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On May 20, 2010, the
Senate passed the "Restoring American Financial Stability Act of
2010" as amended ("Senate Bill"). Congressional leadership has
indicated that conference committee proceedings will take place in June, making
it likely that the legislation will be passed by the House and Senate before
the July 4th Recess and signed into law by the President shortly thereafter.
By way of background, Senate
Banking Committee Chairman Chris Dodd (D-CT) released a draft Senate Bill on
March 15. The draft Senate Bill, which had been in development for months, was
different in many respects from H.R. 4173, the "Wall Street Reform and
Consumer Protection Act of 2009" ("House Bill"), which was
passed by the House on December 12, 2009. Although 473 amendments were filed,
the Senate Banking Committee's March 22 markup lasted only 21 minutes. The
Committee passed only the Manager's Amendment and voted along party lines to
favorably report the legislation to the full Senate. Please see Emerging
Issues: Financial Regulatory Reform Legislation Moves to Senate Floor,
Senator Dodd Releases Financial Regulatory Reform Legislation: The Home
Stretch?, and House Passes Financial Regulatory Reform Legislation for
The Banking Committee bill was subsequently introduced as original measure S.
3217. Floor consideration began on April 28 and lasted over three weeks. 441
amendments were filed and 33 were adopted. Notably, Chairman Dodd and Senate
Banking Committee Ranking Minority Member Richard Shelby (R-AL) were unable to
come to an agreement on a package of non-controversial, bipartisan provisions
for a comprehensive Manager's Amendment, leaving many significant issues
unresolved. Procedurally, the Senate took up the House-passed H.R. 4173,
inserted the text of S. 3217 as amended in lieu of the House's text, and passed
the bill by a vote of 59 to 39. Four Republicans voted for the Senate Bill and
two Democrats voted against the Senate Bill.
Both the House and Senate Bills would abolish the Office of Thrift
Supervision ("OTS"), giving the Office of the Comptroller of the
Currency ("OCC") supervisory authority over national banks and
Federal thrifts. In contrast to the House Bill, the Senate Bill would abolish
the Federal thrift charter, with a grandfather provision for existing thrifts.
The Senate Bill does not offer a national mutual bank charter, which was
included in the House Bill. During the course of the Senate's consideration of
the banking regulatory structure, the Senate Bill moved closer to the House
Bill. As such, this is likely not to be an area of significant debate during
the conference committee proceedings.
While both Bills modify the exceptions to the Bank Holding Company Act
("BHCA"), they do so differently. The House Bill would significantly
narrow the exception to the BHCA for industrial loan companies
("ILCs"), lending companies that are subsidiaries of industrial
companies whose primary purpose is to lend to customers, and require most
companies that currently own ILCs to either register as bank holding companies
or restructure their financial activities. New ILCs would not qualify for the
BHCA exception. In contrast, the Senate Bill imposes a three-year moratorium on
nonfinancial firms acquiring control of a credit card bank, ILC, or trust
company. During the moratorium, a study would be conducted to evaluate
eliminating many of the exceptions to the BHCA.
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