An update on implementation of the Dodd-Frank Act

Almost immediately after enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act on July 21, 2010, federal banking regulators faced a daunting set of new congressional directives with tight (if not impossible) deadlines. Dodd-Frank created a new agency – the Consumer Financial Protection Bureau (CFPB) – to take over most rulemaking (including existing regulations), and a significant portion of supervision and enforcement obligations, from the federal banking regulators in the realm of consumer financial protection by July 21, 2011.

To implement its mandates, Dodd-Frank required the CFPB, the Treasury Department, the Federal Reserve Board, the OCC, and the FDIC (among others) to propose and finalize a vast number of new regulations, to revise many existing regulations, to conduct numerous studies, and to issue a variety of reports to Congress on their findings.

Many of the changes implemented in 2012 primarily affect the largest banks, holding companies, and other financial firms. The largest bank holding companies (with total consolidated assets exceeding $250 billion) were required to issue resolution plans, otherwise known as “living wills,” by July 2, 2012. The CFPB commenced its supervision of banks with total consolidated assets exceeding $10 billion, and has already brought a number of enforcement actions and reached staggeringly large settlements with major credit card issuers Discover, American Express, and Capital One.


Both large and small banks and holding companies can expect significant developments in 2013, including:

  • As of Jan. 1, 2013:
  • Dodd-Frank’s new leverage and risk-based capital requirements (known as the Collins Amendment) will impose new leverage and risk-based capital requirements on bank holding companies, and over a three-year period will phase out trust preferred securities from holding companies’ Tier 1 Capital.
  • The two-year period of unlimited deposit insurance coverage of non-interest-bearing transaction accounts will expire.
  • Revised market risk capital rules issued by the OCC, the Federal Reserve Board, and the FDIC become effective.
  • Revised lending limits for national banks and thrifts take effect and will require inclusion of certain credit exposures from derivatives transactions, repurchase and reverse repurchase agreements, and securities borrowing and lending transactions.
  • Effective July 21, 2013, the FDIC can approve applications for deposit insurance coverage from “non-banks,” including industrial banks, credit card banks, and trust banks that are affiliated with “commercial firms.”
  • The CFPB will issue new integrated disclosure requirements for mortgage loan transactions, combining the Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) disclosures in a single form.
  • The CFPB will amend the TILA and RESPA regulations (Regs. Z and X) to expand the types of mortgage loans that are subject to the protections of the Home Ownership and Equity Protection Act of 1994 (HOEPA) and to impose pre-loan counseling requirements for high-cost mortgage loans.
  • The CFPB will amend the Equal Credit Opportunity Act (ECOA) and TILA regulations (Regs. B and Z) to impose certain appraisal standards and to require banks to give customers free copies of written appraisals in connection with first lien mortgage loans.
  • The CFPB will amend the TILA regulations (Reg. Z) to limit points and fees chargeable by mortgage loan originators.

Timothy S. Crisp is a partner with Foley & Lardner LLP and a member of the Finance & Financial Institutions practice. He can be reached at 608-258-4210.

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