02.17.2011
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Updates
Federal Reserve Board Approves Final "Volcker Rule"
On Wednesday, February 9, 2011, the Federal Reserve Board approved a final rule implementing the conformance period relating to the so-called "Volcker Rule" under the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act"). The Volcker Rule would prohibit banking entities from engaging in proprietary trading and from investing in or sponsoring hedge funds or private equity funds. The final rule gives banking firms a period of time to conform their activities to the prohibitions and restrictions of the Volcker Rule. The final rule will be effective April 1, 2011.
Read the Federal Reserve press release
SEC Proposes First of Many Rule Amendments Removing References to Credit Ratings
On Wednesday, February 9, 2011, the SEC proposed amendments to its rules that would replace credit ratings as a condition for companies seeking to use short-form registration when registering securities for public sale with alternative standards of credit-worthiness. The rule amendments implement Section 939A of the Dodd-Frank Act. It is expected that the SEC, in accordance with the mandates of the Dodd-Frank Act, will soon remove additional references to credit ratings contained in Commission rules.
FDIC Board Approves Interagency Rule regarding Incentive-Based Compensation Requirements
On Monday, February 7, 2011, the FDIC Board of Directors approved for public comment a proposed interagency rule, which implements Section 956 of the Dodd-Frank Act. Section 956 "prohibits incentive-based compensation arrangements that encourage inappropriate risk taking by covered institutions and are deemed to be excessive, or that may lead to material losses." The proposed rule does not apply to banks with consolidated assets totaling less than $1 billion and includes more stringent standards for institutions with total consolidated assets exceeding $50 billion. For these larger institutions, the proposed rule would require that at least 50 percent of incentive-based payments be deferred for a minimum of three years for designated executives. Comments on the proposed rule will be accepted for 45 days after publication in the Federal Register.
Read the FDIC press releaseFDIC Approves Final Rule of Assessments, Dividends, Assessment Base and Large Bank Pricing
On Monday, February 7, 2011, the FDIC Board of Directors approved a final rule, which revises the deposit insurance assessment system by changing the assessment base from adjusted domestic deposits to average consolidated total assets minus average tangible equity. The final rule also revises the assessment system for large banks by eliminating reliance on debt issuer ratings and making it more forward looking in nature. This rule implements certain provisions of the Dodd-Frank Act. The FDIC has indicated that the goal of the changes set forth in the final rule is that "large institutions that pose higher risk will pay higher assessments when they assume these risks rather than when conditions deteriorate."
FDIC Announces Leadership for Office of Complex Financial Institutions and Division of Depositor and Consumer Protection
On Friday, February 11, 2011, the FDIC announced the hiring of leadership staff for the Office of Complex Financial Institutions ("CFI") and the Division of Depositor and Consumer Protection ("DCP"). These two new divisions are tasked with carrying out the enhanced responsibilities under the Dodd-Frank Act; CFI will monitor and address risks in the largest, systemically important financial institutions, while DCP will provide greater focus to the FDIC's depositor and consumer protection programs
© 2011 Perkins Coie LLP
