Dodd-Frank News Center

Oversight Committee Leaders Seek to Repeal HAMP

This story appeared in Bank Digest.

Following the release of a report from Special Inspector General for the Troubled Asset Relief Program Neil Barofsky, Representatives Jim Jordan, R-Ohio, Darrell Issa, R-Calif., and Patrick T. McHenry, R-N.C., announced the introduction of H.R. 430, a bill to repeal the Home Affordable Modification Program (HAMP). Jordan noted that “HAMP is a colossal failure” and that “In many cases, it has hurt the very people it promised to help. It’s one more example of why government interference in the private sector doesn’t work and that’s why it should be repealed.”

Bair: Government Policies Need to Contribute to Long-Term Economic Prosperity

This story appeared in Bank Digest.

In remarks before the Native Sons and Daughters of Kansas, Distinguished Kansan Award in Topeka, Kan., Federal Deposit Insurance Corp. Chairman Sheila C. Bair discussed the causes that resulted in the housing bust and financial crisis. She noted that greed played a role in the housing debacle and that regulators were not sufficiently vigilant in supervising our financial markets. Bair added that “If we are to fix the problems that led to the financial crisis, we must acknowledge and change the government policies that created incentives for risk taking—incentives that broadly influenced behavior in ways that harmed us all.” She concluded that “We need to work together to support government policies that reward behavior which contributes to our long-term economic prosperity. Such polices will reward the virtuous and help prevent the weak or unscrupulous from taking excessive risks at the expense of others.”

Johnson Comments on Being Named Committee Chairman

This story appeared in Bank Digest.

In a statement released by Sen. Tim Johnson, D-S.D., after being named Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, he noted, “I am committed to an agenda to restore our economy, make our financial regulations world  class, and ensure that consumers and investors are meaningfully protected. From the perspective of the Banking Committee, this will include overseeing the implementation of the Dodd-Frank Wall Street Reform and beginning housing finance reform.” Johnson added, “I am committed to working with my colleagues on both sides of the aisle, the White House, regulators, consumer groups, industry and international regulators on oversight of reform. I will work to ensure our regulators have the right tools; that consumers have access, information, choice and protection; and that industry participants have certainty and rules that allow them to compete both at home and abroad.”

Chairman Bachus Asks SEC and CFTC How Much Dodd-Frank Regulations Will Cost

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

In a letter to the Chairs of the SEC and CFTC, House Financial Services Committee Chair Spencer Bachus (R-Ala) asked for information on the costs to each agency of implementing Dodd-Frank regulations and the annual execution of Dodd-Frank mandates. Specifically, the Chair asked for the amount of their FY 2011 budget request and how much that differs from the FY 2010 budget request, and estimates for the FY2012 budget request. The Chairman asks how much of these budget amounts is attributable to the execution of Dodd-Frank. He also wants to know what each agency has budgeted to implement Dodd-Frank and what percent of the full budget this represents. The same letter was also sent to the FDIC and the Fed and Professor Elizabeth Warren, who is assisting Treasury in setting up the Bureau of Consumer Financial Protection. The agencies must respond to the Chairman’s request by Feb. 10, 2011.

Bachus Rejects Financial Crisis Inquiry Commission Report

This story appeared in Bank Digest.

Financial Services Committee Chairman Spencer Bachus, R-Ala., has criticized the Financial Crisis Inquiry Commission report issued on Jan. 27, 2011, complaining that the Commission failed to reach a consensus and that the report was politicized. He also charged that enacting the Dodd-Frank Act without waiting for the report's conclusions made the report “little more than a minor footnote to the financial crisis.”

FHFA Seeks Information on Alternatives to Credit Ratings

This story appeared in Bank Digest.

As required by the Dodd-Frank Act, the Federal Housing Finance Agency has issued an advance notice of proposed rulemaking as the agency begins the process of amending its regulations that require the use of an assessment of the creditworthiness of a security or money market instrument. The Dodd-Frank Act requires that all such regulations be amended to remove the credit rating requirements and replace them with alternative standards for determining credit-worthiness. The agency noted that it has two types of regulations that are affected by the requirement: those that relate to capital requirements and capital charges; and those that relate to prudential standards, business activities and investments. The FHFA also observed that as it amends it regulations it will need to account for differences between the Federal Home Loan Banks and Fannie Mae and Freddie Mac.

Inquiry Commission Says Financial Crisis Was Avoidable

By Richard Roth, J.D., Editor, the CCH Federal Banking Law Reporter, CCH Bank Compliance Guide, Bank Digest; co-author, Dodd-Frank Wall Street Reform and Consumer Protection Act—Law, Explanation and Analysis.

There were enough warning signs before the financial crisis struck that it could have been prevented, according to the final report of the Financial Crisis Inquiry Commission. Commission Chairman Phil Angelides said that "The greatest tragedy would be to accept the refrain that no one could have seen this coming and thus nothing could have been done. If we accept this notion, it will happen again."

"The captains of finance and the public stewards of our financial system ignored warnings and failed to question, understand, and manage evolving risks within a system essential to the well-being of the American public. Theirs was a big miss, not a stumble," the report asserts.

Legislation to Audit the Fed Introduced

This story appeared in Bank Digest.

The Audit the Fed Bill (H.R. 459), introduced by Ron Paul, R-Tex., calls for a full and complete audit of the Federal Reserve Board by the Government Accountability Office to be reported to Congress by the end of 2012. A similar bill, H.R. 1207, garnered broad bi-partisan support with 320 cosponsors in the 111th Congress, and was attached, but removed in conference, as an amendment to the Dodd-Frank Act.

CFPB Implementation Team Positions Announced

This story appeared in Bank Digest.

The Treasury Department has announced the hiring of the leadership team for the CFPB Office of the General Counsel. Len Kennedy will serve as General Counsel, and Meredith Fuchs will serve as Principal Deputy General Counsel. Roberto Gonzalez and Michael Gordon will serve as Deputy General Counsels.

SEC and CFTC Propose Joint Form for Hedge Fund Advisers and CPOs to Report Systemic Risk Information

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

Advisers to hedge funds and other private funds would be required to report information for use by the Financial Stability Oversight Council in monitoring risk to the financial system under rules jointly proposed by the SEC and CFTC. The proposed rules would implement Sections 404 and 406 of the Dodd-Frank Act by creating a new Form PF to be filed periodically by SEC-registered investment advisers who manage one or more private funds. Information reported on Form PF would remain confidential, although the SEC may use Form PF information in an enforcement action.