CLE Materials for Panel #1 - George Washington University Law ...

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59 See Special Interest – On Preemption and Visitorial Powers 27 (Mar. 2004), 23 OCC Q.J. 1, 43, available at http://www.occ.gov/qj/qj23-1/3-SpecialInterest.pdf [hereinafter “Special Interest”] (noting that “[t]he variety of formulations quoted by the Court—“unlawfully encroach,” “hamper,” “interfere with or impair national banks’ efficiency”—defeats any suggestion that any one phrase constitutes the exclusive standard for preemption”). 60 Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). 61 12 U.S.C. § 371. 62 75 Fed. Reg. 57252 (Sept. 20, 2010). As prescribed in Section 1062 of the Dodd-Frank Act, the “designated transfer date” will not be earlier than 180 days but generally no more than 12 months after enactment of the Dodd-Frank Act, and may be extended up to an additional 6 months past the 12 month general deadline if the Treasury Secretary provides to the “appropriate committees of Congress” certain documentation including a written determination that the 12 month deadline is not feasible for an orderly implementation of the transfer of consumer financial protection functions of the various agencies to the BCFP and an explanation for why an extension is necessary. 63 12 U.S.C. §§ 5101 et seq. 64 12 U.S.C. § 5103. 65 12 U.S.C. § 5102(7). See page 13 of draft final rule, as approved by the FDIC on November 12, 2009, available at http://www.fdic.gov/news/board/2009nov12no8.pdf. 66 See Section 1100 of the Dodd-Frank Act. 67 For example, for states that have adopted without modification the Model State Law as proposed by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators, an exemption from state licensing requirements is provided for “registered mortgage loan originators.” This category of persons exempted from the licensing and registration requirements of the state law encompasses mortgage loan originators who are employees of depository institutions and their operating subsidiaries who are already registered with and maintain a unique identifier through the Nationwide Mortgage Licensing System and Registry. Given that the preemption provisions of the Dodd-Frank Act apply only to the “subsidiaries and affiliates” of national banks and federal thrifts, rather than the subsidiaries of other types of depository institutions, e.g., state chartered banks, the application of a state law that implements the S.A.F.E. Act to a mortgage loan originator who is an employee of an operating subsidiary of a national bank or federal thrift would likely have a discriminatory impact on national banks and thrifts, as employees of subsidiaries of state chartered depository institutions may continue to be subject only to the federal registration requirements as implemented by the Agencies. See page 10, fn. 12 of draft final rule, as approved by the FDIC on November 12, 2009, available at http://www.fdic.gov/news/board/2009nov12no8.pdf (noting that employees of depository institutions and their subsidiaries “acting within the scope of their employment are subject only to the Federal registration requirements of the S.A.F.E. Act as implemented by the Agencies through this rulemaking.”). 68 Cuomo v. Clearing House Association, L.L.C., 129 S.Ct. 2710 (2009). 14 14
WILMARTH 4/1/2011 1:11 PM ARTHUR E. WILMARTH, JR.* The Dodd-Frank Act: A Flawed and Inadequate Response to the Too-Bigto-Fail Problem I. Introduction ........................................................................... 953 II. The Severity and Persistence of the Financial Crisis ............ 957 III. LCFIs Played Key Roles in Precipitating the Financial Crisis ...................................................................................... 963 A. LCFIs Originated Huge Volumes of Risky Loans and Helped to Inflate a Massive Credit Boom That Precipitated the Crisis .................................................... 963 B. LCFIs Used Inflated Credit Ratings to Promote the Sale of Risky Structured-Finance Securities .................. 967 C. LCFIs Promoted an Unsustainable Credit Boom That Set the Stage for the Financial Crisis ............................. 970 D. LCFIs Retained Exposures to Many of the Hazards Embedded in Their High-Risk Lending ......................... 971 E. While Other Factors Contributed to the Financial Crisis, LCFIs Were the Most Important Private- Sector Catalysts for the Crisis ........................................ 975 IV. Government Bailouts Demonstrated That LCFIs Benefit from Huge TBTF Subsidies ................................................... 980 V. The Dodd-Frank Act Does Not Solve the TBTF Problem .... 986 A. Dodd-Frank Modestly Strengthened Existing Statutory Limits on the Growth of LCFIs But Did Not Close Significant Loopholes ................................... 988 B. Dodd-Frank Establishes a Special Resolution Regime for Systemically Important Financial Institutions But Allows the FDIC to Provide Full Protection for Favored Creditors of Those Institutions ......................... 993 [951]
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