Getting Started

Since the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act on July 21, 2010, the agencies charged with implementing the Act have begun laying the groundwork for managing their new responsibilities.

The Department of Treasury’s Assistant Secretary for Financial Institutions Michael Barr provided a window into the action during his remarks to the Chicago Club yesterday. The first meeting of the Financial Stability Oversight Council (FSOC) – the council of financial regulators charged with managing systemic risk – will be in September. The Treasury is currently working to stand up the new Office of Financial Research that will support the FSOC by collecting and analyzing data pertaining to systemic risk. Internationally, Treasury is working to raise capital requirements – the ratios and the quality of the underlying capital – and also institute explicit, quantitative liquidity requirements. According to Barr, the Dodd-Frank reforms also require that, “Regulators must supplement existing approaches to supervision with mandatory ‘stress tests,’ credit exposure reporting, and ‘living wills,’ so that they can adequately assess the potential impact of the activities and risk exposures of these firms on each other, on critical markets, and on the broader financial system.”

Also yesterday, the Federal Deposit Insurance Commission (FDIC) announced that it was establishing two new offices – the Office of Complex Financial Institutions (CFI) and the Division of Depositor and Consumer Protection (DCP) – “to vigorously implement its new authorities” under the Act. The CFI will “perform continuous review and oversight of bank holding companies with more than $100 billion in assets as well as non-bank financial companies designated as systemically important by the Financial Stability Oversight Council.” In addition, the CFI will be responsible for their orderly liquidation if any of these institutions fail. The DCP will focus on the FDIC’s compliance examination and enforcement program, which includes consumer protection and fair lending statutes and regulations. While the new Consumer Financial Protection Bureau in the Federal Reserve will be charged with writing new consumer protection rules, the FDIC still has enforcement authority over banks with $10 billion or less in assets.

Finally, in anticipation of upcoming rule makings, the Securities and Exchange Commission (SEC) has set up a site to collect public comments about various provisions of Dodd-Frank. Here’s the link, if anyone cares to comment.

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