Tag Archives: Dodd-Frank Act

Dodd-Frank Update

Last week The House voted to give final congressional approval to a major rewrite of banking rules that would revoke key elements of Dodd-Frank Act but still leaving most of it tact.

The President is expected to sign into law the “Economic Growth, Regulatory Relief and Consumer Protection Act,” which won House approval 258-159 as 33 Democrats and 225 Republicans voted for the bill. Officials say that it recalibrates regulation and risk in the financial services sector while promoting economic growth and new jobs.

The Senate Banking Committee Chairman said that the bill “right-sizes” regulations for smaller financial institutions, allowing community banks, credit unions and mortgage lenders to grow.

Key provisions of the legislation include:

  • Increasing banks’ asset threshold from $50 billion to $250 billion for extra regulatory scrutiny by the Federal Reserve.
  • Streamlining capital requirements and other exemptions from mortgage-lending rules for community banks.
  • Amending the Volcker rule for banks with less than $10 billion in assets in an effort to bolster market liquidity and decrease risk to the financial system in economic downturn.
  • Repealing the Department of Labor’s fiduciary rule, which aimed to minimize supposedly conflicted investment advice given to retirement savers.

Although Republicans claim the bill is a deregulatory effort, GOP lawmakers weren’t able repeal Dodd-Frank in its entirety. Key provisions remain, including the Consumer Financial Protection Bureau and Washington’s authority to unwind failing large banks.

Dodd-Frank Act, What Is It?

The Dodd–Frank Wall Street Reform and Consumer Protection Act was signed into federal law by President Barack Obama on July 21, 2010.  The ACT was a response to the financial crisis of 2007–2008, and brought the most significant changes to financial regulation in the United States since the regulatory reform that followed the Great Depression.

It was designed to promote the financial stability of the US by improving accountability and transparency in the financial system, to end “too big to fail”, to protect the American taxpayer by ending bailouts, and to protect consumers from abusive financial services practices.

The Act changed the existing regulatory structure, and created a streamline to the regulatory process. Agencies that were previously not required to do so, were compelled to report to Congress on an annual (or biannual) basis and present results of current plans and explain future goals

Some of the important new agencies created included the Financial Stability Oversight Council, the Office of Financial Research, and the Bureau of Consumer Financial Protection.

As a practical matter, prior to the passage of Dodd–Frank, investment advisers were not required to register with the SEC if the investment adviser had fewer than 15 clients during the previous 12 months and did not hold itself out generally to the public as an investment adviser. The act eliminated that exemption, thereby rendering numerous additional investment advisers, hedge funds, and private equity firms subject to new registration requirements.

Certain non-bank financial institutions and their subsidiaries were supervised by the Fed in the same manner and to the same extent as if they were a bank holding company.

To the extent that the Act affected all federal financial regulatory agencies, eliminating one (the Office of Thrift Supervision) and creating two (Financial Stability Oversight Council and the Office of Financial Research) in addition to several consumer protection agencies, including the Bureau of Consumer Financial Protection, this legislation in many ways represented a change in the way America’s financial markets would operate in the future. Few provisions of the Act became effective when the bill was signed.

Major reform to the Dodd-Frank Act is underway in Washington today.  We’ll keep you posted!

Banks resubmit bankruptcy contingency plans

Federal banking regulators said the nation’s 12 largest banks have resubmitted plans for navigating a bankruptcy that would not require a taxpayer bailout.

This marks the third time the banks have been forced to refile their plans, which outline their strategy for a rapid and orderly bankruptcy as required by the Dodd-Frank Wall Street Reform and Consumer Protection ActRead More


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