|On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act, HR4173/Public Law 111-203, the most sweeping overhaul of the US financial sector since the Great Depression. The legislation will affect the manner in which many financial services companies are supervised and, in some cases, structured. For example, the legislation contemplates the creation of a new systemic risk council to monitor macroeconomic threats to US financial stability. This council also will have the authority to impose heightened supervision on entities and activities presenting such risks. The legislation also gives special attention to consumer financial products and services, by providing for the creation of a new consumer protection authority responsible for reviewing the terms and conditions and disclosures surrounding consumer financial products.|
The Dodd-Frank Act. How do the Dodd-Frank Act and new Rulemakings affect your business? The 2,300-page act requires or permits the creation of more than 250 new regulations. Read our:
In addition, the legislation abolishes the Office of Thrift Supervision and moves supervision of savings banks to the Office of the Comptroller of the Currency and their holding companies to the Federal Reserve. New restrictions on affiliate transactions and lending limits will be imposed on all. The legislation also contains the so-called "Volcker rule," which will prohibit banks from engaging in proprietary trading activities and in investing in hedge funds and private equity funds. As a result of these changes, providers of financial services will likely face increased compliance expectations and costs, and depository institutions and their holding companies will likely confront stricter capital requirements, creating additional funding and profitability challenges for all.
This legislation does not just affect those in the financial industry. For example, a new regulatory structure would be established for over-the-counter derivatives trading, moving most trading onto exchanges and requiring new and higher capital and margin requirements. A new federal insurance office would provide an additional layer of insurance company monitoring. Investment advisors and hedge funds would be subject to new rules. Additionally, all public companies will face the prospect of greater shareholder participation in corporate governance matters and executive compensation practices.
Companies should be aware of these pending changes and be prepared to address them. Arnold & Porter's attorneys are available to respond to questions raised by the new legislation and to help determine how pending regulations may affect your business and industry. Our multidisciplinary team consists of more than 30 lawyers from our financial services, corporate and securities, hedge fund, compensation and benefits, tax, government contracts, legislative, real estate, bankruptcy, and securities enforcement and litigation areas. They have assisted clients in dealing with the special issues that have arisen under the recent stimulus and bailout programs. They provide US and international clients with comprehensive regulatory, litigation, and transactional services, handling intricate issues and litigation at the administrative level and in the state and federal courts, including the US Supreme Court.