“MR. LEHRER: You want to repeal Dodd-Frank?
MR. ROMNEY: Well, I would repeal it and replace it.”
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)
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Here’s what law firms have been writing about recent Dodd-Frank developments:
On the Consumer Financial Protection Bureau:
- “CFPB Settlement Requires $112.5 Million Payment by American Express” in Mortgage Banking Update – October 4, 2012 – Ballard Spahr LLP
- CFPB Reports on Consumer Credit Scores – BuckleySandler LLP
- CFPB: August Roundup – Venable LLP
- The CFPB, Part 2: The New Regulator on the Block Strikes (Again) – Michael Volkov
- Consumer Financial Protection Bureau Frequently Asked Questions – Morgan Lewis
On Whistleblower Protection:
- The Tip Is In the Mail: Court Tries to Make Sense of Dodd-Frank’s Whistleblower and Retaliation Provisions and Asks Whether It’s Enough Just to Send a Letter – Orrick
- Federal Courts Endorse an Expanded Definition of a “Whistleblower” – Companies Should Carefully Consider the Who and How When Claims Are Made – Snell & Wilmer L.L.P.
- Federal District Court Expands Whistleblower Protections Under Dodd-Frank – Foley & Lardner LLP
On Mortgage Reform:
- Damned if You Do, Damned if You Don’t: Origination of “Qualified” Residential Mortgages May Trigger Disparate Impact Fair Lending Claims – Dechert LLP
- Special Alert: Summary of CFPB Mortgage Servicing Rules Proposals – BuckleySandler LLP
- CFPB Proposes New Servicing Rules – TILA – Jonathan Foxx
- Questions about CFPB’s qualified mortgage definition continue – Ballard Spahr LLP
On Compensation Committee Rules:
- NYSE and NASDAQ Propose New Compensation Committee Rules (Updated) - Skadden, Arps, Slate, Meagher & Flom LLP
- Stock Exchanges Submit Proposed Compensation Committee and Adviser Independence Rule Changes to SEC – Morrison & Foerster LLP
- Executive Compensation and Corporate and Securities Alert: NYSE and Nasdaq Propose Rules Relating to Compensation Committees and Compensation Consultants – Fenwick & West LLP
- NYSE and NASDAQ Propose Rules Establishing Listing Standards for Compensation Committees and Selection of Compensation Advisers – Ballard Spahr LLP
- Exchanges Propose Listing Standards for Compensation Committees and Compensation Adviser Independence – Ropes & Gray LLP
- Nasdaq Proposes Rules Regarding Independence of Compensation Committees – Leonard, Street and Deinard
- NYSE Proposes Rules Regarding Independence of Compensation Committees and Compensation Advisers – Leonard, Street and Deinard
On the Commodity Futures Trading Commission:
- District Court Rejects CFTC Rule on Position Limits, for Now – Jackson Walker
- Court Vacates CFTC Position Limit Rules – Skadden, Arps, Slate, Meagher & Flom LLP
- Court Vacates CFTC Position Limits Rules – Dechert LLP
- Court Vacates CFTC’s Position Limits Rule – Leonard, Street and Deinard
- Court Strikes Down ‘Critical’ CFTC Rule – Shipkevich PLLC
- Barney Frank Urges CFTC Decision to Prevent FX Withdrawals – Shipkevich PLLC
- Swap Definitions Rules Finalized by the SEC and the CFTC under Dodd-Frank – K&L Gates LLP
- CFTC issues final rules establishing swap dealer and major swap participant requirements for swap trading relationship documentation – Baker & McKenzie Australia
On Regulation of Banks and Financial Institutions:
- Federal Banking Regulators Issue Basel III Calculator – Katten Muchin Rosenman LLP
- Regulatory Capital Estimation Tool: Some Observations – Morrison & Foerster LLP
- OCC Issues Rule on Investments in Corporate Debt Securities, Applicable to Federal Savings Associations – Katten Muchin Rosenman LLP
On Other Regulation:
- SEC Extension of Temporary Registration of Municipal Advisors – Orrick
- Agencies Reopen Comment Period on Swap Margin and Capital Proposed Rulemaking – Katten Muchin Rosenman LLP
- Finding Ambiguity – The Future Of Mandatory Rule Making Under The Dodd-Frank Act – Allen Matkins Leck Gamble Mallory & Natsis LLP
- Three State AGs Join Challenge to Dodd-Frank Act and CFPB Appointment – BuckleySandler LLP
- The Dodd-Frank Act: Impact on Investment Advisers – Bernstein Shur
- Geithner Pressures SEC to Act – Shipkevich PLLC
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