Financial Stability Oversight Council

Dodd‐Frank Wall Street Reform and Consumer Consumer Prote

Prote

Integrated Implementation Roadmap

October 1, 2010
Introduction

 This presentation contains a summary of key tasks that will be undertaken 

Stability Oversight Council (FSOC) and its members to implement the DStreet Reform and Consumer Protection Act (the Act).

 This presentation presentation is arranged arranged thematically thematically and includes includes work to be compl

compl

individual agencies and the FSOC itself, including joint rulemakings and sfull account of all the statutory provisions in the Act, but rather the key taskshould expect over the next several years.

 The timelines in this document reflect both statutory deadlines and non-sta

each agency. The non-statutory targets in this presentation represent plimplement the Act as quickly and effectively as possible.

 Accordingly, Accordingly, these current current targets targets may be adjusted adjusted at a later date

proceed faster or slower than initially anticipated, and certain accomplished in advance of the statutory requirements.

 The tasks represented here are focused primarily on regulatory outputs an

th h oug much of the i l t ti implementation will be refl t d ec e th h roug i d mproved ag

supervision, and oversight.

 The Treasury Department respects and supports the independence 

regulatory agencies and is working with them to collect this information to 

g y g g 

public of their coordinated efforts to implement the Act.
Executive Summary

 On July 21, 2010, President Obama signed the Act into law. These hist

reshape the American financial system and restore it to its core purpolasting and broadly shared economic growth.

 Over the next few y , ears and in particular the next 18 months, the FSOC a

will work to issue regulations, policies, and guidance mandated by the other actions necessary to effectively carry out the Act.

 Constraining Risks to Financial Stability: A dangerous build up of risk c

worst financial financial crisis since the Great Depression Depression. The Act provides provides new and constrain risk in the financial system and at large interconnected regardless of corporate form. The Act also provides new authority to set for payment, clearing, and settlement systems – the core infrastructmarkets.

 Resolution Plans and Orderly Liquidation Authority: During the crisis, 

had no effective tools to manage the failure of some of the largest, mosfinancial firms in an orderly fashion while protecting taxpayers and the eco

next year, the Federal Federal Deposit Deposit Insurance Insurance Corporation Corporation (FDIC) will develo

develo

clarity to these processes and will build the capacity necessary to processes effectively. In many cases, the rulemaking, policies and proconsultation with, or concurrence of, the FSOC or its members. Together wGovernors Governors of the Federal Federal Reserve Reserve System (FRB), the FDIC will develo

develo

resolution plans that will make planning for distress or failure a critical pafor firms that pose the most risk.
Executive Summary (Cont’d)

 Consumer and Investor Protection: The Act creates an indepen

Financial Protection Bureau (CFPB) to consolidate certain authorities thspread across seven federal agencies and to begin examining nonbank fproviders. The CFPB will be responsible for conducting research, preducation, maintaining a nationwide consumer complaint response unit, 

implement federal consumer financial laws, and supervising very large nonbank financial services providers for compliance with those laws. Thstandards for those who provide investment advice and provides shareho

voice in corporate governance and executive compensation.

 Transparency and Accountability in Financial Markets: The crisis also 

financial system was ill-equipped to monitor or mitigate risks in critical fiincluding the derivatives markets, and to understand risks taken bparticipants. Over the next year, the Securities and Exchange CommissioCommodity Futures Trading Commission (CFTC) will promulgate rules to increase transparency in these markets, thus improving market discipline. SEC will p g romul ate rules to bring greater oversight and transp y arenc advisers, and work with other regulators to strengthen disclosure and asecuritizations.

 Reforms to Strengthen Regulatory Agencies: The Act reforms the 

financial financial regulatory regulatory agencies agencies. It merges the Office of Thrift Supervision Supervision Office of the Comptroller of the Currency (OCC), mandates structural chaand requires that each designated agency stand up an Office of MinoInclusion within that agency. 
Overview of Rulemaking Process

A typical U.S. federal rulemaking under the

Administrative Pro

U.S.C.§ 551, et seq. follows these steps:

 Optional - Advance Notice of Proposed Rulemaking (ANPR): This is 

that sets forth the agency s' initial initial analysis analysis of the subject subject matter and requ

requ

input on key issues. Comments submitted on the proposal are typically m

the public in accordance with applicable law.

 Notice of Proposed Rulemaking (NPR): In this step, the agency publi

proposed proposed regulatory regulatory language language in the Federal Federal Register Register, which also includes includesthe justification and analysis supporting the rule, as well as the agency's public comment on the advance notice, if applicable.

 Public Comment: Once a proposed rule is published in the Federal R

comment comment period begins, allowing allowing the public to submit written written comments comments to agency is required to consider the issues and concerns raised in Depending on the complexity of the rule, comment periods typically last foAs a simplifying assumption, this document typically represents commedays; comment comment periods periods may differ in length as appropriate appropriate.

 Final Rule: The proposed rule often becomes the final rule with some 

this step, the agency publishes a response to issues raised by public coupdated analysis and justification for the rule. In some cases, the agenc

secon

d propose

d rule, especi ll a

y if the new proposal is f d t ll fun

damentall

y d

original proposal. The final rule is codified in the Code of Federal Regulatio

 The Federal Register can be accessed at: http://www.gpoaccess.gov/fr/ind
More Information

 For more information on specific rulemakings or on the work of the FSO

member agencies, please visit the following websites: 

• Financial Stability Oversight Council (FSOC) <http://www.treasury.gov/FSOC

• Board of Governors of the Federal Reserve System (FRB) Board of Governors of the Federal Reserve System (FRB)

<http://www.federalreserve.gov/newsevents/reform.htm>

• Commodity Futures Trading Commission (CFTC) <http://www.cftc.gov>

• Federal Deposit Insurance Corporation (FDIC) <http://www.fdic.gov>

• Federal Housing Finance Agency (FHFA) Federal Housing Finance Agency (FHFA) < http://www.fhfa.gov http://www.fhfa.gov>

• National Credit Union Administration (NCUA) <http://www.ncua.gov>

• Office of the Comptroller of the Currency (OCC) <http://occ.treas.gov>

• Securities and Exchange Commission (SEC) <http://www.sec.gov/spotlight/d

frank.shtml>

Key

Non-statutory agency targetStatutory deadline

Public comment perioAgency rulemaking wo

Milestones achieved Agency study/report w
Monitoring Systemic Risk

The task of monitoring systemic risk throughout the financial system is primarily the reFSOC which must submit an annual report to Congress and respond to emerging thresupported by a new Office of Financial Research (OFR) with a responsibility to set reported and collected, to collect and publish data (while ensuring that business confideprotected) and perform analysis on risks to the financial system

Date

Enactment Oct-10 Jan-11 Apr-11 Jul-11 

7/21 /2010 E + 3mo E + 6mo E + 9mo E + 12mo 

FSOC Duties

protected) and perform analysis on risks to the financial system.

FSOC Meetings Meetings at Least Quarterl

y

Annual Report to Congress First Annual Report An

Stand-up Office of Financial Research (OFR)

Operational and HR Efforts Set up HR and Management Systems Annua

Stakeholder Outreach Initial Stakeholder Outreach Establish Formal FSOC / OFR 

Reference Databases S t S f R f D t Eff t S

et Scope

of R

eference Data Effort I l t ti P

Implementation, P

Data Format Standardization Set Scope of Standardization Effort Implementation, PRepo t to Co g ess rt to Congress Annual 
Oversight of Large, Interconnected Financial Co

The

Act, for the first time, provides for consolidated supervision and heightened prude

large, interconnected nonbank financial companies. The FSOC has the authority to dfinancial companies for consolidated supervision and to recommend heightened standa

and large bank holding companies (BHCs). The FRB is responsible for supervisin

adopting specific prudential rules

Date

Enactment Oct-10 Jan-11 Apr-11 Jul-11 

7/21 /2010 E + 3mo E + 6mo E + 9mo E + 12mo 

Designations

adopting specific prudential rules.

Process and Criteria for Desi

gnating Nonbanks FSOC ANPR Proposed Final Desi

gnation

Heightened Standards / Consolidated Supervision (FRB)

Capital and Leverage RulemakingLiquidity Requirements RulemakingRisk Management RulemakingCredit Exposure Limits RulemakingAnnual Stress Test RulemakingFSOC Recommendations on Heightened Standards Ongoing
Systemic Financial Market Utilities and Payment

and Settlement Activities

The

Act provides a framework for the oversight of systemically important financial mar

and payment, clearing, and settlement (PCS) activities by financial institutions. The Act de

multi-lateral system for the purpose of transferring, clearing, or settling payments, sfinancial transactions among financial institutions or between financial institutions and the 

activity as an activity carried out by one or more financial institutions to facilitate the com

Date

Enactment Oct-10 Jan-11 Apr-11 Jul-11 

7/21 /2010 E + 3mo E + 6mo E + 9mo E + 12mo 

D i ti

activity as an activity carried out by one or more financial institutions to facilitate the comtransactions (excluding pre-trade and execution activities).

Designations

Processes and Criteria for Designating FMUs / PCS Activities (FSOC) FSOC ANPR Proposed Final DesRisk Management Standards (FRB, CFTC, and SEC) RulemakingRecommendations for Certain Heightened Standards (FRB w/ FSOC Authorization) OngoingFMU Risk Management Supervisory Programs (FRB, CFTC, and SEC) Ongoing (Joint Report to Congress After 12mo)
Constraining Activities and Size of Financial Ins

The

Act includes measures to constrain proprietary trading and private fund investments 

access to deposit insurance. The Act also limits the growth of the largest financial institut

Date

Enactment Oct-10 Jan-11 Apr-11 Jul-11 

7/21 /2010 E + 3mo E + 6mo E + 9mo E + 12mo 

Activity Limits

Limits on Proprietary Trading and Private Equity / Hedge Fund Sponsorship and Investments (FSOC Study, Followed by Rulemaking by Appropriate Federal Banking Agencies, CFTC, and SEC)

FSOC Study Agency Rulemaking

Prohibition of Assistance to Swaps Entities Agency Rulemaking (24mo)

Size Limits

Concentration Limit (FSOC Study, Followed by FRBRulemaking) FSOC Study Agency Rulemaking
Resolution Plans and Orderly Liquidation Autho

The

Act requires the FRB and the FDIC to issue joint rules requiring large interconnecte

periodically submit plans for their rapid and orderly resolution (“resolution plans”). The AcFDIC with authority to write rules and policies to implement the Orderly Liquidation Authothe rulemaking, policies and procedures require consultation with, or concurrence of

members

Date

Enactment Oct-10 Jan-11 Apr-11 Jul-11 

7/21 /2010 E + 3mo E + 6mo E + 9mo E + 12mo 

Resolution Plan

.

FSOC Recommendations on Resolution Plan OngoingResolution Plan (FRB and FDIC jointly) Agency Rulemaking

Orderly Liquidation Authority (OLA)

Creditor Rights Rulemaking (FDIC w/FSOC Consult) Proposed Rule Ongoing Rulemaking Final RuleMaximum Obli

gation Limit (FDIC and Treasury Jointly 

w/FSOC consult) Proposed Rule Final RuleFSOC "Risk Matrix" Assessment Recommendations Recommendations by FSOC OngoinAssessments / Recoupment (FDIC w/Treasury Consult) Proposed Rule Final Rule

QFC Recordkeeping (CFTC, FDIC, FHFA, FRB, OCC,

and SEC Jointly w/FSOC Chairperson Backup) Agency Rulemaking (FSOC Chairperson Backup A
Consumer Protection – CFPB Standup

The

Act creates an independent Consumer Financial Protection Bureau (CFPB) to c

authorities that are currently spread across seven federal agencies and to begin efinancial services providers. The CFPB will be responsible for conducting research, education, maintaining a nationwide consumer complaint response unit, writing rules to 

consumer financial laws and supervising very large banks and key nonbank financial se

Date

Enactment Oct-10 Jan-11 Apr-11 Jul-11 

7/21 /2010 E + 3mo E + 6mo E + 9mo E + 12mo 

CFPB St d

consumer financial laws, and supervising very large banks and key nonbank financial secompliance with those laws.

CFPB Stan

dup

Standup Bureau Plan and Develop Bureau FunctionsRulewriting on Transferred RulesLarge Bank Supervision Authority EffectiveNonbank PlanningTransfer of Employees From Existing Agencies Planning and Transfers as Jointly Agreed With Each Agency
Consumer Protection – Regulations

The

Act mandates that regulations be written to effectuate new consumer protectio

remittances, and other products. Rulemaking authority for most provisions is vested with 

until July 21, 2011, when the authority transfers to the CFPB and various other new authothe existing agencies do not propose rules prior to the designated transfer date, the CFsoon as possible consistent with applicable statutory requirements and statutory deadlines

Date

Enactment Oct-10 Jan-11 Apr-11 Jul-11 

7/21 /2010 E + 3mo E + 6mo E + 9mo E + 12mo 

Mandated Projects

soon as possible consistent with applicable statutory requirements and statutory deadlines

Combined TILA / RESPA Forms Develop Proposed Rule / Forms Title XIV Mortgage Rules CFPB Transition CRemittance Transfers CFPB Transition COther Title X Mandated Rules CFPB Transition 
Investor Protection

The Act provides new statutory authority to the SEC to improve investor protection. The

stronger, more consistent standards for investment advisers and broker dealers, whistle

and reform to the municipal bond market.

Date

Enactment Oct-10 Jan-11 Apr-11 Jul-11 

7/21 /2010 E + 3mo E + 6mo E + 9mo E + 12mo 

Investor Protection

Standards of Conduct for Investment Advisers and Broker Dealers (SEC) Study and Report to Congress Rulemaking and Standa

Enforcement

Whistleblower Protections (SEC) Proposed Rule Finalize

Municipal Securities

Registration of Advisers (SEC) Interim Final Rule: 9/2010
Governance and Compensation

The

Act provides the SEC with primary responsibility for implementing and enforcing prov

greater transparency and accountability to shareholders on corporate governanc

compensation.

Date

Enactment Oct-10 Jan-11 Apr-11 Jul-11 

7/21 /2010 E + 3mo E + 6mo E + 9mo E + 12mo 

Governance and Compensation

Governance Rules for Exchanges SEFs and Central Governance Rules for Exchanges, SEFs and Central Clearing Parties (SEC and CFTC) Proposed Rule Final

“Pay vs. Performance” – Disclosure (SEC) Proposed Rule 

Inde

p p endent Compensation Committees (SEC) Proposed Rule Final Rule Rep

( )

Shareholder “Say on Pay” Votes (SEC) Proposed Final Rule

(DFA Provision Effective after 6mo) Ongoing Say on Pay Vo

Disclosure and Rules on Incentive Compensation 

A t (FRB OCC FDIC OTS SEC FHFA) RulemakingArrangements (FRB, OCC, FDIC, OTS, SEC, FHFA) RulemakingDisclosure of Investment Adviser Votes on Exec Comp (SEC) Proposed Rule Final
Derivatives Reform

The Act provides statutory authority to the SEC and CFTC to directly regulate OTC deriv

the first time. The vast majority of these rules must be completed within one year. Thesclearing and transparent trading, set capital and margin for dealers and major markebusiness conduct rules and position limits, and improve market functions.

Date

Enactment Oct-10 Jan-11 Apr-11 Jul-11 

7/21 /2010 E + 3mo E + 6mo E + 9mo E + 12mo 

Market Oversight Rules (CFTC and SEC)

Joint Definitions Proposed Rule Final RuleDetermination on Foreign Exchange (Treasury) Treasury DeterminationTransaction and Real Time Reporting Proposed Rule Final RuleSwap Trading and Clearing Proposed Rule Final RulePosition Limits (CFTC) Proposed Final Exempt Commodities - 6mo; AgPosition Limits (SEC) Agency Rulemaking

Enforcement

Enhanced Enforcement (Anti-Manipulation) Proposed Rule Final

Business Conduct and Prudential Rules

Conduct of Dealers and Major Mkt Participants (CFTC and SEC) Proposed Rule Final RuleCapital & Margin for Entities w/o Prudential Regulator 

(CFTC and SEC) Proposed Rule Final RuleCapital & Margin for Entities w/Prudential Regulator 

(Farm Credit Administration, FDIC, FHFA, FRB, and OCC)

Agency Rulemaking
Credit Ratings and Securitization

The

Act gives the SEC additional authorities to regulate credit rating agencies and wi

regulators apply new standards for securitizations. This will limit government reliance reduce conflicts of interest, and create transparency in credit ratings across asset creforms to securitizations will bring increased transparency and stability to those markets.

Date

Enactment Oct-10 Jan-11 Apr-11 Jul-11 

7/21 /2010 E + 3mo E + 6mo E + 9mo E + 12mo 

Credit Rating Agencies

Liability Standard Effective Immediatel

y, NRSROs Subject to “Knowing or Reckless” Standard.

Disclosures and Due Diligence (SEC) Proposed Rule Final Rule

Study on “Structured Finance” Ratings (SEC) Report to Congress with Recommendations Due Q3 2012

Internal Controls and Conflicts of Interest (SEC) Proposed Rule Final Rule

Securitization

Risk Retention Studies FRB Study FSOC StudyRisk Retention Rules (FDIC, FHFA, FRB, HUD, OCC,and SEC) RulemakingReview of Underlying Assets and Disclosures (SEC) Proposed Rule FinalReps and Warranties (SEC) Proposed Rule Final
Hedge Fund Adviser Registration & Oversight

The

Act requires all large hedge fund advisers to register with SEC as investment advise

significant gap in our regulatory system and provide better oversight of and information private equity fund activities, including for monitoring systemic risk. The Act also updainvestor” definition and strengthens exclusions for “bad actors” in private offerings.

Date

Enactment Oct-10 Jan-11 Apr-11 Jul-11 

7/21 /2010 E + 3mo E + 6mo E + 9mo E + 12mo 

Adviser Registration

Reporting Req’ts Including Systemic Risk (CFTC / SEC) Proposed Rule Final Rule

Define Exemptions (VC, Family Office) (SEC) Proposed Rule Final RuleRules & Reporting for Mid-Size Advisers to Private Funds 

(SEC) Proposed Rule Final Rule ( )

Monitoring & Reporting

Report on Use of Data Collected (SEC) Annual Report to Congress Short Sale Reporting Studies (SEC) Real Time Reporting 

Accredited Investor

Net Worth Guidance (SEC) Guidance Released 7/23/2010A dit d I t / Q lifi d Cli t A (SEC) Proposed Revision Finalize ccredited Investor / Qualified Client (SEC) Proposed Revision FinalizeExcluding “Bad Actors” in Private Offerings (SEC) Proposed Rule Final Rule
Agency Changes

The Act abolishes the Office of Thrift Supervision (OTS), largely merging the OTS in

authorities for savings and loan holding companies are transferred to the FRB, and associations to the FDIC. The transfer date is scheduled to be one year after enactmrequires a number of structural changes at the SEC, and requires that each designated a

Office of Minority and Women Inclusion within that agency

Date

Enactment Oct-10 Jan-11 Apr-11 Jul-11 

7/21 /2010 E + 3mo E + 6mo E + 9mo E + 12mo 

Implementation Plan

Office of Minority and Women Inclusion within that agency.

Joint Plan (FDIC, FRB, OCC, OTS) Implementation Plan to Congress

Rules Transfer

Identify OTS Rules That Will Continue To Be Enforced 

(FDIC, FRB, OCC) Agencies Identify Rules That Will Continue by the Transfer Date OTS A

Integration

Planning for Integration of Employees, Supervision, and 

Systems (FDIC, OCC, OTS) Agency Planning and Implementation OTS A

Reforms of SEC

Structure Study Report by Independent Consultant 90 Days to Appoint Consultant, 

New SEC Offices Establish Offices Offices: CRA, Munis, Whistleblower, and Inve

Office of Minority and Women Inclusion (CFPB, FDIC, FHFA, FRB, Federal Reserve Banks, NCUA, OCC, SEC, Treasury)

Office Establishment CFPB (6mo After Transfer Annual Reports to Congress Annual Reports Therea
Glossary

 Act – Dodd-Frank Wall Street Reform & Consumer Protection Act

 ANPR – Advance Notice of Proposed Rulemaking BHC – Bank Holding Company

 CFPB – Consumer Financial Protection Bureau

 CFTC – Commodity Futures Trading Commission 

 FDIC – Federal Deposit Insurance Corporation

 FHFA – F d l H i Fi A Federal Housing Finance Agency

 FMU – Financial Market Utility FRB – Board of Governors of the Federal Reserve System 

 FSOC – Financial Stabilit O ersight Co ncil Financial Stability Oversight Council NCUA – National Credit Union Administration OCC – Office of the Comptroller of the Currency  OFR – Office of Financial Research Office of Financial Research OMWI – Office of Minority and Women Inclusion PCS – Payment, Clearing, and Settlement RESPA – Real Estate Settlement Procedures Act Real Estate Settlement Procedures Act SEC – Securities and Exchange Commission TILA – Truth in Lending Act