Obama Hails Breakthrough on Wall Street Reform

The Wall Street reform bill - the biggest shakeup since the 1930s - was passed late last night. Here are some of the key measures:
What we know
• There will be a new consumer financial protection bureau set up within the Federal Reserve, but independent from the central bank. It will tackle "abusive" mis-selling of mortgages, credit cards and other loan products. Banks and other financial institutions worry that reporting standards will become a burden, and that certain credit products could be banned.

• Most of the $600 trillion derivatives market will be forced through central clearing houses to increase oversight and to reduce the risk of one counterparty going bankrupt. There will be exemptions for non-financial companies using the contracts to hedge risk. Banks will be forced to spin off their derivatives dealing businesses.

• Government will be able to seize and wind up a large financial institution if it runs into difficulties and poses a risk to the wider financial system. It will be able to wipe out shareholders and fire executives. Creditors will be paid by the government upfront but those payments would be recouped later from levies on the industry.

• There will be a new multi-authority oversight body to identify risks in the financial system – the financial stability oversight council of regulators chaired by the treasury secretary. Companies considered systemically significant will face stricter capital, leverage and liquidity requirements and will have to draw up a "living will" to ensure an orderly wind-down should they fail.

And what we don't

• Will deposit-taking banks have to to spin off their proprietary trading arms and sell stakes in hedge funds and private equity firms? This is the Volcker rule, named after former Fed chairman Paul Volcker, who has argued for a complete separation of banks' risky "casino" activities from their commercial operations. Obama wants the Volcker rule implemented, but the Senate bill states that regulators will write the precise detail of the rule in the future.

This suggests that it could be watered down, although Democrats are still pushing for stricter controls.