03.10.2011
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Updates
Federal Reserve Proposes Rules regarding Credit Score Disclosures
On Tuesday, March 1, 2011, the Federal Reserve Board and the Federal Trade Commission proposed regulations regarding credit score disclosure. The proposed regulations implement requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"). Proposed requirements include the "disclosure of credit scores and related information to consumers in risk-based pricing and adverse action notices under the Fair Credit Reporting Act if a credit score was used in setting the credit terms or taking adverse action." The proposed regulations would amend Regulation V (Fair Credit Reporting) and Regulation B (Equal Credit Opportunity). Comments on the proposed rules are due 30 days after publication in the Federal Register.
Read the Federal Reserve press release
SEC Proposes Rule Amendments Removing Credit Rating References in Investment Company Act Rules and Forms
On Wednesday, March 2, 2011, the SEC announced rule amendments that would remove any references to credit ratings in certain rules and forms under the Investment Company Act. The proposed rule amendments implement certain requirements under the Dodd-Frank Act in an effort "to eliminate over-reliance on credit ratings by both regulators and investors." Under the proposal, a credit rating would not be required when determining whether a security is a permissible investment for a money market fund and it would instead be permissible if the fund's board concludes that the security presents only minimal credit risks.
SEC Proposes Operation and Governance Standards for Clearing Agencies
On Wednesday, March 2, 2011, the SEC proposed rules that provide for operation and governance standards for clearing agencies. The proposed rules implement certain provisions of the Dodd-Frank Act. The rules, among other things, would require the maintenance of certain standards regarding risk management and operations, provide for adequate safeguards and protection for the confidentiality of trading information, and identify and properly address conflicts of interest.
SEC Proposes Rules Requiring Disclosure of Incentive-Based Compensation at Financial Institutions
On Wednesday, March 2, 2011, the SEC announced a proposed rule that would require certain financial institutions to disclose their incentive-based compensation structure. The proposed rule would apply to broker-dealers and investment advisers with more than $1 billion or more in assets. The rule would prohibit these institutions from having compensation practices that encourage "inappropriate risks." Additional requirements would apply to financial institutions with more than $50 billion in assets. The rule is derived from Section 956 of the Dodd-Frank Act. The proposed SEC rule will be consistent with similar rules to be proposed other federal financial regulators, including the Federal Reserve, the OCC and the FDIC.
The Fed Proposes Rule Amendments to Encourage Banks to Clear and Return Checks Electronically
On Thursday, March 3, 2011, the Federal Reserve Board proposed amendments to Regulation CC (Availability of Funds and Collection of Checks) in order to encourage banks to clear and return checks electronically. This encouragement comes in the form of, among other things, a proposal to provide a depository bank with the expeditious return of a check only if it receives returned checks electronically. The proposal would also shorten the safe-harbor period for an exception hold to 4 days.
Read the Federal Reserve press release
