On Wednesday, July 21, 2010, President Obama signed into law the new Financial Services Reform Act (the "Act"). The Act will have profound implications for the country's financial services industry as a whole, and it is expected that as a result of the legislation there may be as many as 500 new federal regulations implemented. As such, the full scope of the Act and its impact on the financial services industry as well as community banks will not be fully know for some time.
While the new provisions contained in the Act are voluminous, the Act does make a distinction in many of the biggest changes under the Act between small community banks and large complex financial institutions. This does not mean, however, that there will be no impact to community banks in future years as a result of the legislation and its implementing regulations. For example, one of the most discussed aspects of the new legislation is the creation of the Consumer Financial Protection Bureau ("CFPB"). This new regulatory agency will only have the ability to directly examine and enforce regulations for those institutions with $10 billion or more in assets. As such, community banks under that size will not be directly regulated by the CFPB. It is likely, however, that as the CFPB implements consumer protection regulations that other federal banking regulatory agencies will implement the same or similar regulations, which would then in turn result in compliance requirements for those banking institutions regulated by the adopting agencies. Further, there are certain provisions contained in the Act which will directly impact smaller banking organizations immediately, including the deposit insurance limit increase, the new asset based deposit insurance assessment standards and expanded affiliate transaction and insider transaction rules.
The new legislation and its ultimate impact on the banking industry will certainly bear watching in the upcoming years. Winthrop & Weinstine, P.A., will continue to actively counsel and work with our clients on what the changes arising from the Act will mean for their particular organizations, as well as monitor any new regulations implemented as a result of the Act which may impact its clients. Should you wish to discuss further the impact of the new legislation or have any specific questions regarding the provisions contained therein, please feel free to contact any of the below attorneys in Winthrop & Weinstine's Community Banking practice.
Edward J. Drenttel
(612) 604-6675
edrenttel@winthrop.com
Patrick W. Weber
(612) 604-6673
pweber@winthrop.com
Anton J Moch
(612) 604-6671
amoch@winthrop.com
Edward R. Culhane
(612) 604-6732
eculhane@winthrop.com
NOTICE:
This client alert is a periodic publication of Winthrop & Weinstine, P.A., and should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general information purposes only, and you are urged to consult your legal counsel concerning your situation and any specific legal questions you may have.