Current Legislative Reports
Regulatory Restructuring
Federal – Senate Passes Financial Regulatory Overhaul Bill (S. 3217, HR 4173)
The US Senate passed the Restoring American Financial Stability Act as HR 4173 (the House regulatory reform bill number), as amended with the text of the Senate bill (S 3217). In order to reconcile the House and Senate versions of the financial regulatory reform bills, the Congress will create a conference committee to write the final version of the legislation. The Senate is expected to appoint it’s negotiators this coming week and the US House of Representatives is expected follow soon after. Also on Monday, the Senate will conduct two roll call votes in relation to the following items:
- Senator Brownback’s (R-KS) motion to instruct conferees to exclude auto dealers from the jurisdiction of the new Consumer Financial Protection regulator; and
- Senator Hutchison’s (R-TX) motion to instruct conferees with respect to the bill’s prohibition on proprietary trading. Hutchison’s amendment (SA 4055) would exclude: trading on behalf of a customer, market making activities, and investments of a regulated insurance company, affiliate or subsidiary.
At a press conference, Senate Banking Committee Chairman Dodd (D-CT) and House Financial Services Committee Chairman Frank (D-MA) noted that they intend to have a final bill by July 4. Chairman Frank suggested that there were several votes in the House relating to derivatives provisions that would be different had the vote taken place today. When questioned about the provision in the Senate bill forcing banks receiving federal assistance to push out their swaps desks, Chairman Frank said that they will not pre-conference such provisions and that changes would be publicly presented in conference and be subject to votes.
The amendments adopted by the Senate this week include:
- Preservation of FTC Authority: Senator Jay Rockefeller’s (D-WV) amendment (SA 3758) preserves authority of the Federal Trade Commission (FTC).
- Preservation of FERC Authority: Senator Jeff Bingaman’s (D-NM) amendment (SA 3892) preserves the authority of FERC “to ensure just and reasonable rates” and give FERC a public interest waiver to exempt certain agreements, contracts or transactions entered into.
- Restrictions on IMF Loans: Senator John Cornyn’s (R-TX) amendment (SA 3986) requires the U.S. Executive Director of the IMF to vote in opposition to any IMF loans to a target country whose public debt exceeds its GDP or if it is determined that the loan will not be repaid.
- Disclosures on Congo: Senator Sam Brownback’s (R-KS) amendment (SA 3997) requires SEC filing disclosure relating to Congo conflict minerals.
- Credit Scores: Senator Mark Udall’s (D-CO) amendment (SA 4016) requires disclosure of credit scores for those who “are negatively affected by their score through rejected credit applications or unfavorable credit terms.”
- Angel Investors: The amendment (SA 4056) by Senators Kit Bond (R-MO), Mark Warner (D-VA), and Chris Dodd (D-CT) requires the SEC to adjust the accredited investor standard so that the individual net worth of a natural person or the joint net worth be more than $1 million (adjusted periodically), excluding the value of the primary residence. The amendment also requires the SEC to issue rules for the disqualification of offerings and sales of securities made under Rule 506 offerings.
- Preemption: Senator Tom Carper’s (D-DE) amendment (SA 4071) clarifies that federal law preempts state law under the bill, but allows state Attorneys General to prosecute and enforce.
- Inspectors General: Senators Chuck Grassley’s (R-IA) and Claire McCaskill’s (R-MO) amendment (SA 4072) to strengthen the independence of financial regulator Inspectors General.
- Regulatory Flexibility Analysis: Senator Olympia Snowe’s (R-ME) amendment (SA 3883) requires an initial regulatory flexibility analysis by the Bureau of Consumer Financial Protection to determine effects of new regulation on small businesses.
- Definition of Credit: Senator John Ensign’s (R-NV) amendment (SA 4146) amends the definition of credit to exclude no interest credit instruments.
- Covered Nonbank Financial Companies: Senator David Vitter’s (R-LA) amendment (SA 4003) defines covered nonbank financial companies as those for which financial activities make up 85% of their annual revenue rather than those that are “significantly” engaged in financial activities, as modified by Senator Mark Pryor’s (D-AR) amendment (SA 4087, as modified) to address definition of “predominantly engaged in financial activities” and to provide for anti-evasion authority.
Significant Amendments that were not attached to the Senate Bill include:
- Usury Caps: Sen. Sheldon Whitehouse (D-RI) amendment (#3746) would have eliminated the existing ability of banks to charge all customers an interest rate on loans based on the lender’s home state’s (HQ) interest rate cap allowing, thus allowing each individual state to apply its own usury caps.
- ATM Fees: Sen. Harkin’s amendment #3812 would have required the CFPB to set ATM fees that bear a “reasonable relation to the cost of processing the transaction.”
- Naked CDS: Sen. Dorgan’s (D-ND) amendment (#4114) would have imposed a ban on the trade of “naked” credit default swaps
Please take a moment to read the GR weekly report to learn about state legislation that impacts our businesses.
