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Dodd-Frank Chugs Forward for Feds Despite Political Hay

As ""Rep. Barney Frank"":http://www.house.gov/frank/ (D-Massachusetts) made waves this week with legislation to curb voting rights for Fed governors, key provisions under his namesake law, the Dodd-Frank Act, manifested themselves in decisions by major federal regulators. The ""FDIC"":http://www.fdic.gov/ and ""Federal Reserve"":http://www.federalreserve.gov/ rubber-stamped a rule that require the nation's largest banks to send up blueprints for bankruptcy, while the ""Consumer Financial Protection Bureau"":http://www.consumerfinance.gov/ (CFPB) steadily moved forward with the uniform mortgage disclosure form.


New rules and developments for the provisions, underway at the two agencies, arrive amid chatter from candidates for the Republican presidential nomination who remain uniformly opposed to Dodd-Frank.

The FDIC started off Tuesday by ""announcing"":http://www.fdic.gov/news/news/press/2011/pr11151.html the adoption of a final rule that requires financial institutions with more than $50 billion in assets to develop plans for bankruptcy and liquidation. The idea: assess the strength or weakness of bank holding companies and others deemed systemic by regulators well before the start of a bankruptcy proceeding.

Implementing Section 165(d) of Dodd-Frank, the rule tasks larger companies to undertake reviews and map out ""a rapid and orderly resolution├â┬ó├óÔÇÜ┬¼├é┬ª in such a way as not to cause a systemic risk to the financial system,"" according to a statement from the FDIC.

If the Fed votes to also adopt the rule, companies delineating their plans for insolvency will need to assemble a strategic analysis of their resolution processes, devise a plan of action, and develop a review of vulnerabilities possible for other financial institutions.

The final rule specifies that companies must submit their resolution plans at various intervals contingent upon asset strength and financial size. Those institutions with $250 billion or more in non-bank assets must report to the ""Financial Stability Oversight Council"":http://www.treasury.gov/initiatives/Pages/FSOC-index.aspx by the stat of July 2012, while others with $100 billion or more are required to offer up their resolution strategies by July 2013.

A 60-day comment period awaits the rule as Fed regulators mull over it.

Meanwhile, the CFPB started the third round of public commentary for the simplified mortgage disclosure form, a uniform document that Dodd-Frank mandated moving forward for separate documents under the Truth-in-Lending Act and Real Estate Settlement Procedures Act.


""Blogging"":http://www.consumerfinance.gov/know-before-you-owe-go/ for the CFPB in a ""Know Before You Owe"" post, ""Patricia McCoy"":http://www.consumerfinance.gov/author/pmccoy/, the agency's assistant director for mortgage markets, announced the third step in a review process for the uniform disclosure agreement following public commentary periods for front-page designs and second-page closing costs.

She asked consumers to compare two existing forms to help the CFPB ""make sure the disclosure actually helps consumers understand features of competing loan products, from the overall loan amount to estimates of taxes and insurance costs.""

McCoy explained that the CFPB is ""shifting gears for a simple reason: Comparing two versions of a form is useful, but in the real world, consumers should be able to use disclosures to compare different loan offers, not different forms.""

She also wrote that the bureau plans to gauge public reaction to two sample forms in Springfield, Massachusetts, next week.

The Dodd-Frank requirements find a place for discussion on the campaign trail, where candidates for the Republican nomination clamor for a repeal of the law.

Speaking at business roundtable in August, former Massachusetts ""Gov. Mitt Romney"":https://www.mittromney.com/donate/ad?sc=INTADS&cct_info=1|25219|7946991837|100810534|4464305614|b|14208661774|tc||g|||&cct_ver=3&cct_bk=mitt%20romney&gclid=CLehhu-SoKsCFYjt7QodwgGKIQ pledged to repeal Dodd-Frank, calling it ""extraordinarily burdensome"" for businesses, according to ""_The Boston Globe_"":http://www.boston.com/Boston/politicalintelligence/2011/08/romney-would-repeal-dodd-frank-law/FrxSh5Jqsdveyjy5tgKzxK/index.html.

""Writing"":http://blog.american.com/2011/09/gop-candidates-united-against-dodd-frank/ for a journal of the ""American Enterprise Institute"":http://www.aei.org/home, ""Peter Wallison"":http://www.aei.org/scholar/58, an Arthur F. Burns Fellow in financial studies for the conservative-leaning think tank, describes an array of presidential candidates ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô former House speaker ""Newt Gingrich"":http://www.newt.org/get-involved-now, ""Rep. Michelle Bachmann"":http://bachmann.house.gov/ (R-Minnesota), Romney, and former Utah ""Gov. Jon Huntsman"":http://www.jon2012.com/welcome/home.html, among others ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô as uniting in opposition to the legal framework.

""For a long time after the act was adopted, there was silence among Republicans, even those who voted against it,"" he said.

""To oppose the act publicly was to link oneself to Wall Street and the big banks ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô and thus politically deadly,"" he added.

Wallison ascribed the loss of fear among complaining politicians from the right to three reasons.

He said that it had become clear that the Dodd-Frank Act ""would spell the end of the dynamic and innovative financial community in the United States,"" new and unwanted changes for the housing finance industry, and concern over what he calls ""the enormous power"" provided to a single director at the CFPB.

""The regulations that will flow from this agency will add significant costs to doing business,"" Wallison wrote, saying that such a realization continues to motivate candidates for the GOP presidential nomination.

About Author: Ryan Schuette

Ryan Schuette is a journalist, cartoonist, and social entrepreneur with several years of experience in real-estate news, international reporting, and business management. He currently lives in the Washington, D.C., area, where he freelances for DS News and MReport.

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