The Real News Network has PT2 The Fed and the Crisis. If you have not looked at part 1 yet, you will find it in my previous post The Fed and the Crisis.

There is a plethora of good information in the above video, but I shoose to pull out this one section for emphasis. It explains a little appreciated, but important part of the Dodd-Frank bill.

So what other macroprudential possibilities are there? Actually, there is one in Dodd–Frank, which will come into effect at the end of July 2012, and that is section 610, which goes back and corrects an enormous error made by a controller of the currency at the end of the Clinton administration, who acceded to the request of the banks to remove their requirement in the sense that loans to a single borrower had to be a given percentage of capital, if that affected financial institutions. In other words, the commonsense notion of don’t put your eggs all in one basket, which had been part of the National Bank Act since 1865, was to be waived if that basket was another financial or group of financial institutions. What section 610 does is say, no, the law requires you to break it all up, to distribute your lending across the spectrum in relation to capital.

Moreover, it does something else extremely important. It recognizes, unlike the Federal Reserve, that the financial sector has changed. It now doesn’t speak of banks lending; it speaks in the statute of credit exposures. And the credit exposures include repurchase agreements, reverse repurchase agreements, derivatives, securities lending, etc.—in other words, all those exciting things that brought us into crisis.