US financial regulation bill unveiled

Christopher Dodd has struggled to get Republican backing

Democrat senators have unveiled proposed new laws that will give the US Federal Reserve more regulatory powers over big US banks.

The new banking regulation bill proposes the establishment of a new consumer protection agency at the Fed, with powers to regulate all lending.

The bill also includes the formation of a nine-member council responsible for financial stability.

However it is not clear if the bill will gain the support of Republicans.

The Democrat chairman of the Senate Banking Committee, Chris Dodd, unveiled the bill on Monday, but without the support of any of the 10 Republican committee members.

Stronger Fed

Increased powers at the Fed would give it the power to write new regulations and for banks with assets of more than $10bn (£6.6bn), as well as for all mortgage-related businesses and large non-bank financial firms, such as insurers.

A new Financial Stability Oversight Council would have powers to break up large companies if they were deemed to pose a threat to the stability of the financial system, as well as place financial institutions under the supervision of the Fed.

The bill also includes rules limiting banks' involvement in proprietary trading, and bank investments in hedge funds and private equity funds.

Reacting to the bill, President Barack Obama called planned laws "a strong foundation" but pledged to work with the Senate to strengthen the bill and prevent its opponents from weakening it.

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