InfoBytes, May 21, 2010 - Weekly In-depth review of news & developments in the financial services industry


Topics In This Issue

• Federal Issues

• State Issues

• Courts

• Firm News

• Mortgages

• Banking

• Consumer Finance

• Litigation

• E-Financial Services

• Privacy/Data Security

• Credit Cards

Excerpt from "Federal Issues"

Senate Passes Financial Regulatory Reform Legislation. On May 20, by a vote of 59-39, the U.S. Senate passed the “Restoring American Financial Stability Act of 2010,” a comprehensive financial services reform bill. Among other things, the final bill (H.R. 4173) would create the Bureau of Consumer Financial Protection (BCFP) as a unit within the Federal Reserve Board to regulate consumer financial products and activities. Although the language of the final bill is based in large part upon a version shepherded through the Senate Banking Committee by Senator Christopher Dodd (D-CT), several key changes were made following debate on the Senate floor. Among these changes were provisions that would (i) prohibit any payments to loan originators that vary based on the terms of the loan other than the loan amount (e.g., yield spread premiums) (this amendment was reported in InfoBytes, May 14, 2010), (ii) create a subset of “qualified mortgage loans” for which an issuer or securitizer would not have to retain the credit risk upon sale, (iii) scale back the authority of state attorneys general to enforce consumer protection laws (under the purview of the new BCFP) against financial institutions outside of their state, and (iv) restrict the interchange fee a card issuer or payment card network can charge merchants for debit card transactions. A full summary on the legislation is forthcoming in an InfoBytes Regulatory Restructuring Report.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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