Skip to main content

Newly Passed Bill May Impact Dodd-Frank Act

Robert M. Siegel

The House of Representatives passed legislation that could loosen some of the restrictions imposed by Dodd-Frank on big banks. The bill, Promoting Job Creation and Reducing Small Businesses Burden Act, passed by a margin of 271-154, and contained the following measures:

  1. Delay implementation of the “Volcker Rule” until 2019.
  2. Exempt some private equity firms from registering with the Securities and Exchange Commission.
  3. Loosen regulations on derivatives.
  4. Permit some small, publicly traded companies to omit historical financial data from their financial filings.

Delaying implementation of the Volcker Rule until 2019 is one of the biggest reforms contained in this legislation. The Volcker Rule is named after former Federal Reserve Chairman Paul Volcker and prohibits big banks from having relationships with or ownership in hedge funds or private equity firms. The Volcker Rules also requires big banks to sell off collateralized loan obligations (CLO’s), which are interests in bundles of loans that are sold to individual investors.

Another aspect of the bill exempts certain private equity firms from SEC registration. Securities law requires that firms that receive fees for banking activities, such as providing advice on mergers or selling debt securities, must register with the SEC. However, private equity firms typically only register as investment advisers and thereby escape many of the SEC’s rules and regulations. If private equity firms have to register as broker-dealers with the SEC, then greater compliance obligations will be imposed on them.

The bill also reduces regulations on derivatives by allowing firms that own commercial businesses to trade derivatives privately, thus escaping some of the oversight that comes with trading derivatives though central clearinghouses. Moreover, the bill prohibits regulators from requiring banks to take collateral from companies that buy derivatives.

29 of 188 Democrats joined the near-unanimous 242 Republicans who voted for the measure. The Senate has not voted on it yet, and may not be able to get the 60 Democratic votes that will be needed in order for it to pass there. If it does pass the Senate, the White House has threatened to veto the bill, saying that it “would weaken and undermine” Dodd-Frank.

Related Practices
YOU MIGHT ALSO LIKE
Press Release May 21, 2025
The Builders Association of South Florida (BASF), the local affiliate of both the Florida Home Builders Association and the National Association of Home Builders, has awarded Brian S. Adler and Howard E. Nelson with its President's Award.
Press Release May 20, 2025
Bilzin Sumberghas been awarded the 2025 Champion of Women Award presented by the Miami-Dade Chapter of the Florida Association for Women Lawyers (MDFAWL).
Development Conference May 15, 2025
Eric Singer moderates the panel Evolving Approaches to Public-Private Partnerships in Florida at Bilzin Sumberg’s Development Conference. The panel discusses the key challenges and opportunities that P3s present public agencies, private developers, and operators alike, as P3s are creatively de...
VIEW MORE