This week, Compliance Week detailed legislative efforts underway to “tweak” the Dodd-Frank Act, and whether these changes would ultimately either improve or chip away at its reforms. Among the efforts cited was the Center's “Fix, Add, Replace (FAR) Agenda,” an effort to rethink and re-engineer key measures of the legislation. The details of that initiative have now emerged as a long list of changes the Center says are necessary to help businesses “faced with uncertain and conflicting rules of the road, as well as skyrocketing compliance costs.”
The following is an overview of the proposals, as described by the Center:
Consumer Financial Protection Bureau
  • Replace the single director leadership structure at the Consumer Financial Protection Bureau with a bipartisan commission “to ensure continuity and a balanced approach to policymaking.”
  • Bringing the CFPB's budget within the formal, congressional appropriations process.
  • Enact legislation to exempt non-financial end-users from “onerous, costly, and unnecessary” margin requirements.
  • Ensure that purely internal, inter-affiliate derivatives transactions are exempt from clearing, margin, and other requirements more appropriately applied to market-facing swaps.
  • Clarify that non-financial companies that use centralized treasury units to hedge risk will be eligible for the end-user clearing exception.
Coordination of Regulators
  • Support efforts to increase the transparency of Financial Stability Oversight Council when it acts in a regulatory capacity.
  • Safeguard the confidentiality of proprietary and consumer information gathered from data requests and examinations across all regulators.
  • Prohibit final systemically important financial institution (SIFI) designations for non-bank financial companies until all systemic risk rules are finalized.
  • Reform FSOC so that the views of the agencies, and not the chairmen of agencies sitting as individuals, are represented.
Volcker Rule
  • Repeal the Volcker Rule and replace it with higher capital requirements for financial services firms that engage in proprietary trading.
Whistleblower Programs
  • Amend the Securities and Exchange Commission's and Securities and Commodity Futures Trading Commission's whistleblower programs to make any “wrongdoer convicted of a crime” ineligible for an award.
  • Amend these whistleblower programs to provide “consistency with Sarbanes-Oxley required compliance programs” by requiring internal reporting of the alleged misconduct, either before or simultaneously reporting the information to the various commissions.
Modernizing the SEC
  • Appoint a deputy chairman to develop and implement “a transformational reform plan to break down silos, develop priorities for agency action, and instill managerial accountability and discipline.” Funding and resources should be linked to “timely and clear progress” in achieving the plan.
  • Reform hiring practices to acquire the talent needed to regulate complex markets and products.
Coordination of Regulators
  • Consolidating the SEC and CFTC.
  • Create a post-implementation requirement for a new regulation to undergo a cost-benefit analysis two years after promulgation to assess the real-world costs and allow for a correction of unintended consequences.
  • Extend the requirements for cost-benefit analysis to all independent agencies.
  • Regularly review and update existing regulations and, if necessary, sunset obsolete ones.
Global Coordination
  • End efforts to apply domestic regulations extra-territorially and create mechanisms to ensure effective coordination among international regulators to resolve cross-border issues.
Corporate Governance
  • Hold proxy advisory firms to standards that move the industry towards a “more accountable, transparent, and evidence-based policy-making process while eliminating core conflicts of interest.”
  • Support corporate governance and executive compensation provisions and disclosures “that promote long-term shareholder value and allow for reasonable risk-taking” while replacing others, such as pay-ratio disclosures, that “do little for shareholders.”
Financial Reporting
  • Require the Public Company Accounting Oversight Board and Financial Accounting Standards Board to follow transparency requirements of the Administrative Procedures Act and Federal Advisory Committee Act in developing standards and conduct cost-benefit analysis of proposed standards.
  • Create a financial reporting forum made up of regulators, standard-setters, investors, and businesses to proactively identify problems within the financial reporting system and suggest solutions.
  • Abandoning plans by U.S. and foreign regulators for mandatory audit firm rotation. The Center says such plans “would reduce audit quality, diminish the role of audit committees, increase the incidence of undetected fraud, and raise costs.”