Regulating Financial Companies: The House Committee Draft

This week the US House of Representatives issued its draft legislation on regulating financial companies...which has significant implications for the future of banks, mortgage REITs and CMBS issuers....from Dewey & Le Beouf:

The Discussion Draft (the “Draft”) on financial stability released by the House Financial Services Committee combines many of the proposals originally made by the Obama administration but frequently changes their force or emphasis. In the course of this bill-drafting process, Congress appears to be gradually creating a more general system of financial regulation, changing in potentially fundamental ways the basic orientation of regulation in the United States from one focused on a specific industry or product to one concerned with the effects and importance of financial activities and products in general, regardless of their history or specific characterization. In the Draft, this change manifests itself in the near omnipresence of the defined term “financial company” and its variants and in the generality of the proposed remedies. In certain portions of the Draft, the word “company” alone (without the modifier “financial” and without appearing in the defined form of “financial company”) plays a significant role, at least in circumstances in which the entity being subjected to regulation engages in significant financial activity. To accommodate institutions whose activities might be dramatically affected by an abrupt implementation of more general financial regulation, the Draft also creates an unusual transitional or grandfathering mechanism.

For more, click on the following link:

http://www.deweyleboeuf.com/~/media/Files/clientalerts/2009/20091110_RegulatingFinancialCompanies-TheHouseCommitteeDraft.ashx