, working to change the broken system and shield the American people from paying for Wall Street’s mistake. While Democrats have spent months working to clean up Wall Street, Republicans have been meeting with Wall Street and big bank lobbyist to limit accountability and maintain the same policies that got us into this mess in the first place. 

TheRestoring American Financial Stability Act would protect American taxpayers from having to bail out financial firms and would force Wall Street to pay for its own mistakes. The bill would strengthen big financials to better withstand stress, put a price on excessive growth or complexity that poses risks to the financial system, and create a way to shut down big financial firms that fail without threatening the economy.


The Wall Street reform bill would limit large, complex financial companies and prevent bailouts: 

·Costs to Financial Firms, Not Taxpayers: The largest financial firms would bear the costs of shutting down a large failing financial firm. The bill would ensure that industry, not the taxpayers, would pay for liquidating large, interconnected financial companies. 

·Funeral Plans: Large, complex financial companies would be required to periodically submit plans for their rapid and orderly shutdown should the company go under. Companies would be hit with higher capital requirements and restrictions on growth and activity, as well as divestment, if they failed to submit acceptable plans. 

·Orderly Liquidation: The FDIC would have the authority to unwind failing systemically significant financial companies. Shareholders and unsecured creditors would bear losses and management would be removed. 

·Liquidation Procedure: TheTreasury Department, FDIC and the Federal Reserve would all have to agree to put a company into the orderly liquidation process. A panel of three bankruptcy judges would be required to convene and agree within 24 hours that a company is insolvent. 

·Federal Reserve Emergency Lending: The Federal Reserve’s 13(3) emergency lending authority would be updated to prohibit emergency lending to an individual entity. 

·Limits on Debt Guarantees: To prevent bank runs, the FDIC could guarantee the debt of solvent insured banks, but only after meeting serious requirements: 2/3 majority of the Board and the FDIC board determined that there is a threat to financial stability; and the Treasury Secretary approved the terms and conditions and set a cap on overall guarantee amounts. 

·Bankruptcy: Most large financial companies are expected to be resolved through the bankruptcy process.



The Financial Stability Oversight Council 

The bill would also establish a new framework to prevent a recurrence or mitigate the impact of future financial crises that could cripple financial markets and damage the economy. The Financial Stability Oversight Council established by the bill would focus on identifying, monitoring and addressing systemic risks posed by large, complex financial firms as well as products and activities that spread risk across firms. It would make recommendations to regulators for increasingly stringent rules on companies that grow large and complex enough to pose a threat to the financial stability of the United States. 

·Expert Members: A 9 member Council of federal financial regulators and an independent member would be Chaired by the Treasury Secretary and made up of regulators including: the Federal Reserve Board, SEC, CFTC, OCC, FDIC, FHFA, and the new Consumer Financial Protection Bureau. The Council’s sole job would be to identify and respond to emerging risks throughout the financial system. 

·Tough to Get Too Big: The Council would make recommendations to the Federal Reserve for increasingly strict rules for capital, leverage, liquidity, risk management and other requirements as companies grow in size and complexity, with significant requirements on companies that pose risks to the financial system. 

·Regulation of Nonbank Financial Companies: The Council would be authorized to require, with a 2/3 vote, that a nonbank financial company be regulated by the Federal Reserve if its failure would pose a risk to the financial stability of the United States. 

·Breaking Up Large, Complex Companies: The Council would be able to approve, with a 2/3 vote, a Federal Reserve decision to require a large, complex company to divest some of its holdings if it were to pose a grave threat to the financial stability of the United States – but only as a last resort. 

·Making Risks Transparent: Through a new Office of Financial Research and member agencies, the Council would collect and analyze data to identify and monitor emerging risks to the economy and make this information public in periodic reports and testimony to Congress every year. 

·Oversight of Important Market Utilities: The Council would identify systemically important clearing, payments, and settlements systems that would be regulated by the Federal Reserve. 

·No Evasion: Large bank holding companies that have received TARP funds would not be able to avoid Federal Reserve supervision by simply dropping their banks.