Dodd-Frank News Center

Treasury Official Describes Possible Conflicts in Conference Process

By Richard Roth, J.D., Editor, the CCH Federal Banking Law Reporter, CCH Bank Compliance Guide and Bank Digest.

Addressing the Financial Industry Regulatory Authority's Annual Conference in Baltimore, Md., Deputy Treasury Secretary Neal Wolin laid out five areas where the Obama administration intends to fight any efforts to weaken the provisions of financial reform legislation:

1. fiduciary duties for retail brokers that offer investment advice;
2. the authority of the consumer protection agency;
3. the “Volcker Rule,” which would exclude proprietary trading from the business of banking and restrict the size of financial firms by imposing concentration limits;
4. conflicts of interest and transparency rules for credit rating agencies; and
5. appropriate resolution authority for systemically significant financial institutions.

Senator Akaka Envisions SEC Investor Advocate Office as Ombudsman for Retail Investors

This story appeared in Jim Hamilton's World of Securities Regulation.

Authored by Senator Daniel Akaka, Section 914 of the Senate-passed financial reform legislation enhances the ability of the SEC to better represent the interests of retail investors by creating an Investor Advocate within the SEC. The Investor Advocate is tasked with assisting retail investors to resolve significant problems with the SEC or the self-regulatory organizations. The Investor Advocate’s mission includes identifying areas where investors would benefit from changes in Commission or SRO policies, noted Senator Akaka, and problems that investors have with financial service providers and investment products. The Investor Advocate will recommend policy changes to the Commission and Congress on behalf of investors.

In Colloquy with Alaska's Senators on Sec. 412, Chairman Dodd Agrees SEC Should Include State and Local Governments in Definition of Accredited Investor

This story appeared in Jim Hamilton's World of Securities Regulation.

Section 412 of the legislation requires the SRC conduct a rulemaking to implement changes to the definition of accredited investor in Regulation D. Senators Begich and Murkowski engaged in a colloquy with Senator Dodd over whether the SEC has authority under existing law to amend the definitions of accredited investor in Regulation D and related SEC rules and qualified institutional buyer in rule 144A under the Securities Act to expressly include state and local government bodies within those definitions and whether the SEC should take the opportunity presented by Section 412 to include governmental entities within those definitions. Cong. Record, May 20, 2010, S4063-4064.

Bachus Questions Delay on Appointing House Conferees

This story appeared in Bank Digest.

Financial Services Committee Ranking Member Spencer Bachus, R-Ala., has called on House Speaker Nancy Pelosi, D-Calif., to immediately appoint the already announced Democrat conferees and fulfill House Democrats' commitment to a transparent financial regulatory reform conference. The Senate appointed their conferees on May 26, 2010. In a letter sent to House Democratic leaders, including Committee Chairman Barney Frank, D-Mass., on May 25, 2010, Bachus called for the immediate appointment of conferees to the financial regulatory reform conference Frank responded by circulating a memo with his recommended conferees, but the Speaker has yet to appoint the conference, indicating that won't occur until the week of June 7, 2010. Republicans intend to move forward on announcing conferees once Pelosi agrees to appoint.

Financial Crisis Inquiry Commission Details Next Public Hearing

This story appeared in Bank Digest.

The FCIC has announced its witness list and more details for the its June 2, 2010, public hearing entitled “Credibility of Credit Ratings, the Investment Decisions Made Based on those Ratings, and the Financial Crisis.”

FDIC and China Banking Regulatory Commission Enhance Cross Border Resolutions

This story appeared in Bank Digest.

The Federal Deposit Insurance Corp. and the China Banking Regulatory Commission (CBRC) have announced their agreement to enhance cooperation and coordination on cross border resolutions. Under the agreement, the two authorities will expand cooperation on contingency planning, coordination and information sharing related to crisis management and the potential resolution of banks active in the two countries. The agreement will significantly strengthen cooperation between the CBRC and FDIC on these cross-border crisis management and resolution issues. The FDIC also issued an Appendix to its agreement with the CBRC spelling out how the resolution authority will function.

Federal Housing Finance Agency Finalizes Affordable Housing Rule

This story appeared in Bank Digest.

The Federal Housing Finance Agency has finalized a rule that amends its Affordable Housing Program (AHP) regulation to authorize the Federal Home Loan Banks to provide AHP direct subsidies through their members under their homeownership set-aside programs to assist low- or moderate-income households who qualify for refinancing assistance under eligible federal, state and local targeted refinancing programs, including the Hope for Homeowners Program and the Making Home Affordable Refinancing Program. The rule is intended to enhance the ability of the FHLBanks to respond to the mortgage crisis.

Treasury Names Appointee to Ally Board

This story appeared in Bank Digest.

The Treasury Department has exercised its right to appoint the first of two directors to the Ally Financial Inc. (Ally) board of directors, naming Marjorie Magner. Formerly GMAC Financial Services Inc., Ally is a recipient of funds under the Obama Administration's Automotive Industry Financing Program. As a result of investments made in December 2009, the Treasury's equity ownership in Ally increased from 35 percent to 56.3 percent, through which the Treasury acquired the right to appoint two additional directors to the Ally board of directors. The second appointment is expected soon.

CCH Briefing Paper Examines Recent Senate Legislation

On May 20, 2010, the U.S. Senate passed the Restoring American Financial Stability Act of 2010 by a vote of 59 to 39.  As discussed in this CCH Briefing Paper, this legislation would institute far-reaching reforms including the creation of an independent Consumer Financial Protection Bureau housed within the Federal Reserve Board and new federal government power to wind down large, failing financial institutions.  Download the complete CCH Briefing Paper.

Credit CARD Act Report Examines Financial Literacy and English Proficiency

By Gregg D. Killoren, J.D., CCH State Banking Law Reporter, Bank Digestand Individual Retirement Plans Guide.

The Credit Card Accountability, Responsibility and Disclosure Act of 2009 mandated the Government Accountability Office (GAO) to examine the relationship between fluency in the English language and financial literacy. According to Census data, more than 12 million adults in the United States report they do not speak English well or at all. Proficiency in reading, writing, speaking and understanding the English language appears to be linked to multiple dimensions of adult life in the United States, including financial literacy—the ability to make informed judgments and take effective actions regarding the current and future use and management of money.

The GAO study found that a lack of proficiency in English can create significant barriers to financial literacy and to conducting everyday financial affairs. For example, service providers and consumers with limited English proficiency stated that because most financial documents are available only in English, individuals with limited English proficiency can face challenges completing account applications, understanding contracts and resolving problems, such as erroneous bills. In addition, financial education materials—such as print material, websites, broadcast media and classroom curricula—are not always available in languages other than English and, in some cases, Spanish. Further, information and documents related to financial products tend to be very complex and can use language confusing even to native English speakers. In some cases, written financial materials are provided in other languages, but the translation may not be clear if it is not written using colloquial or culturally appropriate language. Oral translation can also be of limited usefulness if the interpreter does not fully understand or is not able to explain the material, a problem exacerbated by the fact that adults with limited English proficiency often receive assistance from their minor children.