Dodd Bill Developments:

On Thursday, May 20, 2010, the Senate invoked cloture on the Restoring American Financial Stability Act of 2010.  The vote of 60-40 allows the Senate to move the bill to a final vote by the end of the week, although it can still be further amended before the final Senate vote. 

Cloture was invoked with the help of three Republican Senators, including Senator Scott Brown (R-MA), who voted against cloture in an earlier vote on Wednesday when Democrats failed to gain the 60 votes needed to move to a final vote.  The voting results on Wednesday were 57 to 42, with Democratic Senators Maria Cantwell of Washington and Russ Feingold of Wisconsin voting against cloture.  In the vote on Thursday Democratic Senators Cantwell and Feingold again voted against cloture, but Republican Senators Brown, Susan Collins (R-ME) and Olympia Snowe (R-ME) supported the measure.

Amendments to the Dodd Bill:

Over 200 proposed amendments to the Dodd Bill have been introduced in the Senate.  Multiple amendments to the Dodd Bill have already been passed by roll-call vote, including the following:

• Amendment No. 3991, sponsored by Sen. Al Franken (D-MN), which subjects credit rating agencies to SEC oversight through the establishment by the SEC of a self-regulatory organization.  Passed 64-35.
• Amendment No. 3989, sponsored by Assistant Senate Majority Leader Dick Durbin (D-IL), which restricts interchange transaction fees imposed by issuers and payment card networks by amending the Electronic Funds Transfer Act and requires them to be "reasonable and proportional to the actual cost incurred by the issuer or payment card network with respect to the transaction." Passed 64-33.
• Amendment No. 3759, sponsored by Senator Kay Bailey Hutchison (R-TX), which maintains the Federal Reserve's role as primary supervisor of bank holding companies and state member banks.  Passed 91-8.
• Amendment No. 3738, sponsored by Senator Bernie Sanders (I-VT), which allows the Government Accountability Office to conduct a one-time audit of the Board of Governors of the Federal Reserve System focused on the actions taken by the Federal Reserve to address the financial crisis.  Passed 96-0.
• Amendment No. 3986, sponsored by Senator John Cornyn (R-TX), which blocks the International Monetary Fund from engaging in loans to foreign governments that are unlikely to repay.  Passed 94-0.
• Amendment No. 4056, sponsored by Senator Kit Bond (R-MO) and other Senators (including Senator Christopher Dodd (D-CT)), which amends language in the Dodd Bill that would have provided for the indexing of the net worth standard in the definition of "accredited investor."  The Amendment authorizes the Securities and Exchange Commission, however, (i) to undertake a review of the term "accredited investor" and, (ii) after a period of four years after the enactment of the Act, and every four years thereafter, to undertake subsequent reviews of the term "accredited investor" and to adjust the $1 million net worth standard.  During the first four years after enactment, therefore, the Amendment would bar the Commission from changing the $1 million net worth standard.     

Stock-by-Stock Circuit Breaker Rule Proposal:

On Tuesday, May 18, 2010, the Securities and Exchange Commission announced that "in response to the market disruption of May 6, the national securities exchanges and the Financial Industry Regulatory Authority (FINRA) are filing proposed rules today under which they would pause trading in certain individual stocks if the price moves 10 percent or more in a five-minute period."  The stocks affected would be "individual securities in the S&P 500® Index that experience a rapid price movement."

Read the SEC's Press Release.

German Ban on Short-Selling

On Tuesday, May 18, 2010, the German Federal Financial Supervisory Authority (BaFin) temporarily prohibited naked short-selling transactions and naked credit default swaps in government bonds of the euro zone.  These prohibitions are set to last until March 31, 2011, with ongoing review.