Reuters: Fed Issues Rule to Prevent Oversized U.S. Financial Firms

The following is an excellent article written by Sarah N. Lynch on the Reuters website on November 5, 2014 titled “Fed Issues Rule to Prevent Oversized U.S. Financial Firms” and I quote:

“Fed issues rule to prevent oversized U.S. financial firms”

WASHINGTON Wed Nov 5, 2014 11:40am EST

The United States Federal Reserve Board building is shown behind security barriers in Washington October 28, 2014. REUTERS/Gary Cameron

The United States Federal Reserve Board building is shown behind security barriers in Washington October 28, 2014.

Credit: Reuters/Gary Cameron

(Reuters) – The U.S. Federal Reserve unveiled a final rule on Wednesday designed to prevent large financial firms from becoming so big that their failure could shake the core of the U.S. financial market.

The final rule, required by the 2010 Dodd-Frank Wall Street reform law, prohibits banks and certain large financial firms from acquiring another company if that merger would cause their liabilities to exceed 10 percent of the total consolidated liabilities for all financial firms.

The Fed said on Wednesday that its final rule is “substantially similar” to the one it proposed in May, but contains a few changes.

For instance, the final rule has an exemption that would permit firms to continue securitization activities even if they have reached the limits set forth in the rule.

The final rule also prohibits a company from acquiring another company under “merchant banking authority” if it has reached the 10 percent limit.

In addition, it spells out more details for how to properly calculate financial sector liabilities, among other things.

The rule is slated to take effect on January 1, 2015.

Wednesday’s rule applies to banks and to large financial firms who are designated as “systemic” by the Financial Stability Oversight Council (FSOC), a federal government panel of regulators that polices for emerging market threats.

The FSOC has already designated General Electric Co’s (GE.N) GE Capital, American International Group Inc (AIG.N) and Prudential Financial Inc (PRU.N) as systemic. It has also proposed designating Metlife Inc (MET.N), although the company has hired a lawyer to fight the proposal.

(Reporting by Sarah N. Lynch; Editing by Susan Heavey)”

[ALL BIG CORPORATIONS ARE FIGHTING THIS RULE CHANGE.  THIS IS CRUCIAL TO GET THESE GROWING MONOPOLIES UNDER CONTROL.  IT’S SIMILAR TO WHAT HAPPENED TO STANDARD OIL WHEN REPUBLICAN, TEDDY ROOSEVELT, WAS PRESIDENT. PRES OBAMA MUST ACT ON THIS IF THE DEMOCRATS ARE GOING TO HAVE ANY CHANCE AT THE PRESIDENCY IN 2016.

LaVern Isely, Overtaxed Independent Middle Class Taxpayer and Public Citizen and AARP Members

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About tim074

I'm a retired dairy farmer that was a member of the National Farmer's Organization (NFO). Before going farming, I spent 4 years in the United States Air Force where I saved up enough money to get my down payment to go farming. I also enjoy writing and reading biographies and I write about myself as well as articles and excerpts I find interesting. I'm specifically interested in finances, particularly in the banking industry because if it wasn't for help from my local Community Bank, I never could have started farming which I was successful at. So, I'm real interested in the Small Business Administration and I know they are the ones creating jobs. I have been a member of Common Cause and am now a member of Public Citizen as well as AARP. I have, in the past, written over 150 articles on the Obama Blog (my.barackobama.com) and I'd like to tie these two sites together. I'm also on Twitter, MySpace and Facebook and find these outlets terrifically interesting particularly what many of these people did concerning the uprising in the Arab world. I believe this is a smaller world than we think it is and my goal is to try to bring people together to live in peace because management needs labor like labor needs management. Up to now, that hasn't been so easy to find.
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