This article was originally published 18 June, 2009

On June 17, 2009, the Obama administration outlined its much-anticipated framework for financial regulatory reform (the "Financial Reform Plan" or "Plan") in its release "Financial Regulatory Reform, A New Foundation: Rebuilding Financial Supervision and Regulation" and the accompanying fact sheets. Introducing the Plan, President Obama said "With the reforms we're proposing today, we seek to put in place rules that will allow our markets to promote innovation while discouraging abuse. We seek to create a framework in which markets can function freely and fairly, without the fragility in which normal business cycles suddenly bring the risk of financial collapse; we want a system that works for businesses and consumers."

Following the release of the Financial Reform Plan, on June 18, 2009, Secretary of the U.S. Department of the Treasury ("Treasury") Timothy Geithner testified on the Financial Reform Plan before the U.S. Senate Committee on Banking, Housing & Urban Affairs.

The Financial Reform Plan focuses on five areas:

  • promotion of robust supervision and regulation of financial firms;
  • establishment of comprehensive regulation of financial markets, including asset-backed securities, over-the-counter ("OTC") derivatives and clearing systems;
  • protection of consumers and investors from financial abuse through creation of a new consumer protection agency and stronger regulation;
  • creation of new government resolution authority over key non-bank financial institutions; and
  • raising international regulatory standards and improving international cooperation.

In this Sidley update we summarize the key provisions of the Financial Reform Plan. These proposals are already generating significant discussion and debate, and some of the more controversial topics are highlighted here. Many proposals remain rather conceptual in nature, while others provide details that cannot be adequately addressed in a summary document, such as this update. Clients affected by various aspects of the Financial Reform Plan should contact their principal Sidley lawyers for more information. We will issue updates as developments warrant.

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This article has been prepared by Sidley Austin LLP for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Readers should not act upon this without seeking professional counsel.