Developments in Securities Regulation, Corporate Governance, Capital Markets, M&A and Other Topics of Interest. MORE

The swap pushout rule was originally embodied in Section 716 of the Dodd-Frank Act.  Among other things, it prohibited “federal assistance” to any “swaps entity.”  Insured depository institutions were subject to this prohibition, subject to a couple of exceptions.  One exception was for hedging activities of the insured depository institution.  The other more significant exception exempted swaps tied to interest rates, foreign exchange, precious metals such as gold and silver and credit default swaps that are centrally cleared.  So there was already a hole in the law a mile wide.

But Section 630 of Title V of the Consolidated and Further Continuing Appropriations Act, 2015, also known as Cromnibus, changed the mile-wide exception to basically read “acting as a swaps entity for swaps or security-based swaps other than a structured finance swap.” So everything is basically permitted other than structured finance swaps, which are swaps or security-based swaps based on an asset-backed security (or group or index primarily comprised of asset-backed securities).  And even structured finance swaps are permitted if each asset-backed security underlying the structured finance swaps is of a credit quality and of a type or category with respect to which the prudential regulators have jointly adopted rules authorizing swap or security-based swap activity by covered depository institutions.

So the swap pushout rule was not repealed.  Just amended to remove all teeth. Whether this is good or bad remains to be seen.

Another Study

Section 202 of Title II of Cromnibus provides that within 90 days after enactment the Director of the Office of Management and Budget will submit a report to the Committees on Appropriations of the House of Representatives and the Senate on the costs of implementing the Dodd-Frank Wall Street Reform and Consumer Protection Act.  The report is to include:

  • the estimated mandatory and discretionary obligations of funds through fiscal year 2017, by Federal agency and by fiscal year, including:
    • the estimated obligations by cost inputs such as rent, information technology, contracts, and personnel;
    • the methodology and data sources used to calculate such estimated obligations; and
    • the specific section of such Act that requires the obligation of funds; and
  • the estimated receipts through fiscal year 2017 from assessments, user fees, and other fees by the Federal agency making the collections, by fiscal year, including:
    • the methodology and data sources used to calculate such estimated collections; and
    • the specific section of such Act that authorizes the collection of funds.

SEC Gets Nicked

Section 629 of Title VI of Cromnibus rescinds $25 million of the unobligated balances available in the Securities and Exchange Commission Reserve Fund established by Section 991 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.  Subject to some limitations, that provision of Dodd-Frank allows the SEC to keep registration fees collected under Section 6(b) of the Securities Act and Section 24(f) of the Investment Company Act.


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