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SRC Insights: Fourth Quarter 2011

DFA Today: The Dodd-Frank Act Keeps Rolling Along

by Bob Rell, Senior Specialist

The Dodd-Frank Wall Street Reform and Consumer Protection Act (DFA or the act) passed its one-year anniversary in July. Trackers indicate that 122 rulemaking deadlines fell on July 16 (360 days after Dodd-Frank's enactment) and July 21 (one year after its enactment).1 While numerous milestones have been reached, many more remain ahead.

This recurring feature of SRC Insights highlights key events associated with the DFA that have transpired since the last issue. Reference links to more detailed information on the subject matter are also provided. If you have any questions regarding this periodic section, please contact Senior Specialist Bob Rell.

RULE PROPOSALS AND REQUESTS FOR COMMENT

October 11, 2011
Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships with, Hedge Funds and Private Equity Funds

This is a request for public comment on a proposed rule that would implement Section 619 of the DFA, which contains certain prohibitions and restrictions on the ability of a banking entity and nonbank financial company supervised by the Board to engage in proprietary trading and have certain interests in, or relationships with, a hedge fund or private equity fund.

August 31, 2011
Regulation OO - Supervised Securities Holding Companies Registration

This is a request for comment on a proposed rule outlining the procedures for securities holding companies (SHCs) to elect to be supervised by the Federal Reserve. An SHC is a nonbank company that owns at least one registered broker or dealer.

August 22, 2011
Agency Information Collection

This is a proposal to exempt a limited number of savings and loan holding companies (SLHCs) from initial regulatory reporting using the Federal Reserve's existing regulatory reports and a two-year phase-in period for regulatory reporting for all other SLHCs. Exempt SLHCs would continue to submit Schedule HC, which is currently a part of the Thrift Financial Report, and the OTS H-(b)11 Annual/Current Report.

August 12, 2011
Regulations LL and MM Savings and Loan Holding Companies

This is a proposed interim final rule setting forth regulations for SLHCs. This interim final rule provides for the corresponding transfer from the OTS to the Board of the regulations necessary for the Board to administer the statutes governing SLHCs.

July 28, 2011
Retail Foreign Exchange Transactions (Regulation NN)

This is a request for comment on a rule to permit supervised banking organizations to engage in off-exchange transactions in foreign currency with retail customers. The proposed rule also describes various requirements with which banking organizations must comply to conduct such transactions.

FINAL RULES ADOPTED

October 17, 2011
Final Rule Implementing the Resolution Plan Requirement of the DFA

The Federal Reserve Board announced the approval of a final rule to implement the resolution plan requirement in the DFA. The final rule requires bank holding companies with assets of $50 billion or more and nonbank financial firms designated by the Financial Stability Oversight Council (FSOC) for supervision by the Board to annually submit resolution plans to the Board and the Federal Deposit Insurance Corporation (FDIC).

September 20, 2011
Final Rule Under Regulation B Regarding Data Collection Compliance Requirements for Motor Vehicle Dealers

The Federal Reserve Board issued a final rule amending Regulation B to provide that motor vehicle dealers are not required to comply with new data collection requirements in the DFA until the Board issues final regulations to implement the statutory requirements.

July 21, 2011
Final Rule Implementing Transfer of Authority from the OTS to the OCC

To incorporate the transfer of certain functions of the OTS to the OCC, the OCC is adopting amendments to its regulations governing organization and functions, availability and release of information, post-employment restrictions for senior examiners, and assessment of fees. The OCC is also amending its rules pertaining to preemption and visitorial powers, change in control of credit card banks and trust banks, and deposit-taking by uninsured federal branches.

LEGISLATIVE ACTIONS, HEARINGS, AND LEGAL PROCEEDINGS

August 16, 2011
Field Hearing Entitled "Potential Mixed Messages: Is Guidance from Washington Being Implemented by Federal Bank Examiners?"

Committee on Financial Services

July 27, 2011
Hearing Entitled “Oversight of the Credit Rating Agencies Post-Dodd-Frank”

Committee on Financial Services

July 21, 2011
Hearing Entitled “Enhanced Oversight After the Financial Crisis: The Wall Street Reform Act at One Year”

United States Senate Committee on Banking, Housing, and Urban Affairs

July 8, 2011
Hearing Entitled “Legislative Proposals Regarding Bank Examination Practices”

Committee on Financial Services

GAO AND OTHER NOTABLE REPORT RELEASES SPEECHES, TESTIMONY, AND EVENTS OF INTEREST

October 17, 2011
Incentive Compensation Practices: A Report on the Horizontal Review of Practices at Large Banking Organizations

October 4, 2011
Federal Reserve System: Opportunities Exist to Strengthen Policies and Processes for Managing Emergency Assistance

The DFA directed the GAO to conduct a one-time audit of the emergency loan programs and other assistance authorized by the Board of Governors of the Federal Reserve System during the recent financial crisis. This testimony summarizes the results of the GAO's July 2011 report (GAO-11-696) examining the emergency actions taken by the Federal Reserve Board from December 1, 2007, through July 21, 2010.

July 19, 2011
Mortgage Reform: Potential Impacts of Provisions in the DFA on Homebuyers and the Mortgage Market

The act directed the GAO to assess the effect of mortgage-related provisions on the availability and affordability of mortgage credit and to issue a report by July 2011, but federal agencies are still developing implementing regulations. This report discusses the potential impact of the act's (1) qualified mortgage criteria, (2) credit risk retention requirement, and (3) provisions concerning homeownership counseling and regulation of high-cost loans.

UPDATES ON NEW AGENCIES

Consumer Financial Protection Bureau (CFPB)

October 13, 2011
CFPB Supervision and Examination Manual

The CFPB released the CFPB Supervision and Examination Manual, the guide for examiners to use in overseeing companies that provide consumer financial products and services.

October 13, 2011
Mortgage Servicing—Examination Procedures

After completing the risk assessment and examination scoping, examiners should use these procedures, in conjunction with the compliance management system review procedures, to conduct a mortgage servicing examination. The examination procedures contain a series of modules, grouping similar requirements together.

October 6, 2011
Senate Banking Committee Approves Cordray Nomination as CFPB Head

The Senate Committee on Banking, Housing and Urban Development voted to confirm former Ohio Attorney General Richard Cordray as director of the CFPB. The committee approved the nomination by a party-line vote of 12-10, with all Republican members voting against it.

Federal Insurance Office (FIO)

October 17, 2011
Public Input on the Report to Congress on How to Modernize and Improve the System of Insurance Regulation in the United States

The DFA requires the FIO to conduct a study on how to modernize and improve the system of insurance regulation in the United States. To assist the FIO in conducting the study and formulating its recommendations, the FIO is issuing this request for comment.

Financial Stability Oversight Council (FSOC)

October 11, 2011
Authority to Require Supervision and Regulation of Certain Nonbank Financial Companies

Section 113 of the act authorizes the FSOC to require a nonbank financial company to be supervised by the Board of Governors of the Federal Reserve System and be subject to prudential standards if it determines that material financial distress at the nonbank financial company, or the nature, scope, size, scale, concentration, interconnectedness, or mix of the activities of the nonbank financial company, could pose a threat to the financial stability of the United States.

October 6, 2011
The Annual Report of the FSOC

The FSOC annual report fulfills the Congressional mandate to report on its activities, describe significant financial market and regulatory developments, analyze potential emerging threats, and make certain recommendations.

Committee on Financial Services Hearing

October 1, 2011
DFA Integrated Implementation Roadmap

This presentation contains a summary of key tasks that the FSOC and its members will take to implement the DFA.

September 26, 2011
Senate Confirmation of S. Roy Woodall

The Senate confirmed the nomination of S. Roy Woodall to be the independent member of the FSOC with insurance expertise. He was named for a six-year term. He will be one of three insurance representatives on the FSOC and the only one with voting power.

Office of Financial Research (OFR)

August 12, 2011
Statement on Progress to Date and Next Steps Forward in the Global Initiative to Establish a Legal Entity Identifier (LEI)

To support the FSOC in identifying connections among market participants and monitoring systemic risk, the OFR intends to standardize how parties to financial contracts are identified in the data it collects on behalf of the FSOC.

The views expressed in this article are those of the author and are not necessarily those of this Reserve Bank or the Federal Reserve System.