Bank transactions with affiliates will be limited by Section 608 of the Dodd-Frank Act, which marks the meeting of two complex banking laws – the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and Section 23A of the Federal Reserve Act.
Section 608 makes a number of significant changes in Section 23A which are intended to expand coverage of the law. The changes become effective on July 21, 2012, and to date there has been no guidance of what the Federal Reserve Board will be doing to interpret and implement the changes in Regulation W.
The most impactful changes are dependent on how the Board will interpret and apply new provisions about affiliate derivative transactions and credit exposure.
This PwC FS Regulatory Brief is intended to serve as a summary of the changes made by Dodd-Frank to bank affiliate transaction rules, the status of regulatory efforts, what banks can be doing now to assess possible impacts, and some significant open issues from our perspective.