Section 716 of the Dodd-Frank Wall Street Reform and Consumer Protection Act prohibits the provision of federal assistance to an insured depository institution that is a swap dealer unless the swap activities of that institution are limited to those permitted by section 716. Accordingly, many banks that have active swap businesses are facing the prospect of having to “push out” their non-permitted swap activities to affiliated entities when section 716 goes into effect on July 16, 2013. On January 3, the Office of the Comptroller of the Currency issued guidance as to how an insured Federal depository institution can apply for a transition period of up to two years before it must comply with section 716. The OCC says in the guidance that it is “prepared to consider favorably [such] requests” because it believes that “that implementation of section 716 without transition periods would cause unwanted adverse consequences.” Under the guidance, covered institutions have until January 31 to file requests for transition periods with the OCC.
A copy of the guidance can be found here.