ABA Dodd-Frank Tracker

SEC Nominee White Promises Tough Wall Street Enforcement

2013-03-13T09:05:00.000-04:00

Mary Jo White, the nominee for chairman of the SEC, told the Senate Banking Committee yesterday that she would make “bold and unrelenting” enforcement of Wall Street a high priority if she is confirmed.

She also said, in response to a question from Sen. Bob Corker (R-Tenn.), that she is “totally committed” to having a bright line between restricted proprietary trading and permitted market-making in the still-pending Volcker Rule.

White said she understands “the importance of the mandate to bar proprietary trading, but also the permitted activities of market-making as well as the hedging activities. ... If confirmed that is something I’m going to turn my personal attention to.”

Panel members spent much less time questioning Richard Cordray, who was re-nominated to head the CFPB when his current term expires at the end of the year.

Tarullo: Regulators Should Consider Making QM, QRM ‘Congruent’

2013-02-15T07:59:00.002-05:00

Regulators should consider aligning the pending risk retention rule’s “qualified residential mortgage” standard with the “qualified mortgage” standard under the ability-to-repay rule the CFPB finalized on Jan. 10, Federal Reserve Governor Daniel Tarullo said yesterday at a Senate Banking Committee hearing on bank oversight and Dodd-Frank Act implementation.

Regulators should be careful to ensure that different rules do not “constrict credit to middle and lower-middle class people, who might be priced out of the housing market,” Tarullo explained. “So I think it’s definitely the case that on the table should be consideration of making QRM more or less congruent with QM.”

Tarullo also told senators that they should expect “a good bit of change” in the final regulations implementing the Volcker Rule and Basel III. Both proposals have been criticized for being too complex, and Tarullo said regulators are taking that into consideration.

Read witnesses’ testimony.

Chairman Johnson Releases Senate Banking Panel Agenda

2013-02-13T08:13:00.002-05:00

The Senate Banking Committee’s agenda during the 113th Congress will include supporting the economic recovery and overseeing implementation of the Dodd-Frank Act, panel Chairman Tim Johnson (D-S.D.) said in a memo.

Johnson remarked that “while a tremendous amount of that work [implementing Dodd-Frank] has been completed to date by the regulators, a number of significant rulemakings have yet to be finalized, including the Volcker Rule and the new derivatives regulatory framework.” Johnson noted the Committee will continue to oversee the regulatory agencies as they move forward on Dodd-Frank implementation requirements.

Read the memo.

GAO: Complexity, Coordination Delaying Some Key DFA Rules

2013-01-24T08:05:00.000-05:00

The complexity and interconnected nature of some Dodd-Frank Act-mandated rules has caused regulators to fall behind in implementing them, according to a Government Accountability Office report.

As of December 2012, regulators had issued final rules on about 48% of the 236 GAO-identified Dodd-Frank provisions that require regulations, the report said. Of the remaining provisions, regulators had proposed rules for about 29%, and had not acted on about 23%.

“Regulators noted that completing rules has taken time because of the number and complexity of the issues, and because many rules are interconnected,” the GAO said. As an example, the report cited the Volcker Rule’s implementation, which requires coordination among five regulatory agencies.

Although regulators have established mechanisms to facilitate coordination and believe coordination efforts have improved the quality of the rulemakings, several regulators indicated that coordination increased the amount of time needed to finalize rulemakings.

It added that regulators have made developing responsive, appropriate rules a higher priority than meeting tight statutory deadlines. “As a result, some important rules may take the longest to develop,” said the GAO, which made no new recommendations.

Read the GAO report.

SEC Gallagher: Misallocation of Resources, Opportunity Costs due to DFA

2013-01-17T11:11:00.001-05:00

SEC Commissioner Daniel Gallagher spoke before the U.S. Chamber Center for Capital Markets Competitiveness on the “misallocation of resources and opportunity costs that have arisen from the many false assumptions underlying the [Dodd-Frank] Act.”

In total, the Dodd-Frank Act contains approximately 400 specific mandates to be implemented by agency rulemaking, with approximately a hundred applying directly to the SEC. The SEC has adopted final rules implementing nearly a third of those statutory mandates and continues to devote tremendous amounts of resources to drafting additional proposals, completing required studies, and implementing the new rules.

[However,] the Commission is handling ten times its normal rulemaking volume.

As a result, the SEC, like other regulators, is now dealing with the problem of rushed, inadequate rule proposals that were pushed out in a bid to meet arbitrary congressional deadlines.

This increased pace raises two sets of concerns. The first stems from the difference between getting rules done and getting them done right.

The second set of concerns centers around the concept of opportunity cost and the misallocation of limited resources.

Read Gallagher’s full remarks.

OCC Curry Sees Congress Considering Technical Corrections to Dodd-Frank Act in 2013

2013-01-14T11:54:00.000-05:00

OCC Thomas Curry spoke to the California Bankers Association at the Annual Bank Presidents Seminar on the topic of looking ahead to some of the challenges and opportunities likely to be faced by the banking industry in 2013. Topics Curry focused on included the recovery of housing markets, the continued integration of the OTS and OCC, the regulatory and legislative landscape for 2013, and industry safety and soundness.

On the topic of Dodd-Frank, Curry stated:

As we look out over the legislative landscape, I think it is likely that Congress will consider a number of technical corrections to Dodd-Frank – and perhaps some corrections that are a bit more substantive than technical – but I doubt that the basic legislative framework will undergo significant change. So the rules we are finishing work on now are not likely to change much as a result of anything Congress might do.

Read Curry’s full remarks.

BPC Urges Consistency in Volcker Rule Implementation

2012-12-20T15:27:00.003-05:00

The Bipartisan Policy Center (BPC) Financial Regulatory Reform Initiative’s working group on Capital Markets and the Volcker Rule sent a letter to the Treasury Department and the five federal financial regulators today, calling for another public comment period for proposed Volcker regulations and the development of one consistent Volcker rule.

The letter was in response to recent statements by SEC and CFTC senior officials that the agencies may adopt regulations different from the proposed rules of the Federal Reserve, FDIC, and OCC.

[W]e believe it is very important that the Agencies act in a coordinated manner to adopt final Volcker Rule regulations that are substantively identical and issued at the same time.

Because of the complexity of this issue and the potential value from additional public commentary, we believe that substantive changes to the proposed regulations would benefit from the same comment process.

Read the full letter.

ABA Comments on Volcker Rule Implementation

2012-12-17T10:53:00.000-05:00

ABA wrote a letter to the federal regulatory agencies responsible for issuing rules that will implement the Volcker Rule.

It is important that the final rules not impair the availability of traditional banking services to bank customers, nor impose unnecessary costs on banks where there is no systemic risk or threat to the U.S. financial system.

Our members also will need to have sufficient time and opportunity to transition their affected activities to conform with the requirements of the final rules in a manner that is not disruptive to customers or to the economy.

As part of the agencies’ rulemaking review process, ABA requested they consider the following in connection with the final rule:

Include a full explanation of the agencies’ reasons for adopting provisions;
Include a Volcker rule summary compliance guide for community banks;
Allow a two-year compliance period from the final rules’ effective date;
Expressly include a “good-faith” compliance provision, whereby no enforcement action or adverse regulatory action will be taken during the two-year conformance period provided reasonable efforts are being taken.

Read the full letter.

Bernanke: Final Volcker Rule Expected in Early 2013

2012-12-13T07:54:00.001-05:00

Regulators have made "quite a bit of progress" in finalizing the Volcker Rule proposal and should complete it early next year, Federal Reserve Chairman Ben Bernanke said yesterday at his news conference following the Federal Open Market Committee meeting. "I think there is quite a bit of agreement, I wouldn't say a final agreement … on key points among the regulators at this juncture," he said.

Watch Bernanke’s press conference. For Volcker comments start at 59.45.

The Week Ahead: December 10 – December 14

2012-12-07T07:44:00.000-05:00

Monday

Meeting FDIC: Systemic Resolution Advisory Committee. Read more about the Committee.

Tuesday

FDIC Board Meeting. Read the meeting agenda.

Wednesday

Hearing HFS: Challenges Implementing Title VII of Dodd-Frank. Read more.

Thursday

Financial Stability Oversight Council (FSOC) Meeting. Read more.
Hearing HFS: Impact of the Volcker Rule. Read more.
Hearing House Ag Committee: Dodd-Frank Derivatives Reform. Read more.

All times in Eastern Standard Time. See future events on the Dodd-Frank Calendar.

Join us at the ABA Government Relations Summit
The ABA Government Relations Summit is your opportunity to educate lawmakers and regulators about the vital role banks play in the economy. It’s also a time to meet with new leadership and advocate for policy change to support the banking industry. Read more and join us this April!

Bachus & Hensarling: Delay Volcker Rule Implementation

2012-11-29T15:54:00.003-05:00

Reps. Spencer Bachus, the chairman of the Financial Services panel, and Jeb Hensarling, who will be chairman next year are urging financial regulators to delay implementation of the Volcker rule, due to concerns regarding the lack of clarity on how the prohibition on proprietary trading could affect the economy and concerns on how the rule will be enforced.

In a letter to the Federal Reserve, SEC, FDIC, OCC and CFTC the Representatives stated:

Given that the costs that the Volcker Rule will inpose on the U.S. financial system will more than likely outweigh any benefits the rule has to offer, it is absolutely essential that you carefully consider how you will implement it and that your agencies be transparent about the process by which you issue the final rule.

Unfortunately, you have been less than transparent about how you intend to implement the Volcker rule, and the resulting confusion has only made it that much more likely that whatever final rule you issue will compound the regulatory uncertainty that continues to plague our economy.

Baches and Hensarling requested that the Volcker rule implementation be delayed until two years after the final rule is released.

Read the full letter.

Derivatives & Volcker Rule Hearings Announced

2012-11-29T12:06:00.001-05:00

Financial Services Committee Chairman Spencer Bachus has announced the committee’s hearing schedule for the first two weeks of December which will include hearings on the Dodd-Frank derivatives rules and the Volcker Rule.

On December 5, the Capital Markets and Government Sponsored Enterprises Subcommittee will hold a hearing to assess the economic and market implications of the derivatives title of the Dodd-Frank Act.

On December 13, the Financial Services Committee will examine the status of implementation of the Volcker Rule.

The Committee’s schedule remains tentative and will depend upon the availability of witnesses and other factors that may require changes.

Read more.

ABA Analyzes Election’s Likely Impact on Banking

2012-11-07T15:00:00.000-05:00

ABA’s government relations team has prepared an analysis of how the 2012 election will affect the banking industry. The analysis, which is available on aba.com, reviews the likely impact on such key issues as Dodd-Frank Act implementation, Basel III, the CFPB, housing reform, the fiscal cliff and tax reform.

This election was one of the most important for the banking industry in modern times. As is the case with most informed Americans, bankers remain concerned with the difficult issues our country faces on the budget deficit, entitlement reform, tax policy and heath care -- issues that are already having a profound effect on economic growth.

Read the members-only analysis.

Because the Obama Administration and Congress will be making decisions that will influence banking's future, ABA strongly encourages bankers to plan to attend the 2013 ABA Government Relations Summit, to be held April 15-17 in Washington, D.C. The conference offers bankers the opportunity to hear detailed briefings from Washington insiders and express their views to policymakers on key issues. Registration is free.

Read more about and register for the summit.

S&P On Volcker Impact

2012-10-23T09:32:00.002-04:00

Per Standard & Poor’s report:

We currently estimate that the Volcker Rule could reduce combined pretax earnings for the eight largest U.S. banks by up to $10 billion annually, up from our initial $4 billion estimate two years ago, if final rules are stricter than as currently written.

In our view, less strict rules would have a limited impact on banks' earnings and business positions, so it's unlikely that we would take any rating actions as a result.

Stricter rules could lead us to take negative rating actions on certain banks, depending on how they adapt their business models to the new regulations

Sen. Warner Calls for DFA Corrections Bill in Next Congress

2012-10-19T09:19:00.000-04:00

Senate Banking Committee member Mark Warner (D-Va.) told the Bipartisan Policy Center yesterday that he hopes the 113th Congress will be able to consider a technical corrections bill to the Dodd Frank Act.

Congress never gets it right, when you’re looking at massive reform legislation the first time through. You directionally head in an area and then you come back, two years, three years hence to do a corrections legislation.

He added that he had issues with the law, but he dismissed the idea of repealing it altogether.

He also provided some ideas for improving Dodd-Frank. They included basing the Volcker Rule more on principles than rigid rules; tightening up the resolution authority mechanism to ensure it’s the absolute last resort for a failing financial firm; and revisiting derivatives reforms and transparency goals.

Watch a video of Warner addressing the Bipartisan Policy Center.

Bipartisan Policy Center Launches Financial Regulatory Reform Initiative

2012-10-18T13:46:00.004-04:00

The Bipartisan Policy Center launched a Financial Regulatory Reform Initiative with the goal of producing “bipartisan consensus reforms to our financial regulatory system to promote long-term sustainable economic growth.” Along with a webcast to launch the initiative, they released an introductory paper discussing the five areas of the study. Those areas of study—systemic risk, failure resolution, capital markets and the Volker rule, consumer financial protection, and regulatory architecture—will be released as a series of white papers beginning in the spring of 2013.

Read the introductory paper.
Visit the initiative launch page for more information including a webcast of the launch.

Bill Seeks International Parity for Volcker Enforcement

2012-09-20T12:07:00.003-04:00

Rep. Peter King (R-NY) is planning this week to introduce a bill—titled the U.S. Financial Services Global Viability Act—stipulating that enforcement of the Volcker Rule should be suspended until Treasury can certify that other international competitors have adopted and are abiding by similar statutory rules.

Read a draft version of the bill.

ABA Requests Volcker Rule Repeal, Suggests Legislative Remedies

2012-09-10T08:21:00.000-04:00

Fully repealing the Volcker Rule is the only way to avoid the harm it would do to the economy, bank customers and the banking industry, ABA said Friday in a letter to House Financial Services Committee Chairman Spencer Bachus (R-Ala.). But in the absence of a full repeal, the association suggested legislative approaches that would reduce—but not eliminate—that harm.

The association was responding to Bachus’ request for public opinions on less-burdensome legislative alternatives to the Volcker rule.

"[W]e would urge that the committee [immediately] alert the agencies to the harm to credit availability and market liquidity that would be caused by adoption of the pending [Volcker] proposal …,” ABA said. The panel also should direct the agencies to ensure that the rules—when finalized—do not impair traditional banking services and customer availability, nor impose costs on banks where no systemic-risk argument could be justified.

The association suggested legislative approaches that, among other things, would sharpen the Volcker Rule’s focus on what constitutes prohibited activities; provide plain and concise definitions of key terms; expressly require a cost-benefit analysis before rulemaking; and appoint the Federal Reserve as the lead agency for Volcker-Rule interpretation.

Read the letter.

Dodd-Frank Act Helping Community Banks?

2012-08-28T15:55:00.000-04:00

Treasury in a recent blog post attempted to explain how the Dodd-Frank Act has helped Main Street banks—community banks. The post states Treasury “recognizes that small banks were not the cause of the financial crisis,” and attempts to explain how new regulations “level the playing field” for community banks.

Read Treasury’s post here.

ABA has identified multiple issues facing community banks that have stemmed from the Dodd-Frank Act, including the following:

Capital Requirements
The Creation of the Another Regulatory Supervisor: CFPB
FDIC Coverage and Assessment Base Changes
Mortgage Finance Changes
Housing: QM and QRM Changes
Interchange Restrictions
Municipal Advisors Regulations
The Merger of OTS into OCC
Preemption Changes
Changes for Savings and Holding Companies
New Swap Regulations
Volcker Rule

These issues are discussed in the ABA online booklet—“Dodd-Frank and Community Banks: Your Guide to 12 Critical Issues.”

Download the free guide.

ABA Seeks Member Input on Volcker Rule Alternatives

2012-08-10T08:32:00.002-04:00

ABA plans to respond to the House Financial Services Committee’s solicitation of public comment on less burdensome legislative alternatives to the Volcker Rule (see: HFS Committee Requests Legislative Overhaul Comments). The response will include proposed legislative reforms that ABA raised in three comments letters filed in February.

ABA welcomes additional member input for legislative amendments. Because submissions are due to the House panel on Sept. 7, ABA requests that bankers submit their suggestions to the association by Friday, Aug. 31.

Read ABA’s comment letters.

S&P: Dodd-Frank Cost $34 Billion per Year

2012-08-10T08:05:00.002-04:00

Standard & Poor's has a new report updating their original estimates on potential costs associated with the Dodd-Frank Act. Standard & Poor’s original estimates were published in November 2010.

We estimate that the DFA could reduce pretax earnings for the eight large, complex banks by a total of $22 billion to $34 billion annually--higher than our prior estimate of $19.5 billion to $26 billion. The bulk of the higher projected costs reflects our view that regulators could take a more strict interpretation of the Volcker Rule.

HFS Committee Requests Legislative Overhaul Comments

2012-08-07T15:45:00.000-04:00

According to an article from The Hill today the House Financial Services Chairman Spencer Bachus (R-Ala.) has requested suggestions from House Republicans as they prepare to rework pieces of the Dodd-Frank Act.

The committee announced it will solicit public input on how lawmakers should rewrite the Volcker Rule, warning the existing requirement could have a "devastating" impact on the economy. Bachus said lawmakers are exploring "legislative alternatives."

If regulators implement the Volcker Rule in its current form, the repercussions will be devastating to our economy. It will undermine our nation’s ability to compete and make it harder for Main Street businesses to raise capital so they can grow and create jobs.

The committee will be accepting comments until September 7—when a hearing will be scheduled on legislative overhaul.

The committee has established an email address to gather suggestions and alternatives to the Volcker Rule—volckeralternative@mail.house.gov.

Read the full article on the ABA RegPolicy twitter feed on the right of the ABA Dodd-Frank Tracker page.

Dodd-Frank Threaten Survival of Community Banks

2012-06-18T08:08:00.001-04:00

Dodd-Frank Act regulations threaten the survival of many community banks and the towns they serve, ABA President and CEO Frank Keating said during an interview last week on Bloomberg Radio's "The Hays Advantage."

Many small towns and communities of America … exist because of the bank in their town ... and if those small banks that had nothing to do with the fall of ’08 are crippled as the result of pile-ons of regulations and costs, they’ll find a buyer … or they’ll just get out of the business entirely.

He explained that there is a danger that Dodd-Frank regulations can hurt or destroy some small-bank business models.

What is the Consumer Financial Protection Bureau going to do in the fair-lending space? What is the [CFPB] going to do in terms of the overdraft fees, and all of these other things that are central to some small banks’ business models?

People need to realize that there will be reactions to whatever actions all of these 7,500 pages of [Dodd-Frank] regulations demand. And we want to make sure as an industry that those reactions are sensible and beneficial to the public, and not just crippling to an industry that’s essential for growth, prosperity and jobs.

Keating also addressed the JPMorgan Chase trading loss, Basel III and the Volcker Rule in the wide-ranging interview.

Listen to the interview.

Federal Reserve Issues Volcker Rule Guidance

2012-06-13T07:44:00.000-04:00

The Federal Reserve has published guidance clarifying the conformance period during which covered entities must bring activities and investments into compliance with the restrictions on proprietary trading and relationships with hedge funds and private equity funds imposed by the Dodd-Frank Act (commonly referred to as the Volcker Rule).

Covered entities have two years from July 21, 2012 to conform all activities and investments to Section 619 of the Dodd-Frank Act.

Read more.

Regulators to Testify on ‘Enhancing Bank Supervision’

2012-06-06T08:24:00.002-04:00

The Senate Banking Committee today will hold a hearing on enhancing bank supervision and reducing systemic risk under the Dodd-Frank Act. FDIC Acting Director Martin Gruenberg, Comptroller of the Currency Thomas Curry, CFPB Director Richard Cordray, Deputy Treasury Secretary Neal Wolin and Federal Reserve Governor Daniel Tarullo will testify.

Read more.

From Federal Reserve Governor Daniel Tarullo’s testimony:

[B]oth the Dodd-Frank Act reforms and the international regulatory reforms share an important feature--a strong focus on the largest, most complex, and most interconnected financial firms and the systemic risks posed by those firms.

As the Federal Reserve implements reforms, we have maintained this core focus on the largest firms by proposing rules that try to mitigate the systemic risks posed by those firms and minimize the burden on smaller entities, particularly community banks.

In his testimony, Tarullo describe the Federal Reserve's progress on several Dodd-Frank Act rules and recent reforms to the international bank regulatory framework such as, enhanced capital standards, capital surcharges for Systemically Important Financial Firms, stress testing, enhanced prudential standards, and the Volcker rule.

Read Tarullo’s full testimony.