The Dodd–Frank Wall Street Reform and Consumer Protection Act (Pub.L. 111-203, H.R. 4173 ) is a federal statute in the United States that was signed into law by President Barack Obama on July 21, 2010.The Act is a product of the financial regulatory reform agenda of the Democratically controlled 111th United States Congress and the Obama administration.
The law was initially proposed on December 2, 2009, in the House of Representatives by Barney Frank, and in the Senate Banking Committee by Chairman Chris Dodd. Due to their involvement with the bill, the conference committee that reported on June 29, 2010, voted to name the bill after the two members of Congress.The Act, which was passed as a response to the late-2000s recession, was touted as the most sweeping change to financial regulation in the United States since the Great Depression,and purportedly represented a significant change in the American financial regulatory environment affecting all Federal financial regulatory agencies and affecting almost every aspect of the nation's financial services industry
Title I outlines two new agencies tasked with monitoring systemic risk and researching the state of the economy and clarifies the comprehensive supervision of bank holding companies by the Federal Reserve. Title I creates the Financial Stability Oversight Council and the Office of Financial Research.
Title II - Orderly Liquidation Authority
In addition to the supervised banks, insured depository institutions and securities companies that may be liquidated under existing law by the FDIC or Securities Investor Protection Corporation (SIPC), respectively, Covered Financial Companies that may be liquidated under this title include, insurance companies and non-bank financial companies not covered elsewhere.
Title III - Transfer of Powers to the Comptroller, the FDIC, and the Fed
Title III, or the "Enhancing Financial Institution Safety and Soundness Act of 2010"is intended to streamline banking regulation and reduce competition and overlaps between different regulators by abolishing the Office of Thrift Supervision and transferring its power over the appropriate holding companies to the Board of Governors of the Federal Reserve System, state savings associations to the FDIC, and other thrifts to the Office of the Comptroller of the Currency.
Title IV - Regulation of Advisers to Hedge Funds and Others
Title IV introduces significant regulation of hedge funds, and other similar investment intermediaries for the first time, and is known severally as the "Private Fund Investment Advisers Registration Act of 2010".
In general, it increases the reporting requirements of investment advisors, and limits the ability of these advisors to exclude information in reporting to the various Federal government agencies.
Title V - Insurance
Federal Insurance OfficeSubtitle A, also called the "Federal Insurance Office Act of 2010", establishes within the Department of the Treasury the Federal Insurance Office.
State-Based Insurance ReformSubtitle B, also called the "Nonadmitted and Reinsurance Reform Act of 2010" says the States may enter into a compact to establish procedures to allocate among the States the premium taxes paid to an insured's home State. After 2-years, a State may not collect any "fees relating to licensing of an individual or entity as a surplus lines broker in the State unless the State has in effect at such time laws or regulations that provide for participation by the State in the national insurance producer database."
Title VI - Improvements to Regulation
Title VI is also called the "Bank and Savings Association Holding Company and Depository Institution Regulatory Improvements Act of 2010". It introduces the so called "Volcker Rule" after former Chairman of the Federal Reserve Paul Volcker by amending the Bank Holding Company Act of 1956.
Title VII - Wall Street Transparency and Accountability
Title VII, also called the Wall Street Transparency and Accountability Act of 2010, concerns regulation of over the counter swaps markets. Included in this section are the credit default swaps and credit derivative that were the subject of several bank failures circa. 2007. Financial instruments have the meanings given the terms in section 1a of the Commodity Exchange Act (7 U.S.C. § 1a). On a broader level, the Act requires that various derivatives known as swaps, which are traded over the counter be cleared through exchanges or clearinghouses.
Title VIII - Payment, Clearing and Settlement Supervision
Title VIII, called the "Payment, Clearing, and Settlement Supervision Act of 2010", aims to mitigate systemic risk within and promote stability in the financial system by tasking the Federal Reserve to create uniform standards for the management of risks by systemically important financial organizations and institutions by providing the Fed with an "enhanced role in the supervision of risk management standards for systemically important financial market utilities; strengthening the liquidity of systemically important financial market utilities; and providing the Board of Governors an enhanced role in the supervision of risk management standards for systemically important payment, clearing, and settlement activities by financial institutions."
Title IX - Investor Protections and Improvements to the Regulation of Securities
Title IX, sections 901 to 991, known as the "Investor Protections and Improvements to the Regulation of Securities", revises the powers and structure of the Securities and Exchange Commission, credit rating organizations, and the relationships between customers and broker-dealers or investment advisers. This title calls for various studies and reports from the SEC and Government Accountability Office (GAO)
Title X - Bureau of Consumer Financial Protection
Title X establishes the Bureau of Consumer Financial Protection, within the Federal Reserve. The new Bureau regulates consumer financial products and services in compliance with federal law.
Title XI - Federal Reserve System Provisions
A new position is created on the Board of Governors, the "Vice Chairman for Supervision", to advise the Board in several areas.
Additionally, the GAO is now required to perform several different audits of the Fed.
Title XII - Improving Access to Mainstream Financial Institutions
Title XII, known as the "Improving Access to Mainstream Financial Institutions Act of 2010", provides incentives that encourage low- and medium-income people to participate in the financial systems.
Title XIII - Pay It Back Act
This title amends the Emergency Economic Stabilization Act of 2008 to limit theTroubled Asset Relief Program, by reducing the funds available by $225 billion (from $700 billion to $475 billion) and further mandating that unused funds can not be used for any new programs.
Title XIV - Mortgage Reform and Anti-Predatory Lending Act
Title XIV is called the Mortgage Reform and Anti-Predatory Lending Act, whose subtitles A, B, C, and E are designated as Enumerated Consumer Law, which will be administered by the new Bureau of Consumer Financial Protection.
Title XV - Miscellaneous Provisions
Restriction on U.S. Approval of Loans issued by International Monetary Fund
Disclosures on Conflict Materials in or Near the Democratic Republic of the Congo
Reporting on Mine Safety
Reporting on Payments by Oil, Gas and Minerals in Acquisition of Licenses
Study on Effectiveness of Inspectors General
Study on Core Deposits and Brokered Deposits
Title XVI - Section 1256 Contracts
A Section 1256 Contract refers to a section of the IRC § 1256 that described tax treatment for any regulated futures contract, foreign currency contract or non-equity option. To calculate capital gains or losses, these trades have traditionally been marked to market on the last business day of the year.