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 & Crutcher LLP

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, mbopp@gibsondunn.com) or C. F. Muckenfuss (202-955-8514, cmuckenfuss@gibsondunn.com) in the firm’s Washington, D.C. office, Kimble Charles Cannon (310-229-7084, kcannon@gibsondunn.com) 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, mlevine@gibsondunn.com)
John F. Olson – Washington, D.C. (202-955-8522, jolson@gibsondunn.com)
Amy L. Goodman – Washington, D.C. (202-955-8653, agoodman@gibsondunn.com)
Alan Platt – Washington, D.C. (202-887-3660, aplatt@gibsondunn.com)
Michael Bopp – Washington, D.C. (202-955-8256, mbopp@gibsondunn.com)

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Lewis Ferguson – Washington, D.C. (202-955-8249, lferguson@gibsondunn.com)
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Alan Bannister – New York (212-351-2310, abannister@gibsondunn.com)
Adam H. Offenhartz – New York (212-351-3808, aoffenhartz@gibsondunn.com)
George B. Curtis – Denver (303-298-5743, gcurtis@gibsondunn.com)
Paul J. Collins – Palo Alto (650-849-5309, pcollins@gibsondunn.com)
Robert C. Blume – Denver (303-298-5758, rblume@gibsondunn.com)
David P. Burns – Washington, D.C. (202-887-3786, dburns@gibsondunn.com)
Charles R. Jaeger – San Francisco (415-393-8331, cjaeger@gibsondunn.com) 

Broker-Dealer and Investment Adviser Compliance Expertise
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Barry Goldsmith – Washington, D.C. (202-955-8580, bgoldsmith@gibsondunn.com)
George Schieren - New York (212-351-4050, gschieren@gibsondunn.com)
Mark K. Schonfeld – New York (212-351-2433, mschonfeld@gibsondunn.com)

Financial Institutions Law Expertise
C.F Muckenfuss – Washington, D.C. (202-955-8514, cmuckenfuss@gibsondunn.com)
Christopher Bellini – Washington, D.C. (202-887-3693, cbellini@gibsondunn.com)
Amy Rudnick – Washington, D.C. (202-955-8210, arudnick@gibsondunn.com)
Dhiya El-Saden – Los Angeles (213-229-7196, delsaden@gibsondunn.com)
Kimble Charles Cannon - Los Angeles (310-229-7084, kcannon@gibsondunn.com)

Corporate Expertise
Howard Adler – Washington, D.C. (202-955-8589, hadler@gibsondunn.com)
Richard Russo – Denver (303-298-5715, rrusso@gibsondunn.com)
Dennis Friedman – New York (212-351-3900, dfriedman@gibsondunn.com)
Robert Cunningham – New York (212-351-2308, rcunningham@gibsondunn.com)
Joerg Esdorn – New York (212-351-3851, jesdorn@gibsondunn.com)
Wayne P.J. McArdle – London (+44 20 7071 4237, wmcardle@gibsondunn.com)
Stewart McDowell – San Francisco (415-393-8322, smcdowell@gibsondunn.com)
C. William Thomas, Jr. – Washington, D.C. (202-887-3735, wthomas@gibsondunn.com)

Private Equity Expertise
E. Michael Greaney – New York (212-351-4065, mgreaney@gibsondunn.com)

Private Investment Funds Expertise
Edward Sopher – New York (212-351-3918, esopher@gibsondunn.com)
Jennifer Bellah Maguire – Los Angeles (213-229-7986, jbellah@gibsondunn.com)

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

Crisis Management Expertise
Theodore J. Boutrous, Jr. – Los Angeles (213-229-7804, tboutrous@gibsondunn.com)

Bankruptcy Law Expertise
Michael Rosenthal – New York (212-351-3969, mrosenthal@gibsondunn.com)
David M. Feldman – New York (212-351-2366, dfeldman@gibsondunn.com)
Oscar Garza – Orange County (949-451-3849, ogarza@gibsondunn.com)
Craig H. Millet – Orange County (949-451-3986, cmillet@gibsondunn.com)
Thomas M. Budd – London (+44 20 7071 4234, tbudd@gibsondunn.com)
Gregory A. Campbell – London (+44 20 7071 4236, gcampbell@gibsondunn.com)
Janet M. Weiss – New York (212-351-3988, jweiss@gibsondunn.com)
Matthew J. Williams – New York (212-351-2322, mjwilliams@gibsondunn.com)
J. Eric Wise – New York (212-351-2620, ewise@gibsondunn.com)

Tax Law Expertise
Arthur D. Pasternak – Washington, D.C. (202-955-8582, apasternak@gibsondunn.com)
Paul Issler – Los Angeles (213-229-7763, pissler@gibsondunn.com)
J. Nicholson Thomas – Los Angeles (213-229-7628, nthomas@gibsondunn.com)
Jeffrey M. Trinklein – New York (212-351-2344, jtrinklein@gibsondunn.com)
Romina Weiss – New York (212-351-3929, rweiss@gibsondunn.com)
Benjamin H. Rippeon – Washington, D.C. (202-955-8265, brippeon@gibsondunn.com)

Executive and Incentive Compensation Expertise
Stephen W. Fackler – Palo Alto (650-849-5385, sfackler@gibsondunn.com)
Charles F. Feldman – New York (212-351-3908, cfeldman@gibsondunn.com)
Michael J. Collins – Washington, D.C. (202-887-3551, mcollins@gibsondunn.com)
Sean C. Feller – Los Angeles (213-229-7579, sfeller@gibsondunn.com)
Amber Busuttil Mullen – Los Angeles (213-229-7023, amullen@gibsondunn.com

© 2010 Gibson, Dunn & Crutcher LLP

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