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The Text of the Dodd-Frank Act
International Association of
Risk and Compliance Professionals (IARCP)
Dodd Frank Act Section 120
SEC. 120. ADDITIONAL STANDARDS
APPLICABLE TO ACTIVITIES OR PRACTICES FOR FINANCIAL STABILITY
PURPOSES.
(a)
IN GENERAL.—The Council may provide for more stringent
regulation of a financial activity by issuing recommendations to
the primary financial regulatory agencies to apply new or
heightened standards and safeguards, including standards
enumerated in section 115, for a financial activity or practice
conducted by bank holding companies or nonbank financial companies
under their respective jurisdictions, if the Council determines
that the conduct, scope, nature, size, scale, concentration, or
interconnectedness of such activity or practice could create or
increase the risk of significant liquidity, credit, or other
problems spreading among bank holding companies and nonbank
financial companies, financial markets of the United States, or
low-income, minority, or underserved communities.
(b)
PROCEDURE FOR RECOMMENDATIONS TO
REGULATORS.—
(1) NOTICE AND
OPPORTUNITY FOR COMMENT.—The Council shall consult with the
primary financial regulatory agencies and provide notice to the
public and opportunity for comment for any proposed recommendation
that the primary financial regulatory agencies apply new or
heightened standards and safeguards for a financial activity or
practice.
(2) CRITERIA.—The
new or heightened standards and safeguards for a financial
activity or practice recommended under paragraph (1)—
(A)
shall take costs to long-term economic growth into account; and
(B) may include prescribing the conduct of the activity or
practice in specific ways (such as by limiting its scope, or
applying particular capital or risk management requirements to the
conduct of the activity) or prohibiting the activity or practice.
(c) IMPLEMENTATION OF RECOMMENDED
STANDARDS.—
(1) ROLE OF
PRIMARY FINANCIAL REGULATORY AGENCY.—
(A)
IN GENERAL.—Each primary financial regulatory agency may
impose, require reports regarding, examine for compliance with,
and enforce standards in accordance with this section with respect
to those entities for which it is the primary financial regulatory
agency.
(B) RULE OF CONSTRUCTION.—The
authority under this paragraph is in addition to, and does not
limit, any other authority of a primary financial regulatory
agency.
Compliance by an entity with actions taken by a
primary financial regulatory agency under this section shall be
enforceable in accordance with the statutes governing the
respective jurisdiction of the primary financial regulatory agency
over the entity, as if the agency action were taken under those
statutes.
(2) IMPOSITION OF
STANDARDS.—The primary financial regulatory agency shall
impose the standards recommended by the Council in accordance with
subsection (a), or similar standards that the Council deems
acceptable, or shall explain in writing to the Council, not later
than 90 days after the date on which the Council issues the
recommendation, why the agency has determined not to follow the
recommendation of the Council.
(d)
REPORT TO CONGRESS.—The Council shall report to Congress
on—
(1) any recommendations issued by the Council under
this section;
(2) the implementation of, or failure to
implement, such recommendation on the part of a primary financial
regulatory agency; and
(3) in any case in which no primary
financial regulatory agency exists for the nonbank financial
company conducting financial activities or practices referred to
in subsection (a), recommendations for legislation that would
prevent such activities or practices from threatening the
stability of the financial system of the United States.
(e)
EFFECT OF RESCISSION OF IDENTIFICATION.—
(1) NOTICE.—The Council may
recommend to the relevant primary financial regulatory agency that
a financial activity or practice no longer requires any standards
or safeguards
implemented under this section.
(2)
DETERMINATION OF PRIMARY FINANCIAL
REGULATORY AGENCY TO CONTINUE.—
(A)
IN GENERAL.—Upon receipt of a
recommendation under paragraph (1), a primary financial regulatory
agency that has imposed standards under this section shall
determine whether such standards should remain in effect.
(B) APPEAL PROCESS.—Each primary
financial regulatory agency that has imposed standards under this
section shall promulgate regulations to establish a procedure
under which entities under its jurisdiction may appeal a
determination by such agency under this paragraph that standards
imposed under this section should remain in effect.
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