26 Jun 2010

Bank reforms agreed by US Congress

10:17 pm on 26 June 2010

The United States Congress has finalised the biggest reform of US financial regulation since the Great Depression.

The Banking Reform Bill, finalised by Congressional negotiators on Friday, will impose stricter regulation of complex Wall Street transactions and create a new consumer protection agency.

President Barack Obama says the reforms will make Wall Street more accountable to the American people.

Legislators held 19 hours of non-stop negotiations to reconcile separate versions of the bill that had been passed by the two houses of Congress.

The BBC reports that compromises were reached on all major points.

The bill introduces the so-called Volcker rule - named after former Federal Reserve chairman Paul Volcker, who proposed it.

The rule is intended to ban banks from risky entanglements in the financial markets. US banks will be barred from taking big trading bets on markets.

They will also be limited to investing a maximum of 3% of their capital in speculative businesses such as hedge funds or private equity funds.

The bill will also set up a powerful consumer financial protection bureau, with powers to clamp down on abusive practices by credit card companies and mortgage lenders.