Repeal Dodd-Frank? But What Is It, Exactly?

“MR. LEHRER: You want to repeal Dodd-Frank?

MR. ROMNEY: Well, I would repeal it and replace it.”

(New York Times)

The Dodd–Frank Wall Street Reform and Consumer Protection Act, both criticized and praised by Republican presidential candidate Mitt Romney in last night’s inaugural presidential debate, was passed in 2010 purportedly to end the practices that led to the 2008 financial crisis.

What is in it, exactly? Here are five key initiatives of Dodd-Frank:

1. Enhance consumer financial protection:

“The creation of the Consumer Financial Protection Bureau (CFPB) in the Dodd-Frank Act was a hotly contested issue… The CFPB is a powerful regulatory agency with broad powers to ensure compliance with consumer protection laws for banks with assets exceeding $10 billion, limited powers to monitor smaller banks and depository institutions, as well as supervisory authority over credit unions, residential mortgage companies, payday lenders and private education lenders. The CFPB also has the authority to supervise nonbank ‘larger participants,’ including credit reporting companies and certain other consumer reporting companies.” (Michael Volkov)

2. End “too big to fail” policies:

“Among the problems the [Dodd-Frank Act] sought to address was the macro issue of what to do about the “Too Big To Fail” larger financial services organizations and the impact their financial distress might have upon the stability of the United States banking or financial system… One approach the Congress chose is … by granting the Federal Reserve Board the authority to put in place on its own, or following recommendations by the Financial Stability Oversight Council, in addition to what is in place for the financial services industry at large – stronger, stricter and enhanced prudential standards for the larger nonbank financial companies and for those bank holding companies with total consolidated assets of $50 billion or more.” (Reed Smith)

3. Reform the nation’s mortgage system:

“Title XIV of the Act, designated the ‘Mortgage Reform and Anti-Predatory Lending Act,’ establishes minimum standards for originating residential mortgages, regulates the compensation of mortgage brokers and expands consumer protections and lender disclosure requirements. It also creates an Office of Housing Counseling within the U.S. Department of Housing and Urban Development (HUD). The amendments in Title XIV become effective six to eighteen months after enactment of the Act.” (Duane Morris)

4. Stop banks from engaging in risky activity:

“The Volcker Rule is a key element of the Dodd-Frank Act. It prohibits covered banking entities from engaging in proprietary trading and from acquiring or retaining an ownership interest in, or sponsoring, hedge funds or private equity funds, subject to certain enumerated exceptions. In October 2011, a number of U.S. financial regulatory agencies issued a joint notice of proposed rulemaking to implement the Volcker Rule.” (Skadden Arps)

5. Create disaster plans for key banks and financial institutions:

“The stated purpose of a living will, according to the Dodd-Frank Act, is to explain how the filing organization can be resolved in a ‘rapid and orderly manner’ if the organization is in material financial distress or is failing. This purpose subsumes three separate objectives of the living will: (i) to explain how the filing organization can manage itself and return to health if it becomes distressed; (ii) to provide a road map for liquidation by the FDIC if the organization is placed in receivership under the Orderly Liquidation Authority; and (iii) to enhance supervision by the Board by providing additional detail on how an organization views the risks within it.” (Morrison & Foerster)

Here’s what law firms have been writing about recent Dodd-Frank developments:

On the Consumer Financial Protection Bureau:

On Whistleblower Protection:

On Mortgage Reform:

On Compensation Committee Rules:

On the Commodity Futures Trading Commission:

On Regulation of Banks and Financial Institutions:

On Other Regulation:

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