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Regulatory Reform On The Horizon: Banking And Securities Outlook

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Executive Summary

The proposed Restoring American Financial Stability Act of 2010, otherwise known as the Dodd bill, is currently being debated in the Senate. It presages the enacting of financial reform legislation that will likely have far-reaching implications for financial institutions, but also for a host of non financial institutions engaged either as clients and customers of financial firms, or as participants in markets that are expected to come under regulatory scrutiny for the first time. In light of the changes coming as a consequence of new legislation, corporate governance at the highest levels of the banks will have to change. At the time of writing, the draft bill is 1,408 pages long, so it is not easy to digest and assess and it is subject to change, perhaps even significant change, before it passes into law. However, whereas a few months ago the uncertainty around the passage of reform was so great as to make commentary redundant, the outlines of reform now seem sufficiently clear that we can summarize and assess some of the biggest elements of the coming change. It is important to bear in mind that the bill is subject to changes during Senate debate and further changes during reconciliation with the House bill, so individual provisions might alter. U.S. financial reform looks set to change the face of domestic, and probably global, finance if it is passed in anything close to its current form. It will have enormous impacts on financial services companies across the board.

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