Category: Dodd-Frank


Forbes

It is no secret that it has become a nightmare for regulators to implement many aspects of the 2,000-page document that has become Dodd-Frank, the most ambitious piece of legislation aimed at the financial system since the Great Depression.  A recent investigation by ProPublica, authored by a Pulitzer-winning duo, shows just how behind implementation on the Volcker Rule, the regulation of derivatives, and the regulation of credit rating agencies, really is.

Ten months since President Barack Obama signed Dodd-Frank into law, regulators have missed all 26 deadlines supposed to be met by April.  According to ProPublica’s Jesse Eisinger and Jake Bernstein, “Dodd-Frank requires 387 different rules from 20 different regulatory agencies. The Byzantine, tedious rulemaking process has occasionally pitted regulator against regulator and proved a bonanza for lobbyists.”

While regulators, responsible for designing rules to implement laws “laid out in principle” only, struggle with insufficient budgets and political pressure from both sides of the aisle, lobbying has exploded.  According to the Center for Responsive Politics, the CFTC, the Fed, the FDIC, and the Office of the Comptroller of the Currency (OCC) have seen more lobbying activity in the first quarter of 2011 than at any other moment since Obama became president.  The SEC saw it’s second most active month. (Read Shiller On Dodd-Frank: ‘A Financial Crisis Is A Thing Not To Be Missed’).

Pertaining to the implementation of the law, Eisinger and Bernstein signal out three major areas for concern: the Volcker Rule, Derivatives regulation, and Credit Rating Agency regulation.

The Volcker-Rule, which bars federally insured banks from trading on their own account, or proprietary trading, has been delayed by “haggling about complicated, but vitally important definitions.”  Specifically, the OCC has been pushing for banks to have “wider latitude in making trades to balance and manage their assets and liabilities.”  Julie Williams, OCC agency counsel, has been pin-pointed Paul Volcker himself as trying to weaken the rule, a concern echoed by Barney Frank and others.

While the law stipulated that banks should invest in Treasury securities in order to manage their books, the OCC has pushed for banks to be allowed to be able to trade other securities as well. “Critics fear that adding the provisions sought by the OCC would mean banks could make almost any trade and claim an exemption, rendering the rule meaningless,” read the report.

In terms of derivatives, Dodd-Frank stipulates exchanges should be used to render markets more transparent and regulated.  Yet, opposition from even previously supported legislators has surfaced.

The Department of the Treasury, headed by Tim Geithner, has proposed that some foreign exchange derivatives “be exempted from the requirement that derivatives trade on exchanges.”  From the report: Critics fear that adding the provisions sought by the OCC would mean banks could make almost any trade and claim an exemption, rendering the rule meaningless

Other opposition came from New York lawmakers, including Senators Chuck Schumer and Kristen Gillibrand, who warned the law could impose “significant competitive disadvantages “ on U.S. financial institutions.  Even the SEC, suggesting that derivatives be traded on “swap execution facilities,” is pushing for less regulation.

On credit rating agencies, it’s the SEC, again, which is backtracking.  Because of “budget uncertainty,” the SEC has delayed staffing a new office to oversee credit rating agencies, and instead added “personnel to existing offices to perform examinations on the rating agencies.”

More importantly, the SEC has gone back on previous attempts to make credit agencies legally liable for their ratings.  While credit ratings have become an integral part of the financial system, making their way to valuation formulas and even legislation regulating pension fund investments, agencies have been off the hook for massive blunders, including their substantial responsibility in the 2007-2008 global financial crisis.  The SEC has “indefinitely tabled provisions” to hold them accountable.

No one expected Dodd-Frank to be an easy law to implement.  At the same time, attempting to regulate the whole financial industry through one piece of legislation appears as an impossible task. In the words of Eisinger and Bernstein, “emerging roadblocks reinforce a fear that Dodd-Frank, which was intended to touch on almost every aspect of the American financial system, may never provide the sweeping reform it promised.”

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Bloomberg

Swaps users may face a “black hole” when Dodd-Frank Act rules take effect next month because too much remains unresolved for markets to operate properly, the Senate Agriculture Committee’s top Republican said.

“We don’t even know what a swap is” under the financial overhaul, Senator Pat Roberts said in an interview today at Bloomberg’s office in Washington. The Kansas Republican said the Commodity Futures Trading Commission needs to outline what provisions will apply when Dodd-Frank takes effect, and which will require rule-making that will delay implementation.

The CFTC and the Securities and Exchange Commission are writing new regulations required by the legislation enacted last July, after largely unregulated swaps helped fuel the 2008 credit crisis. Dodd-Frank seeks to reduce risk and boost transparency in the $601 trillion global swaps market by having most swaps guaranteed by central clearinghouses and traded on exchanges or other venues.

A swap is an agreement between two parties to exchange the difference between two price payments, one fixed and one floating, for a specific commodity over a period of time. The instruments, a form of derivative, are used to hedge against swings in prices for commodities such as energy and crops.

Roberts joined Republican Senators Saxby Chambliss of Georgia and Richard Lugar of Indiana in a letter to CFTC Chairman Gary Gensler on May 27 asking for a list of Dodd-Frank provisions that would become effective on July 16. They also asked the CFTC’s view of how swaps transitions would be governed while new regulations are put in place and how the commission would provide greater legal certainty for the transactions during the transition.

‘Swaps Purgatory’

“We’re getting into swaps purgatory,” Roberts said today. “You have Dodd-Frank going into effect, and you say, ‘What are the regulations?’ And the CFTC says, ‘We don’t know.’”

Gensler was traveling in New York, and CFTC spokesman Steven Adamske didn’t immediately respond to an e-mail and phone call seeking comment.

The CFTC is holding a meeting on June 14 to discuss effective dates for Dodd-Frank provisions. Gensler said in an interview June 2 that “we have ample latitude in the statute to address anything on the 16th,” and that congressional action wouldn’t be needed to deal with any gaps in rules.

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New York Times Dealbook

 

The Dodd-Frank financial regulatory law spans nearly 1,000 pages — but apparently not the United States border.

Members of the Commodity Futures Trading Commission, the agency responsible for implementing dozens of Dodd-Frank’s restrictions on derivatives trading, told lawmakers in Washington on Wednesday that the exact scope of the law was vague.

“This is an issue that has been the subject of much legal debate, but I think that we need to cut through that morass to provide some certainty to market participants who are concerned about what laws are going to apply to them,” Bart Chilton, a Democratic commissioner at the Commodity Futures Trading Commission, told the House Agriculture Committee’s panel on commodities and risk management.

His comments echo larger complaints made by banks and other financial firms, which argue that the Dodd-Frank rules could push derivatives business and profits overseas.

The Dodd-Frank Act says that new restrictions on proprietary trading and the derivatives business do not apply in foreign countries unless there’s a “direct and significant connection with activities” in the United States.

It remains unclear how regulators will interpret that provision as they draw up the borders of the sweeping new regulations.

“The commission has not given the public any formal guidance on what this section means in practice,” Jill E. Sommers, a Republican member of the commission, told the panel. “This has already created regulatory uncertainty for firms with global operations as they attempt to plan for the future.”

Ms. Sommers also warned that European and Asian regulators have yet to complete — or in some cases even propose — rules that resemble Dodd-Frank. The law requires many derivatives contracts to be traded on regulated exchanges and run through clearinghouses, which act as a backstop in case one party defaults.

Under an agreement at the Group of 20 summit meeting in 2009, regulators across the world agreed to require clearing and exchange trading for derivatives. While the Commodity Futures Trading Commission and the Securities and Exchange Commission plan to complete these rules later this year, international regulators plan to wait until the end of 2012.

The European Commission, the European Union’s executive body, has discussed proposals that largely mirror Dodd-Frank’s requirements, but the regulators may take until 2012 or later to complete the plan.

Ms. Sommers warned that the disparate time frames may hurt American businesses or encourage firms to skirt the Dodd-Frank by booking derivatives deals out of Frankfurt or London.

The lag time “may shift business overseas as the cost of doing business in the U.S. increases and creates other opportunities for regulatory arbitrage,” Ms. Sommers said.

She also warned that some Dodd-Frank provisions would not match up with rules written by foreign regulators. The European Union, for instance, might exempt pension funds from mandatory clearing, she said.

Mr. Chilton, however, played down any disagreements among regulators.

“Of course, there are differences on some provisions of our respective laws, but the level of overall harmonization is substantial,” he said, adding that the Commodity Futures Trading Commission keeps in close touch with foreign regulators.

The commission’s staff exchanges daily e-mail with European Commission regulators, and the two teams hold video conferences. Gary Gensler, the chairman of the commission, also traveled to Brussels twice in the last year or so to work on the derivatives proposals.

But, as DealBook reported in April, the commission could not afford to send Mr. Gensler overseas. Mr. Gensler, a Goldman Sachs alumnus, paid his own way.

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Yahoo! Finance

Financial executives in the banking industry believe it will be difficult for their institutions to address the various tax implications of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and Basel III, according to a recent survey from KPMG LLP, the U.S. audit, tax and advisory firm.

In the KPMG survey, 64 percent of the nearly 100 financial executives in the banking industry said it would be difficult for their business to address the tax implications of the Dodd-Frank Act and Basel III.  When asked at what stage their bank was in preparing for the Dodd-Frank Act and Basel III from a tax perspective, 48 percent of the respondents said they were still trying to understand the tax implications, while 27 percent said they were in the process of incorporating scenarios into tax planning.

"Various tax issues related to the Dodd-Frank Act and Basel III have broad and potentially significant implications," said Tony Anzevino, national leader of KPMG LLP’s Banking and Finance practice.  "Senior management should be engaged with their finance and tax teams to understand how these tax issues may impact the business from a strategic, risk and earnings perspective. Ideally, banks at this stage should be well along in determining a way forward."

Thirty-one percent of the respondents in the KPMG survey said they anticipate the tax implications of the Dodd-Frank Act and Basel III will have a significant impact on their business.  Capital and liquidity rules established by the Dodd-Frank Act and Basel III are expected to have the greatest impact from a tax standpoint, according to 41 percent of the respondents.  Derivatives-related issues ranked a distant second with 16 percent saying it would have the greatest impact.

"It’s critical for CFOs, tax directors and other executives to be aware of the tax implications of the Dodd-Frank Act and Basel III," said Mark Price, KPMG’s Banking and Finance practice national tax leader.  "Tax-related issues arising from new bank capital requirements, securitization reform, new rules affecting the derivatives markets, business changes in response to new consumer financial protections, and restructuring activities are all areas that need to be examined now."

In the KPMG survey, 49 percent of the respondents said their bank was currently considering restructuring activities in order to comply with the Dodd-Frank Act or Basel III.

"Many banks are considering legal entity rationalization and dispositions in response to the living will and Volcker Rule provisions, while others are looking at operational and debt-related changes to meet new capital requirements," said Price.  "All of these restructuring-related activities will raise tax issues that need to be considered as banks make these strategic decisions."

In a smaller respondent pool of nearly 60 finance and tax executives in the banking industry, 64 percent said their board of directors had not requested information related to tax planning efforts around the Dodd-Frank Act and Basel III.  In addition, 60 percent said they update the CFO about tax issues related to the Dodd-Frank Act and Basel III on a regular basis or as they deem appropriate, while 40 percent said they don’t update the CFO.

KPMG White Paper Can Help Banks Understand Tax Implications of Dodd-Frank Act

KPMG’s Washington National Tax practice and its Americas’ Financial Services Regulatory Center of Excellence also jointly released a white paper today titled "An Introduction to the Tax Implications of the Dodd-Frank Wall Street Reform and Consumer Protection Act."  The white paper examines the various provisions that have tax implications for banks — such as living wills, the Volcker Rule, derivatives, capital and liquidity requirements, and executive compensation — and provides insight on the tax issues raised by them.  The white paper can be downloaded here.

The KPMG survey was conducted in late March during a KPMG Tax practice-sponsored event focused on the tax implications of the Dodd-Frank Act and Basel III.

About KPMG LLP

KPMG LLP, the audit, tax and advisory firm (www.us.kpmg.com), is the U.S. member firm of KPMG International Cooperative ("KPMG International").  KPMG International’s member firms have 138,000 professionals, including more than 7,900 partners, in 150 countries.

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Housingwire

Senate Banking Committee Chairman Tim Johnson (D-S.D.) said in a hearing Tuesday he would counter any effort to repeal sections of the Dodd-Frank Act.

The committee heard testimony from Financial Crisis Inquiry Commission Chairman Phil Angelides, as it reviews the report and determines if the Dodd-Frank Act sufficiently addresses the regulatory gaps that led up to the financial crisis.

Republicans in the House say the reform goes too far and rolled out several repeals in March, and later three more to dilute the powers of the newly created Consumer Financial Protection Bureau. Earlier in the year, Rep. Michele Bachmann (R-Minn.) attempted to repeal the entire bill.

But Johnson said such actions are "dangerous and irresponsible." He said some of the repeals proposed would take the financial system back to the same weaknesses that exposed investors and taxpayers to uncertain risk.

"We cannot allow Dodd-Frank to be dismantled," Johnson said. "As costly as the Great Recession has been, we simply cannot afford to go back to the old financial system that destroyed millions of jobs and cost the economy trillions of dollars. Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act to address these problems, and it must be fully and carefully implemented."

Angelides backed Johnson and so did, to an extent, Sen. Richard Shelby (R-Ala.), who recently led a GOP letter to President Obama pledging not vote for any CFPB director until Republican reforms of the agency were signed.

"There were gaps," Angelides said. "The SEC could have reduced risk and increased capital and liquidity at investment banks. They did not do it. The New York Fed could have reigned in Citigroup risks, but they did not do it."

Angelides pointed out how Dodd-Frank would have sealed those gaps for one company in particular: Countrywide. By 2007, 25% of Countrywide’s portfolio was made up of option adjustable-rate mortgages, where the borrower didn’t even have to cover the accruing interest in his or her monthly payments.

"Those kind of loans were a recipe for disaster," Shelby said. "Did regulators fail the American people?"

"The Fed looked the other way," Angelides said. "They had a lot of this information and did not act."

Angelides added the Office of the Comptroller of the Currency – Countrywide’s initial regulator – began raising concerns. He pointed to an internal email at Countrywide, noting that executives were wary of the OCC suspicions and decided to switch regulators. It shifted to the Office of Thrift Supervision, which under Dodd-Frank will be absorbed by the OCC this summer.

"The OCC had concerns. The OTS did not," Angelides said. "Dodd-Frank got rid of that regulatory shopping."

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Housingwire

The Consumer Financial Protection Bureau will open in less than three months but questions about who will head it and what it will do still persist.

Panelists speaking about the Dodd-Frank Act and other regulatory issues involving mortgage finance at the HousingWire REthink symposium going on Tuesday and Wednesday said industry players will see regulation that will evolve over time.

"You will have reinterpretation," said Joe Mason, a finance professor at Louisiana State University and an expert on securitization who has consulted for government agencies, research institutions and the mortgage industry.

"This is a dynamic process and the law is incredibly vague," he said. Mason predicted that it will take five to six years for the regulations to shake out, and said the industry should be prepared for more white papers, studies and appeals concerning the law.

"A lot of this will evolve — maybe not be struck down — but we will find a way to maneuver around."

Michael Waldron, a partner at law firm Patton Boggs, who focuses on regulatory issues, said industry players should develop a culture of compliance.

"Understand the benefit of being proactive instead of reactive. Reactive is always much more expensive," he said, noting that regulators like low-lying fruit and most defense of actions has involved issues such as unlicensed loan officers, unlicensed branches, lack of timely disclosures and consumer complaints that don’t get addressed in a timely fashion.

Ed Kramer, executive vice president of Wolters Kluwer Financial Services, said more than 50% of the loans written in the runup of the housing market would not have been written under Dodd-Frank and said the industry lost its footing in terms of following basic underwriting principles.

Ron D’Vari, CEO of NewOak Capital and an investor, said the mortgage industry needs to concentrate on delivering a quality product.

Trust, he said, needs to be regained and investors will come back.

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Appraisal Scoop

The following is a small portion of an excellent Client Alert newsletter from Morrison/Foerster, authored by Joseph Gabai dated Nov. 1, 2010. 

One of the key issues in the Interim Final Rule (IFR) of Dodd-Frank is the Duty to Pay Customary and Reasonable Compensation to Fee Appraisers (Section 226.42(f) of Regulation Z).  Basically it states that the duty of the creditor and its agents is to pay a customary and reasonable fee in the “geographic market of the property being appraised.”

The following are snipped from the full Client Alert noted above:

The interim final rule provides two separate presumptions of compliance with the customary and reasonable compensation requirement.

  • If the creditor and its agents comply with either of the two presumptions, then it is presumed that they are in compliance with the customary and reasonable compensation requirement 
  • Both of the two presumptions of compliance are rebuttable. The presumption may be rebutted with evidence that the amount of compensation paid to a fee appraiser was not customary and reasonable for reasons that are unrelated to the conditions for the presumption. How this will be done remains to be seen. If a presumption relied upon is successfully rebutted, this means that the customariness and reasonableness of the compensation is determined based on all of the facts and circumstances (i.e., without a presumption of compliance or violation)
  • Comment: While the regulation does not require the creditor and its agent to comply with one of the two presumptions, in practice this is what most creditors ultimately are expected to do
  • Comment: Both presumptions contain a fact-intensive determination process, which suggests that there may not be an easy way of being comfortably assured that the customary and reasonable compensation requirement is being met

First Presumption of Compliance. A creditor and its agents are presumed to be in compliance with the customary and reasonable compensation requirement if they conform to the following three-part process:

  • First, the creditor or its agents must determine the amount of the fee that is reasonably related to recent rates paid for comparable appraisal services performed in the geographic market of the property being appraised. This requires the identification of “comparable appraisal services” being performed, which overlaps somewhat with the second part of the three-part process, below. Also, it requires an identification of the “geographic market” (see discussion above). “Recent rates” depend on the relevant facts and circumstances, but the Commentary states that rates charged within one year of reliance on the information generally will qualify

The Commentary also states that the creditor/agent may gather the information using a reasonable method, including a fee survey. Unlike the second presumption of compliance discussed below, the first presumption of compliance does not prohibit the inclusion of fees paid by AMCs in any such survey. In fact, the Board’s Supplementary Information expressly confirms that the regulation and Commentary do not prohibit this.

"This borders on the incredible, given the Dodd-Frank Act’s express prohibition on the use of such information in what has become the second presumption of compliance. Keep in mind that the presumptions are rebuttable, and a survey used to support the first presumption that includes AMC-paid fees could be challenged."

If a decision is made to accept this risk, and a survey used to support the first presumption includes AMC-paid fees, it would be advisable to determine that the overall results of the survey fairly represent the fees paid to fee appraisers in the relevant geographic market.

Finally, nothing in the regulation or Commentary prohibits a creditor from delegating the tasks required by the first presumption to an AMC. However, because the AMC is the agent of the creditor, the creditor presumably will have exposure for the acts or omissions of the AMC in this regard, and creditors should take steps to protect themselves accordingly (e.g., by obtaining appropriate representations, warranties, and indemnities in their agreements with AMCs)

  • Second, once this amount is determined, it must be adjusted, as applicable, based on certain factors (i.e., type of property, scope of work, turnaround time for performance of the work, appraiser qualifications, appraiser experience and professional record, and appraiser work quality)

The need to consider the appraiser’s qualifications does not override federal or state laws prohibiting the exclusion of an appraiser from consideration for an appraisal assignment solely by virtue of membership or lack of membership in any particular appraisal organization. See, e.g., 12 C.F.R. §34.46(a) (OCC regulation). Note that Section 1473 of the Dodd-Frank Act will allow membership in a nationally recognized appraisal organization to be considered, but lack of membership may not be the sole bar against consideration for a particular appraisal assignment

  • Third, the creditor and its agents must not engage in any anticompetitive acts in violation of federal or state law. Examples of prohibited acts include: (i) entering into contracts or engaging in conspiracies to restrain trade through price fixing or market allocation, in violation of federal or state antitrust laws, or (ii) engaging in acts of monopolization, such as restricting entrants into the relevant geographic markets (e.g., if an AMC holds a dominant position in a particular geographic market, through that AMC’s use of exclusivity agreements in its contracts with creditors) or causing persons to leave those markets, in violation of federal or state antitrust laws

Second Presumption of Compliance. A creditor and its agents are presumed to be in compliance with the customary and reasonable compensation requirement if they determine the amount of compensation paid to the fee appraiser by relying on rate information that meets all of the following:

  • First, the information must be based on objective third-party information. This includes fee schedules, studies, and surveys prepared by independent third parties, such as government agencies, academic institutions, and private research firms
  • Second, the information must be based on recent rates paid to a representative sample of providers of appraisal services in the geographic market of the property being appraised, or the fee schedules of those providers. (See discussion above regarding the “geographic market.”) Thus, the fact that the information is derived from a government agency fee schedule is not, by itself, sufficient to get the benefits of the second presumption of compliance—it also is necessary to confirm that the information is based on recent rates actually paid to a representative sample of providers in the relevant market, or the fee schedules for those providers
  • Third, any information based on fee schedules, studies, and surveys must exclude compensation paid to fee appraisers for appraisals ordered by AMCs. For this purpose, an “AMC” is defined as set forth above. As noted above, this definition is the same as the definition of an “AMC” under Section 1124 of FIRREA, except that it does not require the person to oversee a network or panel of a certain minimum size

This is only a SMALL portion of the complete document – Download 101101-Interim-Final-Rule-on-Real-Estate-Appraisals[1]

More information from Morrison/Foerster can be found here: Download Dodd-Frank Residential Mortgage Guide

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Fair lending issues will apply "on the back end" to mortgage servicers under the Dodd-Frank Act, so they need to get prepared, a panel of attorneys said Thursday.

Dodd-Frank describes fair lending as "fair, equitable and nondiscriminatory access to credit for consumers," and that could be applied to access to loan modifications by servicers, said Patrice Alexander Ficklin, counsel with Relman, Dane & Colfax.

Ficklin spoke on a panel Thursday during a mortgage servicing conference in Dallas hosted by SourceMedia.

"It remains to be seen how that might be applied to your industry," she said.

Dodd-Frank’s Consumer Finance Protection Bureau, which goes live on July 21, oversees two aspects of fair lending: the Equal Credit Opportunity Act and the Home Mortgage Disclosure Act. The Housing and Urban Development Department, however, will retain authority over the Fair Housing Act, and other federal regulators will retain some enforcement authority, she said.

"It’s really going to be an alphabet soup" in terms of fair lending oversight, Ficklin said.

"Servicers should start looking at their own procedures, policies and data so that you are ready in case you’ve got a state AG coming after you, in case you’ve got the CFPB" or a another litigator coming after you, she said.

Servicers should look to see, for example, if there are any disparities in approval of loan modifications for racial or ethnic minorities in comparison to whites, Ficklin said. They can use geocoding of census tracks to analyze their data. Servicers will also want to look to see whether certain ethnic groups are getting larger interest rate reductions than others, she said.

Kirsten Thomas, vice president and assistant general counsel with American Home Mortgage Servicing, said the servicer has already started gathering data in preparation for the changes under Dodd-Frank. One place it is making changes is to reduce the discretion customer service agents use in applying fees to borrowers.

Mortgage servicers should consider a more "hardline" policy on fees as a preventative measure against any allegations of disparate application, panelists said.

Lisa Crowley DeLessio, a partner with Hudson Cook, said servicers also need to become aware of a host of new notice requirements and reduced timelines for those notices. Servicers, for example, will need to notify borrowers seven months in advance of an interest rate reset on hybrid adjustable-rate mortgages under the Truth in Lending Act, she said.

Servicers will also have to acknowledge the receipt of a written request from a borrower within five days, instead of the current 20. The time to respond to the request drops from 60 days to 30, but includes an additional 15-day window to gather additional data — if the servicer lets the borrower know that there will be a delay in responding.

Requirements on force-placed insurance also change in respect to providing notification and reimbursements to borrowers, DeLessio said.

Notification changes will take effect on Jan. 1, 2012, if no new regulations are issued, or on Jan. 1, 2013, if new regulations are issued, the panel said.

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By MARK DeCAMBRE –New York Post

Rep. Barney Frank has thrown his prodigious political heft behind the backers of a provision to amend the so-called swipe fee rules on debit cards.

Yesterday, the veteran Democratic lawmaker from Massachusetts, whose name is attached to hundreds of sweeping regulatory rules being enacted throughout Wall Street known as Dodd-Frank reforms, said that he’s in favor of delaying at least one of them.

Frank has suggested that he is in favor of halting the so-called swipe, or interchange, rules in order to allow more time to research and study the rules of the amendment introduced by Sen. Richard Durbin (D-Ill.).

The Federal Reserve, which has been tasked with implementing the rules, has already informed lawmakers that it will not be able to meet an April 21 deadline for coming up with a final rule to cap swipe fees.

"For this reason, I support legislative action to postpone the deadline so that we can revisit it," said the House Finance committee member. Frank’s recent statement is a direct nod to Sen. Jon Tester (D-Mont.), who submitted a bill on the floor of the Senate last week seeking a year-long study of the interchange fee rules.

The swipe rules, which are fees that banks charge to retailers on debit transactions, have become a hot button issue between Main Street and Wall Street.

In December, the Federal Reserve stunned banks and set off a lobbying firestorm by proposing to slash swipe fees from 63 cents to 12 cents.

Major financial institutions, including MasterCard, Visa and JPMorgan Chase, have railed against the new rules.

Tester’s bill was attached to a small business bill that the Senate is expected to vote on soon, but exact timing is unclear.

The swipe rules are meant to go into effect by late July.

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