Senate Chairman Dodd Releases Draft Bill, Senate Banking Committee to
Consider Dodd Bill Week of March 24
On March 14, 2010, Senate Banking Committee Chairman Christopher Dodd
(D-Connecticut) released his draft financial services regulatory reform
legislation, which has been in the works for months.
Last week, Chairman Dodd ended negotiations with committee Republicans and
released his own draft without bipartisan support. He will now do everything
possible to move his legislation through his committee and through the Senate
over the next two to three months. The House approved its own legislation in
Copies of the Dodd
draft legislation and a
summary are available online.
Highlights of the Dodd bill include:
Consumer Protection: Would create a new independent watchdog housed at
the Federal Reserve with the authority to improve available financial
information for consumers.
Too Big to Fail: Would create a way to liquidate failed financial
firms; would impose new capital and leverage requirements; would update the
Fed's authority to allow system-wide support, but no longer prop up individual
firms; and would establish new standards and supervision.
"Systemic Risk" Council: Would create a council to identify and
address systemic risks posed by large, complex companies, products, and
Volcker Rule: Would require banks, their affiliates, and bank holding
companies, to prohibit proprietary trading, investment in and sponsorship of
hedge funds and private equity funds, and to limit relationships with hedge
funds and private equity funds. Nonbank financial institutions supervised by the
Federal Reserve would also have restrictions placed on their proprietary trading
and hedge fund, and private equity investments.
Transparency & Accountability for Exotic Instruments: Would eliminate
loopholes for over-the-counter derivatives, asset-backed securities, hedge
funds, mortgage brokers and payday lenders.
Federal Bank Supervision: Would streamline bank supervision to create
clarity and accountability, and protect the dual banking system.
Executive Compensation & Corporate Governance: Would provide
shareholders with a say on pay and corporate affairs with a non-binding vote on
Investor Protection: Would provide new rules for transparency and
accountability for credit rating agencies to protect investors and businesses.
Regulatory Enforcement: Would strengthen oversight and empower
regulators to pursue financial fraud, conflicts of interest, and manipulation of
McGuireWoods Consulting is closely
involved with financial services regulatory reform legislation, and looks
forward to assisting existing and new clients as this important legislative
process moves forward.