Dodd-Frank News Center

Congress Amends Dodd-Frank to Provide Fix for Full FDIC Protection for Lawyer Trust Accounts

By James Hamilton, J.D., LL.M., Principal Analyst, CCH Federal Securities Law Reporter and CCH Derivatives Regulation Law Reporter.

Congress has passed legislation, HR 6398, amending Section 343 of the Dodd Frank Act to assure continued full FDIC protection for lawyer trust accounts. The current Term Asset Guarantee program under which the FDIC guarantees the total amount of client funds maintained in lawyer trust accounts expires December 31, 2010. The Dodd-Frank Act creates an equivalent program, running for 2 years beginning January 1, 2011, but makes several changes, including a more narrow definition of a covered account. In what appears to have been a drafting error, lawyer trust accounts were not covered under the new program established by the Dodd-Frank Act. The legislation corrects that inadvertent omission so that the accounts are fully insured. The President is expected to sign the legislation.

Forum to Examine Overcoming Obstacles to Small Business Lending

This story appeared in Bank Digest.

The Federal Deposit Insurance Corp. has announced that it is hosting a forum to examine obstacles to small business lending on Jan. 13th, 2011, from 1:00 p.m. to 4:00 p.m. at the L. William Seidman Center in Arlington, Va. The forum will explore ways in which credit can be made more accessible to the small business sector by bringing together policy makers, regulators, small business owners, lenders and other stakeholders to identify key issues and focus on solutions.

Repayment of TARP Funds Delivers $2.7 Billion in Proceeds for Taxpayers

This story appeared in Bank Digest.

The Treasury Department has announced that six financial institutions have repurchased Troubled Asset Relief Program (TARP) Capital Purchase Program investments and paid accrued dividends on those investments, delivering a total of $2.7 billion in proceeds today for taxpayers. The six financial institutions are: Huntington Bancshares, Columbus,

Ohio; First Horizon National Corporation, Memphis, Tenn.; Wintrust Financial  Corporation, Lake Forest, Ill.; Susquehanna Bancshares, Inc., Lititz, Pa.; Heritage Financial Corporation, Olympia, Wash.; and The Bank of Kentucky Financial Corporation, Crestview Hills, Ky.

Incoming Chair of House Oversight Subcommittee Might Introduce Legislation Delaying Dodd-Frank Regulations

By James Hamilton, J.D., LL.M., Principal Analyst, CCH Federal Securities Law Reporter and CCH Derivatives Regulation Law Reporter.

Congressman Randy Neugebauer (R-TX), the incoming Chair of the House Financial Services Subcommittee on Oversight and Investigations, might introduce legislation to delay for one year the implementation of some provisions of the Dodd-Frank Act, presumably including derivatives rulemaking mandates. This was reported on theHill.com blog. The possible legislative delay of Dodd-Frank regulations was heralded by an earlier letter from Financial Services Committee Chair Spencer Bachus (R-AL) to SEC Chair Mary Schapiro and CFTC Chair Gary Gensler stating that Congress will consider legislation to delay the statutory deadlines in Dodd-Frank if that will allow the SEC and CFTC to move deliberately and carefully to ensure that the derivatives regulatory regime is correctly implemented. Rep. Bachus voiced concern over the direction and pace of the SEC-CFTC efforts to implement the derivatives regulatory regime mandated by the Dodd-Frank Act; and warned that derivatives regulations adopted hastily and without due care could damage the economy.

FDIC Report Reviews Role of Trust Preferred Securities

This story appeared in Bank Digest.

One important theme of recent reforms in response to the financial crisis is the need for banking organizations to have stronger capital positions to weather periods of economic stress. As described in “Trust Preferred Securities and the Capital Strength of Banking Organizations” in the current issue of Supervisory Insights, domestic and international legislative and regulatory reforms will end reliance on these hybrid securities and help move the U.S. banking industry to firmer footing. This issue of Supervisory Insights also looks at how insured institutions are responding to the recent period of economic and competitive challenges. Data collected and summarized in “Insights from the FDIC's Credit and Consumer Products/Services Survey” show that institutions are implementing a number of operational changes, including tightening underwriting standards and making use of third-party providers to offer new and innovative products.

TARP Executive Compensation Rulings Issued

This story appeared in Bank Digest.

The Special Master for Executive Compensation has issued the following supplemental determinations regarding compensation and structures regarding companies that received funds under the Troubled Asset Relief Program.

FHFA Regs Address GSEs; Comments Sought on FHLBank Membership

This story appeared in Bank Digest.

The Federal Housing Finance Agency has finalized three rules and one Advance Notice of Proposed Rulemaking for Fannie Mae, Freddie Mac (GSEs) and the Federal Home Loan Banks (FHLBanks). The final rules pertain to Fannie Mae and Freddie Mac portfolio holdings, Minority and Women Inclusion and FHLBank Housing Goals. The Advance Notice of Proposed Rulemaking pertains to membership in FHLBanks.

Fed Announces Latest Initiatives to Implement Dodd-Frank Act

This story appeared in Bank Digest.

The Federal Reserve Board has provided a list of implementation initiatives recently completed by the Fed in connection with the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Fed also provided a list of the most significant initiatives that it expects to address over the next six months.

FOMC Extends Dollar Liquidity Swap Arrangements

This story appeared in Bank Digest.

The Federal Open Market Committee has authorized an extension through Aug. 1, 2011, of its temporary U.S. dollar liquidity swap arrangements with the Bank of Canada, the Bank of England, the European Central Bank, the Bank of Japan and the Swiss National Bank. The swap arrangements, established in May 2010, had been authorized through January 2011. As part of its announcement, the Federal Reserve Board also released U.S. Dollar Liquidity Swaps--Frequently Asked Questions.

SEC Seeks Input for Credit Rating Standardization Study

This story appeared in SEC Today.

Thee SEC is seeking views from investors, portfoli managers, credit rating agencies, investment firms, underwriters, issuers, regulators and the academic community for a study on credit rating standardization which was mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Rel. No. 34-63573, December 17,2010).

The Act directs the SEC to consider whether to standardize the terminology used by credit rating agencies so that all use identical terms; whether the market stress conditions under which ratings are evaluated should be standardized and whether to require a quantitative correspondence between credit ratings and a range of default probabilities and loss expectations under standardized conditions of economic stress.

The SEC is also seeking input on whether credit rating terminology should be standardized across asset classes so that the ratings correspond to a standard range of default probabilities and expected losses independent of asset class and issuing entity.

The comment period will be open for 45 days from the date of publication in the Federal Register. The SEC must submit its study to Congress no later than one year after the enactment of the Dodd-Frank Act. The report will include the findings and any recommendations by the SEC in connection with the study.