Financial Message Board

Dodd-Frank Act. Obama's New US Financial Restrictions on Banks - Mini Exam

The US Senate just recently passed a new set of reforms put forward by President Obama restricting banks. This free mini exam will help you learn new changes to the law.

Every month we create update questions, so keep coming back if you want to be in the loop.

Here's 5 questions, on the new US .

Financial Stability Oversight Council - Dodd-Frank Act- July 2010

3. What power does the Financial Stability Oversight Council FSOC have?

Answer: C

The council, if 2/3rds of voting members approve, incl the Chairman, may elect to ensure that a firm is supervised, if it poses a threat to the security of the United States financial stability. Amongst many things, the council will look at the companies leverage, the off balance sheet and nature of these exposures, relationships with other financial companies, the importance of the company for providing funds to the US consumers, businesses and Government.

The council will also conduct a study of the feasibility, benefits and cost and structure of an extra capital requirement on Supervised nonbank financial companies. This means that capital held can be elevated. This capital will be identified or at least studied to ensure that it can be accessed in times of financial stress. Interestingly, they will also consider how the companies competitiveness may be decreased! So it does seem as if there are competing priorities. Is this workable? Also any supervised company will have to provide information as requested, through the Office of Financial Research.

Follow this link to find out more on the : Financial Stabilization Oversight Council?