Financial Services Reform Bill Headed for Final Passage

The House-Senate Conference on the financial regulatory reform bill initially completed its work on June 25 and approved the newly christened “Dodd-Frank Act” along a party line vote.  The conferees worked for weeks to resolve the differences between the House and Senate versions of the reform bill, and held seven public sessions over a two week period.

Adoption by the conference committee appeared to set the stage for final consideration of the regulatory reform legislation, but the death of Senator Robert Byrd (D-WV) and the $19 billion “pay for” assessment on financial institutions -- otherwise known as the “bank fee” -- caused Democrats to fall short of the 60 votes necessary to avoid a Senate filibuster. As a result, House and Senate conferees reconvened on Tuesday, June 29 to address the concerns about the “bank fee” in order to garner the support of key Republican Senators whose votes are necessary to secure final passage of the bill. The conferees approved a revised conference report that substituted the “bank fee” with an increase in the federal deposit insurance premium banks with more than $10 billion in assets will be required to pay to the FDIC. They will also end the $750 billion Troubled Assets Relief Program (TARP) 3 months ahead of schedule.

The House passed the bill on Wednesday night by a vote of 237-192. The Senate will not take up the bill until after the July 4 recess.

Click here to read a summary of the bill as prepared by NAIFA outside counsel at Steptoe & Johnson. Included in the summary are detailed explanations of the following issues that will most impact NAIFA members:

• Broker-Dealer Fiduciary Duty (Also see June 24 GovWatch)
  Requires SEC study and rulemaking on broker-dealer and investment adviser standard of customer care.

• Indexed Annuity Regulation (Also see June 25 GovWatch)
  Resolves state insurance/SEC regulatory battle over indexed annuities.

• Federal Insurance Office (FIO) of information
  Establishes an office to house federal insurance industry expertise.

• GAO Study of Financial Planning
  Requires the Government Accountability Office to study the effectiveness of state and federal regulations to protect consumers from individuals who hold themselves out as “financial planners.”

• Bureau of Consumer Financial Protection
  Establishes new federal office to primarily regulate consumer loan oriented and related products. Provides for very limited authority over insurance products.
  
• Senior Investor Protection
  Establishes grant incentives for states to address misleading and fraudulent marketing practices aimed at seniors.

• Improved Broker-Dealer Disclosures to Investors
  Clarifies SEC authority to issue broker-dealer disclosure rules and requires the SEC to mandate simple and clear presale disclosures if they use that authority.

• Asset Threshold for Investment Adviser Registration
  Increases the asset threshold from $25 million to $100 million for investment advisers who are required to register with the SEC.

• Investor Advisory Committee
  Establishes an Investor Advisory Committee to advise the SEC on issues relating to securities products, trading strategies, fee structures, disclosure, and other investor-directed initiatives.

• Office of Investor Advocate
  Establishes an ombudsman like office at the SEC to assist investors and provide input on proposed rules and regulations.

NAIFA Staff Contact: Jill Edwards, Assistant Vice President – Federal Government Relations, at (703) 770-8158.