Restoring American Financial Stability Act of 2010 - A Comprehensive Review of the U.S. Senate Banking Reform Bill

April 23, 2010

On March 22, 2010, a bill seeking general reform of financial industry regulation in response to the recent financial crisis was adopted on a party-line vote by the Senate Banking Committee as the “Restoring American Financial Stability Act of 2010.” It subsequently was reported to the Senate as Senate Bill 3217 (posted on the Committee’s website on April 15, 2010). The Senate Bill has been, and will continue in the near term to be, the subject of much public debate and partisan negotiation.

The attached memorandum provides a comprehensive summary of all the provisions of the bill as now being considered in the Senate. While following the titles in this bill in order, this memo also seeks to provide a topical approach that we hope makes its provisions more understandable. To facilitate further analysis, each paragraph includes section and page number references to the provision being discussed, as well as a section and page reference to provisions covering the same substantive areas in H.R. 4173, the “Wall Street Reform and Consumer Protection Act of 2009,” passed by the House of Representatives on December 11, 2009.

The Senate Bill is the latest in a series of financial reform legislative efforts that began on June 17, 2009, when the U.S. Department of the Treasury released a white paper titled “Financial Regulatory Reform – A New Foundation: Rebuilding Financial Supervision and Regulation.” That paper discussed forthcoming Obama Administration (“Administration”) financial reform proposals based on its belief that inadequate and inconsistent regulation of the largest financial firms contributed significantly to the financial crisis that struck both the United States and the global economy beginning in early 2007. The Administration subsequently proposed a series of bills to reform the financial system.

The House Financial Services Committee acted next, beginning with a proposal that used the Administration proposals as its starting point. As marked-up in that Committee and subsequently passed by the House as H.R. 4173 in December 2009, this legislation became different from the Administration’s original proposal in significant ways. In addition, in November 2009, Chairman Christopher Dodd of the Senate Banking Committee released a bill that took different approaches from both the Administration proposal and H.R. 4173.

On March 15, 2010, Chairman Dodd released a revised version of his reform legislation. Modified at mark-up a week later by only a Managers Amendment, it was adopted on a party-line vote by the Senate Banking Committee. Among other things, the Senate Bill would:

Establish a “Financial Stability Oversight Council” focused on identifying and monitoring systemic risks posed by financial firms and financial activities and practices;
Expand the Fed’s powers over the largest financial firms and enhance regulation of all depository institution holding companies;
Subject large bank holding companies and systemically significant nonbank financial companies to stricter prudential standards;
Create a new process for resolving failing financial companies that could cause systemic instability;
Merge the Office of Thrift Supervision with the Office of the Comptroller of the Currency and arrange for the transfer of functions and transfer supervision of regional and smaller bank and thrift holding companies to the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation;
Enhance regulation of over-the-counter derivatives; and
Create a new consumer financial products regulator housed inside the Federal Reserve.

Gibson Dunn’s Memorandum is attached at the following link:

Restoring American Financial Stability Act of 2010 – A Comprehensive Review of the U.S. Senate Banking Reform Bill

Gibson Dunn has assembled a team of experts who are prepared to meet client needs as they arise in conjunction with the issues discussed above. Please contact Michael Bopp (202-955-8256, [email protected]) or C. F. Muckenfuss (202-955-8514, [email protected]) in the firm’s Washington, D.C. office, Kimble Charles Cannon (310-229-7084, [email protected]) in the firm’s Los Angeles office, or any of the following members of the firm’s Financial Regulatory Reform Group:

Public Policy Expertise
Mel Levine – Century City (310-557-8098, [email protected])
John F. Olson – Washington, D.C. (202-955-8522, [email protected])
Amy L. Goodman – Washington, D.C. (202-955-8653, [email protected])
Alan Platt – Washington, D.C. (202-887-3660, [email protected])
Michael Bopp – Washington, D.C. (202-955-8256, [email protected])

Securities Law and Corporate Governance Expertise
Ronald O. Mueller – Washington, D.C. (202-955-8671, [email protected])
Brian Lane – Washington, D.C. (202-887-3646, [email protected])
Lewis Ferguson – Washington, D.C. (202-955-8249, [email protected])
John H. Sturc – Washington, D.C. (202-955-8243, [email protected])
Dorothee Fischer-Appelt – London (+44 20 7071 4224, [email protected])
Alan Bannister – New York (212-351-2310, [email protected])
Adam H. Offenhartz – New York (212-351-3808, [email protected])
George B. Curtis – Denver (303-298-5743, [email protected])
Paul J. Collins – Palo Alto (650-849-5309, [email protected])
Robert C. Blume – Denver (303-298-5758, [email protected])
David P. Burns – Washington, D.C. (202-887-3786, [email protected])
Charles R. Jaeger – San Francisco (415-393-8331, [email protected])

Broker-Dealer and Investment Adviser Compliance Expertise
K. Susan Grafton – Washington, D.C. (202-887-3554, [email protected])
Barry Goldsmith – Washington, D.C. (202-955-8580, [email protected])
George Schieren – New York (212-351-4050, [email protected])
Mark K. Schonfeld – New York (212-351-2433, [email protected])

Financial Institutions Law Expertise
C.F. Muckenfuss – Washington, D.C. (202-955-8514, [email protected])
Christopher Bellini – Washington, D.C. (202-887-3693, [email protected])
Amy Rudnick – Washington, D.C. (202-955-8210, [email protected])
Dhiya El-Saden – Los Angeles (213-229-7196, [email protected])
Kimble Charles Cannon – Los Angeles (310-229-7084, [email protected])

Corporate Expertise
Howard Adler – Washington, D.C. (202-955-8589, [email protected])
Richard Russo – Denver (303-298-5715, [email protected])
Dennis Friedman – New York (212-351-3900, [email protected])
Robert Cunningham – New York (212-351-2308, [email protected])
Joerg Esdorn – New York (212-351-3851, [email protected])
Wayne P.J. McArdle – London (+44 20 7071 4237, [email protected])
Stewart McDowell – San Francisco (415-393-8322, [email protected])
C. William Thomas, Jr. – Washington, D.C. (202-887-3735, [email protected])

Private Equity Expertise
E. Michael Greaney – New York (212-351-4065, [email protected])

Private Investment Funds Expertise
Edward Sopher – New York (212-351-3918, [email protected])
Jennifer Bellah Maguire – Los Angeles (213-229-7986, [email protected])

Real Estate Expertise
Jesse Sharf – Century City (310-552-8512, [email protected])
Alan Samson – London (+44 20 7071 4222, [email protected])
Fred Pillon – San Francisco (415-393-8241, [email protected])
Dennis Arnold – Los Angeles (213-229-7864, [email protected])
Michael F. Sfregola – Los Angeles (213-229-7558, [email protected])
Andrew Lance – New York (212-351-3871, [email protected])
Eric M. Feuerstein – New York (212-351-2323, [email protected])
David J. Furman – New York (212-351-3992, [email protected])
L. Mark Osher – Los Angeles (213-229-7694, [email protected])
Drew C. Flowers – Los Angeles (213-229-7885, [email protected])
Teresa J. Farrell – Orange County (949-451-3895, [email protected])
Deborah A. Cussen – San Francisco (415-393-8226, [email protected])

Crisis Management Expertise
Theodore J. Boutrous, Jr. – Los Angeles (213-229-7804, [email protected])

Bankruptcy Law Expertise
Michael Rosenthal – New York (212-351-3969, [email protected])
David M. Feldman – New York (212-351-2366, [email protected])
Oscar Garza – Orange County (949-451-3849, [email protected])
Craig H. Millet – Orange County (949-451-3986, [email protected])
Thomas M. Budd – London (+44 20 7071 4234, [email protected])
Gregory A. Campbell – London (+44 20 7071 4236, [email protected])
Janet M. Weiss – New York (212-351-3988, [email protected])
Matthew J. Williams – New York (212-351-2322, [email protected])
J. Eric Wise – New York (212-351-2620, [email protected])

Tax Law Expertise
Arthur D. Pasternak – Washington, D.C. (202-955-8582, [email protected])
Paul Issler – Los Angeles (213-229-7763, [email protected])
J. Nicholson Thomas – Los Angeles (213-229-7628, [email protected])
Jeffrey M. Trinklein – New York (212-351-2344, [email protected])
Romina Weiss – New York (212-351-3929, [email protected])
Benjamin H. Rippeon – Washington, D.C. (202-955-8265, [email protected])

Executive and Incentive Compensation Expertise
Stephen W. Fackler – Palo Alto (650-849-5385, [email protected])
Charles F. Feldman – New York (212-351-3908, [email protected])
Michael J. Collins – Washington, D.C. (202-887-3551, [email protected])
Sean C. Feller – Los Angeles (213-229-7579, [email protected])
Amber Busuttil Mullen – Los Angeles (213-229-7023, [email protected])

Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.