House And Senate Debate And Amend Financial Regulatory Reform Proposals

Developments Of Note

House And Senate Debate And Amend Financial Regulatory Reform Proposals FDIC Issues Final Rule That Requires Banks To Prepay Deposit Issuance Assessments For Three Years (Through 2012) Final Model Privacy Notice Form Issued FinCEN Proposes Rule To Expand Information Sharing Procedures Other Items Of Note

Goodwin Procter Issues Client Alert On U.S. Senate Version Of Private Fund Investment Advisers Registration Act Of 2009 Effective Date For DOL Final Regulation And Exemption For Investment Advice To 401(k) Plan Participants And IRA Holders Is Further Delayed The Impact of Financial Services Reform on Real Estate Investors DEVELOPMENTS OF NOTE House And Senate Debate And Amend Financial Regulatory Reform Proposals During the week of November 16, 2009, the House Financial Services Committee and the Senate Banking Committee each continued to work on their respective financial regulatory reform bills. For more on the House financial regulatory reform bill please see the November 3, 2009 Alert and for the Senate financial regulatory reform bill please see the November 17, 2009 Alert. The House Financial Services Committee has finished its markup of the Financial Stability Improvement Act of 2009 (the "House Bill") and has scheduled a final vote on the House Bill after the Thanksgiving recess. House Financial Services Committee Chairman Barney Frank has indicated that the House Bill may be combined with several other House regulatory reform bills, such as those pertaining to the regulation of derivatives or consumer protection, when it is taken to the floor during the second or third week of December 2009. The Restoring American Financial Stability Act of 2009, introduced by Senate Banking Committee Chairman Christopher Dodd, (the "Dodd Bill") was subject to heavy bipartisan criticism during opening statements of the Senate Banking Committee's markup. Following these objections by nearly every member of the Senate Banking Committee, the deadline for amendments to the Dodd Bill has been delayed and it is expected that it will be entirely rewritten before consideration begins again in December 2009.

The House Financial Services Committee approved several significant amendments to the House Bill during the Committee's markup. An anticipated amendment provides for the creation of a standing Systemic Dissolution Fund (the "Fund") for use in the resolution of systemically significant financial companies. The Fund would be funded by risk-based assessments on financial companies with assets of more than $50 billion and hedge funds with assets of more than $10 billion until the balance of the Fund reached $150 billion. Assessments would then be suspended until the Fund dropped below the $150 billion level. The Fund would also have the ability to borrow up to $50 billion from the Treasury Department. A separate amendment would allow the FDIC to impose a 20% haircut on all secured creditors, including holders of qualified financial contracts such as repurchase agreements, when resolving the failure of systemically significant financial companies. This amendment would significantly increase the cost of borrowing for such financial companies, and would prevent them from obtaining advances from the Federal Home Loan Banks.

Another amendment to the...