Community Based, Nationally Recognized (sm)

Tag Archives: Financial Regulatory Reform

Regulators Respond to Dodd-Frank

The federal banking regulators recently took their first official Dodd-Frank rulemaking step, inviting public comments in advance of proposed rulemaking on the use of credit ratings in the formulation of risk-based capital standards.  The reality is that years of such rulemaking and interpretation by regulators will determine the true impact of the law.

More important to community banks, the FDIC announced the establishment of a department—the Division of Depositor and Consumer Protection (DCP) —that will soon become a household name for smaller insured state nonmember banks.  This unit will be dedicated to the enforcement of consumer protection rules promulgated by the new Consumer Financial Protection Bureau (CFPB) as to banks exempt from that agency’s oversight.

The New Community Bank “Regulator”—FDIC’s DCP

On August 10, 2010, the FDIC Board created two new offices specifically for the purpose of implementing Dodd-Frank:  the Office of Complex Financial Institutions (CFI) and Division of Depositor and Consumer Protection (DCP).  The first will be the FDIC vehicle for carrying out the agency’s role in overseeing systemic and large bank holding company and non-bank financial firms.  The DCP, on the other hand, is in a sense a community bank regulator.  According to the FDIC, this body will be charged with enforcing consumer protection rules promulgated by the CFPB as against banks outside its purview:  those with $10 billion or less in total assets.  In the words of Chairman Bair:

Our depositor protection and compliance examination and enforcement responsibilities are integral to our unique responsibilities as deposit insurer and supervisor of thousands of community banks. The creation of this new division emphasizes the importance we place on these responsibilities and is directly responsive to Congress’s intent in the new legislation.  DCP will also complement the activities of the new Consumer Financial Protection Bureau that is being established within the Federal Reserve. The FDIC supports the CFPB, and we are committed to doing our part in carrying out the consumer responsibilities Congress has entrusted to us.

(more…)

Email This Content Email This Content Posted in Bank Regulations, Dodd-Frank Act. Tagged with . By Barry Hester - Thursday, September 2, 2010

Bryan Cave and BKD Present One Hour Webinar on Dodd-Frank

The Dodd-Frank Reform Act & What It Means to You

Wednesday, September 8, 2010 11:00 AM – 12:00 PM EDT

The Dodd-Frank Wall Street Reform and Consumer Protection Act represents a historic restructuring in the regulation of financial institutions.  This comprehensive reform bill will have substantial effects on all facets of the financial services industry.  The new law requires the development of numerous rules and regulations that will continue to evolve over time.

Join experts from Bryan Cave LLP and BKD, LLP to hear what this reform could mean for you now and in the future.  You will receive insight on specific provisions such as consumer compliance regulations, regulatory agency shifts, the Collins Amendment and other capital requirements.  Other changes covered include those to Federal Deposit Insurance Corporation insurance, affiliate transaction and legal lending limits, private securities offerings and executive compensation.

If you are interested in attending, please register online for this free webinar.

(more…)

Email This Content Email This Content Posted in Bank Regulations, Dodd-Frank Act, Presentations. Tagged with , . By Rob Klingler - Monday, August 30, 2010

What Dodd-Frank Means for the Prepaid Card Industry

The Dodd-Frank Wall Street Reform and Consumer Protection  Act, which was signed into law as a means to address some of the most notorious causes of the recent “Great Recession,” was mostly aimed at banks and Wall Street; however it also has been extended to encompass some aspects of the prepaid card industry.  Prepaid cards – including gift cards, payroll cards, flexible spending account and employee benefits cards, government benefits cards, employee incentive cards, employee per diem and relocation cards, and rebate cards – are being used increasingly by businesses in lieu of cash, checks, vouchers and gift certificates.  All of these uses may be impacted by Dodd-Frank.

Although much of Dodd-Frank has little to do with prepaid cards, it includes provisions with which the entire prepaid value chain must be familiar – because all will be subject to new requirements that will affect their current business operations.

New York Partner Judith Rinearson authored an in-depth article in the August edition of Paybefore Update explaining the impact of the act on the prepaid card industry. Click here to read her full article, used with permission from Paybefore Update.

On August 16, 2010, the Bryan Cave Prepaid Card team gave a webinar on how the Dodd-Frank Wall Street Reform and Consumer Protection  Act will affect the prepaid card industry. Readers can now access online the presentation slides and webinar audio.

Email This Content Email This Content Posted in Presentations. Tagged with , . By Judie Rinearson - Sunday, August 29, 2010

Financial Services Update

Department of Labor Weekly Unemployment Report Released 

On Friday, the Department of Labor announced that the unemployment rate fell in 18 states during the month of July. The Department also said the jobless rate rose in 14 states and stayed the same in the remaining 18 states. Nationwide, the unemployment rate remained stuck at 9.5 percent in July. New York and Massachusetts reported strong job gains with Massachusetts reporting that it added 19,200 private-sector jobs in July, the largest monthly gain for any state in more than 20 years.　

Housing Conference Foreshadows Fight Ahead 

On Tuesday, the Departments of Treasury and HUD invited a cross section of housing and banking industry participants to Washington for a summit on the future of the housing finance industry. The industry representatives voiced overwhelming support for the government to maintain a large role in supporting the nearly $11 trillion mortgage market. Participants expressed support for a new program that would allow homeowners to refinance their mortgages at lower interest rates through Fannie Mae and Freddie Mac, although Treasury officials indicated they have no plans to enact such a program.

 Treasury Secretary Timothy Geithner pledged “fundamental change” to the structure of Fannie and Freddie, but saying that the two companies were not the only cause of the financial crisis. While Geithner did not offer a specific strategy for reforming the two mortgage giants, he said that the government could remain involved in the mortgage system by guaranteeing that investors in mortgage-backed securities receive fair compensation, even when borrowers default. Representative Spencer Bachus (R-AL), the Ranking Republican on the House Financial Services Committee, accused the Administration of excluding critics of the Administration from Tuesday’s conference. In a letter to Secretary Geithner, Bachus said the housing conference appears to be “laying the groundwork for a predetermined policy outcome that looks uncomfortably similar to the failed status quo.” 

(more…)

Email This Content Email This Content Posted in Financial Services Update. Tagged with , , , , , , , , . By Matt Jessee - Friday, August 20, 2010

Financial Services Update

Treasury-HUD “Conference on the Future of Housing Finance”

Next Tuesday, August 17th, the U.S. Departments of Treasury and Housing & Urban Development　(HUD) will co-host the “Conference on the Future of Housing Finance,” an open press, day long event where Treasury Secretary Tim Geithner and HUD Secretary Shaun Donovan will moderate panel discussions which will include the following panelists: Barbara J. Desoer, President of Bank of America Home Loans; Ingrid Gould Ellen, Professor of Urban Planning and Public Policy at New York University; · Bill Gross, Co-founder and Co-chief Investment Officer of PIMCO; Mike Heid, Co-president of Wells Fargo Home Mortgage; S.A. Ibrahim, Chief Executive Officer of Radian Group Inc.; Marc H. Morial, President and Chief Executive Officer of the National Urban League; Alex Pollock, Resident Fellow at the American Enterprise Institute; Lewis Ranieri, Chairman of Ranieri and Company, Inc.; Ellen Seidman, Ellen Seidman, Executive Vice President ShoreBank Corporation; Michael A. Stegman, Director of Policy and Housing at the John D. and Catherine T. MacArthur Foundation; Susan Wachter, Professor at the University of Pennsylvania’s Wharton School; Mark Zandi, Chief Economist of Moody’s Analytics. Sources indicate the topic of eliminating GSEs could emerge as one of the most contentious points of discussion.

July Retail Sales and Consumer Price Index Reports Released

On Friday, the Department of Commerce released its July retail sales report showing an increase of 0.4% during the month. This positive report follows Mary and June sales figures showing consecutive declines. The Department of Labor also issued its July consumer prices report for July on Friday showing the seasonally adjusted Consumer Price Index rose 0.3 percent. The June report also showed prices fell 0.1 percent, and therefore such positive July figures could ease concerns about deflation. 　

(more…)

Email This Content Email This Content Posted in Financial Services Update. Tagged with , , , , , , . By Matt Jessee - Friday, August 13, 2010

Enforcement Landmines For Private Funds in Dodd-Frank

This post looks at potential enforcement and compliance risks for private funds under the new Dodd-Frank Act.  We believe it should be of interest to managers of hedge funds, private equity funds and venture capital funds, as well as those who invest in or deal with them.  It follows up an earlier post concerning the basic requirement that most private funds register with the SEC; this post focuses on a series of lesser known but significant risks under the Dodd-Frank Act (also available as a printer-friendly Client Alert).

By now, most “private” or “hedge” fund managers know that the Dodd-Frank Wall Street Reform and Consumer Protection Act requires SEC registration of most advisers to private funds, effective July 2011. But SEC registration is not the only aspect of the new law that fund managers need to be aware of. Other provisions of the law will have significant effects on funds.

Key issues include:

  • Funds must meet expanded books and records requirements.
  • Advisers to venture capital funds, exempt from registration under the law, will have to take pains to avoid being treated as private equity or hedge fund advisers, who do have to register.
  • The standard for aiding and abetting liability has been lowered, such that “recklessness” rather than “actual knowledge” is sufficient.
  • Smaller advisers, not subject to SEC registration, will become subject to the vagaries of state regulation.

“Private” or “hedge” funds are swept into the law through Title IV, the “Private Fund Investment Advisers Registration Act of 2010.” While Title IV does contain the registration requirements, it also contains other provisions that expand the scope well beyond the regulatory hook of registration. Further, other provisions of Dodd-Frank – notably, Title IX, entitled “Investor Protections and Improvements to the Regulation of Securities” – also have significant implications for private funds.

(more…)

Email This Content Email This Content Posted in Client Alerts, Dodd-Frank Act. Tagged with . By Eric Rieder - Wednesday, August 4, 2010

Mortgage Reforms under the Dodd-Frank Act

The following outlines the primary consumer protection requirements of the Mortgage Reform and Anti-Predatory Lending Act (the “Act” or the “Mortgage Act”), which is Title XIV of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Effective Dates. The Mortgage Act is somewhat ambiguous as to its effective dates.  There is a possible argument  that those many provisions of the Act for which no regulation is specifically required took effect immediately upon the signing of the Act by the President on July 21, 2010.  We believe do not believe that to be a plausible interpretation.

Under the best interpretation of the Act, those provisions for which no regulations are issued would take effect 18 months after the designated transfer date.  The designated transfer date is the date on which the various consumer protection functions are transferred from the federal banking agencies to the Consumer Financial Protection Bureau (the “Bureau”).  Where regulations are required by the Act, they must be issued in final form within 18 months of the designated transfer date, and the regulation and corresponding Act provision then would take effect within 12 months thereafter.

The Consumer Financial Protection Bureau. The majority of the Mortgage Act’s provisions will be included in the “enumerated consumer laws” that the Bureau will implement and enforce.  However, most of the regulations that the Act requires would be written by the Federal Reserve, presumably due to the delay until the designated transfer date.

(more…)

Email This Content Email This Content Posted in Dodd-Frank Act. Tagged with , . By John ReVeal - Tuesday, August 3, 2010

SEC Enforcement and Litigation Implications of Dodd-Frank Act

Public companies should be aware of the following potential landmines – there are others – crafted into the Dodd-Frank Act:

Enhancements to whistleblower incentives and protections (§ 922), which may encourage employees to report borderline (or even non-existent) issues to authorities.

The lowering of the standard for “aiding and abetting” liability from “knowing and substantial” assistance to “knowing or reckless and substantial” assistance (§ 929 O), which may encourage the SEC to pursue marginal actions against companies or individuals who potentially may have assisted a violation.  (The Act also mandates a GAO study of the benefits and detriments of enabling private rights of action for aiding and abetting violations.  Such a study could be a basis for legislative attempts, within the next few years, to overturn the long-standing prohibition of such actions established by Central Bank of Denver and other cases.)

Empowerment of the SEC to seek and obtain monetary penalties in administrative proceedings against entities and individuals who are not registered with the Commission, e.g. public companies that are not registered as broker-dealers or investment advisors (§ 929 P).  There is a perception that administrative proceedings – unlike actions in federal district court –provide the SEC with a “home-court advantage.”  Previously, the Commission would have had to file an action in district court were it to seek monetary penalties against a public company.

(more…)

Email This Content Email This Content Posted in Dodd-Frank Act. Tagged with . By Paul Huey-Burns - Tuesday, August 3, 2010

Dodd-Frank Changes Regulatory Framework for Alternative Investment Managers

Given the extensive work that many investment advisers will have to undertake in order to fully comply with the Private Fund Act (a process that can stretch into many months), we urge all Firm clients and contacts to promptly begin to consider what impact the Private Fund Act has on their operations and to plan the steps necessary to comply with its various aspects. To assist our clients and contacts in determining whether you will be affected in this area, below is a brief summary of the changes resulting from the Private Fund Act (also available as a printer-friendly Client Alert).

On July 21, 2010, President Obama signed into law the financial reform package known as the Dodd- Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), which contains the Private Fund Investment Advisers Registration Act of 2010 (the “Private Fund Act”). The Private Fund Act changes the regulatory framework that governs investment advisers managing private fund investments, including private equity funds, hedge funds and real estate funds. Specifically, the Private Fund Act (i) requires that many investment advisers, including certain foreign investment advisers, that are currently exempt from registration with the Securities and Exchange Commission (“SEC”) under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), register with the SEC; (ii) requires that certain investment advisers currently registered with the SEC change to state registration and (iii) significantly expands the reporting and record-keeping requirements for domestic and foreign investment advisers to private funds of all types. The Private Fund Act adopts a new set of limited exemptions from SEC registration based on the asset class managed, the amount of assets under management and/or the operational details of foreign managers. At the same time, the Private Fund Act significantly expands the reporting and record keeping requirements to which these limited exempt entities will be subject going forward.

The Private Fund Act becomes effective one year from the date of the Dodd-Frank Act’s enactment, on July 21, 2011. During this one year window, each affected investment adviser will need to become fully compliant with the requirements of the Private Fund Act, including SEC registration (which currently unregistered investment advisers may choose to pursue immediately). Although the Private Fund Act contemplates substantial SEC rule making and guidance over the next year, it is clear that investment advisers will need to devote substantial resources to conformity with the Private Fund Act (including, for example, designation and training of a Chief Compliance Officer, adoption of extensive compliance procedures as mandated by the Advisers Act, and modification or adoption of SEC mandated internal reporting and record keeping systems).

(more…)

Email This Content Email This Content Posted in Client Alerts, Dodd-Frank Act. Tagged with . By Nir Yarden - Monday, August 2, 2010

The State of State Law Preemption

This post summarizes the federal preemption standard that will apply to national banks and federal thrifts as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act.  The new preemption rules are included in Title X of the Dodd-Frank Act, also referred to as the Consumer Financial Protection Act of 2010.

The Preemption Standards Before The Act

Understanding the new preemption standard requires an understanding of the historical preemption standards.  Until 2004, federal thrifts operated under one standard and national banks under another.

The OTS (and before them, the FHLBB) took the position that federal thrift regulation “occupied the field” of regulation for federal thrifts.  This broad preemption basically meant that only the most incidental of State laws would apply to federal thrifts.

In contrast, the OCC traditionally claimed federal preemption only on a case-by-case basis and only if the State law in question interfered with a national bank in the exercise of its federally-authorized powers.  In 1996, the U.S. Supreme Court in the Barnett decision upheld this approach when it held that State laws can regulate national banks where doing so does not “prevent or significantly interfere with” a national bank’s exercise of its powers.

In 2004, the OCC issued new regulations that stated the OCC’s preemption authority more broadly.  While the OCC refrained from claiming occupation of the field, the broad preemptive language of the regulation was otherwise very similar to the OTS’ preemption regulation.  Given that the OCC announced this new standard while States, counties and cities were aggressively regulating “predatory lending,” it is perhaps not surprising that the OCC was widely criticized by consumer advocacy groups for preempting consumer protection laws.

(more…)

Email This Content Email This Content Posted in Dodd-Frank Act. Tagged with . By John ReVeal - Monday, August 2, 2010