On Monday, March 15,
2010, Senate Banking Committee Chairman Chris Dodd (D-CT) released a Chairman's
Mark of the "Restoring American Financial Stability Act of 2010" (the
"Bill"). The Bill, which has been in development for months, is
intended to replace the Discussion Draft previously circulated by Chairman Dodd
on November 10, 2009 ("Discussion Draft") and is different in many
respects from H.R. 4173, the "Wall Street Reform and Consumer Protection
Act of 2009," which was passed by the House on December 12, 2009 (please
see the Emerging Issues Analysis: Senator Dodd Releases Financial Reform
Proposal: The Restoring American Financial Stability Act of 2009 and House
Passes Financial Regulatory Reform Legislation for additional information).
The Senate Banking Committee is scheduled to begin marking up the legislation
on March 22.
Depository Institutions & Their Holding Companies
The Bill would
shuffle the responsibilities of the Federal banking regulators and abolish the
Office of Thrift Supervision ("OTS"), leaving the Office of the
Comptroller of the Currency ("OCC") to oversee national banks,
Federal thrifts, and holding companies of such depository institutions.
Supervision of state banks that are members of the Federal Reserve System would
be transferred from the Board of Governors of the Federal Reserve System
("Federal Reserve") to the Federal Deposit Insurance Corporation
("FDIC"). The FDIC would continue to supervise Federally-insured
state banks and thrifts. The FDIC would also supervise depository institution
holding companies that have more state-insured deposits than Federally-insured
deposits and have total assets of less than $50 billion. The Federal Reserve
would have rulemaking authority over depository institution holding companies
of all sizes, but it would only directly supervise holding companies with
consolidated assets of over $50 billion.
Contrary to H.R.
4173, the Federal thrift charter would be abolished, with a grandfather
provision for existing thrifts. The Bill would prevent a commercial firm from
acquiring control of an FDIC-insured credit card bank, industrial loan company,
or trust company during a three-year moratorium. During the moratorium, a study
would be conducted to evaluate the consequences of subjecting a broader range
of companies to the restrictions of the Bank Holding Company Act.
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