2012 In Review

July 2012 marked the two-year anniversary of the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, a sweeping overhaul of how financial services are regulated in the United States. As of June 2012, 110, (30 percent) of the law’s 398 total rulemaking requirements, had been met with finalized rules, according to a report by Davis Polk.

In 2012 regulators hammered out details of Dodd-Frank’s Volcker Rule provision, named for former Federal Reserve chairman, Paul Volcker, who proposed it. The rule places restrictions on the ability of federally insured banks from trading for their own benefit.

In 2012 J.P. Morgan Chase & Co reported a trading loss of nearly $6 billion, focusing attention on the issue of systemic risk.

On April 3, 2012 the Financial Stability Oversight Council, a panel of regulators created under Dodd Frank, issued a final rule setting forth the criteria and process it will use to designate nonbank financial firms as systemically important. Once designated, these firms would be subject to consolidated supervision by the Federal Reserve.

There were 65 court-approved securities class-action settlements in shareholder lawsuits involving $1.4 billion in total settlement funds in 2011—the lowest number of approved settlements and corresponding total settlement dollars in more than 10 years, according to a study by Cornerstone Research.

The Dodd-Frank act phased out the Office of Thrift Supervision (OTS) and shifted its responsibilities to other federal agencies. Most of the institutions formerly regulated by the OTS have kept their thrift charters, according to a June 2012 SNL report.

There were 92 bank failures in 2011, down from 157 in 2010, according to the Federal Deposit Insurance Corporation.

On June 28, 2012 the Supreme Court ruled that the 2010 Patient Protection and Affordable Care Act, requiring most U.S. citizens to have health insurance, is constitutional.

 REGULATORY TIMELINE

  • 1916 National Bank Act limiting bank insurance sales except in small towns
  • 1933 Glass-Steagall Act prohibiting commercial banks and securities firms from engaging in each other’s business
  • 1956 Bank Holding Company Act restricting bank holding company activities
  • 1995 VALIC U.S. Supreme Court decision allowing banks to sell annuities
  • 1996 Barnett Bank U.S. Supreme Court decision allowing banks to sell insurance nationwide
  • 1999 Gramm-Leach-Bliley Act allowing banks, insurance companies and securities firms to affiliate and sell each other’s products
  • 2008 The Emergency Economic Stabilization Act, a $700 billion rescue plan for the U.S. financial services industry
  • 2009 The Financial Stability Plan was implemented by the U.S. Treasury to promote economic recovery
  • 2010 New federal rules providing consumer protections related to credit cards
  • 2010 Congress enacts the Dodd-Frank Wall Street Reform and Consumer Protection Act, a massive overhaul of financial services regulation
  • 2011 The Office of Thrift Supervision becomes part of the Office of the Comptroller of the Currency