Dodd-Frank Wall Street Reform and Consumer Protection Act

Dodd-Frank Wall Street Reform and Consumer Protection Act Dodd-Frank Wall Street Reform and Consumer Protection Act From Wikipedia, the free encyclopedia Jump to: navigation, search This article has multiple issues. Please help improve it or discuss these issues on the talk page. ​ It needs to be updated. Tagged since July 2010. ​ It may contain material not appropriate for an encyclopedia. Tagged since July 2010. Dodd-Frank Wall Street Reform and Consumer Protection Act Full title To promote the financial stability of the United States by improving accountability and transparency in the financial system, to end ‘‘too big to fail’’, to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes. Colloquial name(s) Wall Street Reform, Financial Regulatory Reform Enacted by the 111th United States Congress Effective July 21, 2010 Citations Codification Legislative history ​ Introduced in the House as "The Wall Street Reform and Consumer Protection Act of 2009" (H.R. 4173) by Barney Frank (D–MA) on December 2, 2009 ​ Committee consideration by: Financial Services ​ Passed the House on December 11, 2009 (223–202) ​ Passed the Senate with amendment on May 20, 2010 (59-39) ​ Reported by the joint conference committee on June 29, 2010; agreed to by the House on June 30, 2010 (237-192) and by the Senate on July 15, 2010 (60-39) ​ Signed into law by President Barack Obama on July 21, 2010 Major amendments The Dodd-Frank Wall Street Reform and Consumer Protection Act (H.R. 4173) is a federal statute that was signed into law in the United States by President Barack Obama on July 21, 2010.[1] The Act is the product of the financial regulatory reform agenda of the Democratic 111th Congress and the Obama administration. The law was initially proposed on December 2, 2009 in the U.S. House of Representatives by Barney Frank, and in the U.S. Senate Banking Committee by Chairman Chris Dodd. Due to their involvement with the bill, the conference committee which reported on June 29, 2010,[1] voted to name the bill after the two members of Congress.[2] The act is widely regarded as the most sweeping change to financial regulation since the Great Depression.[3][4][5] Contents [hide] ​ 1 Origins and Passage ​ 2 Overview ​ 3 Provisions o​ 3.1 Title I - Financial Stability ​ 3.1.1 Financial Stability Oversight Council ​ 3.1.2 Office of Financial Research o​ 3.2 Title II - Orderly Liquidation Authority o​ 3.3 Title III - Transfer of Powers to the Comptroller, the FDIC, and the FED o​ 3.4 Title IV - Regulation of Advisers to Hedge Funds and Others o​ 3.5 Title V - Insurance ​ 3.5.1 Federal Insurance Office ​ 3.5.2 Nonadmitted and Reinsurance Reform Act of 2010 o​ 3.6 Title VI - Improvements to Regulation ​ 3.6.1 Moratorium on FDIC Deposit Insurance ​ 3.6.2 Changes Related to Banks o​ 3.7 Title VII - Wall Street Transparency and Accountability ​ 3.7.1 Subtitle A—Regulation of Over-the-Counter Swaps Markets o​ 3.8 Title VIII - Payment, Clearing and Settlement Supervision ​ 3.8.1 Payment, Clearing, and Settlement Supervision Act of 2010 o​ 3.9 Title IX - Investor Protections and Improvements to the Regulation of Securities ​ 3.9.1 Investor Protection and Securities Reform Act of 2010 ​ 3.9.2 Investor Advisory Committee ​ 3.9.3 Investor Testing / Licensing ​ 3.9.4 Fiduciary Duty for Brokers ​ 3.9.5 Office of the Investor Advocate ​ 3.9.6 Ombudsman for the SEC ​ 3.9.7 Subtitle B - Increasing Regulatory Enforcement and Remedies ​ 3.9.7.1 Whistleblower Protection ​ 3.9.8 Subtitle C - Improvements to the Regulation of Credit Rating Agencies ​ 3.9.9 Subtitle D—Improvements to the Asset-Backed Securitization Process ​ 3.9.10 Subtitle E—Accountability and Executive Compensation ​ 3.9.11 Subtitle F—Improvements to the Management of the Securities and Exchange Commission ​ 3.9.12 Subtitle G—Strengthening Corporate Governance ​ 3.9.13 Subtitle H—Municipal Securities ​ 3.9.14 Subtitle I—Public Company Accounting Oversight Board, Portfolio Margining, and Other Matters ​ 3.9.15 Subtitle J—Securities and Exchange Commission Match Funding ​ 3.9.16 Bureau of Consumer Financial Protection ​ 3.9.16.1 Organization ​ 3.9.17 Consumer Advisory Board o​ 3.10 Title X - Bureau of Consumer Financial Protection ​ 3.10.1 Consumer Financial Protection Act of 2010 o​ 3.11 Title XI - Federal Reserve System Provisions o​ 3.12 Title XII - Improving Access to Mainstream Financial Institutions ​ 3.12.1 Improving Access to Mainstream Financial Institutions Act of 2010 o​ 3.13 Title XIII - Pay It Back Act o​ 3.14 Title XIV - Mortgage Reform and Anti-Predatory Lending Act ​ 3.14.1 Subtitle A - Residential Mortgage Loan Origination Standards ​ 3.14.2 Subtitle B - Minimum Standards for Mortgages ​ 3.14.3 Subtitle C - High-Cost Mortgages ​ 3.14.4 Subtitle D - Office of Housing Counseling ​ 3.14.4.1 Expand and Preserve Home Ownership Through Counseling Act ​ 3.14.5 Subtitle E - Mortgage Servicing ​ 3.14.6 Subtitle F - Appraisal Activities ​ 3.14.6.1 Property Appraisal Requirements ​ 3.14.6.2 Automated Valuation Models ​ 3.14.6.2.1 Quality Standards ​ 3.14.6.2.2 Regulations ​ 3.14.6.2.3 Enforcement ​ 3.14.6.2.4 Broker Price Opinions ​ 3.14.6.3 Real Estate Settlement Procedures ​ 3.14.6.4 GAO Appraisal Study ​ 3.14.7 Subtitle G - Mortgage Resolution and Modification ​ 3.14.7.1 Multifamily Mortgage Resolution Program ​ 3.14.7.2 Home Affordability Program Modifications ​ 3.14.7.3 Public Information for Making Home Affordable Program ​ 3.14.8 Subtitle H - Miscellaneous Provisions o​ 3.15 Title XV - Miscellaneous Provisions ​ 3.15.1 Restriction on U.S. Approval of Loans issued by International Monetary Fund ​ 3.15.2 Disclosures on Conflict Materials in or Near the Democratic Republic of the Congo ​ 3.15.3 Reporting on Mine Safety o​ 3.16 Reporting on Payments by Oil, Gas and Minerals in Acquisition of Licenses ​ 3.16.1 Study on Effectiveness of Inspectors General ​ 3.16.2 Study on Core Deposits and Brokered Deposits o​ 3.17 Title XVI - Section 1256 Contracts ​ 4 Impact and Reaction o​ 4.1 Congressional Budget Office ​ 5 See also ​ 6 References ​ 7 External links [edit] Origins and Passage The Financial crisis of 2007–2010 led to widespread calls for changes in the regulatory system.[6] In June 2009, President Obama introduced a proposal to "overhaul" the financial regulatory system which passed the House along party lines in December and passed the Senate with amendments in May 2010 once again along party lines.[1] On June 25, 2010, conferees finished reconciling the House and Senate versions of the bills and four days later filed a conference report.[1] The conference committee changed the name of the Act from the "Restoring American Financial Stability Act of 2010." The House passed the conference report by a vote of 237-192 on June 30, 2010.[7] The Senate passed the Act on July 15 by a vote of 60-39,[8] sending the legislation to President Obama's desk.[9] President Obama signed the bill into law on July 21, 2010.[10] [edit] Overview The stated aim of the legislation is: To promote the financial stability of the United States by improving accountability and transparency in the financial system, to end "too big to fail", to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.[11] The Stability Act of 2010 (Title I of the Act) proposes broad changes to the existing regulatory structure, such as creating a host of new agencies (while merging and removing others) in an effort to streamline the regulatory process, increasing oversight of specific institutions regarded as a systemic risk, amending the Federal Reserve Act, promoting transparency, and additional changes. The new agencies are either granted explicit power over a particular aspect of financial regulation, or that power is transferred from an existing agency. All of the new agencies, and some existing ones who are not currently required to do so, are also compelled to report to Congress on an annual (or biannual) basis, to present the results of current plans and to explain future goals. Important new agencies created include Financial Stability Oversight Council, the Office of Financial Research, and the Bureau of Consumer Financial Protection. The former two are attached to the Treasury Department, with the Treasury Secretary being Chair of the Council, and the Head of the Financial Research Office being a Presidential appointment with Senate confirmation. The Council, consisting of the heads of the eight primary financial regulatory agencies plus an independent Presidential appointee (with insurance experience), is charged with maintaining the country’s financial stability. The Council can, in effect, draft any federal employee to work under its supervision. The Council can also strongly suggest (in some cases mandate) that financial regulatory agencies implement rules and policies as directed by the Council. The Financial Research Office, which provides support and the budget for the Council, is charged with assimilating and analyzing financial data, making the financial system more transparent. The Director of the Financial Research office has subpoena power. It appears that the creation of these two organizations within the Treasury Department will be transformational in the way the Country’s financial markets are managed, clearly making the Treasury Secretary the most powerful financial leader in the country. Of the existing agencies, changes are proposed (ranging from new powers to the transfer of powers) in an effort to enhance the regulatory system. The institutions affected by these changes include most of the regulatory agencies currently involved in monitoring the financial system (FDIC, SEC, Comptroller, Federal Reserve, SIPC, etc.), and the final elimination of the Office of Thrift Supervision (further described in Title III—TRANSFER OF POWERS TO THE Comptroller, the FDIC, and the FED). In order to prevent regulatory competition and clarify egulatory duties, the Act divides the regulatory system into three distinct parts, with each part becoming the primary responsibility of a particular agency. The division is as follows[12]: ​ For state banks/thrifts with assets under $50 billion, the FDIC is responsible. ​ For national banks/thrifts with assets under $50 billion, the OCC is responsible. ​ All other banks/thrifts, Bank Holding Companies (and institutions deemed necessary) will be the responsibility of the Federal Reserve. Certain Non-Bank financial companies and their subsidiaries will also be supervised by the Fed[13] in the same manner and to the same extend as if they were a bank holding company.[14] [edit] Provisions [edit] Title I - Financial Stability The short title of this title is the "Financial Stability Act of 2010"[15] The title outlines two new agencies tasked with monitoring systemic risk and researching the state of the economy and clarifies the comprehensive supervision of bank holding companies by the Federal Reserve. [edit] Financial Stability Oversight Council The Council is, in summary, tasked with identifying risks to the financial stability of the United States, promoting market discipline, and responding to emerging threats to the stability of the United States financial markets. At a minimum, it must meet quarterly. Specifically, there are three purposes assigned to the Council:[16] 1.​ identify the risks to the financial stability of the United States from both financial and non-financial organizations 2.​ promote market discipline, by eliminating expectations that the Government will shield them from losses in the event of failure 3.​ respond to emerging threats to the stability of the US financial system Duties In the course of pursuing its goal (in its entirety), the Council has several duties enumerated to it that can broadly be described as anything required to: 1.​ enhance the integrity, efficiency, competitiveness, and stability of United States financial markets 2.​ promote market discipline 3.​ maintain investor confidence More specifically, the Council is to collating data (received from affiliated agencies, and optionally from the companies themselves) to assess risks to the financial system, monitor the financial services marketplace, make general regulatory recommendations to affiliated agencies reflecting a broader consensus, and it may also compel the Federal Reserve to assume an oversight position of certain institutions considered to pose a systemic risk. The Council is to monitor domestic and international regulatory proposals and developments, and advise Congress in these areas. The Council and the associated Office of Financial Research (see below) are charged to facilitate information sharing and coordination among the member agencies and other Federal and State agencies regarding domestic financial services policy development, rule-making, examinations, reporting requirements, and enforcement actions.[17] Membership The Council has nine voting members, eight of whom already direct various agencies involved in the financial system, and one of whom is independent. The exact membership is as follows[18] ​ United States Secretary of the Treasury; also serves as Chairperson of the Council. ​ Chairman of the Federal Reserve ​ Comptroller of the Currency ​ Director of the Bureau of Consumer Financial Protection (established in this act; see below) ​ Chairman of the U.S. Securities and Exchange Commission ​ Chairperson of the Federal Deposit Insurance Corporation ​ Chairperson of the Commodity Futures Trading Commission ​ Director of the Federal Housing Finance Agency ​ Independent member (with insurance expertise); appointed by the President, with the advice and consent of the Senate, for a term of six years. Unless otherwise specified, the Council shall make all decisions that it is authorized or required to make by a majority vote of the voting members then serving. There are five nonvoting members who serve in an advisory capacity, they are ad-hoc members except the Council may go into the equivalent of Executive Session when discussing confidential supervisory information: ​ Director of the Office of Financial Research (part of the Treasury Department and established in this act) who also acts as if they were the Council's Executive Director, the operating budget of the Council is through the Office of Financial Research ​ Director of the Federal Insurance Office (part of the Treasury Department and established in this act) ​ a State insurance commissioner, to be designated by a selection process determined by the State insurance commissioners, 2 year term ​ a State banking supervisor, to be designated by a selection process determined by the State banking supervisors, 2 year term ​ a State securities commissioner (or officer performing like function) to be designated by a selection process determined by such State security commissioners, 2 year term Resources The Federal Advisory Committee Act, which limits the powers of advisory committees, does not apply to the council. The council has an almost unlimited budget in that the Council may draw on virtually any resource of any department or agency of the Federal government. Any employee of the Federal government may be detailed to the Council without reimbursement and without interruption or loss of civil service status or privilege. Any member of the Council who is an employee of the Federal Government serves without additional compensation. In addition, "An employee of the Federal Government detailed to the Council shall report to and be subject to oversight by the Council during the assignment to the Council, and shall be compensated by the department or agency from which the employee was detailed."[19] Additionally, "Any expenses of the Council shall be treated as expenses of, and paid by, the Office of Financial Research"[20]. Authority The Council has very broad powers to monitor, investigate and assess any risks to the US financial system. The Council has the authority to collect information from any State or Federal financial regulatory agency, and may direct the the Office of Financial Research, which supports the work of the Council, "to collect information from bank holding companies and nonbank financial companies"[21]. The Council monitors domestic and international regulatory proposals, including insurance and accounting issues, and advises Congress and the Federal Reserve on ways to enhance the integrity, efficiency, competitiveness and stability of the US financial markets. On a regular basis, the Council is required to make a report to Congress describing the state of the US Financial System. Each voting member of the Council is required to either affirm that the Federal Government is taking all reasonable steps to assure financial stability and mitigate systemic risk, or describe additional steps that need to be taken[22]. Under specific circumstances, the Chairman of the Council (who is also the Secretary of the Treasury), with the concurrence of 2/3 voting members, may place nonbank financial companies or domestic subsidiaries of international banks under the supervision of the Federal Reserve if it appears that these companies could pose a threat to the financial stability of the US.[23] The Federal Reserve may promulgate safe harbor regulations to exempt certain types of foreign banks from regulation, with approval of the Council.[24] Under certain circumstances, the Council may provide for more stringent regulation of a financial activity by issuing recommendations to the primary financial regulatory agency, which the primary financial agency is obliged to implement – the Council reports to Congress on the implementation or failure to implement such recommendations[25]. Financial Reporting to the Council The Council may, at its discretion, require any bank or non-bank financial institution with assets over $50 billion to submit certified reports as to the company's:[26] ​ financial condition ​ systems in place to monitor and control any risks ​ transactions with subsidiaries that are regulated banks ​ the extent to which any of the company's activities could have a potential disruptive impact on financial markets or the overall financial stability of the country GAO Audit of Council The Comptroller General of the United States may audit the Council or anyone working for the Council, and may have access to any information under the control of or used by the Council.[27] [edit] Office of Financial Research Established as a department within the Treasury, the Office is, in summary, tasked with providing administrative, technical, and other support services to the Council and its affiliated agencies[28]. The Director of the Office of Financial Research is appointed for a six year term. To the extent that is his duties are exclusively focused on the Council and the Office of Financial Research, the Director is in effect the executive director of the Council. The Director, in consultation with the Chairman of the Council (who is the Secretary of the Treasure) proposes the annual budget of the Office[29]. The Director may set salaries of the Office’s employees “without regard to chapter 51 or subchapter III of chapter 53 of title 5, United States Code, relating to classification of positions and General Schedule pay rates”[30]. The Director has Subpoena power and may require from any financial institution (bank or non-bank) any data needed to carry out the functions of the office.[31] Financial Research Director's Independent Reports to Congress The Director reports to and testifies before only the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services of the House of Representatives. Testimony shall be annual on