TIMELINE-Long road to implement U.S. financial reform bill

July 21 (BestGrowthStock) – The landmark financial reform
legislation that President Barack Obama signed into law on
Wednesday will take years to implement, with hundreds of new
rules to be written and dozens of authorities transferred
between agencies – some of which must be created from scratch.

Below is a rough timeline for benchmarks in the
implementation from the date of enactment, based on information
from Treasury officials and stipulations in the 2,300-page law
itself.

IMMEDIATELY

— Authority to seize and liquidate large troubled
financial firms is immediately granted to the Federal Deposit
Insurance Corp, in consultation with the new Financial
Stability Oversight Council, or FSOC, headed by Treasury
Secretary Timothy Geithner.

— The FSOC, which includes the heads of all major
surviving financial regulators, plus an independent member
appointed by Obama, is formed immediately. It can begin work to
determine which firms are systemically important and subject to
higher capital requirements.

— The Treasury relinquishes the ability to authorize new
bailouts from the $700 billion Troubled Asset Relief Program.
Funds already distributed do not have to be immediately repaid,
and funds already allocated, such as the remainder of $50
billion in mortgage relief funds, can still be used.

— The Treasury immediately authorizes the Federal
Insurance Office to begin work, with an initial staff of around
10 to 15 people. The office will advise the FSOC on systemic
risks in the insurance sector and help negotiate international
agreements on insurance.

— Investors are allowed to sue credit rating agencies as
Moody’s Corp (MCO.N: ), Standard & Poor’s (MHP.N: ) and Fitch
Ratings (LBCP.PA: ) if they “recklessly” failed to review
information in developing a rating.

TWO MONTHS

— The Treasury, in consultation with regulators, must set
a start-up date for the new Consumer Financial Protection
Bureau and the transfer of consumer authorities from existing
agencies. Treasury officials expect this start-up date to be no
later than one year after enactment.

President Obama must nominate a director for the bureau,
which is expected soon. Until the director is confirmed by the
U.S. Senate, Geithner has authority to make decisions for the
bureau, which will need office space, desks, information
technology systems and staffing. At least some of its employees
will come from other regulators, officials say.

THREE MONTHS

— FSOC must hold its first meeting. For this to happen,
Treasury, working with other surviving regulators, must
establish rules and bylaws. The new council will replace the
President’s Working Group on Financial Markets, and will take
over any remaining PWG work.

— The Commodity Futures Trading Commission must publish an
“interim final rule” for how to report data for swaps that
predate the reform act. It also must establish timelines on how
new swap trades will be reported.

SIX MONTHS

— The Securities and Exchange Commission must enact new
“say on pay” rules for public company compensation and golden
parachutes. After this date at any public company shareholder
meeting, shareholders must be allowed to vote on how frequently
they will be given the opportunity to hold advisory votes on
company pay.

NINE MONTHS

— Regulators must adopt rules requiring securitizers to
retain at least 5 percent of the credit risk in any asset they
securitize, with exceptions for certain residential mortgages.

— The Federal Reserve must promulgate rules for limiting
the fees that debit card issuers can charge merchants.

— The CFTC must establish protections for whistleblowers
related to over-the-counter derivatives under the act.

ONE YEAR:

— Consumer Financial Protection Bureau is expected to
assume its full authorities and staffing.

— Office of the Comptroller of the Currency is expected to
assume full authorities and personnel from the Office of Thrift
Supervision.

— Deadline for new rules governing the bulk of derivatives
requirements, what types of swaps are required to be cleared,
basic rules and standards for clearinghouses and exchange
trading of derivatives, and capital and margin requirements for
dealers.

— Deadline for regulators to determine whether to exempt
small banks, savings associations, farm credit institutions
from the new rules on swaps, which require banks to spin off
some swaps dealing operations.

— Deadline for SEC rules for mandatory registration of
investment advisers to hedge funds and other private pools of
capital with assets exceeding $150 million.

— Deadline for SEC adoption of rules requiring all
publicly traded companies to have an independent compensation
committee.

— The Treasury expects its new Office of Financial
Research to be operational, analyzing data on systemic risks in
the financial system.

— SEC’s Office of the Investor Advocate is expected to
submit its first annual report to Congress.

18 MONTHS

— Some “Volcker Rule” provisions must be in place, such as
limits on scope and scale and limits on mergers and
acquisitions that expand a bank’s aggregate liabilities by more
than 10 percent.

— Federal Reserve must issue must issue rules that limit
debt to equity ratios to no more than 15:1 for large financial
institutions; new rules also due for higher risk-based capital
requirements.

— Annual stress tests must begin for financial institution
with more than $10 billion in assets.

— Rules due for financial institution “living wills” that
offer investors credible plans for wind-downs of firms that get
into trouble.

— Rules for foreign remittances and resolutions for errors
in these transfers are required to be in place.

TWO YEARS

— “Volcker Rule” provisions restricting banks from
“proprietary trading activities” must be in place. These also
allow banks to invest only up to 3 percent of their Tier 1
capital in hedge and private equity funds.

— Report and rulemaking on contingent capital for
financial institutions due.

— Simplified mortgage disclosure rules must be in place.
This is based on a requirement of one year after transfer of
authorities of the new consumer agency, which the Treasury
expects to be fully up and running by one year after
enactment.

— Deadline for SEC to produce a study to mitigate
conflicts of interests at the biggest ratings agencies. If the
SEC does not find a solution, the regulator is required to
implement a proposal by Senator Al Franken to create a board to
match rating agencies with debt issuers.

FIVE YEARS

— Banks with more than $15 billion in assets will have to
strip trust preferred securities from their Tier 1 capital.

Stock Market Basics

(Reporting by David Lawder; Editing by David Alexander)

TIMELINE-Long road to implement U.S. financial reform bill