Ropes & Gray Partners Comment on Senate's Passage of Financial Reform Legislation

In the third of their series of articles on the Dodd financial reform bill, Ropes & Gray banking practice co-leaders Mark Nuccio and Alan Priest provide a review of the final version of the bill, which was passed by the Senate on May 20.

In the article published by Corporate Board Member, Nuccio and Priest write: "Barring unexpected setbacks, the ink on the President's signature will likely be dry before the Fourth of July. Expect the law to look much like the final Senate bill, except perhaps in the area of derivatives reform where the debate rages on."

The authors break out the notable amendments to the bill which they believe are likely to survive to become law. These amendments cover the following issues:

• An end to the federal banking bailout fund;
• Restoration of the Fed as supervisor of bank holding companies and state member banks;
• A one-time OMB audit of the Fed's Wall Street bailout;
• A shift in deposit insurance premiums onto banking organizations with larger assets;
• Limit in the enforcement power of State Attorney Generals over national banks;
• The SEC will be required to establish a self-regulatory organization to select the credit-rating agency that would provide initial credit ratings on financial products;
• Mortgage lenders will be required to maintain certain underwriting standards and verify the ability of borrowers to repay their loans;
• An increase in the capital standard for larger banking organizations;
• Reduction in interchange fees that credit card companies charge to merchants; allowing merchants to provide consumers with incentives to pay by cash, check or debit cards.;
• Providing the Commodity Futures Trading Commission with express authority to penalize anti-market manipulation; and
• Granting so-called 'whistleblower' protection to employees of the ratings agencies.