[Iran Press TV Latest] US Senate Banking Committee Chairman Senator Christopher Dodd (D-CT) has introduced a bill to reduce certain high-risk activities in the American banking industry that has been blamed for triggering the nation's worst economic slump in 60 years. Under Senator Dodd's bill, the Federal Reserve Bank (the US central bank) will have the right to investigate what they deem risky or suspicious activity, reported Wall Street Journal today.
Additionally, the bill will bring large financial companies that are not banks under the domain of the Fed's supervisory powers.
The plan will also see the establishment of a body within the Federal Reserve Bank tasked with protecting consumers' financial interests, such as credit cards and mortgages, the paper reports. This new entity would be independent within the Feds and would have its own budget and rule-making authority.
Mr. Dodd's bill has triggered anger among Republicans in the Senate who believe the bill goes too far and insist that the Fed itself should retain responsibility for protecting consumer interests. On the other hand, the plan is inadequate for many Democratic senators who prefer to see an entirely new agency.
The bill also entails serious outlays among many institutions, with the largest financial firms required to pay into a $50 billion fund, should there be any more financial collapses in the future.
Under Senator Dodd's proposals, there will be restrictions on large bank investments in or sponsorship of hedge funds or private equity funds.
Dodd has also been blamed for being principally responsible for pushing through legislations allowing financial institutions to continue offering huge bonuses and perks to top banking executives even after they were rescued from total bankruptcy by hundreds of billions of tax-payer funds granted to them by the US Government.