Table of Contents. August 2010 Arnold & Porter LLP

Transcription

1 Rulemakings under the Dodd-Frank Act The Dodd-Frank Wall Street Reform and Consumer Protection Act (Act) requires the federal financial regulators to promulgate more than 180 new rules. The Act also permits the promulgation of more than 75 additional rules. Arnold & Porter LLP has prepared the following detailed chart of the rulemakings in the Act. Arnold & Porter has also prepared an advisory that provides a preliminary overview of some of the more notable agency rulemakings that are either required or permitted by the Act. Table of : Financial Stability I: Orderly Liquidation Authority : Transfer of Powers to the Comptroller of the Currency, the Corporation, and the Board of Governors : Regulation of Advisers to Hedge Funds and Others : Insurance I: Improvements to Regulation of Bank and Savings Association Holding Companies and Depository Institutions II: Wall Street Transparency and Accountability III: Payment, Clearing, and Settlement Supervision X: Investor Protections and Improvements to the Regulation of Securities : Bureau of Consumer Financial Protection : Federal Reserve System Provisions : Improving Access to Mainstream Financial Institutions : Mortgage Reform and Anti-Predatory Lending Act

2 I I II III X : Financial Stability Section Rulemakings Timeframe or 102: Definitions The FRB must give meanings to the terms, significant nonbank financial company and significant bank holding company, but the term significant nonbank financial company may not include entities that are excluded from the definition of U.S. nonbank financial companies, such as exchanges, clearing agencies, and swap execution facilities. 102: Definitions The FRB must establish, by regulation, the requirements for determining if a company is predominantly engaged in financial activities, as defined by the Act. 111: Financial Stability Oversight Council Established 120: Additional Standards Applicable to Activities or Practices for Financial Stability Purposes The FSOC must adopt rules necessary for the FSOC s conduct of business, including rules of organization, procedure, or practice. The FSOC may recommend that any of the primary financial regulatory agencies apply new or heightened standards and safeguards for a financial activity or practice, but must consult with the primary financial regulatory agencies and provide notice to the public and opportunity for comment for any such recommendation. The primary financial regulatory agency must impose the FSOC-recommended standards, or similar standards that the FSOC deems acceptable, or must explain in writing to the FSOC why the agency has determined not to follow the FSOC recommendations. for FSOC recommendations. No timeframe specified for agencies to impose the recommended standards; for rejecting the standards, not later than 90 days after the date which the recommendations are issued. 2

3 I I II III X : Financial Stability (cont.) Section Rulemakings Timeframe or 120: Additional Standards Applicable to Activities or Practices for Financial Stability Purposes 152: Office of Financial Research Established 153 and 154: Purpose and Duties of the Office; Organizational Structure; Responsibilities of Primary Programmatic Units Each primary financial regulatory agency that has imposed FSOCrecommended standards for a financial activity or practice must promulgate regulations to establish a procedure for appealing the agency s determination of whether those standards should remain effective. The Treasury Secretary, with the concurrence of the Director of the Office of Government Ethics, must issue regulations establishing postemployment restrictions with financial entities that report to the OFR. The OFR, in consultation with the Chairperson of the FSOC (the Treasury Secretary), must issue rules, regulations, and orders to the extent necessary to collect and provide data to the FSOC and member agencies, standardize the types and formats of data reported and collected, and assist member agencies in determining the types and formats of data authorized by the Act to be collected by member agencies. 3

4 I I II III X : Financial Stability (cont.) Section Rulemakings Timeframe or 165: Enhanced Supervision and Prudential Standards for Nonbank Financial Companies Supervised by the FRB and Certain Bank Holding Companies 165: Enhanced Supervision and Prudential Standards for Nonbank Financial Companies Supervised by the FRB and Certain Bank Holding Companies The FRB must establish prudential standards for nonbank financial companies supervised by the FRB and bank holding companies with total consolidated assets of $50 billion or more that include: (i) riskbased capital requirements or similarly stringent risk controls; (ii) liquidity requirements; (iii) overall risk management requirements; (iv) resolution plan and credit exposure requirements; and (v) concentration limits. The FRB may establish additional prudential standards for nonbank financial companies supervised by the FRB and bank holding companies with total consolidated assets of $50 billion or more that include: (i) a contingent capital requirement; (ii) enhanced public disclosures; (iii) short-term debt limits; and (iv) such other prudential standards as the FRB, on its own or pursuant to recommendations by the FSOC, determines are appropriate. No later than January 22, 2012 No later than January 22,

5 I I II III X : Financial Stability (cont.) Section Rulemakings Timeframe or 165: Enhanced Supervision and Prudential Standards for Nonbank Financial Companies Supervised by the FRB and Certain Bank Holding Companies 165: Enhanced Supervision and Prudential Standards for Nonbank Financial Companies Supervised by the FRB and Certain Bank Holding Companies The FRB may issue regulations that require each nonbank financial company supervised by the FRB and bank holding company with total consolidated assets of $50 billion or more to maintain a minimum amount of contingent capital that is convertible to equity in times of financial stress. The FRB and the FDIC must issue final rules to require each nonbank financial company supervised by the FRB and bank holding company with total consolidated assets of $50 billion or more to report periodically to the FSOC, the FRB, and the FDIC as to the nature and extent of its credit exposure and its plan for rapid and orderly resolution in the event of material financial distress or failure. If regulations are promulgated, they must be subsequent to an FSOC report on a study submitted to Congress under Section 115(c) not later than July 21, 2012 No later than January 21,

6 I I II III X : Financial Stability (cont.) Section Rulemakings Timeframe or 165: Enhanced Supervision and Prudential Standards for Nonbank Financial Companies Supervised by the FRB and Certain Bank Holding Companies 165: Enhanced Supervision and Prudential Standards for Nonbank Financial Companies Supervised by the FRB and Certain Bank Holding Companies The FRB must prescribe limits on credit exposures to limit the risks that the failure of an individual company could pose to nonbank financial company supervised by the FRB or a bank holding company with total consolidated assets of $50 billion or more. The regulation must prohibit such companies from having credit exposure to any unaffiliated company that exceeds 25% of capital stock and surplus, or a smaller amount as deemed necessary by the FRB. The FRB may exempt transactions by regulation or order, in whole or in part, from the definition of credit exposure in Section 165(e), which concerns concentration limits and credit exposure, if the FRB finds that the exemption is in the public interest and is consistent with the purpose of Section 165(e). Rulemaking must occur no later than January 22, 2012; but, the regulations may not be effective until July 21, 2013, and the FRB can extend this limit on the effective period for no longer than an additional 2 years Rulemaking must occur no later than January 22, 2012; but, the regulations may not be effective until July 21, 2013, and the FRB can extend this limit on the effective period for no longer than an additional 2 years 6

7 I I II III X : Financial Stability (cont.) Section Rulemakings Timeframe or 165: Enhanced Supervision and Prudential Standards for Nonbank Financial Companies Supervised by the FRB and Certain Bank Holding Companies 165: Enhanced Supervision and Prudential Standards for Nonbank Financial Companies Supervised by the FRB and Certain Bank Holding Companies The FRB may prescribe, by regulation, periodic public disclosures by nonbank financial companies supervised by the FRB and bank holding companies with total consolidated assets of $50 billion or more in order to support market evaluation of the risk profile, capital adequacy, and risk management capabilities thereof. The FRB may prescribe limits on the amount of short-term debt, including off-balance sheet exposures, that may be accumulated by nonbank financial companies supervised by the FRB and bank holding companies with total consolidated assets of $50 billion or more in order to mitigate the risks that an over-accumulation of short-term debt could pose to financial companies and to the stability of the US financial system. The FRB is authorized to identify, by regulation, what liabilities are included in the definition of short-term debt. No later than January 22, 2012 No later than January 22,

8 I I II III X : Financial Stability (cont.) Section Rulemakings Timeframe or 165: Enhanced Supervision and Prudential Standards for Nonbank Financial Companies Supervised by the FRB and Certain Bank Holding Companies 165: Enhanced Supervision and Prudential Standards for Nonbank Financial Companies Supervised by the FRB and Certain Bank Holding Companies The FRB must issue regulations requiring each publicly traded bank holding company that has total consolidated assets of $10 billion or more and each nonbank financial company supervised by the Federal Reserve that is a publicly traded company to establish a risk committee, to be responsible for oversight of enterprise-wide risk management. The FRB may require each publicly traded bank holding company that has total consolidated assets of less than $10 billion to establish a risk committee, as set forth in Section 165(h)(3), as determined necessary or appropriate by the FRB to promote sound risk management practices. Rulemaking must occur within 1 year of the Transfer Date (i.e., by July 21, 2012 or January 21, 2013, at latest) and must take effect within 15 months of the Transfer Date (i.e., by October 21, 2012 or April 21, 2013, at latest). Rulemaking must occur within 1 year of the Transfer Date (i.e., by July 21, 2012 or January 21, 2013, at latest) and must take effect within 15 months of the Transfer Date (i.e., by October 21, 2012 or April 21, 2013, at latest). 8

9 I I II III X : Financial Stability (cont.) Section Rulemakings Timeframe or 165: Enhanced Supervision and Prudential Standards for Nonbank Financial Companies Supervised by the FRB and Certain Bank Holding Companies 165: Enhanced Supervision and Prudential Standards for Nonbank Financial Companies Supervised by the FRB and Certain Bank Holding Companies 165: Enhanced Supervision and Prudential Standards for Nonbank Financial Companies Supervised by the FRB and Certain Bank Holding Companies Each federal primary financial regulatory agency, in coordination with the FRB and the Federal Insurance Office, must issue consistent and comparable regulations to implement periodic stress tests in order to test the capital of nonbank financial companies supervised by the FRB and bank holding companies with total consolidated assets of $10 billion or more that (i) define stress test ; (ii) establish methodologies for the conduct of stress tests; (iii) establish the form and content of required reports; and (iv) require covered companies to publish a summary of the results of the required stress tests. The FRB must promulgate regulations to require nonbank financial companies supervised by the FRB and bank holding companies with total consolidated assets of $50 billion or more, to maintain a debt to equity ratio of no more than 15 to 1. Upon a determination by the FSOC that such company poses a grave threat to the financial stability of the United States and that the imposition of such requirements is necessary to mitigate the risk that such company poses to the financial stability of the United States. The FRB may expand the definition of off-balance-sheet activities to include additional activities or transactions to its enumerated list. No later than January 22, 2012 No later than January 22,

10 I I II III X : Financial Stability (cont.) Section Rulemakings Timeframe or 166: Early Remediation Requirements The FRB, in consultation with the FSOC and the FDIC, must prescribe regulations establishing requirements to provide for the early remediation of financial distress of nonbank financial companies supervised by the FRB or bank holding companies with total consolidated assets of $50 billion or more. 167: Affiliations The FRB must issue regulations establishing the criteria for determining whether nonbank financial companies supervised by the FRB must establish intermediate holding companies in which to conduct activities that are financial in nature. 167: Affiliations The FRB may promulgate regulations to establish any restrictions or limitations on transactions between an intermediate holding company or a nonbank financial company supervised by the FRB and its affiliates, as necessary to prevent unsafe and unsound practices, except that such regulations may not restrict or limit any transaction in connection with the bona fide acquisition or lease by an unaffiliated person of assets, goods, or services. 168: Regulations The FRB has authority to issue regulations to implement subtitles A and C of, entitled Financial Stability Oversight Council and Additional Board of Governors Authority for Certain Nonbank Financial Companies and Bank Holding Companies respectively, and the amendments made thereunder. Except as otherwise specified in subtitle A or C, not later than 18 months after the effective date of this Act, the FRB must issue final regulations to implement subtitles A and C, and the amendments made thereunder. No later than January 22, 2012 No later than January 22, 2012 No later than January 22, 2012 No later than January 22,

11 I I II III X : Financial Stability (cont.) Section Rulemakings Timeframe or 170: Safe Harbor The FRB must issue regulations on behalf of, and in consultation with, the FSOC setting forth the criteria for exempting certain types or classes of US nonbank financial companies or foreign nonbank financial companies from FRB supervision. These regulations are to be reviewed in consultation with the FSOC not less frequently than every 5 years. 170: Safe Harbor The FRB on behalf of, and in consultation with, the FSOC may revise the regulations for exempting certain types or classes of US nonbank financial companies or foreign nonbank financial companies from FRB supervision. 171: Leverage and Risk-Based Capital Requirements 171: Leverage and Risk-Based Capital Requirements The appropriate federal banking agencies must establish minimum leverage capital requirements and minimum risk-based capital requirements on a consolidated basis for insured depository institutions, depository institution holding companies, and nonbank financial companies supervised by the FRB. Subject to the recommendations of the FSOC, the federal banking agencies must develop capital requirements applicable to insured depository institutions, depository institution holding companies, and nonbank financial companies supervised by the FRB that address the risks that the activities of such institutions pose, not only to themselves, but to other public and private stakeholders in the event of adverse performance, disruption, or failure of the institution or the activity. No later than January 22, 2012 Rulemaking must occur no later than January 22, 2012, but no revisions may take effect before the end of the 2-year period after the date of publication of such revisions in final form No later than January 22, 2012 No later than January 22,

12 I I II III X I: Orderly Liquidation Authority Section Rulemakings Timeframe or 202: Judicial Review The FDIC may issue regulations governing the termination of receiverships under the new orderly liquidation provisions of the Act. 203: Systemic Risk Determination 205: Orderly Liquidation of Covered Brokers and Dealers 209: Rulemaking; Non-Conflicting Law The FDIC must establish policies and procedures acceptable to the Treasury Secretary that would govern the provision and use of funds for orderly liquidations. The SEC and the FDIC, after consultation with SIPC, must jointly issue rules to govern the liquidation of brokers and dealers in cases where the FDIC has been appointed as a receiver pursuant to the new orderly liquidation procedures. The FDIC, in consultation with the FSOC, must prescribe overall rules or regulations to implement the new orderly liquidation procedures, including rules and regulations with respect to the rights, interests, and priorities of creditors, counterparties, and security entitlement holders, among others. The rules must address the potential for conflicts of interest between individual receiverships established under this title or the FDIA. As soon as practicable 12

13 I I II III X I: Orderly Liquidation Authority (cont.) Section Rulemakings Timeframe or 210: Powers and Duties of the Corporation 210: Powers and Duties of the Corporation 210: Powers and Duties of the Corporation 210: Powers and Duties of the Corporation The FDIC must establish a procedure for expedited relief outside of the standard claims process for any person claiming (i) that the person has an enforceable security interest in property of a company for which the FDIC has been appointed receiver; and (ii) that irreparable injury will occur if the standard claims procedure is followed. The FDIC may prescribe rules, including definitions of terms, to establish an interest rate for or to make payments of post-insolvency interest to creditors holding proven claims against the receivership estate of a covered financial company. The FDIC must prescribe regulations and establish retention schedules to maintain the records of the FDIC generated in exercising the authorities of this title and of a covered financial company for which the FDIC is appointed receiver. The FDIC may prescribe that in cases where it is appointed as a receiver and repudiates a contract, actual direct compensatory damages consisting of any obligation under a guarantee, letter of credit, loan commitment, or similar credit obligation must be no less than the estimated value of the claim as of the date the FDIC was appointed receiver, as measured based on the likelihood that such contingent claim would become fixed. 13

14 I I II III X I: Orderly Liquidation Authority (cont.) Section Rulemakings Timeframe or 210: Powers and Duties of the Corporation 210: Powers and Duties of the Corporation 210: Powers and Duties of the Corporation The FDIC may determine which types of securities contracts, commodity contracts, forward contracts, repurchase agreements, swap agreements, and any similar agreements are included in the definition of qualified financial contract for purposes of its authority, as receiver, to repudiate certain contracts. In this regard, the FDIC may determine which purchase, sale, or repurchase obligations under a participation in a commercial mortgage loan would be included in the definition of securities contract or repurchase agreement for these purposes. The federal primary financial regulatory agencies must jointly prescribe regulations requiring financial companies to maintain records with respect to qualified financial contracts, including market valuations, in order to assist the FDIC as receiver. If the agencies fail to do so within the specified time, the FSOC Chairperson (the Treasury Secretary) must prescribe the required rules, in consultation with the FDIC. The FDIC may determine, by regulation, which types of financial institutions in addition to brokers, dealers, depository institutions, futures commission merchants, or bridge financial company to include in the definition of financial institution, for purposes of transferring qualified financial contracts from a company in receivership to another financial institution. No later than July 21,

15 I I II III X I: Orderly Liquidation Authority (cont.) Section Rulemakings Timeframe or 210: Powers and Duties of the Corporation 210: Powers and Duties of the Corporation 210: Powers and Duties of the Corporation The FDIC and the Treasury Secretary must jointly, in consultation with the FSOC, prescribe regulations governing the calculation of the maximum amount of obligations the FDIC is allowed to incur in connection with the liquidation of a financial company. The FDIC, in consultation with the Treasury Secretary, must prescribe regulations to charge risk-based assessments to bank holding companies with total consolidated assets of $50 billion or more and any nonbank financial company supervised by the Federal Reserve (collectively, eligible financial companies ) in order to recover costs incurred in connection with the liquidation of a financial company. If the amounts raised are not enough to recover such costs, assessments may also be imposed against financial companies with total consolidated assets equal to or greater than $50 billion that are not eligible financial companies. Such regulations must take into account the differences in risks posed to the financial stability of the United States by financial companies, differences in liability structures, and the different bases for other assessments that such financial companies may be required to pay. The FDIC must prescribe regulations which, at a minimum, must prohibit the sale of assets of a company subject to new orderly liquidation procedures to persons who have engaged in certain behavior, such as defaulting upon obligations to the company, or who participated in transactions that resulted in substantial losses to the company. 15

16 I I II III X I: Orderly Liquidation Authority (cont.) Section Rulemakings Timeframe or 210: Powers and Duties of the Corporation 213: Ban on Certain Activities by Senior Executives and Directors The FDIC must promulgate overall regulations to allow for recoupment of compensation from executives and directors substantially responsible for a company s failure. The FDIC and the FRB, in consultation with the FSOC, must jointly prescribe regulations to bar senior executives and directors of a financial company subject to FDIC receivership under the new orderly liquidation procedures who have been found to participate in certain improper practices from participating in the company s affairs. 16

17 I I II III X : Transfer of Powers to the Comptroller of the Currency, the Corporation, and the Board of Governors Section Rulemakings Timeframe or 316: Savings Provisions 331: Deposit Insurance Reforms The OCC, FDIC, and the FRB must identify the existing OTS regulations that each agency will be responsible for enforcing and publish a list of the identified regulations in the Federal Register. The FDIC must amend its regulations to define the term assessment base as equal to an institution s average total consolidated assets minus its average tangible equity during an assessment period (subject to adjustments for custodial banks and banker s banks). No later than the Transfer Date (between July 21, 2011 and January 21, 2012) 17

18 I I II III X : Regulation of Advisers to Hedge Funds and Others Section Rulemakings Timeframe or 404: Collection of Systemic Risk Data; Reports; Examinations; Disclosures 404: Collection of Systemic Risk Data; Reports; Examinations; Disclosures 406: Clarification of Rulemaking Authority 407: Exemption of Venture Capital Fund Advisers The SEC may issue rules requiring registered investment advisers to maintain records regarding private funds that they advise, including information that the SEC, in consultation with the FSOC, determines is necessary for assessment of systemic risk. The SEC must issue rules requiring private fund investment advisers to file reports with the SEC containing information that it deems necessary for the protection of investors or for the assessment of systemic risk. The SEC and the CFTC must, after consultation with the FSOC, jointly promulgate rules to establish the form and content of reports required to be filed by private fund advisers registered under both the Advisers Act and the CEA. The SEC must issue final rules defining venture capital fund for purposes of the registration exemption for investment advisers solely to 1 or more venture capital funds. No later than July 21, 2011 No later than July 21,

19 I I II III X : Regulation of Advisers to Hedge Funds and Others (cont.) Section Rulemakings Timeframe or 407: Exemption of Venture Capital Fund Advisers 408: Exemption of and Reporting by Private Fund Advisers 408: Exemption of and Reporting by Private Fund Advisers The SEC must issue rules requiring investment advisers solely to one or more venture capital funds to maintain records and submit reports to the SEC as it deems necessary in the public interest or for the protection of investors. The SEC must create an exemption from registration for investment advisers acting solely as investment advisers to private funds and that have assets under management in the US of less than $150 million. The SEC must require such advisers to maintain records and provide the SEC with annual or other reports as it deems necessary in the public interest or for the protection of investors. The SEC must issue regulations implementing registration requirements for investment advisers to mid-sized private funds that take into account the size, governance, and investment strategy of the funds to determine whether they pose systemic risk. 409: Family Offices The SEC must issue rules, regulations, or orders defining the term family office for purposes of the exclusion of family offices from the definition of an investment adviser, consistent with prior SEC exemptive orders and new grandfathering provisions. 19

20 I I II III X : Regulation of Advisers to Hedge Funds and Others (cont.) Section Rulemakings Timeframe or 410: State and Federal Responsibilities; Asset Threshold for Federal Registration of Investment Advisers 411: Custody of Client Assets 413: Adjusting the Accredited Investor Standard 413: Adjusting the Accredited Investor Standard SEC is authorized to issue a rule establishing an asset under management (AUM) threshold in excess of $100 million. The SEC may, by rule, prescribe steps that a registered investment adviser must take to safeguard client assets over which the adviser has custody. The SEC must adjust the net worth standard required to qualify as an accredited investor so that the individual net worth of any natural person (or joint net worth with spouse) is more than $1 million (excluding the value of the primary residence). The SEC may undertake an initial review of the definition of accredited investor, as it applies to natural persons, and adjust the definition following notice and comment rulemaking, except as to the net worth standard described above. 20

21 I I II III X : Regulation of Advisers to Hedge Funds and Others (cont.) Section Rulemakings Timeframe or 413: Adjusting the Accredited Investor Standard 418: Qualified Client Standard The SEC must undertake a review of the accredited investor definition in its entirety for purposes of Rule 215 of the Securities Act of 1933 as it applies to natural persons, and may make adjustments as it deems appropriate after notice and comment rulemaking. Section 205(e) of the Advisers Act is amended to require the SEC to make an inflation adjustment if the SEC uses a dollar amount test, such as a net asset threshold, as a factor in any SEC rule under Section 205(e), which allows the SEC to create exemptions from the prohibition of investment advisory contracts that provide for compensation on the basis of capital appreciation. No earlier than July 21, 2014 and at least once every 4 years thereafter No later than July 21, 2011 and to be reviewed every 5 years thereafter review; optional rulemaking 21

22 I I II III X : Insurance Section Rulemakings Timeframe or 502: Federal Insurance Office 521: Reporting, Payment, and Allocation of Premium Taxes 521: Reporting, Payment, and Allocation of Premium Taxes The Treasury Secretary may issue orders, regulations, policies, and procedures in order to: (i) establish the Federal Insurance Office and define its scope; (ii) carry out the functions of the Federal Insurance Office; (iii) collect information from insurers and affiliates; and (iv) preempt certain state insurance measures. States are authorized to establish a mechanism by which to allocate premium taxes paid to an insured s home state. To facilitate the payment of premium taxes, an insured s home state may require surplus lines brokers and insureds who have independently procured insurance to file annual tax allocation reports. No specific timeframe specified for the rulemaking, but the final rule may not be effective any earlier than the Transfer Date (between July 21, 2011 and January 21, 2012). No specific timeframe specified for the rulemaking, but the final rule may not be effective any earlier than the Transfer Date (between July 21, 2011 and January 21, 2012). 22

23 I I II III X : Insurance (cont.) Section Rulemakings Timeframe or 524: Uniform Standards for Surplus Lines Eligibility A state cannot impose eligibility requirements for nonadmitted insurers domiciled in a US jurisdiction, except in conformance with the Non-Admitted Insurance Model Act, unless the state has adopted nationwide uniform requirements, forms, and procedures developed in accordance with the provisions of the Act relating to the allocation of nonadmitted premium taxes in Section 521(b) of the Act. No specific timeframe specified for the rulemaking, but the final rule may not be effective any earlier than the Transfer Date (between July 21, 2011 and January 21, 2012). 23

24 I I II III X I: Improvements to Regulation of Bank and Savings Association Holding Companies and Depository Institutions Section Rulemakings Timeframe or 608: Enhancing Existing Restrictions on Bank Transactions with Affiliates 610: Lending Limits Applicable to Credit Exposure on Derivative Transactions, Repurchase Agreements, Reverse Repurchase Agreements, and Securities Lending and Borrowing Transactions FRB may issue regulations or interpretations with respect to the manner in which a netting agreement may be taken into account in determining the amount of a covered transaction between a member bank or subsidiary and an affiliate under Section 23A of the Federal Reserve Act. Interpretations on this issue for a specific member bank, subsidiary, or affiliate must be issued jointly by the FRB and the appropriate federal banking agency for the member bank, subsidiary, or affiliate. The definition of loans and extensions of credit in 12 U.S.C. 84 is amended to include any liability of a national banking association to advance funds to or on behalf of a person pursuant to a contractual commitment to the extent specified by the OCC. No specific timeframe specified for the rulemaking, but the final rule may not be effective any earlier than 1 year after the Transfer Date (i.e., no earlier than July 21, 2012 or January 21, 2013, at latest). No specific timeframe specified for the rulemaking, but the final rule may not be effective any earlier than 1 year after the Transfer Date (i.e., no earlier than July 21, 2012 or January 21, 2013, at latest). 24

25 I I II III X I: Improvements to Regulation of Bank and Savings Association Holding Companies and Depository Institutions (cont.) Section Rulemakings Timeframe or 615: Limitation on Purchases of Assets from Insiders 616: Regulations Regarding Capital Levels 616: Regulations Regarding Capital Levels The FRB, in consultation with the OCC and the FDIC, may issue rules toward prohibiting an insured depository institution from purchasing or selling assets to insiders unless certain conditions have been met (i.e., (i) the transaction is on market terms; and (ii) a transaction representing more than 10 percent of the capital stock and surplus of the insured depository institution has been approved in advance by a majority of the board of disinterested directors). The FRB has authority to issue regulations relating to capital requirements, and if it does so, it must establish capital regulations applicable to bank holding companies and seek to make those regulations countercyclical so that the amount of capital required to be maintained by the company increases in times of economic expansion and decreases in times of economic contraction. The appropriate federal banking agencies have the authority to issue regulations relating to capital requirements, and if they do so, they must establish capital regulations applicable to savings and loan holding companies and seek to make those regulations countercyclical so that the amount of capital required to be maintained by the company increases in times of economic expansion and decreases in times of economic contraction. No specific timeframe specified for the rulemaking, but the final rule may not be effective any earlier than the Transfer Date (between July 21, 2011 and January 21, 2012). No specific timeframe specified for the rulemaking, but the final rule may not be effective any earlier than the Transfer Date (between July 21, 2011 and January 21, 2012). No specific timeframe specified for the rulemaking, but the final rule may not be effective any earlier than the Transfer Date (between July 21, 2011 and January 21, 2012). 25

26 I I II III X I: Improvements to Regulation of Bank and Savings Association Holding Companies and Depository Institutions (cont.) Section Rulemakings Timeframe or 616: Regulations Regarding Capital Levels 616: Regulations Regarding Capital Levels The appropriate federal banking agencies have the authority to issue regulations relating to capital requirements, and if they do so, they must establish capital standards applicable to insured depository institutions, and seek to make those regulations countercyclical so that the amount of capital required to be maintained by the company increases in times of economic expansion and decreases in times of economic contraction. The appropriate federal banking agencies must jointly issue final rules to implement a provision that requires (i) a bank holding company or savings and loan holding company to serve as a source of financial strength for any subsidiary of the bank holding company or savings and loan holding company that is a depository institution; and (ii) if the insured depository institution is not a subsidiary of a bank holding company or savings and loan holding company, any company that directly or indirectly controls the insured depository institution to serve instead as a source of financial strength for such institution. No specific timeframe specified for the rulemaking, but the final rule may not be effective any earlier than the Transfer Date (between July 21, 2011 and January 21, 2012). Final rules must be issued no earlier than the Transfer Date (between July 21, 2011 and January 21, 2012), nor later than one year after the Transfer Date (i.e., July 21, 2012 or January 21, 2013, at latest). 26

27 I I II III X I: Improvements to Regulation of Bank and Savings Association Holding Companies and Depository Institutions (cont.) Section Rulemakings Timeframe or 618: Securities Holding Companies 619: Prohibitions on Proprietary Trading and Certain Relationships with Hedge Funds and Private Equity Funds The FRB must prescribe rules and orders for supervised securities holding companies, which, among other things, may deal with: (i) registration requirements and registration effective dates for entities seeking to become a supervised securities holding company; (ii) recordkeeping and reports requirements; and (iii) rules and orders monitoring compliance with applicable provisions of law. The FRB must also prescribe capital adequacy and other risk management standards for supervised securities holding companies. When a capital requirement is imposed under this section, it may not take effect earlier than 180 days after the date on which a supervised securities holding company is provided notice of that capital requirement. The FRB, FDIC, OCC, SEC, and CFTC must issue rules implementing the Volcker Rule and coordinate to ensure comparable regulations to the extent possible. The FSOC Chairperson (the Treasury Secretary) is responsible for coordinating the regulations issued by those agencies. They must also issue regulations regarding internal controls and recordkeeping in order to ensure compliance with the Volcker Rule. Regulations must be issued no later than October 21, 2011; however, depending on when issued, the final rule will become effective no earlier than August 2011 and no later than July 21,

28 I I II III X I: Improvements to Regulation of Bank and Savings Association Holding Companies and Depository Institutions (cont.) Section Rulemakings Timeframe or 619: Prohibitions on Proprietary Trading and Certain Relationships with Hedge Funds and Private Equity Funds 621: Conflicts of Interest The FRB must issue rules implementing: (i) the conformance period for a banking entity or nonbank financial company supervised by the FRB to bring its activities and investments into compliance with the requirements of the Volcker Rule, and (ii) the transition period for a banking entity s contractual obligation with equity or other ownership interest in an illiquid fund. The SEC must issue rules prohibiting, for the period ending one year after the date of the first closing of the sale of an asset-backed security, an underwriter, placement agent, initial purchaser, or sponsor, or any affiliate or subsidiary of any such entity, of an asset-backed security from engaging in any transaction that would involve or result in any material conflict of interest with respect to any investor in a transaction arising out of such activity. This prohibition does not apply to (i) certain risk-mitigating hedging activities; and (ii) purchases or sales of asset-backed securities consistent with commitments of the underwriter, placement agent, initial purchaser, or sponsor, or any affiliate or subsidiary of any such entity, to provide liquidity for the asset-backed security, or bona fide market-making in the asset-backed security. Rules must be issued no later than January 21, 2011 Rulemaking authority takes effect on enactment of the Act; final rules must be issued no later than April 17,

29 I I II III X I: Improvements to Regulation of Bank and Savings Association Holding Companies and Depository Institutions (cont.) Section Rulemakings Timeframe or 622: Concentration Limits on Large Financial Firms 623: Interstate Merger Transaction 626: Intermediate Holding Companies The FRB must issue regulations implementing the concentration limits on expansion by large financial firms. The FRB may also issue interpretations or guidance on how this section applies to an individual financial company or to financial companies in general. The FRB must issue regulations defining the term liabilities with respect to an insurance company or other nonbank financial company supervised by the FRB in order to provide for consistent and equitable treatment of companies. The OTS or the OCC (if on or after the Transfer Date) must define home state with respect to the prohibition, subject to certain exceptions, on interstate merger or acquisition transactions by insured depository institutions, bank holding companies, or savings and loan holding companies where the resulting insured depository institution would control more than 10 percent of the total deposits of insured depository institutions in the United States. The FRB (i) must issue regulations to establish the criteria for determining whether to require a grandfathered unitary savings and loan holding company to establish an intermediate holding company; and (ii) may issue regulations to establish any restrictions or limitations on transactions between an intermediate holding company or its parent and its affiliates, as necessary to prevent unsafe and unsound practices. Regulations must be issued no later than October 21, 2011 for criteria; optional for restrictions or limitations 29

30 I I II III X II: Wall Street Transparency and Accountability Section Rulemakings Timeframe or 712: Review of Regulatory Authority 712: Review of Regulatory Authority 712: Review of Regulatory Authority The CFTC must consult the SEC to assure consistency before passing any swap-related regulations or orders under its authority. Likewise, the SEC must consult the CFTC before passing any swap-related regulations or orders under its authority. The CFTC and SEC, in consultation with the Federal Reserve, must jointly prescribe regulations regarding mixed swaps. The CFTC and SEC, in consultation with the Federal Reserve, must jointly adopt rules to define swap, security-based swap, swap dealer, security-based swap dealer, major swap participant, major security-based swap participant, eligible contract participant, and security-based swap agreement in section 1a(47)(A)(v) of the Commodity Exchange Act and section 3(a)(78) of the Exchange Act, as well as such other definitions the CFTC and SEC determine are necessary and appropriate, in the public interest, and for the protection of investors. 30

31 I I II III X II: Wall Street Transparency and Accountability (cont.) Section Rulemakings Timeframe or 712: Review of Regulatory Authority 713: Portfolio Margining Conforming Changes 716: Prohibition Against Federal Government Bailout of Swap Entities The CFTC and SEC, in consultation with the Federal Reserve, must engage in joint rulemaking to adopt rules governing the records required to be maintained regarding security-based swap agreements by persons registered as swap data repositories under the CEA. The SEC and CFTC must consult to adopt rules ensuring that portfolio margining transactions and accounts are subject to comparable requirements to the extent practicable for similar products. The FDIC, OCC, and Federal Reserve must make written findings on the potential impact of divestiture on mortgage lending, small business lending, job creation, and capital formation. 719: Studies The CFTC must issue regulations implementing the determinations of whether a stable value contract is a swap, and if so, whether an exemption for stable value contracts from the definition of a swap is appropriate and in the public interest. Until the effective date of these regulations, the requirements of the Act will not apply to stable value contracts. No later than July 21, 2012 No later than October 21,

32 I I II III X II: Wall Street Transparency and Accountability (cont.) Section Rulemakings Timeframe or 721: Definitions The CFTC may include or exclude from the terms commodity pool, commodity pool operator, floor broker, floor trader, futures commission merchant, and introducing broker to effectuate the purposes of the Act. 721: Definitions The CFTC must define by rule or regulation the term substantial position, at the threshold the CFTC deems prudent, to effectively monitor, manage, and oversee entities that are systemically important to, or can significantly impact, the US financial system. 721: Definitions The Treasury Secretary may make a written determination that foreign exchange swaps and/or forwards should not be regulated as swaps under the Act and are not structured to avoid this title in violation of the Act. 721: Definitions The CFTC must promulgate regulations to establish factors for determining whether an entity engages in a de minimis quantity of swap dealing in connection with transactions with or on behalf of customers and is thus exempt from designation as a swap dealer. 721: Definitions The CFTC may adopt a rule to define the term commercial risk and any other term included in an amendment to the CEA. 32

33 I I II III X II: Wall Street Transparency and Accountability (cont.) Section Rulemakings Timeframe or 721: Definitions The CFTC must adopt a rule to further define swap, swap dealer, major swap participant, and eligible contract participant to include entities that have been structured to evade such designation. 721: Definitions The CFTC and SEC may by rule, regulation, or order jointly exclude any agreement, contract, or transaction from Section 2(a)(1)(D) of the CEA, if the CFTC determines that the exemption would be consistent with the public interest. 723: Clearing The CFTC must adopt rules for a derivatives-clearing organization s submission for approval of any group, category, type or class of swaps that the derivative clearing organization seeks to accept for clearing. 723: Clearing The CFTC must prescribe rules as necessary to prevent evasion of the mandatory clearing requirements under this Act. 723: Clearing The CFTC must prescribe rules to provide for data reporting at such times after entering into a swap. 723: Clearing The CFTC must consider whether to exempt small banks, savings associations, farm credit system institutions, and credit unions from the clearing requirements. 33

34 I I II III X II: Wall Street Transparency and Accountability (cont.) Section Rulemakings Timeframe or 724: Swaps; Segregation and Bankruptcy Treatment 724: Swaps; Segregation and Bankruptcy Treatment 724: Swaps; Segregation and Bankruptcy Treatment 724: Swaps; Segregation and Bankruptcy Treatment The CFTC may prescribe terms and conditions by which any money, securities, or property of future commission merchants customers may be commingled and deposited with any other money, securities, or property received by the merchant and required by the CFTC to be separately accounted for, treated, and dealt with as belonging to the swaps customer. The CFTC may by rule or regulation prescribe permissible investments, and the manner in which they may be made, as to the money of a swaps customer described in paragraph 2 of Section 4d of the CEA. The CFTC must adopt rules mitigating conflicts of interest in connection with the business conduct by a swap dealer or a major swap participant with a derivatives-clearing organization, board of trade, or a swap execution facility that clears or trades swaps in which the swap dealer or major swap participant has a material debt or material equity investment. The CFTC must adopt data collection and maintenance requirements for swaps cleared by derivatives-clearing organizations that are comparable to the corresponding requirements for swaps data reported to swap data repositories and swaps traded on swap execution facilities. No later than January 17,

35 I I II III X II: Wall Street Transparency and Accountability (cont.) Section Rulemakings Timeframe or 726: Rulemaking on Conflict of Interest 727: Public Reporting of Swap Transaction Data 728: Swap Data Repositories 729: Reporting and Recordkeeping The CFTC must adopt rules if it determines that such rules are necessary to improve governance, mitigate systemic risk, promote competition, or mitigate conflicts of interest in connection with a swap dealer or major swap participant s conduct of business. The rules would cover transactions with a derivatives-clearing organization, contract market, or swap execution facility that clears or posts swaps or makes swaps available for trading and in which such swap dealer or major swap participant has a material debt or equity investment. The CFTC must by rule make swap transaction and pricing data publicly available. CFTC may delegate its public reporting responsibilities under this paragraph as it deems appropriate and in the public interest. The CFTC must prescribe standards specifying the data elements for each swap that must be collected and maintained by each registered swap data repository, as well as collection and maintenance standards. The CFTC must promulgate an interim final rule providing for the reporting of each swap entered into before the date of enactment. No later than October 19,

36 I I II III X II: Wall Street Transparency and Accountability (cont.) Section Rulemakings Timeframe or 731: Registration and Regulation of Swap Dealers and Major Swap Participants 731: Registration and Regulation of Swap Dealers and Major Swap Participants 731: Registration and Regulation of Swap Dealers and Major Swap Participants 731: Registration and Regulation of Swap Dealers and Major Swap Participants The CFTC must provide rules for registering swap dealers and major swap participants. The CFTC must adopt rules governing persons registered as swap dealers or major swap participants under section 4s of the CEA. Prudential regulators, in consultation with the CFTC and the SEC, must jointly adopt rules regarding the activities of banks that are swap dealers or major swap participants. The rules will impose capital requirements as well as initial and variation margin requirements on all swaps that are not cleared by a registered derivatives-clearing organization. In addition, the CFTC must do the same for nonbank swap dealers and nonbank major swap participants, for which there is no prudential regulator imposing such requirements. The CFTC must adopt rules governing reporting, recordkeeping, and daily trading records for swap dealers and major swap participants. No later than July 21,

37 I I II III X II: Wall Street Transparency and Accountability (cont.) Section Rulemakings Timeframe or 731: Registration and Regulation of Swap Dealers and Major Swap Participants 733: Swap Execution Facilities 733: Swap Execution Facilities 733: Swap Execution Facilities The CFTC must adopt rules governing documentation and back office standards for swap dealers and major swap participants. The CFTC and SEC may promulgate rules defining the universe of swaps executable on a swap execution facility. These rules must take into account the price and nonprice requirements to swap counterparties, to promote the trading of swaps on swap execution facilities and to promote pre-trade price transparency in the swaps market. The CFTC must adopt data collection and reporting requirements for swap execution facilities that are comparable to corresponding requirements for derivatives-clearing organizations and swap data repositories. The CFTC must prescribe rules governing the regulation of alternative swap execution facilities. 737: Position Limits The CFTC must by rule, regulation, or order establish limits on the amount of positions, other than bona fide hedge positions, that may be held by any person with respect to contracts of sale for future delivery or options on the contracts or commodities traded on or subject to the rules of a designated contract market. For exempt commodities, no later than January 17, 2011; for agricultural commodities, no later than April 17,