The Plan recommends the creation of a US systemic risk regulator and assigns the task to the Board of Governors of the Federal Reserve System (Federal Reserve).

The Federal Reserve would have the authority to supervise and enact regulations for all financial firms that could pose a threat to financial stability, even—unlike under the Federal Reserve's current authority—firms that do not control a bank. Such firms would be designated "Tier 1 Financial Holding Companies" (Tier 1 FHCs).

The Plan also recommends the creation of a Financial Services Oversight Council, which would be composed of the major US financial regulators. The Council would be charged with advising the Federal Reserve in its role as systemic risk regulator and facilitating inter-agency co-ordination to reduce system risk. Under the Proposed Legislation, however, the Council would merely be an advisory body.

The Plan would end exemptions that currently allow companies controlling certain kinds of depository institutions to avoid registration as a bank holding company and the non-banking activity prohibitions that come with the designation.

Today, companies controlling a FDIC-insured thrift, industrial loan company, credit card bank, trust company, or grand-fathered depository institution, do not need to register as bank holding companies. The recommendation could force several important industrial companies to give up their commercial lending subsidiaries.

The Plan would also end the federal thrift charter and merge the Office of Thrift Supervision and the Office of the Comptroller of the Currency to create the National Bank Supervisor.

The Plan recommends that advisers to hedge funds and other private pools of capital (including private equity and venture capital funds) whose assets under management exceed some "modest threshold" be subject to the investment adviser registration and regulation requirements under the US Investment Advisers Act of 1940, as amended (Advisers Act). Contrary to press reports, the Plan does not recommend that private investment funds themselves be subject to direct registration or regulation under the US Investment Company Act of 1940, as amended. However, the Plan does use its SEC investment adviser registration requirement as a means to impose certain requirements on private investment funds advised by such advisers.

The Plan recommends that the SEC hold broker-dealers to a fiduciary duty standard when they provide investment advice to retail investors. Currently, investment advisers are held to a fiduciary standard (meaning that the adviser must place client interests ahead of its own interests), whereas broker-dealers are subject to regulation of their advisory services principally on the basis of the suitability and professional standards of that advice.

The Plan does not propose banning any particular product (for example, credit default swaps), but instead recommends requiring that all "standardised" over-the-counter (OTC) derivatives be cleared through regulated central counterparties.

In addition, all OTC derivatives dealers and all other firms that create large exposures to counterparties would be subject to a robust regime of prudential supervision.

The Plan recommends the creation of the Consumer Financial Protection Agency (CFPA), an independent agency with broad authority over any financial product or service used by consumers.

The CFPA would assume all responsibilities for banking institutions' consumer regulatory compliance, regardless of whether the institution is state or federally chartered. The CFPA would have primary enforcement authority for any federal consumer protection law with respect to any person subject to the CFPA’s jurisdiction, except with respect to products and services regulated by the SEC or the Commodity Futures Trading Commission.

The Plan also recommends that the CFPA be authorised to define standards for "plain vanilla" financial products, and to require that all providers and intermediaries offer plain vanilla products prominently alongside their other product offerings.

For further information on the above, see:

In July, the Obama Administration began submitting proposed legislation to the US Congress that would, on its adoption, enact into law many of the Plan's recommendations. For information on the proposed legislation, see: