Perhaps the most salient feature of the Dodd-Frank Act is the number of rulemakings required in a short period of time. The industry and regulators alike will need to coordinate to give adequate consideration to each rule and its impact on the economy and financial services sector.
FACT: Dodd-Frank calls for over 300 rulemakings and studies, compared to 16 in Sarbanes Oxley.
FACT: Dodd-Frank calls for a significant level of interagency coordination with 46 joint rulemakings.
- The following agencies are tasked with joint rulemaking and have already begun setting up coordination processes: Treasury; Federal Reserve; FDIC; OCC; SEC; CFTC; FSOC; CFPB
FACT: Dodd-Frank created two new federal agencies with broad authority to write rules and oversee the financial industry:
- Financial Stability Oversight Council (FSOC): The FSOC has the authority to issue rules for “systemically important” firms – regardless of whether they are banks or not. Areas of rulemaking include capital and liquidity, resolution processes, and risk management. On October 1, 2010, the FSOC met for the first time and issued a 30-day request for comment on the Volcker Rule.
- Bureau of Consumer Financial Protection (CFPB): The CFPB has broad authority to issue rules governing consumer financial products on the basis of “abusiveness,” among other areas. Rulemaking cannot commence until the designated transfer date, July 21, 2011, when consumer protection responsibilities are transferred from the Federal Reserve and other disparate locations to the CFPB. The first rulemaking test is likely to be consolidation of TILA and RESPA, and efforts to undergo this process are already underway.
FACT: In the next 6 months, up to 142 rules will be open for comment