Dodd-Frank Wall Street Reform and Consumer Protection Act

This week, President Obama signed into law the"Dodd-Frank Wall Street Reform and Consumer Protection Act" (the "Act"). The Act contains a number of significant provisions that affect the securitization industry. One change with immediate effect is the repeal of Rule 436(g) of the Securities Act of 1933, which currently excludes NRSROs from being treated as "experts" when their ratings are included in a registration statement. The legislation also contains a 5 percent risk retention requirement for securitizations, other than those involving "qualified residential mortgage" or loans originated under approved underwriting standards indicating low credit risk. The Act calls for the issuance of regulations regarding the application of risk retention provisions and the specification of underwriting standards. We will be monitoring these developments and will provide updates to you as the picture becomes clearer.

First, the legislation will require advisers to certain private funds, including hedge funds, private equity funds, venture capital funds and various other investment vehicles, to register under the Investment Advisers Act of 1940, and to respond to increased reporting and disclosure requirements, as we have outlined in our client alert "Dodd-Frank Act Impacts Private Fund Advisers."

Second, the Act includes expansive financial industry regulatory reforms, including new restrictions on the private investment fund activities of banking entities and their affiliates, known as the "Volcker Rule," described in our client alert "Volcker Rule Will Impact Private Fund Industry."

Third, the Act contains a number of provisions regarding executive compensation, corporate governance and enforcement provisions that are applicable to most public companies, as discussed in more detail in our client alert "Executive Compensation, Corporate Governance and Enforcement Provisions of The Dodd-Frank Act Affecting Public Companies."

Fourth, the legislation calls for changes in the regulatory landscape for "main street" financial institutions and their holding companies, as we have detailed in our client alert "Impact of the Dodd-Frank Act on Main Street."

Fifth, the legislation substantially alters the regulation of over-the-counter ("OTC") derivatives markets, in ways that will not be fully understood until extensive rulemaking, required by the legislation, is complete. A description of these changes is found in our client alert "OTC Derivatives Reform: Wall Street Transparency and Accountability Act of 2010."