While praising the House Financial Services unanimous approval of HR 2827 to clarify the scope of the Dodd-Frank SEC municipal advisory registration mandate, the banking industry said that the well-intentioned substitute legislation would not adequately cover the range of products and services that banks provide to municipalities. In a memo, the American Bankers Association also said that HR 2827 may not provide an exemption for the negotiations that banks regularly undertake with municipalities when booking loan products such as tax anticipation notes and revenue anticipation notes.
The legislation exempts banks providing “traditional banking products” from the SEC’s proposed
rule implementing the Section 975. The ABA said that the bill’s narrow
“traditional banking products” definition covers deposits, bankers acceptances,
letters of credits, loans, certain loan participations and swap agreements. The
legislation also exempts banks for trust services that are subject to a state or
federal fiduciary duty, and extends to them the existing exemption for
registered investment advisers.
The committee approved an
amendment to H.R. 2827 eliminating
the need for individuals employed by municipal advisory firms to separately
register with the SEC. It also adopted panel ranking member Barney Frank’s
(D-MA) amendment deleting the bill’s provision requiring municipal adviser registration
only where the adviser had a written contract to provide advice for separate