Financial regulatory overhaul looming on the horizon.

• Author: North, Cady
• Position: REGULATION

If nothing else, the current economic crisis, bank failures and fraudulent activities have convinced leaders in the United States government that there may be defects within parts of the financial regulatory framework.

"The U.S. government does not have the legal means today to manage the orderly restructuring of a large, complex, nonbank financial institution that poses a threat to the stability of our financial system," said Treasury Secretary Timothy Geithner, at a March 24 House Financial Services Committee hearing.

Both President Barack Obama and Geithner have made it clear that regulatory reforms will be enacted this year to help stem systemic risks and prevent future economic crises. In addition, last year Paul Volcker, a trusted Obama adviser and chair of the President's Economic Recovery Advisory Board, released a report through his own international working group (Group of Thirty) detailing financial regulation proposals, which could be used as a reform framework.

Chairman of the House Financial Services Committee Barney Frank (D-Mass.) and Chairman of the Senate Banking, Housing and Urban Affairs Committee Chris Dodd (D-Conn.) held numerous hearings on the subject during February and March, and have indicated they will begin drafting financial-regulation reform legislation sometime in early May. They expect legislation to pass over the summer.

The following list of areas are those that Financial Executives International has determined could potentially be targeted for regulation-reform proposals that could occur in several different bills or in one large bill:

* Curbing "systemic risks" seems unanimous. Some suggest either the Federal Reserve, Treasury or a new agency should regulate these types of threats to the financial system. The goal will be to prevent situations where entities become "too big to...